INVESTMENT MANAGEMENT AGREEMENT dated as of August 1, 2008 BY AND BETWEEN PNMAC MORTGAGE OPPORTUNITY FUND, L.P., a Delaware limited partnership AND PNMAC CAPITAL MANAGEMENT, LLC, a Delaware limited liability company
Exhibit G
dated as
of August 1, 2008
BY AND
BETWEEN
PNMAC
MORTGAGE OPPORTUNITY FUND, L.P.,
a
Delaware limited partnership
AND
PNMAC
CAPITAL MANAGEMENT, LLC,
a
Delaware limited liability company
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1.
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General
Duties of the Investment Manager
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3
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2.
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No
Joint Venture
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6
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3.
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Portfolio
Execution
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7
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4.
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Compensation
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7
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5.
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Expenses
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8
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6.
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Co-Investment
Rights; Services to Other Companies or Accounts
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8
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7.
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Indemnification
and Related Matters
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10
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8.
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Term
of Agreement; Events Affecting the Investment Manager; Survival of Certain
Terms; Key Person Event
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11
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9.
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Amendment
of this Agreement
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13
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10.
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Notices
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13
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11.
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Binding
Nature of Agreement; Successors and Assigns
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14
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12.
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Entire
Agreement
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14
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13.
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Costs
and Expenses
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14
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14.
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Books
and Records
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14
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15.
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Titles
Not to Affect Interpretation
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14
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16.
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Provisions
Separable
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15
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17.
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Governing
Law
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15
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18.
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Execution
in Counterparts
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15
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This
Investment Management Agreement (the "Agreement"), dated as
of August 1, 2008, is made by and between PNMAC Mortgage Opportunity Fund, L.P.
(the "Company"), a Delaware
limited partnership which will be registered as a nondiversified closed-end
management investment company under the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder (the "1940 Act"), and PNMAC
Capital Management, LLC (the "Investment Manager"),
a Delaware limited liability company registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers
Act"). Capitalized terms used but not otherwise defined in
this Agreement shall have the meanings given to them in the Limited Partnership
Agreement of the Company dated as of August 1, 2008 (as the same may be amended
from time to time, the "Partnership
Agreement") or the Limited Liability Company Agreement of PNMAC Mortgage
Opportunity Fund, LLC (the "Parent"), as the case
may be.
1. General Duties of the
Investment Manager.
(a) Subject
to the direction and control of the Company's Board of Directors (the "Board") and subject
to and in accordance with the terms of the Partnership Agreement, the policies
adopted or approved by the Board, and this Agreement, the Investment Manager
agrees to supervise and direct the investment and reinvestment of the Assets of
the Company (which term for purposes of this Section 1 shall include the
Company's subsidiaries) and perform the duties set forth herein or in the
Partnership Agreement, and shall have such other powers with respect to the
investment related functions of the Company as shall be delegated from time to
time to the Investment Manager by the Board. The Investment Manager
is hereby granted, and shall have, full power to take all actions and execute
and deliver all necessary and appropriate documents and instruments on behalf of
the Company in accordance with the Partnership Agreement, the policies adopted
or approved by the Board, and this Agreement. The Investment Manager
shall endeavor to comply in all material respects with the 1940 Act, and all
other applicable federal and state laws and regulations in performing its duties
under this Agreement. Subject to the foregoing and the other
provisions of this Agreement, and subject to the direction and control of the
Board, the Investment Manager is hereby appointed as the Company's agent and
attorney-in-fact with authority to negotiate, execute and deliver all documents
and agreements on behalf of the Company and to do or take all related acts, with
the power of substitution, to acquire, dispose of or otherwise take action with
respect to or affecting the investments of the Company, including, without
limitation:
