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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  November 17, 2021, (November 16, 2021)

 

 

Bimini Capital Management, Inc.

(Exact name of registrant as specified in its charter)

 

Maryland

001-32171

72-1571637

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification No.)

 

3305 Flamingo Drive, Vero Beach, Florida 32963

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (772) 231-1400

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

 

Effective as of November 16, 2021, Bimini Advisors, LLC (the “Manager”), a wholly-owned subsidiary of Bimini Capital Management, Inc. (the “Company”), and Orchid Island Capital, Inc. (“Orchid”) entered into a Third Amendment (the “Amendment”) to the Management Agreement between the Manager and Orchid dated February 20, 2013 (the “Agreement”). The Agreement was previously amended on April 1, 2014 and June 30, 2014.

 

Pursuant to the Agreement, the Manager performs management and other activities relating to the mortgage-backed securities portfolio, business activities and day-to-day operations of Orchid as set forth in the Management Agreement, and provides Orchid with its management team. In consideration for such services, the Manager receives management fees as well as reimbursement of certain costs and expenses. Certain repurchase agreement trading, clearing and administrative services have been provided to Orchid by AVM, L.P. (“AVM”). Pursuant to Section 7 of the Agreement, Orchid is required to pay the fees for such services directly to AVM.

 

Pursuant to the Amendment, Orchid and the Manager have agreed the services that are currently performed by AVM will be performed by the Manager. The Company has hired Patrick Doyle, effective as of December 1, 2021, to perform the services currently handled by AVM. The transition of such services from AVM to the Manager shall occur on the first business day immediately after the termination of Orchid’s arrangements with AVM, which the Company currently expects will occur on approximately March 31, 2022.

 

Pursuant to the Amendment, following termination of the AVM arrangements and in consideration for the repurchase agreement trading, clearing and administrative services being performed by the Manager, Orchid will pay the following fees to the Manager:

 

A daily fee for repurchase agreement funding transaction services that is based on the outstanding principal balance of Orchid’s repurchase agreement funding. The fee for each day shall be equal to the product of the outstanding principal balance of repurchase agreement funding in place as of the end of such day and the applicable basis point factor set forth in Appendix A of the Amendment, divided by 360; and

A fee for the clearing and operational services provided by personnel of the Manager equal to $10,000 per month.

 

Pursuant to the Amendment, Orchid is also required to pay its allocable share of fees incurred for safekeeping, transactions and cash services provided to Orchid by the Bank of New York Mellon (the “BNYM Fee”) directly to the Bank of New York Mellon. Orchid’s allocable share of the BNYM Fee shall be equal to Orchid’s percentage of all assets under management by the Manager, inclusive of the Company’s assets (measured as of the first day of each month).

 

The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to the entire Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

 

ITEM 7.01. REGULATION FD DISCLOSURE.

 

The Company also issued a press release today announcing that Mr. Doyle has been hired by the Company and that the repurchase agreement funding services and clearing and operational functions currently handled by AVM are being internalized by the Manager and will be handled by employees of the Manager following a transition period. This press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information referenced in this Item 7.01 (including Exhibit 99.1 referenced in Item 9.01 below) is being “furnished” under this Item 7.01. Regulation FD Disclosure and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document filed by the Company pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Caution About Forward-Looking Statements.

 

This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including, but not limited to, statements about the timing of the transition

 

 

of services from AVM to the Manager. These forward-looking statements are based upon the Company’s present expectations, but the Company cannot assure investors that actual results will not vary from the expectations contained in the forward-looking statements. Investors should not place undue reliance upon forward looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020. All forward-looking statements speak only as of the date on which they are made. New risks and uncertainties arise over time, and it is not possible to predict those events or how they may affect the Company. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

ITEM 9.01. EXHIBITS.

(d)Exhibits

 

Exhibit No.

 

Description

10.1

 

Third Amendment to Management Agreement, effective as of November 16, 2021

99.1

 

Press Release dated November 17, 2021

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 17, 2021

BIMINI CAPITAL MANAGEMENT, INC.

