Document:

EXHIBIT 10.4

 

EMPLOYMENT
AGREEMENT

 

 

EMPLOYMENT AGREEMENT dated as of April 12, 2004, by and between
Bimini Mortgage Management Inc. with its principal place of business at
3305 Flamingo Drive, Suite 100, Vero Beach, Florida 32963 (the
“Company”), and Robert E. Cauley, residing at the address set forth on the
signature page hereof (the “Executive”).

 

WHEREAS, the parties have previously entered into an employment
agreement as of December 18, 2003, and wish to amend and completely
restate such agreement as forth herein; and

 

WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept such offer, on the terms set forth below:

 

Accordingly, the parties hereto agree as follows:

 

1.                                       Term.  The Company
hereby employs the Executive, and the Executive hereby accepts such employment,
for an initial term commencing as of the date hereof and continuing for a
three-year period, unless sooner terminated in accordance with the provisions
of Section 4 or Section 5; with such employment to continue for
successive one-year periods in accordance with the terms of this Agreement
(subject to termination as aforesaid) unless either party notifies the other
party of non-renewal in writing prior to six months before the expiration of
the initial term and each annual renewal, as applicable (the period during
which the Executive is employed hereunder being hereinafter referred to as the
“Term”).

 

2.                                       Duties.  During the
Term, the Executive shall be employed by the Company as Secretary of the
Company, Chief Financial Officer of the Company and Chief Investment Officer

 

 

of the Company and, and, for so long as he continues to be appointed as
such, shall serve as a member of the Board of Directors of the Company (the
“Board”), and, as such, the Executive shall faithfully perform for the Company
the duties of said offices and shall perform such other duties of an executive,
managerial or administrative nature as shall be specified and designated from
time to time by the Chief Executive Officer of the Company, the President of
the Company or the Board.  The Executive
shall devote substantially all of his business time and effort to the
performance of his duties hereunder; provided that in no event shall this
sentence prohibit the Executive from performing personal and charitable
activities, and any other business interests as may be approved by the
Board.  It is expressly acknowledged and
understood that the Executive may in the future seek to form and operate other
companies, which may include mortgage “REITs” which are not directly
competitive with the Company, and it is agreed that the Board will consider
promptly and in good faith whether (i) any such proposed venture is competitive
and (ii) to permit the Executive to pursue such venture provided that all of the
Executive’s duties and obligations hereunder shall be capable, in the
reasonable judgment of the Board, of being fully and satisfactorily performed
during the remaining Term.

 

3.                                       Compensation.

 

3.1                                 Salary.  The Company
shall pay the Executive during the Term a salary at a minimum rate of $150,000
per annum (the “Annual Salary”), in accordance with the customary payroll
practices of the Company applicable to senior executives.  At such time as a registration statement on
Form S-11 covering the initial public offering of the Company’s Class A Common
Stock has been declared effective by the U.S. Securities and Exchange
Commission (the “SEC”), the Executive’s Annual Salary shall be increased to
$267,500.  At least annually, the Board
shall review the Executive’s Annual Salary and may provide for such increases
therein as it may in its

 

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discretion deem appropriate. 
The Board shall also consider increases to the Executive’s Annual Salary
following the completion of each capital raising event and following such time
as a registration statement on Form S-11 covering the resale of the Company’s
Class A Common Stock has been declared effective by the SEC.  (Any such increased salary shall constitute
the “Annual Salary” as of the time of the increase.)

 

3.2                                 Bonus.  During the
Term, in addition to the Annual Salary, for each fiscal year of the Company
ending during the Term, the Executive shall have the opportunity to receive an
annual bonus under the Company’s bonus plans or arrangements as in effect from
time to time.  In providing for bonuses,
the Board shall consider, among other things, whether the completion of a
capital raising event should result in the payment of a bonus.  In addition, the Executive shall receive a
$125,000 cash bonus at the time a registration statement on Form S-11
covering resale of the Company’s Class A Common Stock issued in
November 2003 has been declared effective by the SEC.

 

3.3                                 Benefits - In General. 
Except with respect to benefits of a type otherwise provided for under
Section 3.4, the Executive shall be permitted during the Term to
participate in any group life, hospitalization or disability insurance plans,
health programs, retirement plans, fringe benefit programs and similar benefits
that may be available to other senior executives of the Company generally, on
the same terms as such other executives, in each case to the extent that the
Executive is eligible under the terms of such plans or programs.

