CUSTODY AGREEMENT
Exhibit
J
THIS
AGREEMENT is made and entered into as of this 28th day of July, 2008, by
and among
PNMAC MORTGAGE OPPORTUNITY
FUND, L.P. a Delaware limited partnership (the “Portfolio Fund”), PNMAC MORTGAGE CO. LLC, a
Delaware limited liability company (the “Disregarded Entity”) and U.S. BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under
the laws of the United States of America with its principal place of business at
Cincinnati, Ohio (the “Custodian”).
WHEREAS, the
Portfolio Fund is registered under the Investment Company Act of 1940, as
amended (the “1940 Act”), as a closed-end management investment company, and is
authorized to issue shares of beneficial interest (the “Shares”);
WHEREAS, the Portfolio Fund will conduct a portion of
its operations through PNMAC Mortgage Co. LLC;
WHEREAS,
PNMAC Capital Management, LLC is the investment manager of the Funds and manages
the day-to-day and portfolio investment activities of the Funds in accordance
with the applicable governing documents of the Funds;
WHEREAS, the Custodian is a bank having
the qualifications prescribed in Section 26(a)(1) of the 1940 Act;
and
WHEREAS,
each Fund desires to retain the Custodian to act as custodian of the cash
certain and securities of such Fund.
NOW,
THEREFORE, in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE
I
CERTAIN
DEFINITIONS
Whenever
used in this Agreement, the following words and phrases shall have the meanings
set forth below unless the context otherwise requires:
1.01 “Authorized Person”
means any Officer or other person duly authorized by resolution of the Board of
Directors or the General Partner, as appropriate, to give Written Instructions
on behalf of the Funds and named in Exhibit A hereto
or in such resolutions of the Board of Directors certified by an Officer or the
General Partner, as appropriate, as may be received by the Custodian from
time to time.
1.02 “Board of Directors”
shall mean the directors from time to time serving under the Disregarded
Entity’s organizational documents, as amended from time to time.
1.03 “Book-Entry System”
shall mean a federal book-entry system as provided in Subpart O of Treasury
Circular Xx. 000, 00 XXX 306, in Subpart B of 31 CFR Part 350, or in such
book-entry regulations of federal agencies as are substantially in the form of
such Subpart O.
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1.04
“Business Day”
shall mean any day recognized as a settlement day by The New York Stock
Exchange, Inc., and any other day for which the Funds computes the net asset
value of Shares of the Portfolio Fund.
1.05
“Eligible
Securities Depository” shall mean a system for the central handling of
securities as that term is defined in Rule 17f-4 and 17f-7 under the 1940
Act.
1.06 “FINRA” shall mean
The Financial Industry Regulatory Authority.
1.07
“Fund Custody Account” shall mean any
of the accounts in the name of the Funds, which are provided for in Section 3.2
below.
1.08
“General Partner” shall mean the
General Partner under the protfolio Fund's limited partnership agreement, as
amended from time to time.
1.09
“Intersts”
shall mean, with respect to the Portfolio Fund, the interestes issued by the
Portfolio Fund.
1.10
“IRS” shall
mean the Internal Revenue Service.
1.11 “Officer” shall mean the Chairman, President, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, or any Assistant Treasurer of the Funds.
1.12
“Proper
Instructions” shall mean Written
Instructions.
1.13
“SEC” shall mean the Securities and Exchange
Commission.
1.14 “Securities” shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian or its agents have the facilities
to clear and service.
1.15
“Securities
Depository” shall mean The
Depository Trust Company and any other clearing agency registered with the SEC
under Section 17A of the Securities Exchange Act of 1934, as amended (the “1934
Act”), which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities.
1.16
“Shares” shall mean, with respect to the Disregarded
Entity, the shares issued by the Disregarded Entity.
1.17
“Sub-Custodian” shall mean and include any branch of a “U.S.
bank,” as that term is defined in Rule 17f-5 under the 1940 Act having a
contract with the Custodian which the Custodian has determined will provide
reasonable care of assets of the Funds based on the standards specified in
Section 3.3 below. Such contract shall be in writing and shall
include provisions that provide: (i) for indemnification or insurance
arrangements (or any combination of the foregoing) such that the Funds will be
adequately protected against the risk of loss of assets held in accordance with
such contract; (ii) that the Securities will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their safe custody
or administration, in the case of cash deposits, liens or rights in favor of
creditors of the Sub-Custodian arising under bankruptcy, insolvency, or similar
laws; (iii) that beneficial
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ownership
for the Securities will be freely transferable without the payment of money or
value other than for safe custody or administration; (iv) that adequate records
will be maintained identifying the assets as belonging to the Funds or as being
held by a third party for the benefit of a Fund; (v) that the Funds’ independent
public accountants will be given access to those records or confirmation of the
contents of those records; and (vi) that the Funds will receive periodic reports
with respect to the safekeeping of the Funds’ assets, including, but not limited
to, notification of any transfer to or from a Fund’s account or a third party
account containing assets held for the benefit of a Fund . Such
contract may contain, in lieu of any or all of the provisions specified in
(i)-(vi) above, such other provisions that the Custodian determines will
provide, in their entirety, the same or a greater level of care and protection
for the Funds assets as the specified provisions.
1.18
“Written
Instructions” shall mean (i) written
communications actually received by the Custodian and signed by any two
Authorized Persons, (ii) communications by telex or any other such system from
one or more persons reasonably believed by the Custodian to be Authorized
Persons, or (iii) communications between electro-mechanical or electronic
devices provided that the use of such devices and the procedures for the use
thereof shall have been approved by resolutions of the Board of
Directors, certified by an Officer or the General Partner, as appropriate,
a copy of which shall have been delivered to the Custodian.
ARTICLE
II.
APPOINTMENT
OF CUSTODIAN
2.01 Appointment. Each
Fund hereby appoints the Custodian as custodian of all Securities and cash owned
by or in the possession of such Fund at any time during the period of this
Agreement, on the terms and conditions set forth in this Agreement, and the
Custodian hereby accepts such appointment and agrees to perform the services and
duties set forth in this Agreement. The services and duties of the
Custodian shall be confined to those matters expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Custodian
hereunder.
2.02 Documents to be
Furnished. The following documents, including any amendments
thereto, will be provided contemporaneously with the execution of the Agreement
to the Custodian by each Fund:
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(a)
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A
copy of the Fund’s certificate of formation, certified by the
Secretary;
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(b)
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A
copy of the Fund’s bylaws, certified by the Secretary or partnership
agreement;
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(c)
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A
copy of the resolution of the Board of Directors (certified by
the Secretary) or the General Partner, as appropriate, of the
Fund appointing the Custodian;
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(d)
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A
copy of the current offering document of the Fund, if applicable (the
“Prospectus”);
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(e)
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A
certification of the Chairman or the President and the Secretary, or the
General Partner, as appropriate, of the Fund setting forth the names
and signatures of the current Officers of the Fund and other Authorized
Persons; and
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(f)
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An
executed authorization required by the Shareholder Communications Act of
1985, attached hereto as Exhibit
D.