 

 

 

 

 

By:

/s/ Robert E. Cauley

 

 

 

Robert E. Cauley

 

 

Chairman and Chief Executive Officer

 

 

 
 
 
 
 
 
 
THIRD AMENDMENT TO
MANAGEMENT AGREEMENT
THIS THIRD AMENDMENT TO MANAGEMENT AGREEMENT
 
(the “
Amendment
”) is
entered into effective as of November 16, 2021 (the “
Effective Date
”), by and between Orchid Island
Capital, Inc., a Maryland corporation (the “
Company
”), and Bimini Advisors, LLC, a Maryland limited
liability company (“
Manager
”). Capitalized terms used but not defined in this Amendment shall have
the meanings set forth in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS
, the Company and the Manager entered into a Management Agreement effective as
of February 20, 2013, the First Amendment to Management Agreement effective as of April 1, 2014 and
the Second Amendment to Management Agreement effective as of June 30, 2014 (collectively,
 
the
“
Agreement
”);
 
WHEREAS
, the execution of repurchase agreement funding transactions and certain clearing
and operational functions related to the Company’s trading activities are currently handled by AVM,
L.P.
 
(“
AVM
”), with the Company paying for such services directly to AVM;
WHEREAS
, Section 7 of the Agreement includes the following language relating to such
payment by the Company directly to AVM
 
(the “
AVM
 
Language
”):
“
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.
”;
 
WHEREAS
, in connection with the Manager hiring an individual experienced in the execution
of repurchase agreement funding transactions and related clearing and operational functions, the
repurchase agreement funding services and clearing and operational functions currently handled by
AVM
 
are being internalized by the Manager and will be handled by employees of the Manager
following a transition period;
 
WHEREAS
, the Company will terminate its agreements with AVM
 
according to the terms
thereof; and
WHEREAS
, the Company and the Manager now desire to amend the Agreement on the terms
set forth herein.
NOW
,
THEREFORE
, in consideration of the premises and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are expressly
acknowledged, the parties hereby amend and modify the Agreement in the manner set forth below:
1.
Section 2 of the Agreement is hereby amended by renumbering Sections 2(b)(xxv) and
2(b)(xxvi) as Sections 2(b)(xxvi) and 2(b)(xxvii), respectively, and by adding the following new
Section 2(b)(xxv) of the Agreement as follows:
“(xxv) performing repurchase agreement trading and certain clearing and operations services;”
2.
Section 7(a) of the Agreement is hereby deleted and replaced by the following:
 
“(a) Except as provided in Section 7(b)(xx) and 7(b)(xxi), the Manager shall be responsible for
(i) 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 and (ii) all other costs and expenses payable by the Manager under the Overhead
Sharing Agreement.”
3.
Section 7 of the Agreement is hereby amended by renumbering Section 7(b)(xxi) as Section
7(b)(xxiii), and by adding the following new Sections 7(b)(xxi) and 7(b)(xxii) of the Agreement as
follows:
“(xxi) beginning on the first business date immediately following the termination of the
Company’s agreements with AVM,
 
(a) fees for repurchase agreement funding transaction
services performed by personnel of the Manager which shall be calculated on a daily basis. The
fee for each day shall be equal to the product of (i) the outstanding principal balance of the
Company’s repurchase agreement funding in place as of the end of such day and (ii) the Basis
Point Factor, as described in Appendix A, divided by 360 ((principal * bps)/360); and
(b) a fee for the clearing and operational services provided by personnel of the Manager equal to
$10,000 per month;
(xxii) beginning on the first business date immediately following the termination of the
Company’s agreements with AVM,
 
the Company’s allocable share of fees incurred for
safekeeping, transactions and cash services provided by the Bank of New York
 