 

3.4                                 Certain Specific Benefits.

 

(a)  The
Executive, shall be covered by reasonable medical, vision and dental insurance,
to be provided at no cost to the Executive. 
The Executive shall be covered by life insurance in an amount no less than
$2,000,000, at no cost to the Executive, to the extent such

 

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insurance may be obtained at reasonable rates; provided that the
Executive cooperates as reasonably requested by the Company in the Company’s
efforts to obtain such insurance.  The
Executive shall be covered by long-term disability insurance, to provide
replacement income in an amount no less than 100% of Annual Salary, at no cost
to the Executive, to the extent such insurance may be obtained at reasonable
rates; provided that the Executive cooperates as reasonably requested by the
Company in the Company’s efforts to obtain such insurance.

 

(b)  The
Executive shall be entitled to vacation of no less than 25 days per year,
personal days of no less than five days per year and holidays of no less than
14 days per year, to be credited in accordance with regular Company policies.

 

All of the foregoing shall be implemented within a reasonable time
after the date hereof.

 

3.5                                 Expenses - In General. 
The Company shall pay or reimburse the Executive for all ordinary and
reasonable out-of-pocket expenses actually incurred (and, in the case of
reimbursement, paid) by the Executive during the Term in the performance of the
Executive’s services under this Agreement; provided that the Executive submits
proof of such expenses, with the properly completed forms as prescribed from
time to time by the Company.  Expense
reimbursement reports should generally be submitted to the Company within 60
days of the payment by the Executive of the out-of-pocket expense; provided
that no report for reimbursement will be accepted after more than six months’
time, other than in the case of unusual circumstances as may be determined by
the Board.

 

3.6                                 Certain Legal
Expenses.  The Company
shall pay directly or reimburse the Executive for all reasonable legal fees and
expenses incurred by the Executive in connection with the review, negotiation
and execution of this Agreement.

 

3.7                                 Automobile.  During the
Term, the Executive shall be permitted the use of an automobile reasonably commensurate with the Executive’s
positions with the Company.

 

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4.                                             Termination upon Death or Disability. 
If the Executive dies during the Term, the Term shall terminate as of
the date of death, and the obligations of the Company to or with respect to the
Executive shall terminate in their entirety upon such date except as otherwise
provided under this Section 4.  If
the Executive by virtue of ill health or other disability is unable to perform
substantially and continuously the duties assigned to him for more than 180
consecutive or non-consecutive days out of any consecutive 12-month period, the
Company shall have the right, to the extent permitted by law, to terminate the
employment of the Executive upon notice in writing to the Executive.  Upon termination of employment due to death
or disability, (i) the Executive (or the Executive’s estate or beneficiaries in
the case of the death of the Executive) shall be entitled to receive any Annual
Salary and other benefits earned and accrued under this Agreement prior to the
date of termination (and reimbursement under this Agreement for expenses
incurred prior to the date of termination); (ii) subject to
Section 5.2(c), for a period of three years after termination of
employment, the Executive (if applicable), and in the event of his death, his
spouse (or life partner) and his dependents, shall receive such continuing
coverage under the group health plans they would have received under this
Agreement (but at such costs no higher than as in effect immediately preceding
such termination) as would have applied in the absence of such termination;
(iii) without duplication of any amounts due under clause (i), the Executive
shall receive an amount equal to the annual bonus that, in the absence of such
termination, would have been payable for the fiscal year in which termination
occurs, payable at such time as would have applied in the absence of such
termination, with such amount to be multiplied by a fraction (x) the numerator
of which is the number of days in the fiscal year preceding the termination and
(y) the denominator of which is 365; (iv) all outstanding unvested equity-based
awards (including stock options and restricted

 

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stock) held by the Executive shall fully vest and become immediately
exercisable, as applicable, and, in the case of options, shall continue to be
exercisable for their full terms; and (v) the Executive (or the Executive’s
estate or beneficiaries in the case of the death of the Executive) shall have
no further rights to any other compensation or benefits hereunder, or any other
rights hereunder (but, for the avoidance of doubt, shall receive such
disability and death benefits as may be provided under the Company’s plans and
arrangements in accordance with their terms).

 

5.                                       Certain Terminations of Employment;
Certain Benefits.

 

5.1                                 Termination by the Company for Cause;
Termination by the Executive without Good Reason.

