Exhibit 10.44
 
CUSTODIAN AGREEMENT
 
dated as of April 3, 2009
by and between
Allied Capital Corporation
(“Company”)
and
U.S. Bank National Association
(“Custodian”)

 

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TABLE OF CONTENTS

                      Page
1.
  DEFINITIONS     1  
2.
  APPOINTMENT OF CUSTODIAN AND DESIGNATION OF ACCOUNTS     3  
3.
  DUTIES OF THE CUSTODIAN     4  
4.
  REPORTING     10  
5.
  [INTENTIONALLY OMITTED]     11  
6.
  COMPENSATION OF CUSTODIAN     11  
7.
  APPOINTMENT OF AGENTS     11  
8.
  DEPOSIT IN U.S. SECURITIES SYSTEMS     11  
9.
  [INTENTIONALLY OMITTED]     12  
10.
  RESPONSIBILITY OF CUSTODIAN     12  
11.
  SECURITY CODES     16  
12.
  TAX LAW     16  
13.
  EFFECTIVE PERIOD, TERMINATION AND AMENDMENT     16  
14.
  REPRESENTATIONS AND WARRANTIES     17  
15.
  PARTIES IN INTEREST; NO THIRD PARTY BENEFIT     18  
16.
  NOTICES     18  
17.
  CHOICE OF LAW AND JURISDICTION     18  
18.
  ENTIRE AGREEMENT AND COUNTERPARTS     19  
19.
  AMENDMENT; WAIVER     19  
20.
  SUCCESSOR AND ASSIGNS     19  
21.
  SEVERABILITY     19  
22.
  INSTRUMENT UNDER SEAL; HEADINGS     20  
23.
  REQUEST FOR INSTRUCTIONS     20  
24.
  OTHER BUSINESS     20  
25.
  REPRODUCTION OF DOCUMENTS     20  
26.
  SHAREHOLDER COMMUNICATIONS     20  

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     THIS CUSTODIAN AGREEMENT (this “Agreement”) is dated as of April 3, 2009
and is by and between Allied Corporation, a corporation organized under the laws
of Maryland (the “Company”), having a business address at 1919 Pennsylvania
Avenue NW, Suite 300, Washington, DC 20006 and U.S. Bank National Association
(the “Custodian”) a national banking association having a place of business at
One Federal Street, Boston, MA 02110.
     WHEREAS, the Company desires to engage the Custodian to act as custodian
for the Company to provide the custodial and administrative services set forth
in this Agreement, upon and subject to the terms of this Agreement; and
     WHEREAS, the Custodian is willing to act in such capacity as custodian
under and subject to the terms of this Agreement;
     NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:

1.   DEFINITIONS   1.1.   The following words have these meanings as used in
this Agreement:       “Accounts” shall mean, collectively, the Cash Account, the
Securities Account and any other Account established by the Custodian pursuant
to Section 2.2 of this Agreement.       “Authorized Person” shall have the
meaning ascribed to such term in Section 3.10 of this Agreement.       “Business
Day” means a day on which the Custodian or the relevant sub-custodian is open
for business in the market or country in which a transaction is to take place.  
    “Cash Amount(s)” means the initial deposit in the amount of $50,000,000.00
made on April 3, 2009 by the Company to U.S. Bank National Association and any
other cash amounts received by the Custodian from the Company from time to time.
      “Cash Account” shall have the meaning set forth in Section 2.2(b).      
“Confidential Information” means any databases, computer programs, screen
formats, screen designs, report formats, interactive design techniques, and
other similar or related information furnished to the Company by the Custodian,
for the purposes of this Agreement.       “Delivery Date” means such date or
dates on which Securities or Cash Amounts may be delivered to the Custodian from
time to time pursuant to the terms of this Agreement (it being hereby expressly
acknowledged that there will be more than one Delivery Date).       “Federal
Reserve Bank Book-Entry System” means a depository and securities transfer
system operated by the Federal Reserve Bank of the United States on which are
eligible to be held all United States Government direct obligation bills, notes
and bonds.

 

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    “Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof) unincorporated organization, or any government or agency or
political subdivision thereof.       “Proceeds” means, collectively, (i) all
distributions, earnings, dividends and other payments paid on the Securities or
Other Securities by or on behalf of the issuer or obligor thereof, or applicable
paying agent, and received by the Custodian during the term hereof, and (ii) the
net proceeds of the sale or other disposition of the Securities pursuant to the
terms of this Agreement and received by the Custodian during the term hereof
(and any Reinvestment Earnings from investment of the foregoing, as defined in
Section 3.5(b) hereof).       “Proper Instructions” means instructions received
by the Custodian, in form acceptable to it, from the Company, or any Person duly
authorized by the Company in any of the following forms acceptable to the
Custodian:

  (a)   in writing signed by the Authorized Person; or     (b)   in tested
communication; or     (c)   in a communication utilizing access codes effected
between electro mechanical or electronic devices; or     (d)   such other means
as may be agreed upon from time to time by the Custodian and the party giving
such instructions, including without limitation oral instructions.