| (i) identifying and originating investments in Portfolio Investments and Mortgage Assets (each as defined in clause (x) below) to be purchased by the Company, selecting the dates for such purchases, and purchasing or directing the purchase of such Portfolio Investments and Mortgage Assets on behalf of the Company; | |
| (ii) identifying Portfolio Investments and Mortgage Assets owned by the Company to be sold by the Company, selecting the dates for such sales, and selling such Portfolio Investments and Mortgage Assets on behalf of the Company; |
| (iii) negotiating and entering into, on behalf of the Company, documentation providing for the purchase and sale of Portfolio Investments and Mortgage Assets, including without limitation, confidentiality agreements and commitment letters; | |
| (iv) structuring the terms of, and negotiating, entering into and/or consenting to, on behalf of the Company, documentation relating to Portfolio Investments and Mortgage Assets to be purchased, held, exchanged or sold by the Company, including any amendments, modifications or supplements with respect to such documentation; |
| (v) exercising, on behalf of the Company, rights and remedies associated with Portfolio Investments and Mortgage Assets, including without limitation, rights to petition to place an obligor or issuer in bankruptcy proceedings, to vote to accelerate the maturity of a Portfolio Investment or Mortgage Asset, to waive any default, including a payment default, with respect to a Portfolio Investment or Mortgage Asset and to take any other action which the Investment Manager deems necessary or appropriate in its discretion in connection with any restructuring, reorganization or other similar transaction involving an obligor or issuer with respect to a Portfolio Investment or Mortgage Asset, including without limitation, initiating and pursuing litigation; | |
| (vi) responding to any offer in respect of Portfolio Investments and Mortgage Assets by tendering the affected Portfolio Investments and Mortgage Assets, declining the offer, or taking such other actions as the Investment Manager may determine; |
| (vii) exercising all voting, consent and similar rights of the Company on its behalf and advising the Company with respect to matters concerning the Portfolio Investments and Mortgage Assets; | |
| (viii) advising and assisting the Company with respect to the valuation of the Portfolio Investments and Mortgage Assets; | |
| (ix) retaining legal counsel and other professionals (such as financial advisers) to assist in the structuring, negotiation, documentation, administration and modification and restructuring of Portfolio Investments and Mortgage Assets; and | |
| (x) purchasing from time to time: |
(A) residential
mortgage whole loans (whether performing, sub-performing, non-performing or
otherwise), pools of such loans, homebuilder loans and multi-family mortgages
and real estate owned properties acquired by PNMAC Mortgage Co., LLC
(or the Company) as a result of foreclosures of mortgage loans that it (or the
Company) is unable to restore to performing status (collectively, "Mortgage
Assets");
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(B) mortgage-related
securities and financial instruments and other securities and financial
instruments, including, but not limited to:
(I) tranches
of asset-backed securities, mortgage-backed securities ("MBS"), and
residential mortgage-backed securities;
(II) mortgage-related
derivatives, including, but not limited to, credit default swaps, options,
futures and derivatives on MBS, including, but not limited to, interest-only
securities and principal-only securities;
(III) equity
interests in any of the foregoing or in entities that primarily hold such
assets, including the Mortgage Subsidiary and any similar entities;
(IV) policies,
instruments and agreements related to mortgage insurance or reinsurance
risk;
(V) similar
commercial real estate finance assets;
(VI) hedging
instruments that include U.S. Treasury securities, options and futures, as well
as MBS issued by government-sponsored enterprises; and
(VII) temporary
investments in high-grade fixed income securities and short-term fixed income or
money market funds and other fixed income investments as necessary or
appropriate in the judgment of the Investment Manager for the Company to
maintain its status as a registered investment company (assets described in this
paragraph (B), collectively, "Portfolio
Investments").
(b) In
addition to the authority granted to the Investment Manager in Section 1(a) of
this Agreement, the Company hereby makes, constitutes and appoints the
Investment Manager, with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead, in accordance with the terms of this Agreement (i) to sign, execute,
certify, swear to, acknowledge, deliver, file, receive and record any and all
documents which the Investment Manager reasonably deems necessary or appropriate
in connection with its investment management duties under this Agreement and as
required by the 1940 Act and (ii) to (A) subject to any policies adopted by the
Board with respect thereto, exercise in its discretion any voting or consent
rights associated with any securities, instruments or obligations included in
the Company's Assets, (B) execute proxies, waivers, consents and other
instruments with respect to such securities, instruments or obligations, (C)
endorse, transfer or deliver such securities, instruments and obligations and
(D) participate in or consent (or decline to consent) to any modification,
work-out, restructuring, bankruptcy proceeding, class action, plan of
reorganization, merger, combination, consolidation, liquidation or similar plan
or transaction with regard to such securities, instruments and
obligations. To the extent permitted by applicable law, this grant of
power of attorney is irrevocable and coupled with an interest, and it shall
survive and not be affected by the subsequent dissolution or
5
bankruptcy
of the Company; provided that this
grant of power of attorney will expire, and the Investment Manager will cease to
have any power to act as the Company's attorney-in-fact, upon termination of
this Agreement in accordance with its terms. The Company shall
execute and deliver to the Investment Manager all such other powers of attorney,
proxies, dividend and other orders, and all such instruments, as the Investment
Manager may reasonably request for the purpose of enabling the Investment
Manager to exercise the rights and powers which it is entitled to exercise
pursuant to this Agreement. Each of the Investment Manager and the
Company shall take such other actions, and furnish such certificates, opinions
and other documents, as may be reasonably requested by the other party hereto in
order to effectuate the purposes of this Agreement and to facilitate compliance
with applicable laws and regulations and the terms of this
Agreement.