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2.03 Notice of Appointment of
Transfer Agent. Each Fund agree to notify the Custodian in
writing of the appointment, termination or change in appointment of any transfer
agent of a Fund.
ARTICLE
III.
CUSTODY
OF CASH AND SECURITIES
3.01 Segregation. All
Securities and non-cash property held by the Custodian for the account of a Fund
(other than Securities maintained in a Securities Depository, Eligible
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other series of a Fund,
if applicable) and shall be identified as subject to this
Agreement.
3.02 Fund Custody
Accounts. As to the Funds, the Custodian shall open and
maintain in its trust department a custody account in the name of each Fund,
subject only to draft or order of the Custodian, in which the Custodian shall
enter and carry all Securities, cash and other assets of such Fund which are
delivered to it.
3.03 Appointment of Agents.
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(a)
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In
its discretion, the Custodian may appoint one or more Sub-Custodians to
establish and maintain arrangements with Eligible Securities Depositories
or members of its network to hold Securities and cash of the
Funds and to carry out such other provisions of this Agreement
as it may determine; provided, however, that the appointment of any such
agents and maintenance of any Securities and cash of the Funds shall be at
the Custodian's expense and shall not relieve the Custodian of any of its
obligations or liabilities under this Agreement. The Custodian
shall be liable for the actions of any Sub-Custodians (regardless of
whether assets are maintained in the custody of a Sub-Custodian or a
member of its network) appointed by it as if such actions had been done by
the Custodian.
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(b)
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If,
after the initial appointment of Sub-Custodians by the Board of Directors
in connection with this Agreement, the Custodian wishes to appoint other
Sub-Custodians to hold property of a Fund, it will so notify such Fund and
make the necessary determinations as to any such new Sub-Custodian's
eligibility under Rule 17f-5 under the 1940
Act.
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(c)
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The
agreement between the Custodian and each Sub-Custodian acting hereunder
shall contain the required provisions set forth in Rule 17f-5(c)(2) under
the 1940 Act.
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(d)
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At
the end of each calendar quarter, the Custodian shall provide written
reports notifying the Board of Directors or General Partner of the
Funds of the withdrawal or placement of the Securities and cash of the
Funds with a Sub-Custodian and of any material changes in the Funds’
arrangements. Such reports shall include an analysis of the
custody risks associated with maintaining assets with any Eligible
Securities Depositories. The Custodian shall promptly take such
steps as may be required to withdraw assets of the Funds from any
Sub-Custodian arrangement that has ceased to meet the requirements of Rule
17f-5 or Rule 17f-7 under the 1940 Act, as
applicable.
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has
ceased to meet the requirements of Rule 17f-5 or Rule 17f-7 under the 1940
Act, as applicable.
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(e)
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With
respect to its responsibilities under this Section 3.3, the Custodian
hereby warrants to the Funds that it agrees to exercise reasonable care,
prudence and diligence such as a person having responsibility for the
safekeeping of property of the Funds. The Custodian further
warrants that the Funds’ assets will be subject to reasonable care if
maintained with a Sub-Custodian, after considering all factors relevant to
the safekeeping of such assets, including, without
limitation: (i) the Sub-Custodian's practices, procedures, and
internal controls for certificated securities (if applicable), its method
of keeping custodial records, and its security and data protection
practices; (ii) whether the Sub-Custodian has the
requisite financial strength to provide reasonable care for the Funds’
assets; (iii) the Sub-Custodian's general reputation and
standing and, in the case of a Securities Depository, the Securities
Depository's operating history and number of participants; and
(iv) whether the Funds will have jurisdiction over and be able
to enforce judgments against the Sub-Custodian, such as by virtue of the
existence of any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United
States.
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(f)
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The
Custodian shall establish a system or ensure that its Sub-Custodian has
established a system to monitor on a continuing basis (i) the
appropriateness of maintaining the Funds’ assets with a Sub-Custodian or
members of a its network; (ii) the performance of the contract governing
the Funds’ arrangements with such Sub-Custodian or members of a its
network; and (iii) the custody risks of maintaining assets with an
Eligible Securities Depository. The Custodian must promptly
notify the Funds or its investment adviser of any material change in these
risks.
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(g)
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The
Custodian shall use reasonable commercial efforts to collect all income
and other payments with respect to Securities to which the Funds shall be
entitled and shall credit such income, as collected, to the
Funds. In the event that extraordinary measures are required to
collect such income, the Funds and Custodian shall consult as to the
measures and as to the compensation and expenses of the Custodian relating
to such measures.
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3.04 Delivery of Assets to
Custodian. The Funds shall deliver, or cause to be delivered,
to the Custodian all of the Funds’ Securities, cash and other investment assets,
including (i) all payments of income, payments of principal and capital
distributions received by the Funds with respect to such Securities, cash or
other assets owned by the Funds at any time during the period of this Agreement,
and (ii) all cash received by the Funds for the issuance of Shares or
Interests. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.05 Securities Depositories and
Book-Entry Systems. The Custodian may deposit and/or maintain
Securities of the Funds in a Securities Depository or in a Book-Entry System,
subject to the following provisions:
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(a)
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The
Custodian, on an on-going basis, shall deposit in a Securities Depository
or Book-Entry System all Securities eligible for deposit therein and shall
make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder,
including, without limitation, in connection with settlements of
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purchases
and sales of Securities, loans of Securities, and deliveries and returns
of collateral consisting of
Securities.
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(b)
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Securities
of the Funds kept in a Book-Entry System or Securities Depository shall be
kept in an account (“Depository Account”) of the Custodian in such
Book-Entry System or Securities Depository which includes only assets held
by the Custodian as a fiduciary, custodian or otherwise for
customers.
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(c)
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The
records of the Custodian with respect to Securities of the Funds
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to the relevant
Fund.
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(d)
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If
Securities purchased by the Funds are to be held in a Book-Entry System or
Securities Depository, the Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository
that such Securities have been transferred to the Depository Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the relevant
Fund. If Securities sold by the Funds are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that payment for such Securities has been
transferred to the Depository Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and payment for the
account of the relevant Fund.
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(e)
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The
Custodian shall provide the Funds with copies of any report (obtained by
the Custodian from a Book-Entry System or Securities Depository in which
Securities of the Funds are kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such Book-Entry System
or Securities Depository.
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(f)
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Notwithstanding
anything to the contrary in this Agreement, the Custodian shall be liable
to the Funds for any loss or damage to the Funds resulting from (i) the
use of a Book-Entry System or Securities Depository by reason of any
negligence or willful misconduct on the part of the Custodian or any
Sub-Custodian, or (ii) failure of the Custodian or any Sub-Custodian to
enforce effectively such rights as it may have against a Book-Entry System
or Securities Depository. At its election, the Funds shall be
subrogated to the rights of the Custodian with respect to any claim
against a Book-Entry System or Securities Depository or any other person
from any loss or damage to the Funds arising from the use of such
Book-Entry System or Securities Depository, if and to the extent that the
Funds has not been made whole for any such loss or
damage.
