Options and Futures Transactions (a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-the-Counter.
(i) The Bank shall take action as to put options ("puts") and call options ("calls") purchased or sold (written) by the Fund regarding escrow or other arrangements (i) in accordance with the provisions of any agreement entered into upon receipt of Proper Instructions among the Bank, any broker-dealer registered with the National Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the Fund, relating to the compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations.
(ii) Unless another agreement requires it to do so, the Bank shall be under no duty or obligation to see that the Fund has deposited or is maintaining adequate margin, if required, with any broker in connection with any option, nor shall the Bank be under duty or obligation to present such option to the broker for exercise unless it receives Proper Instructions from the Fund. The Bank shall have no responsibility for the legality of any put or call purchased or sold on behalf of the Fund, the propriety of any such purchase or sale, or the adequacy of any collateral delivered to a broker in connection with an option or deposited to or withdrawn from a Segregated Account (as defined in subsection 6.10 below). The Bank specifically, but not by way of limitation, shall not be under any duty or obligation to: (i) periodically check or notify the Fund that the amount of such collateral held by a broker or held in a Segregated Account is sufficient to protect such broker or the Fund against any loss; (ii) effect the return of any collateral delivered to a broker; or (iii) advise the Fund that any option it holds, has or is about to expire. Such duties or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and futures contracts ("Futures") purchased or sold by the Fund in accordance with the provisions of any agreement entered into upon the receipt of Proper Instructions among the Fund, the Bank 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 the Fund.
(ii) The responsibilities of the Bank as to futures, puts and calls traded on commodities exchanges, any Futures Commission Merchant account and the Segregated Account shall be limited as set forth in subparagraph (a)(ii) of this Section 6.9 as if such subparagraph referred to Futures Commission Merchants rather than brokers, and Futures and puts and calls thereon instead of options.
Futures Contracts Upon receipt of Instructions, the Custodian shall enter into a futures margin procedural agreement among the appropriate Fund, the Custodian and the designated futures commission merchant (a "Procedural Agreement"). Under the Procedural Agreement the Custodian shall: (a) receive and retain confirmations, if any, evidencing the purchase or sale of a futures contract or an option on a futures contract by such Fund; (b) deposit and maintain in a segregated account cash, Securities and/or other Assets designated as initial, maintenance or variation "margin" deposits intended to secure such Fund's performance of its obligations under any futures contracts purchased or sold, or any options on futures contracts written by such Fund, in accordance with the provisions of any Procedural Agreement designed to comply with the provisions of the Commodity Futures Trading Commission and/or any commodity exchange or contract market (such as the Chicago Board of Trade), or any similar organization(s), regarding such margin deposits; and (c) release Assets from and/or transfer Assets into such margin accounts only in accordance with any such Procedural Agreements. The appropriate Fund and such futures commission merchant shall be responsible for determining the type and amount of Assets held in the segregated account or paid to the broker-dealer in compliance with applicable margin maintenance requirements and the performance of any futures contract or option on a futures contract in accordance with its terms.