 

(a)  For
purposes of this Agreement, “Cause” shall mean the Executive’s:

 

(i)                                     conviction of (or pleading nolo
contendere to) a felony (but in no event including a traffic or similar
violation), a crime of moral turpitude, dishonesty, breach of trust or
unethical business conduct, or any crime involving the Company;

 

(ii)                                  engagement in the performance of his
duties hereunder, in willful misconduct, willful or gross neglect, fraud,
misappropriation or embezzlement;

 

(iii)                               repeated failure to adhere to the
directions of the Board, to adhere to the Company’s policies and practices or
to devote his business time and efforts to the Company as required by
Section 2;

 

(iv)                              willful and continued failure to
substantially perform his duties properly assigned to him (other than any such
failure resulting from his Disability) after demand for substantial performance
is delivered by the Company specifically identifying the manner in which the
Company believes the Executive has not substantially performed such duties;

 

(v)                                 material breach of any of the provisions
of Section 6; or

 

(vi)                              breach in any material respect of the
terms and provisions of this Agreement and failure to cure such breach within
21 days following written notice from the Company specifying such breach;

 

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provided that the
Company shall not be permitted to terminate the Executive for Cause except on
written notice given to the Executive at any time following the occurrence of
any of the events described in clauses (i), (ii) or (v) above and on written
notice given to the Executive at any time not more than 30 days following the
occurrence of any of the events described in clause (iii), (iv) or (vi) above
(or, if later, the Company’s knowledge thereof).  No termination for Cause shall be effective unless the Board
makes a Cause determination after notice to the Executive and the Executive has
been provided with the opportunity (with counsel of his choice) to contest the
determination at a meeting of the Board.

 

(b)                                 The Company may terminate the Executive’s
employment hereunder for Cause, and the Executive may terminate his employment
on at least 30 days’ and not more than 60 days’ written notice given to the
Company.  If the Company terminates the Executive
for Cause, or the Executive terminates his employment and the termination by
the Executive is not for Good Reason in accordance with Section 5.2, (i)
the Executive shall receive Annual Salary and other benefits (including any
bonus for a fiscal year completed before termination and awarded but not yet
paid, but not any other bonus) earned and accrued under this Agreement prior to
the termination of employment (and reimbursement under this Agreement for
expenses incurred prior to the termination of employment); (ii) in the case of
such a termination by the Executive, he shall receive an amount equal to the
annual bonus that, in the absence of such termination, would have been payable
for the fiscal year in which termination occurs, payable at such time as would
have applied in the absence of such termination, with such amount to be
multiplied by a fraction (x) the numerator of which is the number of days in
the fiscal year preceding the termination and (y) the denominator of which is
365; and (iii) the Executive shall

 

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have no further rights to any other compensation or benefits hereunder
on or after the termination of employment, or any other rights hereunder.

 

5.2                                 Termination by the Company without Cause;
Termination by the Executive for Good Reason.

 

(a)                                  For purposes of this Agreement, “Good
Reason” shall mean, unless otherwise consented to by the Executive,

 

(i)                                     the material reduction of the Executive’s
authority, duties and responsibilities, the failure to continue the Executive’s
appointment as a member of the Board, or the assignment to the Executive of
duties materially inconsistent with the Executive’s position or positions with
the Company;

 

(ii)                                  a reduction in Annual Salary of the
Executive;

 

(iii)                               the relocation of the Executive’s office
to more than 25 miles from Vero Beach, Florida;

 

(iv)                              the Company’s failure to pay the
Executive any amounts otherwise due hereunder or under any plan, policy,
program, agreement, arrangement or other commitment of the Company; or

 

(v)                                 the Company’s material and willful breach
of this Agreement.

 

Notwithstanding
the foregoing, (i) Good Reason shall not be deemed to exist unless notice
of termination on account thereof (specifying a termination date no later than
30 days from the date of such notice) is given no later than 30 days after the
time at which the event or condition purportedly giving rise to Good Reason
first occurs or arises; and (ii) if there exists (without regard to this
clause (ii)) an event or condition that constitutes Good Reason, the Company
shall have ten days from the date notice of such a termination is given to cure
such event or condition and, if the Company does so, such event or condition
shall not constitute Good Reason hereunder.

 

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(b)  The Company may terminate the Executive’s
employment at any time for any reason or no reason and the Executive may
terminate the Executive’s employment with the Company for Good Reason.  If the Company terminates the Executive’s
employment and the termination is not covered by Section 4 or 5.1, or the
Executive terminates his employment for Good Reason:

 

(i)                                     the Executive shall receive Annual Salary
and other benefits (including any bonus for a fiscal year completed before
termination, but not any other bonus) earned and accrued under this Agreement
prior to the termination of employment (and reimbursement under this Agreement
for expenses incurred prior to the termination of employment);

 

(ii)                                  if (and only if) the Executive provides a
general release in a form reasonably acceptable to the Company which is or has
become irrevocable,

 