    “Securities” means, collectively, the (i) investment securities delivered to
the Custodian by the Company from time to time during the term of, and pursuant
to the terms of, this Agreement, and (ii) all dividends in kind (e.g., non-cash
dividends) from the securities described in clause (i).       “Securities
Account” shall have the meaning set forth in Section 2.2(a).       “Securities
System” means the Federal Reserve Book Entry System, a clearing agency which
acts as a securities depository, or another book entry system for the central
handling of securities.       “Street Delivery Custom” means a custom of the
United States securities market to deliver securities which are being sold to
the buying broker for examination to determine that the securities are in proper
form.       “Street Name” means the form of registration in which the securities
are held by a broker who is delivering the securities to another broker for the
purposes of sale, it being an accepted custom in the United States securities
industry that a security in Street Name is in proper form for delivery to a
buyer and that a security may be re-registered by a buyer in the ordinary
course.

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In this Agreement unless the contrary intention appears:

  (a)   a reference to this Agreement or another instrument refers to such
agreement or instrument as the same may be amended, modified or otherwise
rewritten from time to time;     (b)   a reference to a statute, ordinance, code
or other law includes regulations and other instruments under it and
consolidations, amendments, re-enactments or replacements of any of them;    
(c)   the singular includes the plural and vice versa;     (d)   the word
“Person” includes any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, or any government or agency,
authority or political subdivision of any government.     (e)   a reference to a
Person includes a reference to the Person’s executors, administrators,
successors and permitted assigns;     (f)   an agreement, representation or
warranty in favor of two or more Persons is for the benefit of them jointly and
severally;     (g)   To the extent required in order to avoid accelerated
taxation and/or tax penalties under Section 409A, you shall not be considered to
have terminated employment with the Company for purposes of the Agreement until
you would be considered to have incurred a “separation from service” from the
Company within the meaning of Section 409A and, for the purposes of determining
the timing of payment, termination of employment shall not be considered to
occur until you have incurred such a “separation from service.”     (h)   an
agreement, representation or warranty on the part of two or more Persons binds
them jointly and severally; and a reference to any accounting term is to be
interpreted in accordance with generally accepted principles and practices in
the United States, consistently applied.

1.2.   Headings are inserted for convenience and do not affect the
interpretation of this Agreement.   2.   APPOINTMENT OF CUSTODIAN AND
DESIGNATION OF ACCOUNTS   2.1.   Employment of Custodian

  (a)   The Company hereby appoints the Custodian as the custodian of the
Securities, Cash Amounts and Proceeds pursuant to this Agreement, and in such
capacity appoints the Custodian to act as custodial agent on behalf of the
Company with respect thereto. All Securities, Cash Amounts and Proceeds
delivered to the Custodian, its agents or its sub-custodians shall be held and
dealt with in accordance with this Agreement. The Custodian shall not be
responsible for any property held or received by the Company or any other Person
and not delivered to the Custodian (its agents or its sub-custodians) pursuant
to the terms of this Agreement. At the time of each delivery of Securities to
the Custodian by or on behalf of the Company, the Company agrees that it shall
expressly identify the same to the Custodian as Securities being delivered under
this Agreement.

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  (b)   The Custodian accepts its appointment as custodian hereunder, and agrees
to receive and hold, as custodian for the Company pursuant to the terms of this
Agreement, the Cash Amounts and Securities delivered and identified to it by the
Company on each Delivery Date and any Proceeds received from time to time
therefrom.

2.2.   Establishment of Accounts

  (a)   There shall be established at the Custodian a securities account to
which it shall deposit and hold the Securities received by it (and any Proceeds
received by it from time to time in the form of dividends in kind) pursuant to
this Agreement, which account shall be designated the “Allied Capital
Corporation Custody Account” (the “Securities Account”).     (b)   There shall
be established at the Custodian an account or accounts to which the Custodian
shall deposit and hold any Cash Amounts and cash Proceeds received by it from
time to time from or with respect to the Securities, which accounts shall be
designated the “Allied Capital Corporation Interest Collection Account” to which
the Custodian shall deposit Cash Amounts, interest Proceeds received on the
Securities and the “Allied Capital Corporation Principal Collection Account”
into which the Custodian shall deposit Cash Amounts and principal Proceeds
received on the Securities (collectively, the “Cash Account”).     (c)  
Securities held in the Securities Account may be withdrawn by the Company from
time to time pursuant to Section 3.2 below. Amounts held in the Cash Account
from time to time may be withdrawn by the Company upon receipt of Proper
Instructions therefor, and may be invested upon and pursuant to specific
direction of the Company in the form of Proper Instruction, pursuant to
Section 3.5 below.

3.   DUTIES OF THE CUSTODIAN   3.1.   Holding Securities

  (a)   The Custodian shall hold and segregate, or direct its agents to hold and
segregate for the account of the Company all Securities received by it pursuant
to this Agreement other than Securities which are held in a Securities System,
or which are maintained in one or more omnibus accounts at the Custodian, its
agents or sub-custodians, and shall properly account for all Securities held in
a Securities System or maintained through one or more omnibus accounts and
identify the same on its books and records as held for the account of the
Company.         Any Account may contain any number of sub-accounts for the
convenience of the Custodian or as required by the Company for convenience in
administering such accounts.     (b)   The Custodian shall have no power or
authority to assign, hypothecate, pledge, or otherwise dispose of any Securities
except pursuant to Proper Instructions and as described in this Agreement.