Mellon (the
“
BNYM fee
”). For purposes of this Section 7(b)(xxii), the Company’s “allocable share,” as
applied to the dollar amount of the BNYM fee, shall be equal to the Company’s percentage of all
assets under management by the Manager, inclusive of the assets of Bimini Capital Management,
Inc. (measured as of the first day of each month);”
4.
The AVM
 
Language in Section 7 of the Agreement is hereby deleted in its entirety and replaced
by the following:
 
“
For the avoidance of doubt, payment for safekeeping, transactions and cash services provided
to the Company by the Bank of New York
 
Mellon shall be made by the Company directly to the
Bank of New York
 
Mellon.
”
5.
Section 7(c) of the Agreement is hereby deleted in its entirety.
6.
Section 16(a) of the Agreement is hereby amended to amend and restate the notice information
for the Company as follows:
“The Company:
 
Orchid Island Capital, Inc.
3305 Flamingo Drive
Vero
 
Beach, FL 32963
Attention: Chief Executive Officer
Fax: 772-231-2896
with a copy to:
 
Vinson & Elkins L.L.P.
2200 Pennsylvania Avenue NW
Suite 500 West
Washington, DC 20037
Attention: S. Gregory Cope, Esq.
Fax: 202-879-8916”
7.
This Amendment constitutes an amendment or modification of the Agreement that is entered into
pursuant to Section 16(d) of the Agreement.
8.
Except as set forth in this Amendment, the parties acknowledge and agree that all other terms of
the Agreement shall remain in full force and effect.
9.
All prior agreements, promises, representations, or statements, whether oral or in writing,
regarding this Amendment are merged and integrated herein. This Amendment and the Agreement, as so
amended, constitute the entire agreement with respect to the subject matter hereof. No amendments,
waivers or modifications to the terms of the Agreement shall be valid unless set forth in writing and
signed by the Company and the Manager.
10.
This Amendment may be executed in counterparts, each of which will be deemed an original,
and all of which taken together shall constitute a single agreement.
[Signature page follows]
 
 
IN WITNESS WHEREOF
, the parties hereto have executed this Amendment 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/ George H. Haas, IV
Name:
 
George H. Haas, IV
Title:
 
Chief Financial Officer, Chief Investment Officer
and Secretary
 
Appendix A
Basis Point Factor
For purposes of calculating the daily fee set forth in Section 7(b)(xxi)(a) of the
Agreement, (i) if the aggregate outstanding principal balance of the Company’s repurchase
agreement funding is equal to or less than $5,000,000,000 (measured as of the end of each day),
the Basis Point Factor to be applied shall be equal to 1.5 basis points (or 0.00015) and (ii) if the
aggregate outstanding principal balance of the Company’s repurchase agreement funding is
greater than $5,000,000,000 (measured as of the end of each day), the Basis Point Factor to be
applied for amounts in excess of $5,000,000,000 shall be equal to 1.0 basis points (or 0.00010).
 
ORCHID ISLAND CAPITAL, INC. AND
BIMINI CAPITAL MANAGEMENT,
 
INC. ANNOUNCE
THIRD AMENDMENT TO MANAGEMENT AGREEMENT
●
Third Amendment to Management Agreement
●
Internalization of Funding and Custody/Settlement Operations
●
Hiring of Patrick Doyle by Bimini Capital, Inc.
Vero
 
Beach, Fla., November 17, 2021
 
- Orchid Island Capital, Inc.
 
(“Orchid”) (NYSE: ORC) and Bimini
Capital,
 
Inc.
 
(“Bimini”)
 
(OTCQB:
 
BMNM)
 
jointly
 
announced
 
today
 
that
 
effective
 
as
 
of
 
November
 
16,
2021,
 
Orchid
 
and
 
its
 
external
 
manager,
 
Bimini
 
Advisors,
 
LLC
 
(the
 
“Manager”),
 
entered
 
into
 
a
 
Third
Amendment (the
 
“Amendment”) to
 
the Management
 
Agreement between
 
Orchid and
 
the Manager
 
dated
February 20, 2013, as
 
previously amended (the
 
“Agreement”).
 