(A)           the
Executive shall receive (I) a single-sum cash payment equal to 300% of the
sum of (x) the Executive’s Annual Salary (as in effect immediately before
such termination) plus (y) the average bonus to the Executive for the
three fiscal years ending coincident with or immediately preceding such
termination (such amount to be deemed to be $350,000 if termination occurs
before the end of the first year, and, in addition, such amount in all events
to include for the first year any $125,000 bonus payable in accordance with the
last sentence of Section 3.2), payable no later than ten days after such
termination (but subject to the release provided for above having become
irrevocable), (II) subject to Section 5.2(c), for a period of three
years after termination of employment, such continuing coverage under the group
health plans the Executive would have received under this Agreement (but at
such costs (if any) to the Executive no higher than as in effect immediately
preceding such termination) as would have applied in the absence of such
termination; (III)  an amount equal to the annual bonus that, in the
absence of such termination, would have been payable for the fiscal year in
which termination occurs, payable at such time as would have applied in the
absence of such termination, with such amount to be multiplied by a fraction
(x) the numerator of which is the number of days in the fiscal year preceding
the termination and (y) the denominator of which is 365; and

 

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(IV)  at the Company’s cost (not to exceed $7,500), outplacement
services reasonably selected by the Company; and

 

(B)             all
outstanding unvested equity-based awards (including stock options and
restricted stock) held by the Executive shall fully vest and become immediately
exercisable, as applicable, and, in the case of options, shall continue to be
exercisable for their full terms; and

 

(iii)                               the Executive shall have no further
rights to any other compensation or benefits hereunder on or after the
termination of employment, or any other rights hereunder.

 

(c)                                  Notwithstanding clause (ii) of the third
sentence of Section 4 or clause (ii)(A)(II) of the second sentence of
Section 5.2(b), (i) nothing herein shall restrict the ability of the
Company to amend or terminate with general application the plans and programs
referred to in such clauses from time to time in its sole discretion, and
(ii) the Company shall in no event be required to provide any benefits
otherwise required by such clauses after such time as the Executive becomes
entitled to receive benefits of the same type from another employer or
recipient of the Executive’s services.

 

5.3                                 Change of Control.

 

(a)                                  Without duplication of the foregoing,
upon a “Change of Control” (as defined below) while the Executive is employed,
all outstanding unvested equity-based awards (including stock options and
restricted stock) shall fully vest and become immediately exercisable, as
applicable.  In addition, if, after a
Change of Control, the Executive terminates his employment with the Company as
of the three-month anniversary of the Change of Control, such termination shall
be deemed a termination by the Executive for Good Reason covered by
Section 5.2.

 

(b)                                 For purposes of this Agreement, “Change
in Control” shall mean the happening of any of the following:

 

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(i)                  any “person,” including a “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), but excluding the Company, any entity
controlling, controlled by or under common control with the Company, any
employee benefit plan of the Company or any such entity, and Executive and any
“group” (as such term is used in Section 13(d)(3) of the Exchange Act) of
which the Executive is a member) is or becomes the “beneficial owner” (as
defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of either (A) the combined
voting power of the Company’s then outstanding securities or (B) the then
outstanding Common Stock of the Company (in either such case other than as a
result of an acquisition of securities directly from the Company); provided,
however, that, in no event shall a Change in Control be deemed to have occurred
upon an initial public offering or a subsequent public offering of the Common
Stock under the Securities Act of 1933, as amended; or

 

(ii)               any consolidation or merger of the Company where the
stockholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate 50% or more of the combined
voting power of the securities of the corporation issuing cash or securities in
the consolidation or merger (or of its ultimate parent corporation, if any); or

 

(iii)            there shall occur (A) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company, other than a sale or disposition by the Company of all
or substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by “persons”
(as defined above) in substantially the same proportion as their ownership of
the Company immediately prior to such sale or (B) the approval by stockholders
of the Company of any plan or proposal for the liquidation or dissolution of
the Company; or

 

(iv)           the members of the Board at the beginning of any
consecutive 24-calendar-month period (the “Incumbent Directors”) cease for any
reason other than due to death to constitute at least a majority of the members
of the Board; provided that any director whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the

 

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members of the Board then
still in office who were members of the Board at the beginning of such
24-calendar-month period, shall be deemed to be an Incumbent Director.