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3.2.   Delivery of Securities

  (a)   Delivery of Securities to the Custodian shall be in Street Name or other
good delivery form.     (b)   The Custodian shall release and deliver, or direct
its agents or sub-custodians to release and deliver, as the case may be,
Securities of the Company held by the Custodian, its agents or its
sub-custodians from time to time only upon receipt of Proper Instructions (which
shall, among other things specify the Securities to be released, with such
delivery and other information as may be necessary to enable the Custodian to
perform), which may be standing instructions (in form acceptable to the
Custodian) in the following cases:

  (i)   upon sale of such Securities by or on behalf of the Company and, unless
otherwise directed by Proper Instructions:

  (A)   in accordance with the customary or established practices and procedures
in the jurisdiction or market where the transactions occur, including, without
limitation, delivery to the purchaser thereof or to a dealer therefor (or an
agent of such purchaser or dealer) against expectation of receiving later
payment; or     (B)   in the case of a sale effected through a Securities
System, in accordance with the rules governing the operations of the securities
System;

  (ii)   upon the receipt of payment in connection with any repurchase agreement
related to such securities;     (iii)   to the depositary agent in connection
with tender or other similar offers for securities;     (iv)   to the issuer
thereof or its agent when such securities are called, redeemed, retired or
otherwise become payable. Unless otherwise directed by Proper Instructions, the
cash or other consideration is to be delivered to the Custodian, its agents or
its sub-custodians;     (v)   to an issuer thereof, or its agent, for transfer
into the name of the Custodian or of any nominee of the Custodian or into the
name of any of its agents or sub-custodians or their nominees or for exchange
for a different number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units.     (vi)   to brokers clearing
banks or other clearing agents for examination in accordance with the Street
Delivery Custom;     (vii)   for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or readjustment of the
securities of the

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      issuer of such securities, or pursuant to any deposit agreement. Unless
otherwise directed by Property Instructions, the new securities and cash, if
any, are to be delivered to the Custodian, its agents or its sub-custodians;    
(viii)   in the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for definitive securities.
Unless otherwise directed by Proper Instructions, the new securities and cash,
if any, are to be delivered to the Custodian, its agents or its sub-custodians;
and/or     (ix)   for any other purpose, but only upon receipt of Proper
Instructions specifying the Securities to be delivered and naming the Person or
Persons to whom delivery of such Securities shall be made.

3.3.   Registration of Securities

Securities held by the Custodian, its agents or its sub-custodians (other than
bearer securities or securities held in a Securities System) shall be registered
in the name of the Company or if directed by the Company by Proper Instruction,
may be maintained in Street Name. The Custodian, its agents and its
sub-custodians shall not be obliged to accept securities on behalf of the
Company under the terms of this Agreement unless such Securities are in Street
Name or other good deliverable form.

3.4.   Bank Accounts, and Management of Cash   (a)   Both Cash Amounts and Cash
Proceeds from the Securities received by the Custodian, or its agents or
sub-custodians, from time to time shall be credited to the Cash Account. All
amount credited to the Cash Account shall be subject to clearance and receipt of
final payment by the Custodian.   (b)   Amounts held in the Cash Account from
time to time may be invested pursuant to specific Proper Instructions (which may
be standing instructions) received by the Custodian from the Company. Such
investments shall be subject to availability and the Custodian’s then applicable
transaction charges (which shall be at the Company’s expense). The Custodian
shall have no liability for any loss incurred on any such investment. Absent
receipt of such specific written instruction from the Company, the Custodian
shall have no obligation to invest (or otherwise pay interest on) amounts on
deposit in the Cash Account; and in no instance will the Custodian have any
obligation to provide investment advice to the Company. Any earnings from such
investment of amounts held in the Cash Account from time to time (collectively,
“Reinvestment Earnings”) shall be redeposited in the Cash Account (and may be
reinvested at the written direction of the Company).   (c)   In the event that
the Company shall at any time request a withdrawal of amounts from the Cash
Account, the Custodian shall be entitled to liquidate, and shall have no
liability for any loss incurred as a result of the liquidation of, any
investment of the funds credited to such account as needed to provide necessary
liquidity. Investment instructions may be in

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    the form of standing instructions (in form Proper Instructions in form
acceptable to Custodian).   (d)   The Company acknowledges that cash deposited
or invested with any bank (including the bank acting as Custodian) may generate
a margin or banking income for which such bank shall not be required to account
to the Company.   3.5.   [Intentionally Omitted]   3.6.   Collection of Income

The Custodian, its agents or its sub-custodians shall use reasonable efforts to
collect on a timely basis all income and other payments with respect to the
Securities held hereunder to which the Company shall be entitled, to the extent
consistent with usual custom in the securities custodian business in the United
States. Such efforts shall include collection of interest income, dividends and
other payments with respect to registered domestic securities if on the record
date with respect to the date of payment by the issuer the Security is
registered in the name of the Custodian or its nominee (or in the name of its
agent or sub-custodian, or their nominee); and interest income, dividends and
other payments with respect to bearer domestic securities if, on the date of
payment by the issuer such securities are held by the Custodian or its
sub-custodian or agent; provided, however, that in the case of Securities held
in Street Name, the Custodian shall use its reasonable efforts only to timely
collect income. In no event shall the Custodian’s agreement herein to collect
income be construed to obligate the Custodian to commence, undertake or
prosecute any legal proceedings.