SECURITIES AND FUTURES AUTHORITY Notwithstanding anything to the contrary contained in a definitive Private Placement Memorandum or any transaction document, all persons may disclose to any and all persons, without limitation of any kind, the federal income tax treatment and tax structure of the securities described herein, any fact relevant to understanding the federal tax treatment or tax structure of the securities described herein, and all materials of any kind (including opinions or other tax analyses) relating to such federal tax treatment or tax structure. -------------------------------------------------------------------------------- Page 14 Weighted Average Life Sensitivity To MATURITY ----------------------------------------------------------------------------------------------------------------------------------- PPC (%) 50 60 75 100 125 150 175 ----------------------------------------------------------------------------------------------------------------------------------- A-2 WAL (yrs) 5.76 4.95 4.05 3.06 2.37 1.85 1.38 First Payment Date 3/25/2004 3/25/2004 3/25/2004 3/25/2004 3/25/2004 3/25/2004 3/25/2004 Expected Final Maturity 6/25/2031 9/25/2029 7/25/2026 9/25/2021 2/25/2018 7/25/2015 8/25/2013 Window 1 - 328 1 - 307 1 - 269 1 - 211 1 - 168 1 - 137 1 - 114 ----------------------------------------------------------------------------------------------------------------------------------- M-1 WAL 11.05 9.49 7.73 5.88 5.00 4.76 5.40 First Payment Date 2/25/2009 5/25/2008 7/25/2007 5/25/2007 8/25/2007 11/25/2007 5/25/2008 Expected Final Maturity 10/25/2028 6/25/2026 12/25/2022 8/25/2018 8/25/2015 6/25/2013 11/25/2011 Window 60 - 296 51 - 268 41 - 226 39 - 174 42 - 138 45 - 112 51 - 93 ----------------------------------------------------------------------------------------------------------------------------------- M-2 WAL 10.97 9.40 7.65 5.79 4.81 4.33 4.21 First Payment Date 2/25/2009 5/25/2008 7/25/2007 4/25/2007 5/25/2007 7/25/2007 9/25/2007 Expected Final Maturity 4/25/2027 10/25/2024 5/25/2021 4/25/2017 7/25/2014 8/25/2012 3/25/2011 Window 60 - 278 51 - 248 41 - 207 38 - 158 39 - 125 41 - 102 43 - 85 ----------------------------------------------------------------------------------------------------------------------------------- M-3 WAL 10.85 9.29 7.55 5.70 4.70 4.14 3.89 First Payment Date 2/25/2009 5/25/2008 7/25/2007 3/25/2007 5/25/2007 6/25/2007 7/25/2007 Expected Final Maturity 10/25/2024 4/25/2022 2/25/2019 7/25/2015 2/25/2013 6/25/2011 3/25/2010 Window 60 - 248 51 - 218 41 - 180 37 - 137 39 - 108 40 - 88 41 - 73 ----------------------------------------------------------------------------------------------------------------------------------- B-1 WAL 10.74 9.18 7.46 5.63 4.61 4.06 3.77 First Payment Date 2/25/2009 5/25/2008 7/25/2007 3/25/2007 4/25/2007 5/25/2007 6/25/2007 Expected Final Maturity 11/25/2023 5/25/2021 4/25/2018 11/25/2014 8/25/2012 1/25/2011 11/25/2009 Window 60 - 237 51 - 207 41 - 170 37 - 129 38 - 102 39 - 83 40 - 69 ----------------------------------------------------------------------------------------------------------------------------------- B-2 WAL 10.54 8.99 7.30 5.50 4.51 3.94 3.63 First Payment Date 2/25/2009 5/25/2008 7/25/2007 3/25/2007 3/25/2007 4/25/2007 5/25/2007 Expected Final Maturity 4/25/2022 11/25/2019 1/25/2017 11/25/2013 10/25/2011 5/25/2010 4/25/2009 Window 60 - 218 51 - 189 41 - 155 37 - 117 37 - 92 38 - 75 39 - 62 ----------------------------------------------------------------------------------------------------------------------------------- B-3 WAL 10.18 8.67 7.02 5.29 4.32 3.79 3.46 First Payment Date 2/25/2009 5/25/2008 7/25/2007 3/25/2007 3/25/2007 3/25/2007 4/25/2007 Expected Final Maturity 5/25/2020 2/25/2018 8/25/2015 9/25/2012 11/25/2010 8/25/2009 9/25/2008 Window 60 - 195 51 - 168 41 - 138 37 - 103 37 - 81 37 - 66 38 - 55 -----------------------------------------------------------------------------------------------------------------------------------
Commodity Exchange Act Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended (the “CEA”), the Agreement and this Transaction are subject to individual negotiation by the parties and have not been executed or traded on a “trading facility” as defined in Section 1a(51) of the CEA.