 

6.                                       Covenants of the Executive.

 

6.1                                 Covenant Against Competition; Other
Covenants.  The Executive acknowledges that (i) the
principal business of the Company (which expressly includes for purposes of
this Section 6 (and any related enforcement provisions hereof), its
successors and assigns) is the acquiring, owning and selling residential
mortgage-related securities and/or debt securities issued or guaranteed by the
U.S. government, U.S. government sponsored or chartered enterprises or U.S.
government agencies  (such business
herein being referred to as the “Business”); (ii) the Company is one of
the limited number of persons who have developed such a business; (iii) the
Company’s Business is, in part, national in scope; (iv) the Executive’s
work for the Company has given and will continue to give him access to the
confidential affairs and proprietary information of the Company; (v) the
covenants and agreements of the Executive contained in this Section 6 are
essential to the business and goodwill of the Company; and (vi) the
Company would not have entered into this Agreement but for the covenants and
agreements set forth in this Section 6. 
Accordingly, the Executive covenants and agrees that:

 

(a)                                  By and in consideration of the salary and
benefits to be provided by the Company hereunder, including the severance
arrangements set forth herein, and further in consideration of the Executive’s
exposure to the proprietary information of the Company, the Executive covenants
and agrees that, during the period commencing on the date hereof and ending one
year following the date upon which the Executive shall cease to be an employee
of the Company and its affiliates, he shall not in the United States, directly
or indirectly, except with the prior approval of the Board, (i) engage in
the Business (other than for the Company or its affiliates) or otherwise
compete with the Company or its affiliates, (ii) render any services to

 

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any person, corporation, partnership or other entity (other than the
Company or its affiliates) engaged in the elements of the Business, or
(iii) become interested in any person, corporation, partnership or other
entity (other than the Company or its affiliates) engaged in the elements of
the Business, as a partner, shareholder, principal, agent, employee, consultant
or in any other relationship or capacity; provided, however, that,
notwithstanding the foregoing, the Executive may invest in securities of any
entity, solely for investment purposes and without participating in the
business thereof, if (A) such securities are traded on any national
securities exchange or the National Association of Securities Dealers, Inc.
Automated Quotation System, (B) the Executive is not a controlling person
of, or a member of a group which controls, such entity and (C) the
Executive does not, directly or indirectly, own 5% or more of any class of
securities of such entity. 
Notwithstanding the foregoing, the restrictions in this
Section 6(a) shall not apply upon and after (i) a termination covered by
Section 5.2 or (ii) a termination by the Executive after a Change in
Control.  In addition, the restrictions
of this Section 6(a) shall not apply to any existing investments or other
activities of the Executive which have been disclosed in writing to the Board
prior to the date hereof.

 

(b)                                 During and after the period of the
Executive’s employment with the Company and its affiliates, the Executive shall
keep secret and retain in strictest confidence, and shall not use for his
benefit or the benefit of others, except in connection with the business and
affairs of the Company and its affiliates, all confidential matters relating to
the Company’s Business and the business of any of its affiliates and to the
Company and any of its affiliates, learned by the Executive heretofore or
hereafter directly or indirectly from the Company or any of its affiliates (the
“Confidential Company Information”); and shall not disclose such Confidential
Company Information to anyone outside of the Company except with the

 

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Company’s express written consent and except for Confidential Company
Information which is at the time of receipt or thereafter becomes publicly
known through no wrongful act of the Executive or is received from a third
party not under an obligation to keep such information confidential and without
breach of this Agreement.

 

(c)                                  During the period commencing on the date
hereof and ending one year following the date upon which the Executive shall
cease to be an employee of the Company and its affiliates, (i) the Executive
shall not, without the Company’s prior written consent, directly or indirectly,
knowingly (i) solicit or encourage to leave the employment or other service of
the Company, or any of its affiliates, any employee or independent contractor
thereof or (ii) hire (on behalf of the Executive or any other person or entity)
any employee or independent contractor who has left the employment or other
service of the Company or any of its affiliates within the one-year period
which follows the termination of such employee’s or independent contractor’s
employment or other service with the Company and its affiliates, and (ii) the Executive
will not, whether for his own account or for the account of any other person,
firm, corporation or other business organization, intentionally interfere with
the Company’s or any of its affiliates’ relationship with, or endeavor to
entice away from the Company or any of its affiliates, any person who during
the Term is or was a customer or client of the Company or any of its
affiliates.

 

(d)                                 All memoranda, notes, lists, records,
property and any other tangible product and documents (and all copies thereof),
whether visually perceptible, machine-readable or otherwise, made, produced or
compiled by the Executive or made available to the Executive concerning the
business of the Company or its affiliates, (i) shall at all times be the
property of the Company (and, as applicable, any affiliates) and shall be
delivered to the Company at any

 

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time upon its request, and (ii) upon the Executive’s termination of
employment, shall be immediately returned to the Company (except that in all
events the Executive may retain a copy of his contacts list).