3.7.   Payment of Moneys

  (a)   Upon receipt of Proper Instructions, which may be standing instructions,
the Custodian shall pay out from the Cash Account (or remit to its agents or its
sub-custodians, and direct them to pay out) moneys of the Company on deposit
therein in the following cases:

  (i)   upon the purchase of Securities for the Company pursuant to such Proper
Instruction; and such purchase may, unless and except to the extent otherwise
directed by Proper Instructions, be carried out by the Custodian;

  (A)   in accordance with the customary or established practices and procedures
in the jurisdiction or market where the transactions occur, including, without
limitation, delivering money to the seller thereof or to a dealer therefor (or
any agent for such seller or dealer) against expectation of receiving later
delivery of such securities; or     (B)   in the case of a purchase effected
through a Securities System, in accordance with the rules governing the
operation of such Securities System;

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  (ii)   for the purchase or sale of foreign exchange or foreign exchange
agreements for the accounts of the Company, including transactions executed with
or through the Custodian, its agents or its sub-custodians, as contemplated by
Section 3.6 above; and     (iii)   for any other purpose directed by the
Company, but only upon receipt of Proper Instructions specifying the amount of
such payment, and naming the Person or Persons to whom such payment is to be
made.

  (b)   No less than 7 days following the delivery of a statement to the Company
identifying any such amounts, the Custodian shall be entitled to pay (i) itself
from the Cash Account, whether or not in receipt of express direction or
instruction from the Company, any amounts due and payable to it pursuant to
Section 6 hereof, and (ii) as otherwise permitted by Section 3.11(a) or
Section 10.4 below, provided, however, that in each case all such payments shall
be accounted for to the Company.

3.8.   Proxies

The Custodian may not vote any securities held by or for the Company’s account,
except in accordance with Proper Instructions or instructions contained in an
Officer’s Certificate. The Custodian will, with respect to the Securities held
hereunder, use its reasonable efforts to cause to be promptly executed by the
registered holder of such Securities proxies received by the Custodian from its
agents or its sub-custodians or from issuers of the Securities being held for
the Company, without indication of the manner in which such proxies are to be
voted, and upon receipt of Proper Instructions shall promptly deliver such
proxies, proxy soliciting materials and notices relating to such Securities. In
the absence of such Proper Instructions, or in the event that such Proper
Instructions are not received in a timely fashion, the Custodian shall be under
no duty to act with regard to such proxies.

3.9.   Communications Relating to Securities

The Custodian shall transmit promptly to the Company all written information
(including, without limitation, pendency of calls and maturities of Securities
and expirations of rights in connection therewith) received by the Custodian,
from its agents or its sub-custodians or from issuers of the Securities being
held for the Company. The Custodian shall have no obligation or duty to exercise
any right or power, or otherwise to preserve rights, in or under any Securities
unless and except to the extent it has received timely Proper Instruction from
the Company in accordance with the next sentence. The Custodian will not be
liable for any untimely exercise of any right or power in connection with
Securities at any time held by the Custodian, its agents or sub-custodians
unless

  (a)   the Custodian has received Proper Instructions with regard to the
exercise of any such right or power; and     (b)   the Custodian, or its agents
or sub-custodians are in actual possession of such Securities

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      at least three (3) Business Days prior to the date on which such right or
power is to be exercised. It will be the responsibility of the Company to notify
the Custodian of the Person to whom such communications must be forwarded under
this Section.

3.10.   Proper Instructions   (a)   The Company will give a notice to the
Custodian, in the form acceptable to it, specifying the names and specimen
signatures of persons authorized by the Board of Directors to give Proper
Instructions (collectively, “Authorized Officers”) which notice shall be signed
by the President, Chief Executive Officer or a Senior Vice President or by
another Authorized Officer previously certified to the Custodian. The Custodian
shall be entitled to rely upon the identity and authority of such persons until
it receives written notice from the Company to the contrary.   (b)   The
Custodian shall have no responsibility or liability to the Company (or any other
person or entity), and shall be indemnified and held harmless by the Company, in
the event that a subsequent written confirmation of an oral instruction fails to
conform to the oral instructions received by the Custodian. The Custodian shall
have no obligation to act in accordance with purported instructions to the
extent that they conflict with applicable law or regulations, local market
practice or the Custodian’s operating policies and practices. The Custodian
shall not be liable for any loss resulting from a delay while it obtains
clarification of any Proper Instructions.   3.11.   Actions Permitted without
Express Authority

The Custodian, may at its discretion, without express authority from the
Company:

  (a)   subject to Section 3.7(b), make payments to itself as described in or
pursuant to Section 3.7(b), or to make payments to itself or others for minor
expenses of handling securities or other similar items relating to its duties
under this agreement, provided that all such payments shall be accounted for to
the Company;     (b)   surrender Securities in temporary form for Securities in
definitive form;     (c)   endorse for collection cheques, drafts and other
negotiable instruments; and     (d)   in general attend to all nondiscretionary
details in connection with the sale, exchange, substitution, purchase, transfer
and other dealings with the securities and property of the Fund.