The Manager is a
 
wholly-owned subsidiary
of Bimini.
 
Pursuant to
 
the Agreement, the
 
Manager performs management
 
services relating to
 
the mortgage-backed
securities
 
portfolio,
 
business
 
activities
 
and
 
day-to-day
 
operations
 
of
 
Orchid.
 
In
 
consideration
 
for
 
those
services, the
 
Manager receives
 
management fees
 
as well
 
as reimbursement of
 
certain costs
 
and expenses
from
 
Orchid.
 
Also
 
pursuant
 
to
 
the
 
Agreement,
 
certain
 
repurchase
 
agreement
 
trading,
 
clearing
 
and
administrative services
 
are provided
 
to Orchid
 
by AVM,
 
L.P.
 
(“AVM”).
 
Orchid pays
 
the fees
 
for those
services directly to AVM.
 
Bimini
 
and
 
the
 
Manager
 
are
 
taking
 
steps
 
to
 
internalize
 
the
 
repurchase
 
agreement
 
trading,
 
clearing
 
and
administrative services that are currently provided by AVM.
 
Pursuant to the Amendment, Orchid and the
Manager have
 
agreed that
 
Orchid’s agreements with
 
AVM will be terminated and
 
the Manager
 
will become
responsible for the performance of repurchase agreement trading,
 
clearing and administrative services.
 
Following termination
 
of the
 
AVM arrangements and in
 
consideration for
 
the repurchase
 
agreement trading,
clearing and administrative services
 
to be performed by the
 
Manager, Orchid will pay the following
 
fees to
the Manager:
●
A
 
daily
 
fee
 
for
 
repurchase
 
agreement
 
funding
 
transaction
 
services
 
equal
 
to
 
the
 
product
 
of
 
the
outstanding principal balance of repurchase
 
agreement funding in place as
 
of the end of
 
such day
and the applicable basis point factor set forth in the Amendment,
 
divided by 360; and
●
A
 
fee
 
for
 
the
 
clearing
 
and
 
operational
 
services
 
provided
 
by
 
personnel
 
of
 
the
 
Manager
 
equal
 
to
$10,000 per month.
Pursuant
 
to
 
the
 
Amendment,
 
Orchid
 
is
 
also
 
required
 
to
 
pay
 
its
 
allocable
 
share
 
of
 
fees
 
incurred
 
for
safekeeping,
 
transactions
 
and
 
cash
 
services
 
provided
 
to
 
Orchid
 
by
 
the
 
Bank
 
of
 
New
 
York
 
Mellon
 
(the
“BNYM Fee”) directly to the Bank of New York Mellon.
 
Orchid’s allocable share of the BNYM Fee will
be equal to Orchid’s percentage of all
 
the assets under management by
 
the Manager, inclusive of the assets
of Bimini (measured as of the first day of each month).
 
AVM
 
also
 
performs repurchase
 
agreement trading,
 
clearing and
 
administrative services
 
for
 
Bimini with
respect to
 
its mortgage-backed
 
securities portfolio.
 
The Manager’s
 
internalization of
 
these services
 
will
allow Bimini to
 
terminate its arrangements
 
with AVM,
 
and the
 
Manager will become
 
responsible for the
performance of these services for Bimini.
 
Bimini
 
has
 
hired
 
Patrick
 
Doyle,
 
effective
 
as
 
of
 
December
 
1,
 
2021,
 
to
 
lead
 
the
 
Manager’s
 
repurchase
agreement trading, clearing and
 
administrative services.
 
From 1998 until
 
joining Bimini, Mr.
 
Doyle was
employed by AVM,
 
most recently as Head of Funding and Liquidity.
 
Commenting on the
 
Amendment, the internalization
 
of certain functions
 
and the hiring
 
of Patrick
 
Doyle,
Robert E. Cauley, the Chairman and CEO of Orchid and Bimini, stated, “We
 
are very pleased to welcome
Pat
 
to
 
Bimini.
 