(c) The
Investment Manager shall act in conformity with the written instructions and
directions of the Board, except to the extent that authority has been delegated
to the Investment Manager pursuant to the terms of this Agreement and the
Partnership Agreement. The Investment Manager will not be bound to
follow any amendment to the Partnership Agreement until it has received written
notice thereof and until it has received a copy of the amendment from the
Company; provided that if any
such amendment materially and adversely affects the rights or duties of the
Investment Manager, the Investment Manager shall not be obligated to respect or
comply with the terms of such amendment unless it consents
thereto. Subject to the fiduciary duty of the Board, the Company
agrees that it shall not permit any amendment to the Partnership Agreement that
materially and adversely affects the rights or duties of the Investment Manager
to become effective unless the Investment Manager has been given prior written
notice of such amendment and has consented thereto in writing.
(d) The
Investment Manager may, with respect to the affairs of the Company, consult with
such legal counsel, accountants and other advisors as may be selected by the
Investment Manager. The Investment Manager shall be fully protected,
to the extent permitted by applicable law, in acting or failing to act hereunder
if such action or inaction is taken or not taken in good faith by the Investment
Manager in accordance with the advice or opinion of such counsel, accountants or
other advisors. The Investment Manager shall be fully protected in
relying upon any writing signed in the appropriate manner with respect to any
instruction, direction or approval of the Board and may also rely on opinions of
the Investment Manager's counsel with respect to such instructions, directions
and approvals. The Investment Manager shall also be fully protected
when acting upon any instrument, certificate or other writing the Investment
Manager believes in good faith to be genuine and to be signed or presented by
the proper person or persons. The Investment Manager shall be under
no duty to make any investigation or inquiry as to any statement contained in
any such writing and may accept the same as conclusive evidence of the truth and
accuracy of the statements therein contained if the Investment Manager in good
faith believes the same to be genuine.
2. No Joint
Venture.
Nothing
in this Agreement shall be deemed to create a joint venture or partnership
between the parties with respect to the arrangements set forth in this
Agreement. For all purposes hereof, the Investment Manager shall be
deemed to be an independent contractor and,
6
unless
otherwise provided herein or specifically authorized by the Board from time to
time, shall have no authority to act for or represent the Company.
3. Portfolio
Execution.
The
Investment Manager shall effect all purchases and sales of securities in a
manner consistent with the principles of best execution, taking into account net
price (including commissions) and execution capability and other services which
the broker or other intermediary may provide. In this regard, the
Investment Manager may effect transactions which cause the Company to pay a
commission in excess of a commission which another broker or other intermediary
would have charged; provided, however, that the
Investment Manager shall have first determined that such commission is
reasonable in relation to the value of the brokerage or research services
performed by that broker or other intermediary or that the Company is the sole
beneficiary of the services provided.
4. Compensation.
(a) The
Company agrees to pay to the Investment Manager and the Investment Manager
agrees to accept as compensation for services rendered by the Investment Manager
as such, a base fee (the "Base Management Fee"),
which is accrued at the end of each month and is payable quarterly in arrears at
an annual rate equal to (i) during the Commitment Period, an annualized rate of
one and one-half percent (1.5%) of the total Capital Commitments and (ii)
thereafter, an annualized rate of one and one-half percent (1.5%) of the
Company’s net asset value so long as such amount does not exceed one and
one-half percent (1.5%) of the aggregate Capital Contributions to the Company;
provided, however, that such fee shall not be payable to the extent of any base
management fees payable to the Investment Manager or an affiliate thereof by any
registered investment company that invests in the Company. The Base
Management Fee shall be prorated for any partial payment period.