3.12.   Evidence of Authority

The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate instrument or paper reasonably believed by it to
be genuine and to have been properly executed or otherwise given by or on behalf
of the Company by any two Authorized Officers. The Custodian may receive and
accept a certificate signed by any two Authorized Officers (an “Officers’
Certificate”) as conclusive evidence of:

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  (a)   the authority of any person to act in accordance with such certificate;
or     (b)   any determination or of any action by the Company as described in
such certificate,

and such certificate may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary from an Authorized Officer of
the Company.

3.13.   Receipt of Communications

Any communication received by the Custodian on a day which is not a Business Day
or after 3:30 p.m. (or such other time as is agreed by the Company and the
Custodian from time to time) on a Business Day will be deemed to have been
received on the next Business Day (but in the case of communications so received
after 3:30 p.m. on a Business Day the Custodian will use reasonable endeavors to
process such communications as soon as possible after receipt.

4.   REPORTING

The Custodian shall provide promptly, upon request, such reports as are
available concerning the internal controls and financial strength of the
Custodian and any Sub-custodian.

  (a)   The Custodian shall render to the Company a monthly report of (i) all
deposits to and withdrawals from the Cash Account during the month, and the
outstanding balance (as of the last day of the preceding monthly report and as
of the last day of the subject month) and (ii) an itemized statement of the
Securities held in the Securities Account as of the end of each month, as well
as a list of all Securities transactions that remain unsettled at that time and
(iii) such other matters as the parties may agree from time to time.     (b)  
The Custodian shall have no duty or obligation to undertake any market valuation
of the Securities under any circumstance.     (c)   The Company acknowledges
that any data and information held by the Custodian from time to time concerning
the Securities and to which the Company is given access (without herein implying
any obligation or agreement by the custodian to maintain or provide access to
any particular information or database) from time to time at the election of the
Custodian (the “Securities Database”) is unaudited and the Custodian does not
independently verify the accuracy of information it receives concerning the
Securities (whether form the Company, from others at the Company’s behest or on
its behalf, or from issuers of the Securities or their agents) prior to its
inclusion in the Securities Database. The Custodian will not be liable to the
Company or any other Person for any loss or damage arising out of or in
connection with the relationship established by this Agreement as a result of
inaccuracies in any information contained in the Securities Database or any
information to which the Company is given access pursuant to this Section 4.    
(d)   Within five Business Days of completion of any Securities purchased or
sold pursuant to Proper Instructions, the Custodian shall provide trade
confirmation in writing to the Company.

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  (e)   The Company and the Custodian may agree to other recordkeeping
procedures from time to time in order to comply with 31(a) of the Investment
Company Act of 1940, as amended (the “1940 Act”).

5.   [INTENTIONALLY OMITTED]   6.   COMPENSATION OF CUSTODIAN   (a)   The
Custodian shall be entitled to compensation for its services in accordance with
the terms set forth in Schedule A attached hereto and made a part hereof.   (b)
  The Company agrees to pay or reimburse to the Custodian upon its request from
time to time all costs, disbursements, advances and expenses (including without
limitation reasonable fees and expenses of legal counsel) incurred, and any
disbursements and advances made (including without limitation any account
overdraft resulting from any settlement or assumed settlement, provisional
credit, reclaimed payment or claw-back, or the like), in connection with the
preparation or execution of this Agreement, or in connection with the
transactions contemplated hereby or the administration of this Agreement or
performance by the Custodian of its duties and services under this Agreement,
from time to time (including without limitation costs and expenses of any action
deemed necessary by the Custodian to collect any amounts owing to it under this
Agreement).   7.   APPOINTMENT OF AGENTS

The Custodian may at any time or times in its discretion appoint (and may at any
time remove) any other bank, trust company or other Person to act as an agent or
sub-custodian to carry out such of the provisions of this Agreement as the
Custodian may from time to time direct; provided, however, that the appointment
of any agent or sub-custodian shall not relieve the Custodian of its
responsibilities or liabilities hereunder (except to the extent otherwise
provided in Sections 8, 9 or 10 below). The Custodian is further obligated to
exercise due care in accordance with reasonable commercial standards in
discharging its duties and must require any agent or Sub-custodian as appointees
to likewise exercise due care in accordance with reasonable commercial standards
in discharging its duty as securities intermediary to obtain and thereafter
maintain the Company’s assets.

8.   DEPOSIT IN U.S. SECURITIES SYSTEMS

The Custodian may deposit and/or maintain Securities in a U.S. Securities System
in accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:

8.1.   The Custodian may keep domestic Securities in a U.S. Securities System
provided that such Securities are represented in an account (“Participant
Account”) of the Custodian in the U.S. Securities System which shall not include
any assets of the Custodian other than assets held by it as a fiduciary,
custodian or otherwise for customers;

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8.2   The records of the Custodian with respect to Securities which are
maintained in a U.S. Securities System shall identify by book-entry those
securities belonging to the Company;   8.3   If requested by the Company, the
Custodian shall provide to the Company copies of all advices from the U.S.
Securities System of transfers of Securities for the account of the Company; and
  8.4   Anything to the contrary in this Agreement notwithstanding, the
Custodian shall not be liable to the Company for any direct loss, damage, cost,
expense, liability or claim to the Company resulting from use of the U.S.
Securities System (other than to the extent resulting from the gross negligence,
misfeasance or misconduct of the Custodian itself, or from failure of the
Custodian to enforce effectively such rights as it may have against the U.S.
Securities System).   9.   [INTENTIONALLY OMITTED]   10.   RESPONSIBILITY OF
CUSTODIAN   10.1.   General Duties

The Custodian shall have no duties, obligations or responsibilities under this
Agreement or with respect to the Cash Amounts, Securities or the Proceeds except
for such duties as are expressly and specifically set forth in this Agreement as
duties on its part to be performed or observed, and the duties and obligations
of the Custodian shall be determined solely by the express provisions of this
Agreement. No implied duties, obligations or responsibilities shall be read into
this Agreement against, or on the part of, the Custodian.

