ARMOUR Capital Management

The Management Agreement expressly permits directors, officers, employees, and agents of ARMOUR Residential Management LLC and its affiliates to simultaneously serve as trustees, directors, officers, employees, agents, nominees, or signatories for JAVELIN Mortgage Investment Corp. or its subsidiaries. This creates an ongoing key-person and dual-role conflict.

“Directors, officers, employees and agents of the Manager and its Affiliates may serve as trustees, directors, officers, employees, agents, nominees or signatories for the REIT or any subsidiary of the REIT, to the extent permitted by the Governing Instruments, as from time to time amended, or by any resolutions duly adopted by the Board of Directors”

The REIT and its subsidiaries are obligated to reimburse, indemnify and hold harmless the Manager and its affiliates from and against any and all expenses, losses, costs, damages, liabilities, demands, charges and claims arising from the Manager's acts or omissions under the agreement. Manager liability is limited to cases of gross negligence, reckless disregard, willful misconduct, or fraud. The REIT pays the Manager's litigation and indemnification costs.

“The REIT and its subsidiaries shall reimburse, indemnify and hold harmless the Manager and its Affiliates, directors, officers, stockholders, equity holders, employees, representatives and agents, and any Affiliates thereof from and against any and all expenses, losses, costs, damages, liabilities, demands, charges and claims of any nature whatsoever, actual or threatened (including, without limitation, reasonable attorneys' fees), arising from or in respect of any acts or omissions, errors of judgment or mistakes of law (or any alleged acts or omissions, errors of judgment or mistakes of law) performed or made while acting in any capacity contemplated under this Agreement”

ARMOUR Residential Management LLC and its affiliates, officers, directors, and employees are expressly permitted to invest in any type of mortgage assets for their own accounts or for other clients, including investments that meet the REIT's principal investment objectives, without obligation to offer such opportunities to the REIT. Allocation decisions are made at the Manager's discretion on procedures it deems fair and equitable.

“Nothing in this Agreement shall (i) prevent the Manager or its Affiliates, officers, directors or employees, from engaging in other businesses or from rendering services of any kind to any other person or entity, including, without limitation, investing in, or rendering advisory service to others investing in, any type of mortgage assets or other real estate investments (including, without limitation, investments that meet the principal investment objectives of the REIT), whether or not the investment objectives or policies of any such other person or entity are similar to those of the REIT”

Concurrently with the Management Agreement, ARMOUR Residential Management LLC entered into a Sub-Management Agreement with Staton Bell Blank Check LLC and the Manager Shareholders (Jeffrey J. Zimmer and Scott J. Ulm). The REIT represents it has duly authorized this sub-management arrangement. This creates a layered related-party structure. The term of the Management Agreement is linked to the Sub-Management Agreement's 'Final Payment' to Staton Bell.

“the Manager is entering into the Sub-Management Agreement, dated as of even date herewith, by and among the Manager, Staton Bell Blank Check LLC ('Staton Bell'), and Jeffrey J. Zimmer and Scott J. Ulm (Messrs. Zimmer and Ulm, together, the 'Manager Shareholders') (such agreement, the 'Sub-Management Agreement'), and nothing to the contrary contained in this Agreement shall limit the ability of the Manager, Staton Bell, or the Manager Shareholders to enter into and perform their respective obligations under such Sub-Management Agreement or otherwise limit the effectiveness of such Sub-Management Agreement. The REIT represents and warrants that the Sub-Management Agreement has been duly authorized and approved by all necessary action of the REIT.”