(b) In
addition to the Base Management Fee, the Company agrees to pay to the General
Partner, after the common equity holders of each registered investment company
that has invested in Common Interests in the Company have received distributions
in an aggregate amount equal to the sum of (i) the aggregate initial net asset
value of their cumulative Capital Contributions and (ii) a preferred return on
the amounts described in clause (i) above calculated at a rate of 8% per annum compounded annually
on the average daily amount outstanding each annual period, an amount equal to
20% of the profits distributed to the members of the Parent pursuant to clause
(ii) above and, thereafter, 20% of all realized proceeds; provided, however,
that the Company shall pay such amount only if the Company does not distribute
to the General Partner pursuant to Section 8.1 of the Partnership
Agreement.
5. Expenses.
The
Company will be responsible for paying the compensation of the Investment
Manager and General Partner, due diligence, negotiation and broken deal
expenses, fees and expenses of custodians, administrators, transfer and
distribution agents, counsel and directors, insurance, filings and
registrations, proxy expenses, expenses of communications to investors,
interest, taxes, portfolio transaction expenses, indemnification, litigation and
other extraordinary
7
expenses
and such other expenses as the Investment Manager is not obligated to provide
(such as services the Investment Manager is required to supervise, review or
coordinate) and as are approved by the directors as being reasonably related to
the organization, offering, capitalization, operation, regulatory compliance or
administration of the Company and any portfolio investments. Expenses
associated with the general overhead of the Investment Manager will not be
covered by the Company. Notwithstanding the foregoing, and subject to
review by the Board, the Parent and/or the Company will bear the costs and
expenses of the Investment Manager as set forth in Section 9 of the Operating
Agreement and Section 9.3 of the Partnership Agreement, which provisions may not
be amended without the Investment Manager's written consent. On
behalf of the Company, the Investment Manager may advance payment of any such
fees and expenses of the Company, and the Company shall reimburse the Investment
Manager therefor within 30 days following written request from the Investment
Manager. Nothing in this Section 5 shall limit the ability of the
Investment Manager to be reimbursed by any Person (including issuers or obligors
of securities, instruments or obligations owned by the Company) for
out-of-pocket expenses incurred by the Investment Manager in connection with the
performance of services hereunder. The Investment Manager shall
maintain complete and accurate records with respect to costs and expenses and
shall furnish the Company with receipts or other written vouchers with respect
thereto upon request of the Board.
6. Co-Investment Rights;
Services to Other Companies or Accounts.
(a) During
the Commitment Period and subject to the limitations of the 1940 Act, where
appropriate and feasible, as determined by the General Partner in its sole
discretion, the General Partner may, but will not be obligated to, offer
available co-investment opportunities in assets eligible for purchase by the
Company or the Parent to common members of registered investment companies
investing in the Company, to investors in any such common member whose account
is managed by the General Partner or an affiliates thereof, to shareholders of
PNMAC Mortgage Opportunity (Offshore) Fund, Ltd. (the “Offshore Fund”) and
to members of PNMAC Mortgage Opportunity Fund Investors, LLC (the “Parallel Fund”) prior
to making such opportunities available to others, on such terms and conditions
as are determined by the Investment Manager. The General Partner may,
but will not be obligated to, receive a carried interest and the Investment
Manager may, but will not be obligated to, receive a management fee in respect
of any such co-investment opportunities. Any amounts contributed by
any such member in respect of a co-investment opportunity will not reduce the
Unfunded Commitment of such member. For purposes of this Agreement,
co-investment opportunities refer to investment opportunities that exceed the
amount the Investment Manager determines its clients should invest
in.
(b) The
Company may, as determined by the General Partner in its sole discretion, also
provide co-investment opportunities to persons who are not investors in the
Investment Manager’s clients. Any co-investment opportunities
provided by the General Partner will be on such terms and conditions as the
General Partner, in its sole discretion, may determine.