 

6.2                                 Rights and Remedies upon Breach. 
The Executive acknowledges and agrees that any breach by him of any of
the provisions of Section 6.1 (the “Restrictive Covenants”) would result
in irreparable injury and damage for which money damages would not provide an
adequate remedy.  Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the provisions
of Section 6.1, the Company and its affiliates, in addition to, and not in
lieu of, any other rights and remedies available to the Company and its
affiliates under law or in equity (including, without limitation, the recovery
of damages), shall have the right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, including,
without limitation, the right to an entry against the Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then continuing,
of such covenants.

 

7.                                       Other Provisions.

 

7.1                                 Severability. 
The Executive acknowledges and agrees that (i) he has had an
opportunity to seek advice of counsel in connection with this Agreement and
(ii) the Restrictive Covenants are reasonable in geographical and temporal
scope and in all other respects.  If it
is determined that any of the provisions of this Agreement, including, without
limitation, any of the Restrictive Covenants, or any part thereof, is invalid
or unenforceable, the remainder of the provisions of this Agreement shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions.

 

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7.2                                 Duration and Scope of Covenants. 
If any court or other decision-maker of competent jurisdiction
determines that any of the Executive’s covenants contained in this Agreement,
including, without limitation, any of the Restrictive Covenants, or any part
thereof, is unenforceable because of the duration or geographical scope of such
provision, then, after such determination has become final and unappealable,
the duration or scope of such provision, as the case may be, shall be reduced
so that such provision becomes enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.

 

7.3                                 Enforceability; Jurisdiction; Arbitration.

 

(a)  The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants set forth in Section 6 upon the courts of any jurisdiction
within the geographical scope of the Restrictive Covenants.  If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of
breadth of scope or otherwise it is the intention of the Company and the
Executive that such determination not bar or in any way affect the Company’s
right, or the right of any of its affiliates, to the relief provided above in
the courts of any other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdiction’s being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of res  judicata.

 

(b)  Any controversy or claim
arising out of or relating to this Agreement or the breach of this Agreement
(other than a controversy or claim arising under Section 6, to the extent
necessary for the Company (or its

 

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affiliates, where
applicable) to avail itself of the rights and remedies referred to in
Section 6.2) that is not resolved by the Executive and the Company (or its
affiliates, where applicable) shall be submitted to arbitration in Vero Beach
or Palm Beach, Florida in accordance with Florida law and the procedures of the
American Arbitration Association.  The
determination of the arbitrator(s) shall be conclusive and binding on the
Company (or its affiliates, where applicable) and the Executive and judgment
may be entered on the arbitrator(s)’ award in any court having
jurisdiction.  In any action in which
the Executive is the prevailing party, the Company shall pay the Executive’s
legal fees.

 

7.4                                 Indemnification and Insurance. 
The Company agrees to indemnify (in addition to any other
indemnification provided to the Executive under any separate agreement or the
by-laws of the Company) the Executive to the fullest extent permitted by
applicable law, as the same exists and may hereafter be amended, from and
against any and all losses, damages, claims, liabilities and expenses asserted
against, or incurred or suffered by, the Executive (including the costs and
expenses of legal counsel retained by the Company to defend the Executive and
judgments, fines and amounts paid in settlement actually and reasonably
incurred by or imposed on such indemnified party) with respect to any action,
suit or proceeding, whether civil, criminal, administrative or investigative in
which the Executive is made a party or threatened to be made a party, either
with regard to his entering into this Agreement or in his capacity as an
officer or director, or former officer or director, of the Company or any
affiliate thereof for which he may serve in such capacity.  Such indemnification shall continue after
the Executive is no longer employed by the Company and shall inure to the
benefit of his heirs, executors, and administrators.  The Company also agrees to attempt to secure and maintain
reasonable officers and directors liability insurance at reasonable rates,
within a reasonable time after the date hereof, providing coverage for
Executive, which coverage would continue after termination of

 

17

 

employment for a reasonable time (but in no event for a shorter time
than is applicable to any other senior executive of the Company).

 

7.5                                 Notices.  Any notice
or other communication required or permitted hereunder shall be in writing and
shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage
prepaid.  Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or, if mailed, five days after the date of deposit in
the United States mails as follows:

 

(i)                                     If to the Company,
to:

 

Bimini Mortgage Management Inc.

3305 Flamingo Drive, Suite 100

Vero Beach, Florida 32963

Attention:  Chief Executive
Officer

 

with a copy to:

 

Clifford Chance US LLP

200 Park Avenue

New York, New York  10166

Attention:  Robert E. King, Jr.

 

(ii)                                  If to the Executive,
to the address set forth on the signature page hereof.

 

Any such person
may by notice given in accordance with this Section 7.4 to the other
parties hereto designate another address or person for receipt by such person
of notices hereunder.