10.2.   Instructions

  (a)   The Custodian shall be entitled to refrain from taking any action unless
it has such instruction (in the form of Proper Instructions) from the Company as
the Custodian deems necessary, and shall be entitled to require that
instructions to it be in writing. The Custodian shall have no liability for any
action (or forbearance from action) taken pursuant to the instruction of the
Company.     (b)   Whenever the Custodian is entitled or required to receive or
obtain any report, opinion, notice of other information pursuant to or as
contemplated by this Agreement, it shall be entitled to receive the same in
writing, in form, content and medium reasonably acceptable to it; and whenever
any report or other information is required to be produced or distributed by the
Custodian shall be in form, content and medium reasonably acceptable to it.

10.3. General Standards of Care
Notwithstanding any terms herein contained to the contrary, the acceptance of
the Custodian of its appointment hereunder is expressly subject to the following
terms, which shall govern and apply to each of the terms and provisions of this
Agreement (whether or not so stated therein):

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  (a)   The Custodian shall not be responsible for the title, validity or
genuineness, including good deliverable form of any property or evidence of
title thereto received by it or delivered by it pursuant to this Agreement.    
(b)   The Custodian may rely on and shall be protected in acting or refraining
from acting upon any written notice, instruction, statement, certificate,
request, waiver, consent, opinion, report, receipt or other paper or document
furnished to it (including without limitation any of the foregoing provided to
it by telecopier or electronic means), not only as to its due execution and
validity, but also as to the truth and accuracy of any information therein
contained, which it in good faith believes to be genuine and signed or presented
by the proper person; and the Custodian shall be entitled to presume the
genuineness and due authority of any signature appearing thereon. The Custodian
shall not be bound to make any independent investigation into the facts or
matters stated in any such notice, instruction, statement, certificate,
statement, request, waiver, consent, opinion, report, receipt or other paper or
document, provided, however, that if the form thereof is specifically prescribed
by the terms of this Agreement, the Custodian shall examine the same to
determine whether it substantially conforms on its face to such requirements
hereof.     (c)   Neither the Custodian nor any of its directors, officers or
employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it (or any of its directors,
officers of employees), or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, unless such action
constitutes gross negligence, willful misconduct or bad faith on its part and in
breach of the terms of this Agreement. The Custodian shall not be liable for any
action taken by it in good faith and reasonably believed by it to be within
powers conferred upon it, or taken by it pursuant to any direction or
instruction by which it is governed hereunder, or omitted to be taken by it by
reason of the lack of direction or instruction required hereby for such action.
    (d)   In no event shall the Custodian be liable for any indirect, special or
consequential damages (including, without limitation, lost profits) whether or
not it has been advised of the likelihood of such damages.     (e)   The
Custodian may consult with, and obtain advice from, legal counsel with respect
to any question as to any of the provisions hereof or its duties hereunder, or
any matter relating hereto, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by the Custodian in good faith in accordance with the opinion and
directions of such counsel; the cost of such services shall be reimbursed
pursuant to paragraph 6 hereinabove.     (f)   The Custodian shall not be deemed
to have notice of any fact, claim or demand with respect hereto unless actually
known by an officer working in its Corporate Trust Division and charged with
responsibility for administering this Agreement

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      or unless (and then only to the extent received) in writing by the
Custodian at its Corporate Trust Services Group and specifically referencing
this Agreement.     (g)   No provision of this Agreement shall require the
Custodian to expend or risk its own funds, or to take any action (or forbear
from action) hereunder which might in its judgment involve any expense or any
financial or other liability unless it shall be furnished with acceptable
indemnification. Nothing herein shall be construed to obligate the Custodian to
commence, prosecute or defend legal proceedings in any instance, whether on
behalf of the Company on its own behalf or otherwise, with respect to any matter
arising hereunder or relating to this Agreement or the services contemplated
hereby.     (h)   The permissive right of the Custodian to take any action
hereunder shall not be construed as duty.     (i)   With the consent of Allied,
Custodian may act or exercise its duties or powers hereunder through agents or
attorneys, and the Custodian shall not be liable or responsible for the actions
or omissions of any such agent or attorney appointed and maintained with
reasonable due care.     (j)   All indemnifications contained in this Agreement
in favor of the Custodian shall survive the termination of this Agreement.    
(k)   All costs and risks of shipment shall be borne exclusively by the Company.