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(g)
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With
respect to its responsibilities under this Section 3.5 and pursuant
to Rule 17f-4 under the 1940 Act, the Custodian hereby warrants to
the Funds that it agrees to (i) exercise due care in accordance with
reasonable commercial standards in discharging its duty as a securities
intermediary to obtain and thereafter maintain such assets,
(ii) provide, promptly upon request by the Funds, such reports as are
available concerning the Custodian’s internal accounting controls and
financial strength, and (iii) require any Sub-Custodian to exercise
due care in accordance with reasonable commercial standards in discharging
its duty as a
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securities
intermediary to obtain and thereafter maintain assets corresponding to the
security entitlements of its entitlement
holders.
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3.06 Disbursement of Moneys from
Fund Custody Account. Upon receipt of Proper Instructions, the
Custodian shall disburse moneys from a Fund Custody Account but only in the
following cases:
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(a)
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For
the purchase of Securities for a Fund but only in accordance with Section
4.1 of this Agreement and only (i) in the case of Securities (other than
options on Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any Sub-Custodian)
of such Securities registered as provided in Section 3.9 below or in
proper form for transfer, or if the purchase of such Securities is
effected through a Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3.5 above; (ii) in the
case of options on Securities, against delivery to the Custodian (or any
Sub-Custodian) of such receipts as are required by the customs prevailing
among dealers in such options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to the Custodian (or any
Sub-Custodian) of evidence of title thereto in favor of a Fund or any
nominee referred to in Section 3.9 below; and (iv) in the case of
repurchase or reverse repurchase agreements entered into between a Fund
and a bank which is a member of the Federal Reserve System or between a
Fund and a primary dealer in U.S. Government securities, against delivery
of the purchased Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or Securities
Depository with such Securities;
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(b)
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In
connection with the conversion, exchange or surrender, as set forth in
Section 3.7(f) below, of Securities owned by a
Fund;
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(c)
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For
the payment of any dividends or capital gain distributions declared by a
Fund;
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(d)
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In
payment of the redemption price of Shares or Interests as provided in
Section 5.01 below;
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(e)
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For
the payment of any expense or liability incurred by a Fund, including, but
not limited to, the following payments for the account of a
Fund: interest; taxes; administration, investment advisory,
accounting, auditing, transfer agent, custodian, director and legal fees;
and other operating expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as deferred
expenses;
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(f)
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For
transfer in accordance with the provisions of any agreement among a Fund,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of FINRA, relating to compliance with rules of the Options Clearing
Corporation and of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by a
Fund;
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(g)
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For
transfer in accordance with the provisions of any agreement among a Fund,
the Custodian and a futures commission merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account deposits in
connection with transactions by a
Fund;
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(h)
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For
the funding of any uncertificated time deposit or other interest-bearing
account with any banking institution (including the Custodian), which
deposit or account has a term of one year or less;
and
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(i)
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For
any other proper purpose, but only upon receipt, in addition to Proper
Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer or the General Partner, as appropriate, specifying
the amount and purpose of such payment, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such
payment is to be made.
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3.07 Delivery of Securities from
Fund Custody Account. Upon receipt of Proper Instructions, the
Custodian shall release and deliver, or cause the Sub-Custodian to release and
deliver, Securities from a Fund Custody Account but only in the following
cases:
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(a)
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Upon
the sale of Securities for the account of a Fund but only against receipt
of payment therefor in cash, by certified or cashiers check or bank
credit;
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(b)
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In
the case of a sale effected through a Book-Entry System or Securities
Depository, in accordance with the provisions of Section 3.5
above;
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(c)
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To
an offeror’s depository agent in connection with tender or other similar
offers for Securities of the Funds; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
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(d)
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To
the issuer thereof or its agent (i) for transfer into the name of a Fund,
the Custodian or any Sub-Custodian, or any nominee or nominees of any of
the foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new Securities are to be
delivered to the Custodian;
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(e)
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To
the broker selling the Securities, for examination in accordance with the
“street delivery” custom;
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(f)
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For
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the issuer of such
Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or
receipt of underlying Securities in connection with the issuance or
cancellation of depository receipts; provided that, in any such case, the
new Securities and cash, if any, are to be delivered to the
Custodian;
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(g)
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Upon
receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by a
Fund;
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(h)
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In
the case of warrants, rights or similar Securities, upon the exercise
thereof, provided that, in any such case, the new Securities and cash, if
any, are to be delivered to the
Custodian;
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(i)
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For
delivery in connection with any loans of Securities of a Fund, but only
against receipt of such collateral as such Fund shall have specified to
the Custodian in Proper
Instructions;
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(j)
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For
delivery as security in connection with any borrowings by a Fund requiring
a pledge of assets by such Fund, but only against receipt by the Custodian
of the amounts borrowed;
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(k)
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Pursuant
to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of a
Fund;
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(l)
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For
delivery in accordance with the provisions of any agreement among a Fund,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of FINRA, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by a
Fund;
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(m)
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For
delivery in accordance with the provisions of any agreement among a Fund,
the Custodian and a futures commission merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account deposits in
connection with transactions by a
Fund;
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(n)
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For
any other proper corporate purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such Securities shall be made;
or
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(o)
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To
brokers, clearing banks or other clearing agents for examination or trade
execution in accordance with market custom; provided that in any such case
the Custodian shall have no responsibility or liability for any loss
arising from the delivery of such securities prior to receiving payment
for such securities except as may arise from the Custodian’s own
negligence or willful
misconduct.
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3.08 Actions Not Requiring Proper
Instructions. Unless otherwise instructed by the Funds, the
Custodian shall with respect to all Securities held for the Funds:
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(a)
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Subject
to Section 9.4 below, collect on a timely basis all income and other
payments to which a Fund is entitled either by law or pursuant to custom
in the securities business;
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(b)
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Present
for payment and, subject to Section 9.4 below, collect on a timely basis
the amount payable upon all Securities which may mature or be called,
redeemed, or retired, or otherwise become
payable;
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(c)
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Endorse
for collection, in the name of the relevant Fund, checks, drafts and other
negotiable instruments;
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(d)
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Surrender
interim receipts or Securities in temporary form for Securities in
definitive form;
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(e)
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Execute,
as custodian, any necessary declarations or certificates of ownership
under the federal income tax laws or the laws or regulations of any other
taxing authority now or
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hereafter
in effect, and prepare and submit reports to the IRS and the Funds at such
time, in such manner and containing such information as is prescribed by
the IRS;
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(f)
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Hold
for the Funds, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all rights
and similar Securities issued with respect to Securities of the Funds;
and
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(g)
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In
general, and except as otherwise directed in Proper Instructions, attend
to all non-discretionary details in connection with the sale, exchange,
substitution, purchase, transfer and other dealings with Securities and
other assets of the Funds.
