THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Luminent Mortgage Capital, Inc. (LUM)

4/18/2006 Proxy Information

On March 26, 2005, we entered into an Amended and Restated Management Agreement, or Amended Agreement, dated as of March 1, 2005 with Seneca Capital Management LLC, or the Manager. The Amended Agreement replaced a management agreement that had been in effect since our formation in 2003. From our formation through December 31, 2005, Gail P. Seneca, our chairman of the board and chief executive officer, was employed by the Manager. Effective January 1, 2006, Ms. Seneca became our full-time employee.

The Amended Agreement provides, among other things, that we will pay certain fees and reimbursements to the Manager, in exchange for investment management and certain administrative services with respect to the spread portion of our investment portfolio as follows:

base management compensation equal to a percentage of our applicable average net worth, as defined in the Amended Agreement, payable quarterly in arrears, calculated at the following rates per annum:

0.90% of the first $750 million;

0.70% of the next $750 million; and

0.50% of the amount in excess of $1.5 billion;

incentive management compensation equal to a percentage of applicable average net worth, as defined in the Amended Agreement, payable annually, calculated at the following rates per annum:

0.35% for the first $750 million of applicable average net worth;

0.20% for the next $750 million of applicable average net worth; and

0.15% for the applicable average net worth in excess of $1.5 billion if the return on assets, as defined in the Amended Agreement, for any such fiscal year exceeds the threshold return, defined as the average of the weekly values for any period of the sum of (i) the 10-year U.S. Treasury rate for such period and (ii) 2%; and

out-of-pocket expenses and certain other costs incurred by the Manager and related directly to us.

The base management compensation for the years ended December 31, 2005 and 2004, was $4.2 million and $4.1 million, respectively.

Incentive compensation expense for the years ended December 31, 2005 and 2004 was $1.3 million and $4.9 million, respectively. Under the Amended Agreement, the Manager did not earn any incentive compensation during the year ended December 31, 2005. The incentive compensation expense of $1.3 million for the year ended December 31, 2005 related to restricted common stock awards granted for incentive compensation earned in prior periods that vested during the year.