INVESTMENT MANAGEMENT AGREEMENT dated as of August 1, 2008 BY AND BETWEEN PNMAC MORTGAGE OPPORTUNITY FUND, LLC, a Delaware limited liability company AND PNMAC CAPITAL MANAGEMENT, LLC, a Delaware limited liability company
Exhibit
G
dated
as of August 1, 2008
BY
AND BETWEEN
a
Delaware limited liability company
AND
PNMAC
CAPITAL MANAGEMENT, LLC,
a
Delaware limited liability company
TABLE OF
CONTENTS
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Page
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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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Duties
and Obligations of the Investment Manager with Respect to the
Administration of the Company
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5
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3.
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No
Joint Venture
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6
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4.
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Portfolio
Execution
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6
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5.
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Compensation
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7
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6.
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Expenses
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7
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7.
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Co-Investment
Rights; Services to Other Companies or Accounts
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8
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8.
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Indemnification
and Related Matters
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9
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9.
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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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10.
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Amendment
of this Agreement
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12
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11.
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Notices
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13
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12.
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Binding
Nature of Agreement; Successors and Assigns
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13
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13.
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Entire
Agreement
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13
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14.
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Costs
and Expenses
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14
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15.
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Books
and Records
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14
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16.
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Titles
Not to Affect Interpretation
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14
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17.
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Provisions
Separable
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14
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18.
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Governing
Law
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14
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19.
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Execution
in Counterparts
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15
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i
This
Investment Management Agreement (the "Agreement"), dated as
of August 1, 2008, is made by and between PNMAC Mortgage Opportunity Fund, LLC
(the "Company"), a Delaware
limited liability company 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 Liability
Company Agreement of the Company dated as of August 1, 2008 (as the same may be
amended from time to time, the "Operating Agreement")
or the Limited Partnership Agreement of PNMAC Mortgage Opportunity Fund, L.P.
(the "Portfolio
Partnership"), 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 Operating 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 and perform the
duties set forth herein or in the Operating Agreement and shall perform on
behalf of the Company those investment duties and functions assigned to the
Company or the Investment Manager in the Operating Agreement and shall have such
other powers with respect to the investment 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
Operating 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,
investing substantially all of the Company's assets in a common limited partner
interest in the Portfolio Partnership.
(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 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 Operating Agreement. The
Investment Manager will not be bound to follow any amendment to the Operating
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 Operating 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
2
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. Duties
and Obligations
of the Investment Manager with Respect to the Administration of the
Company.
The
Investment Manager also agrees to furnish office facilities and equipment and
certain services (other than such services, if any, provided by the Company's
custodian and other service providers) to the Company. To the extent
requested by the Company, the Investment Manager agrees to provide the following
services:
(a) provide information relating to, and
oversee the determination by others of, the Company's net asset value in
accordance with the Company's policy as adopted from time to time by the Board
and communicated to the Investment Manager in writing;
(b) oversee the maintenance of the books and
records of the Company by others as required under the 1940
Act;
(c) oversee the preparation and filing by
others of the Company's federal, state and local income tax returns and any
other required tax returns or reports;
(d) review and supervise the preparation of
information for the Company's semi-annual and annual reports and other
communications with Members required by applicable law to be sent to Company
Members;
(e) review the Company's periodic financial
reports required to be filed with the Securities and Exchange Commission (the
"SEC") on Form N-SAR, Form N-CSR, Form N-PX,
Form N-Q and such other reports, forms and filings, as may be required by law or
the Operating Agreement;
(f) make such reports and recommendations to
the Board concerning the performance and fees of any of the Company's service
providers as the Board may reasonably request or deem
appropriate;
(g) review calculations of fees paid to the
Company's service providers;
(h) oversee any necessary calculations
required under Section 18 of the 1940 Act;
(i) consult with the Audit Committee of the
Board, the Company's independent accountants, legal counsel, custodian and other
service providers in establishing the accounting policies of the Company and
monitor financial and shareholder accounting services;
(j) review the amounts available for
distribution as dividends and distributions to be paid by the Company to its
Members;
(k) review dividend notices to
Members;
3
(l) review such information and reports as
may be required by any banks from which the Company borrows
funds;
(m) coordinate with the Company's custodian,
counsel, auditors and other service providers regarding the business and
operations of the Company; and
(n) coordinate with others regarding the
preparation and filing of Forms 3, 4, and 5 pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended, and Section 30(h) of the 1940 Act
for the executive officers and directors of the Company, such filings to be
based on information provided by those persons.