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3.09 Registration and Transfer of
Securities. All Securities held for the Funds that are issued
or issuable only in bearer form shall be held by the Custodian in that form,
provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for a Fund may be
registered in the name of such Fund, the Custodian, a Sub-Custodian or any
nominee thereof, or in the name of a Book-Entry System, Securities Depository or
any nominee of either thereof. The records of the Custodian with
respect to foreign securities of the Funds that are maintained with a
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers shall identify those securities as belonging to the
relevant Fund. The Funds shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees referred to above or
in the name of a Book-Entry System or Securities Depository, any Securities
registered in the name of a Fund.
3.10 Records.
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(a)
|
The
Custodian shall maintain complete and accurate records with respect to
Securities, cash or other property held for the Funds, including (i)
journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical
possession, (C) monies and Securities borrowed and monies and Securities
loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received,
and (E) dividends receivable and interest receivable; (iii) canceled
checks and bank records related thereto; and (iv) all records relating to
its activities and obligations under this Agreement. The
Custodian shall keep such other books and records of the Funds as the
Funds shall reasonably request, or as may be required by the 1940 Act,
including, but not limited to, Section 31 of the 1940 Act and Rule 31a-2
promulgated thereunder.
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(b)
|
All
such books and records maintained by the Custodian shall (i) be maintained
in a form acceptable to the Funds and in compliance with the rules and
regulations of the SEC, (ii) be the property of the Funds and at all times
during the regular business hours of the Custodian be made available upon
request for inspection by duly authorized officers, employees or agents of
the Funds and employees or agents of the SEC, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the periods
prescribed in Rules 31a-1 and 31a-2 under the 1940
Act.
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10
3.11 Fund Reports by
Custodian. The Custodian shall furnish each Fund with a daily
activity statement and a summary of all transfers to or from a Fund Custody
Account on the day following such transfers. At least monthly, the
Custodian shall furnish each Fund with a detailed statement of the Securities
and moneys held by the Custodian and the Sub-Custodians for such Fund under this
Agreement.
3.12 Other Reports by
Custodian. As the Funds may reasonably request from time to
time, the Custodian shall provide the Funds with reports on the internal
accounting controls and procedures for safeguarding Securities which are
employed by the Custodian or any Sub-Custodian.
3.13 Proxies and Other
Materials. The Custodian shall cause all proxies relating to
Securities which are not registered in the name of a Fund to be promptly
executed by the registered holder of such Securities, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
relevant Fund such proxies, all proxy soliciting materials and all notices
relating to such Securities. With respect to the foreign Securities,
the Custodian will use reasonable commercial efforts to facilitate the exercise
of voting and other investor rights, subject to the laws, regulations and
practical constraints that may exist in the country where such securities are
issued. The Funds acknowledges that local conditions, including lack
of regulation, onerous procedural obligations, lack of notice and other factors
may have the effect of severely limiting the ability of the Funds to
exercise investor rights.
3.14 Information on Corporate
Actions. The Custodian shall promptly deliver to each Fund all
information received by the Custodian and pertaining to Securities being held by
such Fund with respect to optional tender or exchange offers, calls for
redemption or purchase, or expiration of rights as described in the Standards of
Service Guide attached as Exhibit
B. If a Fund desires to take action with respect to any tender
offer, exchange offer or other similar transaction, the Fund shall notify the
Custodian at least three Business Days prior to the date on which the Custodian
is to take such action. The Funds will provide or cause to be
provided to the Custodian all relevant information for any Security which has
unique put/option provisions at least three Business Days prior to the beginning
date of the tender period.
ARTICLE
IV.
PURCHASE
AND SALE OF INVESTMENTS OF THE FUND
4.01 Purchase of
Securities. Promptly upon each purchase of Securities for a
Fund, Written Instructions shall be delivered to the Custodian, specifying (i)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (ii) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (iii) the date of purchase and
settlement, (iv) the purchase price per unit, (v) the total amount payable upon
such purchase, and (vi) the name of the person to whom such amount is
payable. The Custodian shall upon receipt of such Securities
purchased by a Fund pay out of the moneys held for the account of the relevant
Fund the total amount specified in such Written Instructions to the person named
therein. The Custodian shall not be under any obligation to pay out
moneys to cover the cost of a purchase of Securities for a Fund, if in a Fund
Custody Account there is insufficient cash available to the relevant Fund for
which such purchase was made.
11
4.02 Liability for Payment in
Advance of Receipt of Securities Purchased. In any and every
case where payment for the purchase of Securities for a Fund is made by the
Custodian in advance of receipt of the Securities purchased and in the absence
of specified Written Instructions to so pay in advance, the Custodian shall be
liable to such Fund for such payment.
4.03 Sale of
Securities. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (i) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (ii) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (iii) the date of sale and settlement,
(iv) the sale price per unit, (v) the total amount payable upon such sale, and
(vi) the person to whom such Securities are to be delivered. Upon
receipt of the total amount payable to a Fund as specified in such Written
Instructions, the Custodian shall deliver such Securities to the person
specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
4.04 Delivery of Securities
Sold. Notwithstanding Section 4.3 above or any other provision
of this Agreement, the Custodian, when instructed to deliver Securities against
payment, shall be entitled, if in accordance with generally accepted market
practice, to deliver such Securities prior to actual receipt of final payment
therefor. In any such case, the Funds shall bear the risk that final
payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
4.05 Payment for Securities
Sold. In its sole discretion and from time to time, the
Custodian may credit the relevant Fund Custody Account, prior to actual receipt
of final payment thereof, with (i) proceeds from the sale of Securities which it
has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Funds, and (iii) income from
cash, Securities or other assets of the Funds. Any such credit shall
be conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The
Custodian may, in its sole discretion and from time to time, permit the Funds to
use funds so credited to the relevant Fund Custody Account in anticipation of
actual receipt of final payment. Any such funds shall be repayable
immediately upon demand made by the Custodian at any time prior to the actual
receipt of all final payments in anticipation of which funds were credited to a
Fund Custody Account.
4.06 Advances by Custodian for
Settlement. The Custodian may, in its sole discretion and from
time to time, advance funds to the Funds to facilitate the settlement of a
Fund’s transactions in a Fund Custody Account. Any such advance shall
be repayable immediately upon demand made by Custodian.
ARTICLE
V.
REDEMPTION
OF FUND SHARES/INTERESTS
5.01 Transfer of
Funds. From such funds as may be available for the purpose in
the relevant Fund Custody Account, and upon receipt of Proper Instructions
specifying that the funds are
12
required
to redeem Shares or Interests of a Fund, the Custodian shall wire each
amount specified in such Proper Instructions to or through such bank or
broker-dealer as a Fund may designate.