(c) The
Investment Manager may manage one or more additional investment vehicles or
client accounts ("Other Accounts") to
invest in assets eligible for purchase by the Company or the Parent including,
but not limited to, PNMAC Mortgage Opportunity
8
Institutional
Fund, LLC, the Offshore Fund and the Parallel Fund. Each Other
Account will also hold its final closing (or otherwise close to new investments)
on or prior to January 2, 2009 and will participate in investments eligible for
purchase by the Company or the Parent and such Other Account in accordance with
the allocation policy of the Investment Manager. After January 2,
2009 and until the earlier of (i) the termination of the Commitment Period and
(ii) such time that at least 75% of the aggregate Capital Commitments of the
Company have been funded or reserved for investments in process at the end of
the Commitment Period, expenses (including the Management Fee) or reserves, none
of Private National Mortgage Acceptance Company, LLC, the Investment Manager or
the General Partner may form a new investment fund or account (collectively,
"Successor
Funds") with investment objectives that are substantially similar to
those of the Company and the Parent. Notwithstanding the foregoing,
Private National Mortgage Acceptance Company, LLC, the Investment Manager or the
General Partner may form one or more Successor Funds for the purpose of
investing in one or more investment opportunities where the capital necessary to
acquire such assets exceeds the available capital of the Company and
its other clients, or where the Investment Manager determines that acquiring the
entire interest in such assets would not be in the best interest of the Company
and such other clients, taking into account diversification and Company
investment goals. If a Successor Fund is formed to invest in specific
investment opportunities under such circumstances, in addition to any investment
that may be made by the Company, the Investment Manager will offer to common
members of registered investment companies investing in the Company, and other
direct and indirect investors in the Company and the Other Accounts, the
opportunity to invest in such Successor Fund. Any amounts contributed
by a such member in respect of such Successor Fund will not reduce the Unfunded
Commitment of such member.
(d) To
the extent that the Investment Manager manages Other Accounts or Successor Funds
(other than those created to invest in specific opportunities) that follow an
investment strategy substantially similar to that followed by the Company and
the Parent during the overlap of the Commitment Period and the investment
periods of such Other Accounts or Successor Funds (and subject to the
considerations and limitations described in "Co-Investment
Rights"), all investment opportunities that are consistent with the
investment objectives of the Company and the Parent, on the one hand, and the
Other Accounts or Successor Funds, on the other hand, will be allocated among
the Company and the Parent and the Other Accounts and such Successor Funds,
generally pro rata
based upon relative amounts of investment capital (including undrawn capital
commitments) available for new investments by the Company and the Parent and
each of the other relevant accounts or in alternation such that allocations
among client accounts are fair and equitable over time; provided that the
Investment Manager, in its sole discretion, may allocate such investment
opportunities in any other manner that it deems to be fair and
equitable.
7. Indemnification and Related
Matters.
(a) Except
as otherwise required by law, none of the General Partner, the Investment
Manager, or any of their respective Affiliated Persons, directors, officers,
employees, shareholders, managers, members, assigns, representatives or agents
(each, an "Indemnified
Person" and, collectively, the "Indemnified Persons")
shall be liable, responsible or accountable in damages or otherwise to the
Company, any Partner or any other Person for any loss, liability, damage,
settlement cost, or other expense (including reasonable attorneys'
fees)
9
incurred
by reason of any act or omission or any alleged act or omission performed or
omitted by such Indemnified Person (other than solely in such Indemnified
Person's capacity as a Partner, if applicable) in connection with the
establishment, management or operations of the Company or the management of its
Assets except that the foregoing exculpation shall not extend to any act or
failure to act constituting bad faith, willful misfeasance, gross negligence or
reckless disregard of the Indemnified Person's duty to the Company or such
Partner, as the case may be (such conduct, "Disabling
Conduct").
(b) To
the fullest extent permitted by applicable law, each of the Indemnified Persons
shall be held harmless and indemnified by the Company (out of the Assets
(including, without limitation, the Unfunded Commitments) and not out of the
separate assets of any Partner) against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and reasonable counsel fees reasonably incurred by such Indemnified
Person in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or investigative body in which such Indemnified Person may be or may have been
involved as a party or otherwise (other than as authorized by the Directors, as
the plaintiff or complainant) or with which such Indemnified Person may be or
may have been threatened, while acting in such Person's capacity as an
Indemnified Person, except with respect to any matter as to which such
Indemnified Person shall not have acted in good faith in the reasonable belief
that such Person's action was in the best interest of the Company or, in the
case of any criminal proceeding, as to which such Indemnified Person shall have
had reasonable cause to believe that the conduct was unlawful, provided, however, that an
Indemnified Person shall only be indemnified hereunder if (i) such Indemnified
Person's activities do not constitute Disabling Conduct and (ii) there has been
a determination (A) by a final decision on the merits by a court or other body
of competent jurisdiction before whom the issue of entitlement to
indemnification was brought that such Indemnified Person is entitled to
indemnification or, (B) in the absence of such a decision, by (I) a majority
vote of a quorum of those Directors who are neither "interested persons" of the
Company (as defined in Section 2(a)(19) of the ▇▇▇▇ ▇▇▇) nor parties to the
proceeding (the "Disinterested Non-Party
Directors") that the Indemnified Person is entitled to indemnification,
or (II) if such quorum is not obtainable or even if obtainable, if a majority so
directs, independent legal counsel in a written opinion that concludes that the
Indemnified Person should be entitled to
indemnification. Notwithstanding the foregoing, with respect to any
action, suit or other proceeding voluntarily prosecuted by any Indemnified
Person as plaintiff, indemnification shall be mandatory only if the prosecution
of such action, suit or other proceeding by such Indemnified Person was
authorized by a majority of the Directors. All determinations to make advance
payments in connection with the expense of defending any proceeding shall be
authorized and made in accordance with the immediately succeeding paragraph (c)
below.