 

7.6                                 Entire Agreement. 
This Agreement contains the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.

 

7.7                                 Waivers and Amendments. 
This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance.  No

 

18

 

delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege.

 

7.8                                 GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

7.9                                 Assignment.  This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive; any purported assignment by the Executive in
violation hereof shall be null and void. 
In the event of any sale, transfer or other disposition of all or
substantially all of the Company’s assets or business, whether by merger,
consolidation or otherwise, the Company may assign this Agreement and its
rights hereunder.

 

7.10                           Withholding. 
The Company shall be entitled to withhold from any payments or deemed
payments any amount of tax withholding it determines to be required by law.

 

7.11                           Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, permitted assigns, heirs, executors
and legal representatives.

 

7.12                           Counterparts. 
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original
but all such counterparts together shall constitute one and the same
instrument.  Each counterpart may
consist of two copies hereof each signed by one of the parties hereto.

 

7.13                           Survival.  Anything
contained in this Agreement to the contrary notwithstanding, the provisions of
Sections 6, 7.3, 7.4 and 7.10, and the other provisions of this Section 7
(to the

 

19

 

extent necessary to effectuate the survival of Sections 6, 7.3, 7.4 and
7.10), shall survive termination of this Agreement and any termination of the
Executive’s employment hereunder.

 

7.14                           Existing Agreements. 
The Executive represents to the Company that he is not subject or a
party to any employment or consulting agreement, non-competition covenant or
other agreement, covenant or understanding which might prohibit him from
executing this Agreement or limit his ability to fulfill his responsibilities
hereunder, except that, as previously disclosed to the Board, the Executive may
have certain non-solicitation and non-interference obligations to a former
employer.

 

7.15                           Headings.  The headings
in this Agreement are for reference only and shall not affect the
interpretation of this Agreement.

 

7.16                           Parachutes.  If any
amount payable to or other benefit receivable by the Executive pursuant to this
Agreement is deemed to constitute a Parachute Payment (as defined below), alone
or when added to any other amount payable or paid to or other benefit
receivable or received by the Executive which is deemed to constitute a
Parachute Payment (whether or not under an existing plan, arrangement or other
agreement), and would result in the imposition on the Executive of an excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), then, in addition to any other benefits to which the Executive is
entitled under this Agreement, the Executive shall be paid by the Company an
amount in cash equal to the sum of the excise taxes payable by the Executive by
reason of receiving Parachute Payments plus the amount necessary to put the
Executive in the same after-tax position (taking into account any and all
applicable federal, state and local excise, income or other taxes at the
highest applicable rates on such Parachute Payments and on any payments under
this Section 7.16) as if no excise taxes had been imposed with respect to
Parachute Payments.  “Parachute Payment”

 

20

 

shall mean a “parachute payment” as defined in Section 280G of the
Code.  The amount of any payment under
this Section 7.16 shall be computed by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive, subject to
the last sentence of this Section 7.16. 
Notwithstanding any other provision of this Section 7.16, if a
reduction in Parachute Payments by 10% or less would cause there not to be
excise taxes imposed upon the Executive under Section 4999 of the Code (as
determined by the accounting firm referred to above, but subject to the last
sentence of this Section 7.16), then (i) no payments shall be made to the
Executive under the foregoing provisions of this Section 7.16, and (ii)
the payments and benefits provided under this Agreement shall be reduced to the
extent necessary so that no excise taxes would be imposed upon the
Executive.  In the event that the
Internal Revenue Service or a court, as applicable, finally and in a decision
that has become unappealable, decides that the determinations by the accounting
firm under this Section 7.16 are incorrect, then the parties shall within
five business days take such corrective actions as are necessary to conform to
such final decision; provided that (i) the Executive shall not initiate any
proceeding or other contests regarding these matters, other than at the
direction of the Company, and shall provide notice to the Company of any proceeding
or other contest regarding these matters initiated by the Internal Revenue
Service, and (ii) the Company shall be entitled to direct and control all such
proceeding and other contests, if it commits to and does pay all costs
(including without limitation legal and other professional fees) associated
therewith.

 

21

 

IN WITNESS WHEREOF, the parties hereto have signed their names as of
the day and year first above written.