10.4.   Indemnification; Custodian’s Lien   (a)   The Company shall and does
hereby indemnify and hold harmless the Custodian for and from any and all costs
and expenses (including without limitation attorney’s fees and expenses), and
any and all losses, damages, claims and liabilities, that may arise, be brought
against or incurred by the Custodian as a result of, relating to, or arising out
of this Agreement, or the administration or performance of the Custodian’s
duties hereunder, or the relationship between the Company and the Custodian
created hereby, other than such liabilities, losses, damages, claims, costs and
expenses as are directly caused by the Custodian’s own actions taken in bad
faith or constituting gross negligence.   (b)   The Custodian shall have a right
of set-off against, any property and assets it may hold from time to time under
this Agreement to secure the payment when due of all amounts owing to it from
time to time hereunder including but not limited to the payments permitted under
Section 3.7(b) hereof.   10.5.   Force Majeure

Without prejudice to the generality of the foregoing, the Custodian shall be
without liability to the Company for any damage or loss resulting from or caused
by:

  (i)   events or circumstances beyond the Custodian’s reasonable control
including nationalization, expropriation, currency restrictions, the
interruption, disruption or

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      suspension of the normal procedures and practices of any securities
market, power, mechanical, communications or other technological failures or
interruptions, computer viruses or the like, acts of war or terrorism, riots,
revolution, acts of God, work stoppages, strikes, national disasters of any
kind, or other similar events or acts;     (ii)   errors by the Company
(including any Authorized Person) in its instructions to the Custodian;    
(iii)   failure by the Company to adhere to the Custodian’s operational policies
and procedures;     (iv)   acts, omissions or insolvency of any Securities
System;     (v)   any delay or failure of any broker, agent or intermediary,
central bank or other commercially prevalent payment or clearing system to
deliver to the Custodian’s sub-custodian or agent securities purchased or in the
remittance of payment made in connection with Securities sold;     (vi)   any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the
Company, the Custodian’s sub-custodians, nominees or agents or any consequential
losses arising out of such delay or failure to transfer such securities
including non-receipt of bonus, dividends and rights and other accretions or
benefits; or     (vii)   changes in applicable law, regulation or orders.

10.6.   Disputes

If any dispute or conflicting claim is made by any person with respect to
securities or other property held for the Company, the Custodian shall be
entitled to refuse to act until either:

  (i)   such dispute or conflicting claim has been finally determined by a court
of competent jurisdiction or settled by agreement between conflicting parties,
and the Custodian has received written evidence satisfactory to it of such
determination or agreement; or     (ii)   the Custodian has received an
indemnity, security or both satisfactory to it and sufficient to hold it
harmless from and against any and all loss, liability and expense which the
Custodian may incur as a result of its actions.

10.7.   Advances

Under no circumstances shall the Custodian have any responsibility, duty or
obligation to advance its own funds to or for the benefit of the Company.
Notwithstanding the foregoing, if the Custodian (or its affiliates, subsidiaries
or agents) at any time or times, pursuant to this Agreement:

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  (a)   advances cash or securities for any purpose, including, without
limitation, advances or overdrafts relating to or resulting from securities
settlements, foreign exchange contracts, assumed settlements, provisional credit
or payment items, or reclaimed payments or adjustments or claw-backs,     (b)  
incurs any liability to pay taxes, interest, charges, expenses, assessments, or
other moneys in connection with the performance of this Agreement, except such
as may arise from its own gross negligent acts or gross negligent omissions,

then, any property or assets at any time held for the account of the Company
shall be security therefor and shall be subject to a right of set-off thereon in
favor of the Custodian for the repayment of such advances and liabilities. If
the Company shall fail to promptly reimburse the Custodian in respect of the
advances or liabilities described above, the Custodian may utilize available
cash and dispose of Securities of the Company, in a manner, at a time and at a
price which the Custodian deems proper, to the extent necessary to obtain
reimbursement and make itself whole.

11.   SECURITY CODES

If the Custodian issues to the Company, security codes, passwords or test keys
in order that the Custodian may verify that certain transmissions of
information, including Proper Instructions, have been originated by the Company,
the Company shall, safeguard any security codes, passwords, test keys or other
security devices which the Custodian shall make available.

12.   TAX LAW

The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Company or the Custodian as custodian of the
Securities or the Proceeds, by the tax law of the United States or any state or
political subdivision thereof. The Custodian shall be kept indemnified by and be
without liability to the Company for such obligations including taxes, (but
excluding any income taxes assessable in respect of compensation paid to the
Custodian pursuant to this agreement) withholding, certification and reporting
requirements, claims for exemption or refund, additions for late payment
interest, penalties and other expenses (including legal expenses) that may be
assessed against the Company, or the Custodian as custodian of the Securities or
Proceeds.