5.02 No Duty Regarding Paying
Banks. Once the Custodian has wired amounts to a bank or
broker-dealer pursuant to Section 5.01 above, the Custodian shall not be
under any obligation to effect any further payment or distribution by such bank
or broker-dealer.
ARTICLE
VI.
SEGREGATED
ACCOUNTS
Upon
receipt of Proper Instructions, the Custodian shall establish and maintain a
segregated account or accounts for and on behalf of each Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
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(a)
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in accordance with the provisions
of any agreement among a Fund, the Custodian and a broker-dealer
registered under the 1934 Act and a member of FINRA (or any futures
commission merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of the Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by a
Fund;
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(b)
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for
purposes of segregating cash or Securities in connection with securities
options purchased or written by a Fund or in connection with financial
futures contracts (or options thereon) purchased or sold by a
Fund;
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(c)
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which
constitute collateral for loans of Securities made by a
Fund;
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(d)
|
for
purposes of compliance by the Funds with requirements under the 1940 Act
for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and
when-issued, delayed delivery and firm commitment transactions;
and
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(e)
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for
other proper corporate purposes, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Directors, certified by an Officer or the General Partner, as appropriate,
setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate
purposes.
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Each
segregated account established under this Article VI shall be established and
maintained for a Fund only. All Proper Instructions relating to a
segregated account shall specify the relevant Fund.
ARTICLE
VII.
COMPENSATION
OF CUSTODIAN
7.01 Compensation. The
Custodian shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit C hereto
(as amended
13
from
time to time). The Custodian shall also be compensated for such
out-of-pocket expenses (e.g., telecommunication charges, postage and delivery
charges, and reproduction charges) as are reasonably incurred by the Custodian
in performing its duties hereunder. The Funds shall pay all such fees
and reimbursable expenses within 30 calendar days following receipt of the
billing notice, except for any fee or expense subject to a good faith
dispute. The Funds shall notify the Custodian in writing within 30
calendar days following receipt of each invoice if a Fund is disputing any
amounts in good faith. The Fund shall pay such disputed amounts within 10
calendar days of the day on which the parties agree to the amount to be
paid. With the exception of any fee or expense a Fund is disputing in
good faith as set forth above, unpaid invoices shall accrue a finance charge of
½% per month after the due date. Notwithstanding anything to the contrary,
amounts owed by the Funds to the Custodian shall only be paid out of the assets
and property of the Funds.
7.02 Overdrafts. The
Funds are responsible for maintaining an appropriate level of short term cash
investments to accommodate cash outflows. The Funds may obtain formal
line of credit for potential overdrafts of its custody account. In
the event of an overdraft or in the event the line of credit is insufficient to
cover an overdraft, the overdraft amount or the overdraft amount that exceeds
the line of credit will be charged in accordance with the fee schedule set forth
on Exhibit C hereto
(as amended from time to time)
ARTICLE
VIII.
REPRESENTATIONS
AND WARRANTIES
8.01 Representations and
Warranties of the Fund. Each Fund hereby represents and
warrants to the Custodian, which representations and warranties shall be deemed
to be continuing throughout the term of this Agreement, that:
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(a)
|
It
is duly organized and existing under the laws of the jurisdiction of its
organization, with full power to carry on its business as now conducted,
to enter into this Agreement and to perform its obligations
hereunder;
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(b)
|
This
Agreement has been duly authorized, executed and delivered by the Funds in
accordance with all requisite action and constitutes a valid and legally
binding obligation of the Fund, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors
and secured parties; and
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|
(c)
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It
is conducting its business in compliance in all material respects with all
applicable laws and regulations, both state and federal, and has obtained
all regulatory approvals necessary to carry on its business as now
conducted; there is no statute, rule, regulation, order or judgment
binding on it and no provision of its charter, bylaws or any contract
binding it or affecting its property which would prohibit its execution or
performance of this Agreement.
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8.02 Representations and
Warranties of the Custodian. The Custodian hereby represents
and warrants to the Funds, which representations and warranties shall be deemed
to be continuing throughout the term of this Agreement, that:
14
|
(a)
|
It
is duly organized and existing under the laws of the jurisdiction of its
organization, with full power to carry on its business as now conducted,
to enter into this Agreement and to perform its obligations
hereunder;
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(b)
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It
is a U.S. Bank as defined in section (a)(7) of Rule
17f-5.
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(c)
|
This
Agreement has been duly authorized, executed and delivered by the
Custodian in accordance with all requisite action and constitutes a valid
and legally binding obligation of the Custodian, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties;
and
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(d)
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It
is conducting its business in compliance in all material respects with all
applicable laws and regulations, both state and federal, and has obtained
all regulatory approvals necessary to carry on its business as now
conducted; there is no statute, rule, regulation, order or judgment
binding on it and no provision of its charter, bylaws or any contract
binding it or affecting its property which would prohibit its execution or
performance of this
Agreement.
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ARTICLE
IX.
CONCERNING
THE CUSTODIAN
9.01 Standard of
Care. The Custodian shall exercise reasonable care in the
performance of its duties under this Agreement. The Custodian shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by a Fund in connection with its duties under this Agreement, except a
loss arising out of or relating to the Custodian’s (or a Sub-Custodian’s)
refusal or failure to comply with the terms of this Agreement (or any
sub-custody agreement) or from its (or a Sub-Custodian’s) bad faith, negligence
or willful misconduct in the performance of its duties under this Agreement (or
any sub-custody agreement). The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Funds of any action
taken or omitted by the Custodian pursuant to advice of counsel.
9.02 Actual Collection
Required. The Custodian shall not be liable for, or considered
to be the custodian of, any cash belonging to a Fund or any money represented by
a check, draft or other instrument for the payment of money, until the Custodian
or its agents actually receive such cash or collect on such
instrument.
9.03 No Responsibility for Title,
etc. So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received or
delivered by it pursuant to this Agreement.
9.04 Limitation on Duty to
Collect. Custodian shall not be required to enforce
collection, by legal means or otherwise, of any money or property due and
payable with respect to Securities held for the Funds if such Securities are in
default or payment is not made after due demand or presentation.
15
9.05 Reliance Upon Documents and
Instructions. The Custodian shall be entitled to rely upon any
certificate, notice or other instrument in writing received by it and reasonably
believed by it to be genuine. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by it
pursuant to this Agreement.
9.06 Cooperation. The
Custodian shall cooperate with and supply necessary information to the entity or
entities appointed by the Funds to keep the books of account of the Funds and/or
compute the value of the assets of the Funds. The Custodian shall
take all such reasonable actions as the Funds may from time to time request to
enable the Funds to obtain, from year to year, favorable opinions from a Fund’s
independent accountants with respect to the Custodian's activities hereunder in
connection with (i) the preparation of the Fund's reports on Form N-2 and Form
N-SAR and any other reports required by the SEC, and (ii) the fulfillment by the
Funds of any other requirements of the SEC.