All services are to be furnished
through the medium of any directors, officers and other authorized persons of
the Company or employees of the Investment Manager or its affiliates as the
Investment Manager deems appropriate in order to fulfill its obligations
hereunder.
The Company will reimburse the
Investment Manager or its affiliates for all out-of-pocket expenses incurred by
them in connection with the performance of the services described in this
paragraph 2.
3. 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, 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.
4. 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.
5. 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
4
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. 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 Investment Manager (or, if requested by the
Investment Manager, the General Partner of the Portfolio Partnership) and the
Investment Manager (or the General Partner of the Portfolio Partnership) agrees
to accept as additional compensation, after the Common Members 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 realized profits distributed to the Members pursuant to clause (ii)
above and, thereafter, 20% of all realized proceeds; provided, however, that the
Company shall pay such amount only if the Portfolio Partnership does not
distribute to PNMAC Opportunity Fund Associates, LLC (the "General
Partner" of the Portfolio
Partnership), the amount provided by Section 8.1 of the Limited Partnership
Agreement of the Portfolio Partnership and does not pay to the General Partner
of the Portfolio Partnership the amount provided by Section 5(b) of the
Investment Management Agreement of the Portfolio
Partnership.
6. Expenses.
The
Company will be responsible for paying the compensation of the Investment
Manager, 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 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 Company will bear the costs and expenses of the
Investment Manager as set forth in Section 9 of the Operating Agreement, which
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 6 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.
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7. 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 Investment Manager in its sole discretion, the Investment
Manager may, but will not be obligated to, offer available co-investment
opportunities in assets
eligible for purchase by
the Company or the
Portfolio Partnership to
Members, shareholders of PNMAC Mortgage Opportunity (Offshore) Fund, Ltd. (the
"Offshore
Fund") and 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 of the
Portfolio Partnership 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 a 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
Investment Manager 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 Investment
Manager will be on such terms and conditions as the Investment Manager, 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 Portfolio Partnership
including, but not limited to, PNMAC Mortgage Opportunity Institutional
Fund, LLC, the Portfolio Partnership, 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 Portfolio Partnership 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 of the Portfolio Partnership
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 Portfolio
Partnership. Notwithstanding the foregoing, Private
National Mortgage Acceptance Company, LLC, the Investment Manager or the General
Partner of the Portfolio
Partnership 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 Members, 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 Member in respect of
such Successor Fund will not reduce the Unfunded Commitment of such
Member.
6
(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 Portfolio
Partnership 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 Portfolio Partnership, on the
one hand, and the Other
Accounts or Successor Funds, on the other hand, will be allocated among the
Company and the Portfolio Partnership
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 Portfolio Partnership
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.
8. Indemnification and Related
Matters.
(a) Except as otherwise required by law,
none of 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 Member or
any other Person for any loss, liability, damage, settlement cost, or other
expense (including reasonable attorneys' fees) 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 Member, 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 Member, 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 Member)
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
7
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 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.
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9. 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 outstanding voting securities of
the Company at the time outstanding and 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 holders of a majority of the voting securities of the Company at the
time outstanding and 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 Members and the Commitment Period shall be 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 Members. 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.
9
(c) Notwithstanding anything herein to the
contrary, Sections 6, 8 and this Section 9 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.
10. 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.
11. 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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Attn:
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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10
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(b)
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If
to the Investment Manager:
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PNMAC
Capital Management, LLC
Attn: ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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(c)
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If
to any of the Members, as provided in the Operating
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 11. Other addresses set forth in
this Section 11 shall be changed only with the consent of the relevant
addressee.
12. 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.
13. 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 terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms hereof.
14. 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.
15. 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.
16. 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.
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17. 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.
18. 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.
19. 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:
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,
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its
Managing Member
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By:
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Member
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PNMAC
MORTGAGE OPPORTUNITY
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FUND,
LLC
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By:
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