Fund/SERV Transactions If the parties choose to use the National Securities Clearing Corporation’s Mutual Fund Settlement, Entry and Registration Verification (“Fund/SERV”) or any other NSCC service, the following provisions shall apply: The Company and the Fund or its designee will each be bound by the rules of the National Securities Clearing Corporation (“NSCC”) and the terms of any NSCC agreement filed by it or its designee with the NSCC. Without limiting the generality of the following provisions of this section, the Company and the Fund or its designee will each perform any and all duties, functions, procedures and responsibilities assigned to it and as otherwise established by the NSCC applicable to Fund/SERV, the Mutual Fund Profile Service, the Networking Matrix Level utilized and any other relevant NSCC service or system (collectively, the “NSCC Systems”). Any information transmitted through the NSCC Systems by any party or its designee to the other or its designee and pursuant to this Agreement will be accurate, complete, and in the format prescribed by the NSCC. Each party or its designee will adopt, implement and maintain procedures reasonably designed to ensure the accuracy of all transmissions through the NSCC Systems and to limit the access to, and the inputting of data into, the NSCC Systems to persons specifically authorized by such party. On each day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC (“Business Day”), the Company shall aggregate and calculate the net purchase and redemption orders for each Account received by the Company by the close of the New York Stock Exchange (generally, 4:00 p.m. Eastern Time) (the “Close of Trading”) on the Business Day. The Company shall communicate to the Fund or its designee for that Business Day, by Fund/SERV, the net aggregate purchase or redemption orders (if any) for each Account received by the Close of Trading on such Business Day (the “Trade Date”) no later than 7:00 a.m. Eastern Time (or such other time as may be agreed by the parties from time to time) (the “Fund/SERV Transactions Deadline”) on the Business Day following the Trade Date. All such aggregated orders communicated to the Fund or its designee by the Fund/SERV Transactions Deadline on the Business Day following the Trade Date shall be treated by the Fund or its designee as if received prior to the Close of Trading on the Trade Date. All orders received by the Company after the Close of Trading on a Business Day shall not be aggregated with Orders received by the Company prior to the Close of Trading on such Business Day and shall be communicated to BRIL or its designee as part of an aggregated order no sooner than after the FUND/SERV Transactions Deadline or such other time as may be agreed by the parties from time to time) the following Business Day. Cash settlement shall be transmitted pursuant to the normal NSCC settlement process. In the case of delayed settlement, the Fund or its designee shall make arrangements for the settlement of redemptions by wire no later than the time permitted for settlement of redemption orders by the 1940 Act. Unless otherwise informed in writing, such redemption wires should be sent to an account specified by the Company and agreed to by Fund Parties.
Futures Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle the Investment Adviser’s position with cash from a Portfolio or elsewhere. Transactions in futures carry a high degree of risk. The “gearing” or “leverage” often obtainable in futures trading means that a small deposit or down payment can lead to large losses as well as gains. It also means that a relatively small market movement can lead to a proportionately much larger movement in the value of the Investment Adviser’s investment, and this can work against the Investment Adviser as well as for the Investment Adviser. Futures transactions have a contingent liability, and the Investment Adviser should be aware of the implications of this, in particular the margining requirements, which are described in paragraph 7.2 below.
FUTURES CONTRACT OPTIONS 1. Promptly after the execution of a purchase of any Futures Contract Option by the Fund, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such Option is specifically allocated; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such Option was purchased; and (i) the name of the broker, or futures commission merchant, to whom payment is to be made. The Custodian shall pay out of the moneys specifically allocated to such Series the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) Series to which such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate.