(c) The
Company shall make advance payments in connection with the expenses of defending
any action with respect to which indemnification might be sought hereunder if
the Company receives a written affirmation by the Indemnified Person of the
Indemnified Person's good faith belief that the standards of conduct necessary
for indemnification have been met and a written undertaking to reimburse the
Company unless it is subsequently determined that such Indemnified Person is
entitled to such indemnification and if a majority of the Directors determine
that the applicable standards of conduct necessary for indemnification appear to
have been met. In addition, at least one of the following
conditions
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must be
met: (i) the Indemnified Person shall provide adequate security for
his undertaking, (ii) the Company shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of a quorum of the
Disinterested Non-Party Directors, or if a majority vote of such quorum so
direct, independent legal counsel in a written opinion, shall conclude, based on
a review of readily available facts (as opposed to a full trial-type inquiry),
that there is substantial reason to believe that the Indemnified Person
ultimately will be found entitled to indemnification.
(d) The
rights accruing to any Indemnified Person under these provisions shall not
exclude any other right to which such Indemnified Person may be lawfully
entitled.
(e) Each
Indemnified Person shall, in the performance of its duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Company, upon an opinion of counsel, or upon reports made to the Company
by any of the Company's officers or employees or by any advisor, administrator,
manager, distributor, selected dealer, accountant, appraiser or other expert or
consultant selected with reasonable care by the Directors, officers or employees
of the Company, regardless of whether such counsel or other person may also be a
Director.
8. Term of Agreement; Events
Affecting the Investment Manager; Survival of Certain Terms; Key Person
Event.
(a) This
Agreement shall become effective as of the time at which the Company registers
as an investment company with the SEC and, unless sooner terminated by the
Company or Investment Manager as provided herein, shall continue in effect for a
period of two years. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to the Company for successive periods of 12
months, provided such continuance is specifically approved at least annually
around such time by both (i) the vote of a majority of the Board or the vote of
a majority of the Partners entitled to vote, and (ii) by the vote of a majority
of the Directors who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated (iii) by the Company at any time, without the payment of any penalty,
upon giving the Investment Manager 60 days' notice (which notice may be waived
by the Investment Manager), provided that such termination by the Company shall
be directed or approved by the vote of a majority of the Directors of the
Company in office at the time or by the vote of the majority of the Partners
entitled to vote, or (iv) by the Investment Manager on 60 days' written notice
(which notice may be waived by the Company). This Agreement will also
immediately terminate in the event of its assignment. As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meanings as such terms are given in the
1940 Act.
(b) A
"Key Person
Event" will occur if fewer than three Principals remain involved in the
management and decision making of the Investment Manager at any time during the
Commitment Period. Upon the occurrence of a Key Person Event, the
Investment Manager will promptly notify the Board and the Partners and the
Commitment Period shall be
11
suspended
(the "Suspension
Period"). The Investment Manager will seek to promptly present
to the Board in writing for its consideration the name of one or more persons
the Investment Manager believes possess skills reasonably comparable to the
departed Principal (or Principals) and should replace the departed Principal (or
Principals) (a person having such skills being a "Replacement
Principal"). Upon approval of the Replacement Principal (or
Replacement Principals) by a majority of the independent Directors of the
Company, any Suspension Period will immediately terminate. In the
event that a majority of the independent Directors do not approve the
Replacement Principal (or Replacement Principals), any Suspension Period will
continue and, if the number of remaining initial and approved Replacement
Principals is not at least three on or prior to 90 days after the occurrence of
the Key Person Event, the independent Directors will appoint a liquidator, which
may be the Investment Manager, to liquidate the Company and its subsidiaries in
such a manner, and over such reasonable period of time, so as to seek to
maximize returns to the Company and its Partners. Such person will
have the exclusive power and authority to wind up the affairs of the Company and
commence the orderly liquidation and distribution (including distributions in
kind) of their assets in accordance with the terms of this
Agreement. For purposes of the foregoing, a "Principal" means
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and any other person approved by the Board, as described
above.