 

 

	
   

  	
  BIMINI MORTGAGE
  MANAGEMENT INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Jeffrey
  J. Zimmer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey J.
  Zimmer

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Robert E. Cauley

  	
   

  
	
   

  	
   

  	
  Robert E. CauleyQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.2    
    

 
 

AMENDMENT TO RIGHTS AGREEMENT    
    

        This Amendment, dated as of April 26, 2004 (this "Amendment"), to the Rights Agreement, dated as of April 26, 1994 (the "Rights Agreement"), between
Pogo Producing Company, a Delaware corporation (the "Company"), and Computershare Investor Services, L.L.C., a Delaware limited liability company as Rights Agent (the "Rights Agent"). 

        WHEREAS,
the Company and Harris Trust Company of New York (the "Former Rights Agent") entered into the Rights Agreement specifying the terms of the Rights (as defined therein); 

        WHEREAS,
effective June 30, 2000 the Former Rights Agent resigned as Rights Agent, the Company appointed Computershare Investor Services, L.L.C. to serve as Rights Agent pursuant
to Section 20 of the Rights Agreement, and Computershare Investor Services, L.L.C. accepted such appointment; and 

        WHEREAS,
the Company desires to amend the Rights Agreement in accordance with Section 25 of the Rights Agreement to reflect the succession of Computershare Investor Services,
L.L.C. to the position of Rights Agent, to extend the Final Expiration Date (as defined in the Rights Agreement) and to make other changes in the Rights Agreement; 

        NOW,
THEREFORE, in consideration of the premises and mutual agreements set forth herein and in the Rights Agreement, the parties hereby agree as follows: 

        Section 1.
Definitions. Capitalized terms used and not otherwise defined herein shall have the meaning assigned to such terms in
the Rights Agreement. 

        Section 2.
Amendments to Rights Agreement. The Rights Agreement is hereby amended as set forth in this Section 2. 

        (a)   The
definition of "Acquiring Person" in Section 1 of the Rights Agreement is hereby amended to read in its entirety as follows: 

        "Acquiring
Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person; provided, however, that a Person shall not be or become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding due to
the repurchase of Common Stock by the Company, unless and until such time as such Person shall purchase or otherwise become the Beneficial Owner of additional shares of Common Stock constituting 1% or
more of the then outstanding shares of Common Stock or any other Person (or Persons) who is (or collectively are) the Beneficial Owner of shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock shall become an Affiliate or Associate of such Person unless, in either such case, such Person, together with all Affiliates and Associates of such Person, is not
then the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding; and provided, further, that if the Board of Directors determines in good faith that a Person that would
otherwise be an "Acquiring Person" has become such inadvertently (including, without limitation, because (i) such Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (ii) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without any intention of changing control of the Company, and if such Person as promptly as practicable divested or divests itself
of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person would no longer be an "Acquiring Person," then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement. 

 

        At
any time that the Rights are redeemable, the Board of Directors may, with respect to any specified Person or Persons, determine to increase to a specified percentage greater than that
set forth herein or decrease to a specified percentage lower than that set forth herein, the level of Beneficial Ownership of Common Stock at which such Person or Persons becomes an Acquiring Person. 

        (b)   The
definition of "Final Expiration Date" in Section 1 of the Rights Agreement is hereby amended to read in its entirety as follows: 

        "Final
Expiration Date" shall mean the close of business on April 25, 2014. 

        (c)   The
form of Rights Certificate attached to the Rights Agreement as Exhibit B is hereby amended by changing the date April 26, 2004 in the legend at the
beginning thereof and in the first paragraph of the body thereof to April 25, 2014. 

        Section 3.
Successor Rights Agent. Computershare Investor Services, L.L.C. hereby acknowledges and confirms acceptance of its
appointment, effective as of June 30, 2000, as Rights Agent pursuant to Section 20 of the Rights Agreement. 

        Section 4.
Miscellaneous. 

        (a)   The
term "Agreement" as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended hereby. 

        (b)   This
Amendment shall be effective as of the date first above written, and, except as set forth herein, the Rights Agreement shall remain in full force and effect and
shall be otherwise unaffected hereby. 

        (c)   This
Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all for which together shall constitute one and the same
instrument. 

        (d)   This
Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and performed entirely within such State. 

        (e)   Except
to the extent specifically amended hereby, the provisions of the Rights Agreement shall remain unmodified, and the Rights Agreement as amended hereby is confirmed
as being in full force and effect. 

2

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written. 

	 	 	POGO PRODUCING COMPANY
	

 	
 	

By:	

/s/  GERALD A. MORTON      
 Gerald A. Morton

Senior Vice President and

Corporate Secretary
	

 	
 	

COMPUTERSHARE INVESTOR SERVICES, L.L.C.
	

 	
 	

By:	

/s/  MARK ASBURY      
 Mark Asbury

3

QuickLinks

Exhibit 4.2

AMENDMENT TO RIGHTS AGREEMENT

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