Non-Investment Advisory Services The Fund hereby employs the Manager to provide certain non-investment advisory services for the Portfolio, subject to the direction of the officers and the Board on the terms hereinafter set forth. Specifically, the Manager shall perform or arrange for the performance, as applicable, at its own expense (except as provided in Section 4 or unless otherwise agreed to by the Manager and the Fund, in which case at the Fund’s expense), the following services to the Fund on behalf of the Portfolio to the extent that any such services are not otherwise provided by any other service provider to the Fund:
(i) monitor and evaluate the services provided to the Fund for the benefit of the Portfolio by the Portfolio’s custodian, transfer and dividend disbursing agents, printers, insurance carriers (as well as insurance agents and insurance brokers), independent public accountants, legal counsel and other persons and entities who provide similar services to the Fund for the benefit of the Portfolio;
(ii) monitor the preparation of periodic reports and notices of distributions to shareholders of the Portfolio;
(iii) coordinate, monitor and evaluate the daily pricing and valuation of the Portfolio’s investment portfolio;
(iv) monitor the Portfolio’s compliance with recordkeeping requirements of applicable federal, state, and foreign laws and regulations;
(v) assist the Portfolio to comply with the provisions of applicable federal, state, and foreign tax laws and tax regulations;
(vi) assist the Portfolio to comply with the provisions of applicable federal, state, local and foreign securities, organizational and other laws that govern the business of the Fund in respect of the Portfolio, including with respect to the preparation of registration statements and other materials in connection with the offering of the Portfolio’s shares;
(vii) monitor and coordinate the provision of trade administration oversight services to the Portfolio, including settlement oversight services, reconciliation services, collateral management oversight services, and similar services, including recommending corrective action;
(viii) assist the Portfolio to conduct meetings of the Portfolio’s shareholders if and when called by the Board;
(ix) furnish such information to the Board as the Board may reasonably require in connection with the annual approval of this Agreement, and coordinate the provision of such other information as the Board may reasonably request; and
(x) provide the shareholders of the Portfolio with such information regarding the operation and affairs of the Portfolio, and their investment in its shares, as they or the Fund may reasonably request. The Manager accepts such employment and agrees to provide or coordinate the provision of the non-investment advisory services specified above in this Section 3 for the compensation provided in Section 5. The Manager is not required at its own expense to provide non-investment advisory services to the Fund under this Agreement except as specified in this Section 3. The Manager may provide additional non-investment advisory services, i.e., those not specified in this Section 3, for the benefit of the Portfolio subject to terms mutually agreed upon by the Fund and the Manager. Subject to approval or ratification by the Board, the Manager may delegate to one or more entities some or all of the services for the Portfolio described in this Section 3 for which the Manager is responsible, provided that the Manager will be responsible for supervising such entities and paying the compensation, if any, of such entities for such services to the Portfolio, except as otherwise agreed to by the Manager and the Fund.
Portfolio Transaction and Brokerage In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust’s Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an “affiliated person” of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust’s other Portfolios, except as permitted under the Investment Company Act and rules promulgated thereunder. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list.
Investment Advisory Services The Adviser undertakes to act as investment adviser of the Portfolio and shall, subject to the supervision of the Fund's Board of Trustees, direct the investments of the Portfolio in accordance with the investment objective, policies and limitations as provided in the Portfolio's Prospectus or other governing instruments, as amended from time to time, the Investment Company Act of 1940 and rules thereunder, as amended from time to time (the "1940 Act"), and such other limitations as the Portfolio may impose by notice in writing to the Adviser. The Adviser shall also furnish for the use of the Portfolio office space and all necessary office facilities, equipment and personnel for servicing the investments of the Portfolio; and shall pay the salaries and fees of all officers of the Fund, of all Trustees of the Fund who are "interested persons" of the Fund or of the Adviser and of all personnel of the Fund or the Adviser performing services relating to research, statistical and investment activities. The Adviser is authorized, in its discretion and without prior consultation with the Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds and other securities and investment instruments on behalf of the Portfolio. The investment policies and all other actions of the Portfolio are and shall at all times be subject to the control and direction of the Fund's Board of Trustees.