ARTICLE
X.
INDEMNIFICATION
10.01 Indemnification by
Fund. Each Fund, severally, but not jointly, shall indemnify
and hold harmless the Custodian, any Sub-Custodian and any nominee thereof
(each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from
and against any and all claims, demands, losses, expenses and liabilities of any
and every nature (including reasonable attorneys' fees) that an Indemnified
Party may sustain or incur or that may be asserted against an Indemnified Party
by any person arising directly or indirectly (i) from the fact that Securities
are registered in the name of any such nominee, (ii) from any action taken or
omitted to be taken by the Custodian or such Sub-Custodian (a) at the request or
direction of or in reliance on the advice of a Fund, or (b) upon Proper
Instructions, or (iii) from the performance of its obligations under this
Agreement or any sub-custody agreement, provided that neither the Custodian nor
any such Sub-Custodian shall be indemnified and held harmless from and against
any such claim, demand, loss, expense or liability arising out of or relating to
its refusal or failure to comply with the terms of this Agreement (or any
sub-custody agreement), or from its bad faith, negligence or willful misconduct
in the performance of its duties under this Agreement (or any sub-custody
agreement). This indemnity shall be a continuing obligation of the
Funds, its successors and assigns, notwithstanding the termination of this
Agreement. As used in this paragraph, the terms “Custodian” and
“Sub-Custodian” shall include their respective directors, officers and
employees.
10.02 Indemnification by
Custodian. The Custodian shall indemnify and hold harmless the
Funds from and against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable attorneys’ fees) that
a Fund may sustain or incur or that may be asserted against a Fund by any person
arising directly or indirectly out of any action taken or omitted to be taken by
an Indemnified Party as a result of the Indemnified Party’s refusal or failure
to comply with the terms of this Agreement (or any sub-custody agreement), or
from its bad faith, negligence or willful misconduct in the performance of its
duties under this Agreement (or any sub-custody agreement). This
indemnity shall be a continuing obligation of the Custodian, its successors and
assigns, notwithstanding the termination of this Agreement. As used
in this paragraph, the term “Fund” shall include a Fund’s directors, officers
and employees.
16
10.03 Security. If
the Custodian advances cash or Securities to a Fund for any purpose, either at a
Fund's request or as otherwise contemplated in this Agreement, or in the event
that the Custodian or its nominee incurs, in connection with its performance
under this Agreement, any claim, demand, loss, expense or liability (including
reasonable attorneys' fees) (except such as may arise from its or its nominee's
bad faith, negligence or willful misconduct), then, in any such event, any
property at any time held for the account of a Fund shall be security therefor,
and should the Funds fail promptly to repay or indemnify the Custodian, the
Custodian shall be entitled to utilize available cash of the relevant Fund and
to dispose of other assets of such Fund to the extent necessary to obtain
reimbursement or indemnification.
10.04 Miscellaneous.
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(a)
|
No
party to this Agreement shall be liable to any other party for
consequential, special or punitive damages under any provision of this
Agreement.
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(b)
|
The
indemnity provisions of this Article shall indefinitely survive the
termination and/or assignment of this
Agreement.
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(c)
|
In
order that the indemnification provisions contained in this Article shall
apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully
and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation
that presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim that may be the subject of this
indemnification. In the event that the indemnitor so elects, it
will so notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. The indemnitee shall in no
case confess any claim or make any compromise in any case in which the
indemnitor will be asked to indemnify the indemnitee except with the
indemnitor’s prior written consent.
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ARTICLE
XI.
FORCE MAJEURE
Neither
the Custodian nor any Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics;
riots; power failures; computer failure and any such circumstances beyond its
reasonable control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that in the event of a failure or delay, the
Custodian (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and
17
personnel
available to input or process the transactions contemplated by this Agreement,
and (ii) shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE
XII.
PROPRIETARY
AND CONFIDENTIAL INFORMATION
12.01 The
Custodian agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Funds, all records
and other information relative to the Funds and prior, present, or
potential investors of the Funds (and clients of said investors), and not
to use such records and information for any purpose other than the performance
of its responsibilities and duties hereunder, except (i) after prior
notification to and approval in writing by the Funds, which approval shall not
be unreasonably withheld and may not be withheld where the Custodian may be
exposed to civil or criminal contempt proceedings for failure to comply, (ii)
when requested to divulge such information by duly constituted authorities, or
(iii) when so requested by the Funds. Records and other information
which have become known to the public through no wrongful act of the Custodian
or any of its employees, agents or representatives, and information that was
already in the possession of the Custodian prior to receipt thereof from a Fund
or its agent, shall not be subject to this paragraph.
12.02 Further,
the Custodian will adhere to the privacy policies adopted by the Funds pursuant
to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from time to
time. In this regard, the Custodian shall have in place and maintain
physical, electronic and procedural safeguards reasonably designed to protect
the security, confidentiality and integrity of, and to prevent unauthorized
access to or use of, records and information relating to the Funds and its
investors.
ARTICLE
XIII.
EFFECTIVE
PERIOD; TERMINATION
13.01 Effective
Period. This Agreement shall become effective as of the date
first written above and will continue in effect for a period of three
years.
13.02 Termination. Subsequent
to the initial three-year term, this Agreement may be terminated by a party upon
giving 90 days prior written notice to all other parties or such shorter period
as is mutually agreed upon by the parties. Notwithstanding the
foregoing, this Agreement may be terminated by the Funds or USBank, upon the
breach of USBank in the case of the Funds and upon the breach of a Fund in the
case of USBank, of any material term of this Agreement if such breach is not
cured within 15 days of notice of such breach to the breaching
party. In addition, the Funds may, at any time, immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
the Custodian by regulatory authorities or upon the happening of a like event at
the direction of an appropriate regulatory agency or court of competent
jurisdiction.
13.03 Early
Termination. In
the absence of any material breach of this Agreement, should the Funds elect to
terminate this Agreement prior to the end of the term, the Funds agree to pay
the following fees:
18
a)
All fees associated with converting services to a successor service
provider;
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||
b)
All fees associated with any record retention and/or tax reporting
obligations that may not be eliminated due to the conversion to a
successor service provider;
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All
out-of-pocket costs associated with a and b above
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13.04 Appointment of Successor
Custodian. If a successor custodian shall have been appointed
by the Board of Directors or the General Partner, the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on such specified
date of termination (i) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or Securities
Depository) and cash then owned by the Funds and held by the Custodian as
custodian, and (ii) transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of the Funds at the
successor custodian, provided that the Funds shall have paid to the Custodian
all fees, expenses and other amounts to the payment or reimbursement of which it
shall then be entitled. In addition, the Custodian shall, at the
expense of the Funds, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by the Custodian under
this Agreement in a form reasonably acceptable to the Funds (if such form
differs from the form in which the Custodian has maintained the same, the Funds
shall pay any expenses associated with transferring the data to such form), and
will cooperate in the transfer of such duties and responsibilities, including
provision for assistance from the Custodian’s personnel in the establishment of
books, records, and other data by such successor. Upon such delivery
and transfer, the Custodian shall be relieved of all obligations under this
Agreement.
