EXHIBIT 10.31
ADMINISTRATIVE SERVICES
AGREEMENT
This ADMINISTRATIVE SERVICES
AGREEMENT (the “Agreement”) is made effective as of
December 29, 2008 (the “Effective Date”), by and
between Pacific Income Advisers, a Delaware corporation
(“PIA”), and Anworth Mortgage Asset Corporation, a
Maryland corporation (“Anworth”).
RECITALS:
A. Anworth is in the business of
investing primarily in United States agency mortgage-backed
securities that it acquires in the secondary market;
B. Anworth desires PIA to provide to
it certain services and equipment as it may require, and PIA
desires to provide such services and equipment to Anworth, in
accordance with the terms and conditions hereof.
AGREEMENT:
NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual covenants agreements
contained herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Services to be Performed by
PIA .
1.1 Services
. PIA shall furnish to Anworth and Anworth
shall utilize the services described in Schedule A-1
attached hereto (collectively, the
“Services”).
During the term of this Agreement,
PIA will use its best efforts to conduct its duties hereunder in
the best interests of Anworth and in a lawful manner in compliance
with applicable laws, statutes, rules and regulations. PIA shall
provide the Services with the same degree of care, skill and
prudence customarily exercised by it for its own operations. The
Services provided by PIA to Anworth shall be made available by PIA
at such level of utilization as Anworth may reasonably require
following the date hereof.
1.2 Inspection; Furnishing of
Information and Witnesses . PIA shall
permit Anworth, and its authorized representatives, to enter upon
PIA’s premises during normal business hours for the purpose
of examining or inspecting Anworth’s records or examining or
making extracts of Anworth’s books and records related to the
Services; provided, however, that the same shall be conducted
without unreasonable interference or disruption to the business and
operation of PIA.
PIA also agrees to use its best
efforts to make available to Anworth, upon Anworth’s request,
PIA’s officers, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection
with any legal, administrative or other proceedings relating to the
Services in which Anworth may, from time to time, be involved.
Anworth agrees to reimburse PIA for its reasonable out-of-pocket
expenses incurred in making such officers, employees and agents
available as witnesses.
2. Term and Termination
.
The term of this Agreement shall be
from the Effective Date until the one year anniversary of the
Effective Date. Thereafter, this Agreement shall automatically
renew for successive one-year terms, unless written notice of
either parties’ intent not to renew is received by the other
party no less than thirty (30) days prior to the expiration of
the term or the applicable renewal period. Notwithstanding the
foregoing, Anworth shall have the sole and exclusive right to
terminate this Agreement without liability (other than for accrued
but unpaid liabilities provided hereunder) (i) for any reason
upon thirty (30) days prior written notice to PIA, and
(ii) immediately upon any material breach by PIA of its
obligations hereunder.
3. Compensation .
As full payment for providing the
Services, Anworth shall pay PIA the amount set forth on
Schedule A-2 attached hereto, subject to adjustment as
described below (the “Service Charges”). If, for any
reason, Anworth’s requirements for the level, scope or type
of Services and/or Equipment to be provided significantly decreases
or completely terminates at any time during the term of this
Agreement, the Service Charges for such Services and/or Equipment
shall immediately be decreased or eliminated
accordingly.
The Service Charges shall be
calculated as the product of (a) Anworth’s Stockholder
Equity as shown on Anworth’s Balance Sheet for the
immediately preceding quarter multiplied by (b) the Applicable
Percentage, as set forth in Schedule A-2 . The Service
Charges shall be calculated quarterly in arrears on the last day of
each quarter and paid on or before the thirtieth day of the first
month of each subsequent quarter. If this Agreement is terminated
effective on some day other than the last day of a quarter, the
Service Charges for such partial quarter shall be prorated based on
the number of days during such quarter that this Agreement is in
effect.
4. Banking .
Any and all monies received by PIA
on behalf of Anworth in the business and performance of PIA’s
duties under this Agreement shall be received in trust for Anworth
and deposited in special accounts bearing the name of Anworth at
such banking institutions and with such authorized signatories as
Anworth specifies in writing. Such monies shall not be commingled
with PIA’s funds and may be withdrawn from the accounts only
by Anworth.
5. Litigation .
PIA shall, as soon as it becomes
aware of any threatened or potential legal, administrative or other
proceedings involving Anworth, promptly notify Anworth of such
threatened or potential proceeding in writing, and shall promptly
provide to Anworth the originals of any and all correspondence and
other documents related thereto that PIA receives.
6. Books and Records
.
6.1 Proprietary
. All books of account, accounting and
personnel records, customers’ and suppliers’ lists,
documents, vouchers, letters and all other papers and records (in
whatever form stored or recorded) pertaining to the Services and
information provided to Anworth hereunder shall be the property of
Anworth.
6.2 Maintenance; Delivery
. PIA agrees to maintain books and records
pertaining to the Services and information provided hereunder in
accordance with Anworth’s internal control procedures and
shall deliver all such records to Anworth, at Anworth’s sole
expense, promptly upon the expiration of this Agreement.
7. Confidentiality
.
7.1 Duty of Confidentiality
. The parties agree: (i) to hold in
trust and maintain confidential; (ii) not to disclose to
others without prior written approval from the disclosing party;
(iii) not to use for any purpose, other than such purpose as
may be authorized in writing by the disclosing party or pursuant to
this Agreement; and (iv) to prevent duplication of and
disclosure to any other party, any Information received from the
disclosing party or developed, presently held or continued to be
held, or otherwise obtained, by the receiving party under this
Agreement.
7.2 Information
. “Information” shall mean all
information disclosed by either party to the other orally,
visually, in writing, or in any other tangible form, and shall
include, but is not limited to, all technical information,
financial plans, computer databases and similar information
disclosed in connection with this Agreement.
7.3 Exceptions
. The foregoing obligations of
confidentiality, non-