(c) Notwithstanding
anything herein to the contrary, Sections 5, 7 and this Section 8 of this
Agreement shall survive any termination hereof.
(d) From
and after the effective date of termination of this Agreement, the Investment
Manager and its Affiliated Persons shall not be entitled to compensation for
further services hereunder, but shall be paid all compensation and reimbursement
of expenses accrued to the date of termination. Upon such
termination, and upon receipt of payment of all compensation and reimbursement
of expenses owed, the Investment Manager shall as soon as practicable (and in
any event within 90 days after such termination) deliver to the Company all
property (to the extent, if any, that the Investment Manager has custody
thereof) and documents of the Company or otherwise relating to the Assets of the
Company then in the custody of the Investment Manager (although the Investment
Manager may keep copies of such documents for its records). The
Investment Manager agrees to use reasonable efforts to cooperate with any
successor investment manager in the transfer of its responsibilities hereunder,
and will, among other things, provide upon receipt of a written request by such
successor investment manager any information available to it regarding any
Assets of the Company. The Investment Manager agrees that,
notwithstanding any termination, it will reasonably cooperate in any proceeding
arising in connection with this Agreement or any Investment (excluding any such
proceeding in which claims are asserted against the Investment Manager or any
Affiliated Person of the Investment Manager) upon receipt of appropriate
indemnification and expense reimbursement.
9. Amendment of this
Agreement.
No
provision of this Agreement may be amended, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the amendment, waiver, discharge or termination is
sought. Any amendment of this Agreement shall be subject to the 1940
Act.
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10. Notices.
Unless
expressly provided otherwise herein, any notice, request, direction, demand or
other communication required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received if sent
by hand or by overnight courier, when personally delivered, if sent by
telecopier, when receipt is confirmed by telephone, or if sent by registered or
certified mail, postage prepaid, return receipt requested, when actually
received if addressed as set forth below:
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(a)
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If
to the Company:
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PNMAC
Mortgage Opportunity Fund, L.P.
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Attn:
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Tel: (▇▇▇)
▇▇▇-▇▇▇▇
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Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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(b)
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If
to the Investment Manager:
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PNMAC
Capital Management, LLC
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Attn: ▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Tel: (▇▇▇)
▇▇▇-▇▇▇▇
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Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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(c)
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If
to any of the partners in the Company, as provided in the Partnership
Agreement.
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Either
party to this Agreement may alter the address to which communications or copies
are to be sent to it by giving notice of such change of address in conformity
with the provisions of this Section 10. Other addresses set forth in
this Section 10 shall be changed only with the consent of the relevant
addressee.
11. Binding Nature of Agreement;
Successors and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns as provided herein.
12. Entire
Agreement.
This
Agreement contains the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express
or implied, oral or written, of any nature whatsoever with respect to the
subject matter hereof. The express
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terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
13. Costs and
Expenses.
The costs
and expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiation, preparation and execution of this
Agreement, and all matters incident thereto, shall be borne by the
Company.
14. Books and
Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Manager hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any such records upon the Company's
request. The Investment Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act such records maintained by it under
the 1940 Act.
15. Titles Not to Affect
Interpretation.
The
titles of sections contained in this Agreement are for convenience only, and
they neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.
16. Provisions
Separable.
The
provisions of this Agreement are independent of and separable from each other,
and, to the extent permitted by applicable law, no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in
part.
17. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware and, to the extent inconsistent therewith, the 1940
Act.
18. Execution in
Counterparts.
This
Agreement may be executed in separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
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PNMAC
CAPITAL MANAGEMENT, LLC
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By: _____________________,
its Managing
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Member
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By:
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Member
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PNMAC
MORTGAGE OPPORTUNITY FUND, L.P.
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By:
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By:
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