13.05 Failure to Appoint Successor
Custodian. If a successor custodian is not designated by the
Funds on or before the date of termination of this Agreement, then the Custodian
shall have the right to deliver to a bank or trust company of its own selection,
which bank or trust company (i) is a “bank” as defined in the 1940 Act, and (ii)
has aggregate capital, surplus and undivided profits as shown on its most recent
published report of not less than $25 million, all Securities, cash and other
property held by Custodian under this Agreement and to transfer to an account of
or for the Funds at such bank or trust company all Securities of the Funds held
in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. In addition, under these circumstances, all books, records
and other data of the Funds shall be returned to the Funds.
ARTICLE
XIV.
MISCELLANEOUS
14.01 Compliance with
Laws. Each Fund has and retains primary responsibility for all
compliance matters relating to such Fund, including but not limited to
compliance with the 1940 Act, the Internal Revenue Code of 1986, the
Xxxxxxxx-Xxxxx Act of 2002, the USA Patriot Act of 2002 and the policies and
limitations of the Fund relating to its portfolio investments as set forth in
its Prospectus and statement of additional information. The
Custodian’s services hereunder shall not relieve a Fund of its responsibilities
for assuring such compliance or the Board of Directors’ oversight responsibility
with respect thereto.
19
14.02 Amendment. This
Agreement may not be amended or modified in any manner except by written
agreement executed by the Custodian and the Funds, and authorized or approved by
the Board of Directors and the General Partner.
14.03 Assignment. This
Agreement shall extend to and be binding upon the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Funds without the written consent of the Custodian, or
by the Custodian without the written consent of the Funds accompanied by the
authorization or approval of the Board of Directors and the General
Partner.
14.04 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles. To the extent that the applicable laws of the
State of California, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control, and nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or order of the SEC thereunder.
14.05 No Agency
Relationship. Nothing herein contained shall be deemed to
authorize or empower any party to act as agent for any other party to this
Agreement, or to conduct business in the name, or for the account, of any other
party to this Agreement.
14.06 Services Not
Exclusive. Nothing in this Agreement shall limit or restrict
the Custodian from providing services to other parties that are similar or
identical to some or all of the services provided hereunder.
14.07 Invalidity. Any provision of
this Agreement which may be determined by competent authority to be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties.
14.08 Notices. Any notice required
or permitted to be given by a party to any other party shall be in writing and
shall be deemed to have been given on the date delivered personally or by
courier service, or three days after sent by registered or certified mail,
postage prepaid, return receipt requested, or on the date sent and confirmed
received by facsimile transmission to the party’s address set forth
below:
Notice to the Custodian shall be sent
to:
U.S Bank, N.A.
0000 X. Xxxxxxxxxxx Xx.,
XX-XX-X000
Xxxxxxxxx, XX 00000
Attn: Xxx
Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
20
and notice to the Funds shall be sent to:
x/x XXXXX Capital Management,
LLC
00000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention: General
Counsel
Fax:
(000)
000-0000
14.09 Multiple
Originals. This Agreement may be executed on two or more
counterparts, each of which when so executed shall be deemed an original, but
such counterparts shall together constitute but one and the same
instrument.
14.10 No
Waiver. No failure by any party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by a party hereto of any right hereunder shall
not preclude the exercise of any other right, and the remedies provided herein
are cumulative and not exclusive of any remedies provided at law or in
equity.
14.11 References to
Custodian. The Funds shall not circulate any printed matter
which contains any reference to Custodian without the prior written approval of
Custodian, excepting printed matter contained in the prospectus or statement of
additional information for the Funds and such other printed matter as merely
identifies Custodian as custodian for the Funds. The Funds shall
submit printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
a duly authorized officer on one or more counterparts as of the date first above
written.
PNMAC
Mortgage Opportunity Fund, L.P.
|
PNMAC
Mortgage Co, LLC
|
||
By: |
|
By:
|
|
Name: |
|
Name:
|
|
Title: |
Title:
|
||
U.S. Bank National Association | |||
By: | |||
Name: | |||
Title: |
21
EXHIBIT
A
22
AUTHORIZED
PERSONS
Set forth below are the names and
specimen signatures of the persons authorized by the Funds to administer a Fund
Custody Account.
Authorized
Persons
|
Specimen
Signatures
|
|
23
EXHIBIT
B
to
the
U.S.
Bank Institutional Custody Services
Standards
of Service Guide
U.S.
Bank, N.A. (“USBank”) is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide
as a tool for our clients to determine our standards for the processing of
security settlements, payment collection, and capital change
transactions. Deadlines recited in this guide represent the times
required for USBank to guarantee processing. Failure to meet these
deadlines will result in settlement at our client's risk. In all
cases, USBank will make every effort to complete all processing on a timely
basis.
USBank is a direct participant of the
Depository Trust Company, a direct member of the Federal Reserve Bank of
Cleveland, and utilizes the Bank of New York as its agent for ineligible and
foreign securities.
For corporate reorganizations, USBank
utilizes SEI's Reorg Source, Financial Information, Inc., XCITEK, DTC Important
Notices, Capital Changes Daily (CCH) and the Wall Street
Journal.
For bond calls and mandatory puts,
USBank utilizes SEI's Bond Source, Xxxxx Information Systems, Standard &
Poor's Corporation, XCITEK, and DTC Important Notices. USBank will
not notify clients of optional put opportunities.
Any securities delivered free to USBank
or its agents must be received three (3) business days prior to any payment or
settlement in order for the USBank standards of service to
apply.
Should you have any questions regarding
the information contained in this guide, please feel free to contact your
account representative.