Pat
 
has
 
significant
 
expertise
 
and
 
experience
 
in
 
the
 
repo
 
markets,
 
as
 
well
 
as
 
extensive
knowledge of the
 
settlement and operations
 
related practices of
 
our business. As
 
a manager of repo
 
funding
operations
 
at
 
AVM,
 
Pat
 
has
 
worked
 
with
 
Bimini
 
since
 
2003.
 
Once
 
these
 
critical
 
functions
 
are
 
being
performed by Bimini for Orchid, we will be able to provide them in an efficient and cost-effective manner
with the help of one
 
of the funding market’s leading professionals.”
 
Mr. Doyle added, “The opportunity to
work with Bimini is very exciting
 
for me. I have been
 
working with Bimini as a client
 
since their inception
in 2003.
 
This opportunity is
 
a natural
 
fit for
 
both of
 
us. I
 
look forward to
 
enhancing Bimini’s
 
abilities to
fund
 
their
 
portfolios
 
under
 
management,
 
to
 
create
 
new
 
operational
 
efficiencies,
 
and
 
to
 
enhance
 
the
management of liquidity risks.”
 
About Orchid Island Capital, Inc.
Orchid
 
Island
 
Capital,
 
Inc.
 
is
 
a
 
specialty
 
finance
 
company
 
that
 
invests
 
on
 
a
 
leveraged
 
basis
 
in
 
Agency
RMBS. Our
 
investment strategy
 
focuses on,
 
and our
 
portfolio consists
 
of, two
 
categories of
 
Agency RMBS:
(i) traditional
 
pass-through Agency RMBS,
 
such as
 
mortgage pass-through certificates
 
and collateralized
mortgage obligations
 
issued by
 
Fannie Mae,
 
Freddie Mac
 
or Ginnie
 
Mae, and
 
(ii) structured
 
Agency RMBS.
The Company
 
is managed
 
by Bimini
 
Advisors, LLC,
 
a registered
 
investment adviser
 
with the
 
Securities
and Exchange Commission.
About Bimini Capital Management, Inc.
Bimini
 
Capital
 
Management,
 
Inc.
 
invests
 
primarily
 
in,
 
but
 
is
 
not
 
limited
 
to
 
investing
 
in,
 
residential
mortgage-related securities
 
issued by
 
Fannie Mae,
 
Freddie Mac
 
and Ginnie
 
Mae. Its
 
objective is
 
to earn
returns on
 
the spread
 
between the
 
yield on
 
its assets
 
and its
 
costs, including
 
the interest
 
expense on
 
the
funds it borrows.
 
In addition, Bimini generates a significant portion of its revenue serving as the manager
of the MBS portfolio of Orchid Island Capital, Inc.
 
Forward-Looking Statements
This
 
press
 
release
 
contains
 
forward-looking
 
statements
 
within
 
the
 
meaning
 
of
 
the
 
Private
 
Securities
Litigation Reform Act
 
of 1995
 
and other federal
 
securities laws. These
 
forward-looking statements
 
include,
but
 
are
 
not
 
limited
 
to,
 
statements
 
about
 
the
 
transition
 
of
 
services
 
from
 
AVM
 
to
 
the
 
Manager
 
and
 
the
performance of repurchase
 
agreement funding, clearing
 
and administrative services
 
by the Manager. These
forward-looking
 
statements
 
are
 
based
 
upon
 
Orchid’s
 
and
 
Bimini’s
 
present
 
expectations,
 
but
 
these
statements are
 
not guaranteed
 
to occur.
 
Investors should
 
not place
 
undue reliance
 
upon forward-looking
statements.
 
For
 
further
 
discussion
 
of
 
the
 
factors
 
that
 
could
 
affect
 
outcomes,
 
please
 
refer
 
to
 
the
 
“Risk
Factors” section
 
of the Annual
 
Report on
 
Form 10-K
 
for the
 
fiscal year
 
ended December
 
31, 2020
 
of Bimini
and Orchid, respectively