The information contained in this
Standards of Service Guide is subject to change. Should any
changes be made USBank will provide you with an updated copy of its
Standards of Service Guide.
|
24
USBank
Security Settlement Standards
Transaction
Type
|
Instructions
Deadlines*
|
Delivery
Instructions
|
||
DTC
|
1:30 P.M. on Settlement
Date
|
DTC Participant
#0000
Xxxxx Xxxx XX
00000
Institutional
#________________
For Account
#____________
|
||
Federal Reserve Book
Entry
|
12:30 P.M. on Settlement
Date
|
Federal Reserve Bank of
Cleveland
for US Bank, N.A. ABA#
000000000
XXXXX/1050
For Account
#_____________
|
||
Federal Reserve Book Entry
(Repurchase Agreement Collateral Only)
|
1:00 P.M. on Settlement
Date
|
Federal Reserve Bank of
Cleveland
for US Bank,
N.A. ABA# 000000000
XXXXX/1040
For Account
#_____________
|
||
PTC Securities
(GNMA Book
Entry)
|
12:00 P.M. on Settlement
Date
|
PTC For Account
BYORK
US Bank /
117612
|
||
Physical
Securities
|
9:30 A.M. EST on Settlement
Date
(for Deliveries, by 4:00 P.M. on
Settlement Date minus 1)
|
Bank of New
York
One Xxxx Xxxxxx- 0xx Xxxxx – Window
A
Xxx Xxxx,
XX 00000
For account of US Bank
/ Cust #117612
Attn: Xxxxxx
Xxxxxx
|
||
CEDEL/EURO-CLEAR
|
11:00 A.M.
on Settlement Date minus 2
|
Cedel a/c
55021
FFC: a/c
387000
US Bank /Global
Omnibus
Euroclear a/c
97816
FFC: a/c
387000
US Bank/Global
Omnibus
|
||
Cash Wire
Transfer
|
3:00 P.M.
|
US Bank, X.X. Xxxxx/Trust ABA#
000000000
Credit Account
#112950027
Account of US Bancorp
Trust Services
Further Credit to
___________
Account #
_______________
|
* All times listed are
Eastern Standard Time.
25
USBank
Payment Standards
Security
Type
|
Income
|
Principal
|
Equities
|
Payable
Date
|
|
Municipal
Bonds*
|
Payable
Date
|
Payable
Date
|
Corporate
Bonds*
|
Payable
Date
|
Payable
Date
|
Federal Reserve Bank Book
Entry*
|
Payable
Date
|
Payable
Date
|
PTC GNMA's
(P&I)
|
Payable Date +
1
|
Payable Date +
1
|
CMOs *
|
||
DTC
|
Payable Date +
1
|
Payable Date +
1
|
Bankers
Trust
|
Payable Date +
1
|
Payable Date +
1
|
SBA Loan
Certificates
|
When
Received
|
When
Received
|
Unit Investment Trust
Certificates*
|
Payable
Date
|
Payable
Date
|
Certificates of
Deposit*
|
Payable Date +
1
|
Payable Date +
1
|
Limited
Partnerships
|
When
Received
|
When
Received
|
Foreign
Securities
|
When
Received
|
When
Received
|
*Variable Rate
Securities
|
||
Federal
Reserve Bank Book Entry
|
Payable
Date
|
Payable
Date
|
DTC
|
Payable Date +
1
|
Payable Date +
1
|
Bankers
Trust
|
Payable Date +
1
|
Payable Date +
1
|
|
NOTE:
|
If a payable date falls on a
weekend or bank holiday, payment will be made on the immediately following
business day.
|
26
USBank
Corporate Reorganization Standards
Type of
Action
|
Notification to
Client
|
Deadline for Client
Instructions
to USBank
|
Transaction
Posting
|
||
Rights,
Warrants,
and Optional
Mergers
|
Later of 10 business days prior to
expiration or receipt of notice
|
5 business days prior to
expiration
|
Upon
receipt
|
||
Mandatory Puts
with
Option to
Retain
|
Later of 10 business days prior to
expiration or receipt of notice
|
5 business days prior to
expiration
|
Upon
receipt
|
||
Class
Actions
|
10 business days prior to
expiration date
|
5 business days prior to
expiration
|
Upon
receipt
|
||
Voluntary
Tenders,
Exchanges,
and
Conversions
|
Later of 10 business days prior to
expiration or receipt of notice
|
5 business days prior to
expiration
|
Upon
receipt
|
||
Mandatory Puts, Defaults,
Liquidations, Bankruptcies, Stock Splits, Mandatory
Exchanges
|
At posting of funds or securities
received
|
None
|
Upon
receipt
|
||
Full and Partial
Calls
|
Later of 10 business days prior to
expiration or receipt of notice
|
None
|
Upon
receipt
|
NOTE: Fractional shares/par
amounts resulting from any of the above will be sold.
27
EXHIBIT
C
to
the
Fee
Schedule
Annual Fee Based Upon Market
Value per Fund
1.0
basis point on average daily market value of the Fund plus standard transaction
fees
Minimum
annual fee for the Funds (combined minimum for both Funds) -
$4,800*
Transaction
Fees
$ 4.00
per book entry DTC transaction
$ 4.00
per principal paydown
$ 6.00
per short sale
$ 7.00
per US Bank repurchase agreement transaction
$ 8.00
per option/future contract written, exercised or expired
$10.00
per book entry Federal Reserve transaction
$15.00
per mutual fund trade
$25.00
per physical security transaction
$ 5.00
per disbursement (waived if U.S. Bancorp is Administrator)
$ 6.00
per Fed Wire
$15.00
per margin variation Fed wire
$150.00
per segregated account per year
·
|
A
transaction is a purchase/sale of a security, free receipt/free delivery,
maturity, tender or exchange.
|
·
|
No
charge for the initial conversion free
receipt.
|
·
|
Overdrafts
– charged to the account at prime interest rate plus
2.
|
Plus
Out-Of-Pocket Expenses – Including but not limited to expenses incurred
in the safekeeping, delivery and receipt of securities, shipping, transfer fees,
extraordinary expenses based upon complexity, and all other out-of-pocket
expenses.
Fees
are billed monthly.
*
Subject to annual CPI increase, Milwaukee MSA.
28
EXHIBIT
D
SHAREHOLDER
COMMUNICATIONS ACT AUTHORIZATION
The
Shareholder Communications Act of 1985 requires banks and trust companies to
make an effort to permit direct communication between a company which issues
securities and the shareholder who votes those securities.
Unless
you specifically require us to NOT release your name and address to requesting
companies, we are required by law to disclose your name and
address.
Your
“yes” or “no” to disclosure will apply to all securities U.S. Bank holds for you
now and in the future, unless you change your mind and notify us in
writing.
______
YES
|
U.S.
Bank is authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the
Fund.
|
||
______
NO
|
U.S.
Bank is NOT authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the
Fund.
|
PNMAC
MORTGAGE OPPORTUNITY FUND, LP
By:
__________________________________
Title:
________________________________
Date:
________________________________
29
SHAREHOLDER
COMMUNICATIONS ACT AUTHORIZATION
The
Shareholder Communications Act of 1985 requires banks and trust companies to
make an effort to permit direct communication between a company which issues
securities and the shareholder who votes those securities.
Unless
you specifically require us to NOT release your name and address to requesting
companies, we are required by law to disclose your name and
address.
Your
“yes” or “no” to disclosure will apply to all securities U.S. Bank holds for you
now and in the future, unless you change your mind and notify us in
writing.
______
YES
|
U.S.
Bank is authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the
Fund.
|
|
|
______
NO
|
U.S.
Bank is NOT authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the
Fund.
|
|
PNMAC
MORTGAGE CO, LLC
By:
__________________________________
Title:
________________________________
Date:
________________________________
30