13.   EFFECTIVE PERIOD, TERMINATION AND AMENDMENT   13.1   This Agreement shall
become effective as of its due execution and delivery by each of the parties.
This Agreement shall continue in full force and effect until terminated as
hereinafter provided. This Agreement may only be amended by mutual written
agreement of the parties hereto. This Agreement may be terminated by the
Custodian or the Company pursuant to Section 13.2.   13.2   This Agreement shall
terminate upon the earliest of (a) occurrence of the effective date of
termination specified in any written notice of termination given by either party
to the other not later than 60 days prior to the effective date of termination
specified therein, provided that all Cash Amounts, Securities and Proceeds shall
have been delivered to the

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    Company or as it otherwise instructs (subject to Section 13.4 below),
(b) such other date of termination as may be mutually agreed upon by the parties
in writing.   13.3   The Custodian may at any time resign under this Agreement
by giving not less than 60 days advance written notice thereof to the Company.  
13.4   Prior to the effective date of termination of this Agreement, or the
effective date of the resignation (or removal of the Custodian), as the case may
be, the Company shall give Proper Instruction to the Custodian to cause the Cash
Amounts, Securities and Proceeds then held by the Custodian hereunder to be
delivered to the Company, or its designee, or a successor custodian hereunder;
and if the Company shall fail or be unable to do so on a timely basis, the
Custodian shall be entitled (but not obligated) to petition a court of competent
jurisdiction (at the Company’s expense) for such instruction.   13.5   (a) Upon
termination of this Agreement or resignation (or removal) of the Custodian, the
company shall pay to the Custodian prior to the delivery by the Custodian to the
Company (or as it may otherwise direct) the Cash Amounts, Securities and
Proceeds held hereunder, such compensation as may be due as of the date of such
termination or resignation (or removal) and shall likewise reimburse the
Custodian for its costs, expenses and disbursements. All indemnifications in
favor of the Custodian under this Agreement shall survive the termination of
this Agreement, or any resignation or removal of the Custodian.   (b)   If Cash
Amounts, Securities, Proceeds or any other property remain in the possession of
the Custodian, its agents or its sub-custodians after the date of termination
hereof or the date of resignation (or removal) of the Custodian, as the case may
be, owing to failure of the Company to give Proper Instructions to the Custodian
for delivery thereof, as referred to in Section 13.4, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such Securities, funds and other property and
the provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect during such period.

14.   REPRESENTATIONS AND WARRANTIES   (a)   The Company represents and warrants
to the Custodian that:

  (i)   it has the power and authority to enter into and perform its obligations
under this Agreement, and it has duly authorized and executed this Agreement so
as to constitute its valid and binding obligation; and     (ii)   in giving any
instructions which purport to be “Proper Instructions” under this Agreement, the
Company will act in accordance with the provisions of its memorandum and
articles of association and any applicable laws and regulations.

(b)   The Custodian hereby represents and warrants to the Company that it has
the power and authority to enter into and perform its obligations under this
Agreement, and it has duly

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    authorized and executed this Agreement so as to constitute its valid and
binding obligations.
  (c)   The Company hereby represents and warrants to the Custodian that (i) the
aggregate interest in any class of interests any benefit plan investors (as such
term is interpreted under The Employment Retirement Income Security Act of 1974,
as amended; “ERISA”) for whose benefit or account the Portfolio is held by the
Company shall not at any time equal or exceed 25% of the outstanding shares of
such class without the prior written consent of the Custodian and (ii) the
Company shall not, without the prior written consent of the Custodian, permit
the assets of the Portfolio to be deemed assets of an employee benefit plan
which is subject to ERISA. The Company acknowledges and agrees that the
Custodian shall not grant its consent in either of the foregoing circumstances
unless and until the Company has entered into such amendments to this Agreement
and has provided such assurances and indemnities to the Custodian, as the
Custodian reasonably may require to be assured that it will not be subject to
ERISA liability. If for any reason the Company breaches or otherwise fails to
comply with the provisions of this Section, this Agreement may be terminated
immediately by the Custodian.   15.   PARTIES IN INTEREST; NO THIRD PARTY
BENEFIT

This Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto. This Agreement is not intended
for, and shall not be construed to be intended for, the benefit of any third
parties and may not be relied upon or enforced by any third parties.

16.   NOTICES

All notices, approvals and other communications hereunder shall be sufficient if
made in writing (unless and except where and to the extent otherwise expressly
provided by the terms of this Agreement) and given to the parties at the
following address (or such other address as either of them may subsequently
designate by notice to the other), given by (i) certified or registered mail,
postage prepaid, (ii) recognized courier or delivery service, or (iii) confirmed
telecopier or telex, with a duplicate sent on the same day by first class mail,
postage prepaid:

  (a)   if to the Company, to Allied Capital Corporation, 1919 Pennsylvania
Avenue, NW, Washington D.C. 20006, Attn: Shawn Stuckey, Fax: (202) 721-6227; or
    (b)   if to the Custodian, to U.S. Bank National Association, One Federal
Street, Third Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Services/CDO Unit — Allied Capital Corporation Fax: (866) 832-3895.

17.   CHOICE OF LAW AND JURISDICTION

This Agreement shall be construed, and the provisions hereof interpreted under
and in accordance with and governed by the laws of The Commonwealth of
Massachusetts for all purposes (without regard to its choice of law provisions),
except and unless there exists a conflict with the 1940 Act, in which case the
1940 Act shall govern. The parties to this Agreement

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hereby submit to the jurisdiction of the courts of The Commonwealth of
Massachusetts, including any appellate courts thereof.

18.   ENTIRE AGREEMENT AND COUNTERPARTS   18.1   This Agreement constitutes the
complete and exclusive agreement of the parties with regard to the matters
addressed herein and supersedes and terminates as of the date hereof, all prior
agreements, agreements or understandings, oral or written between the parties to
this Agreement relating to such matters.   18.2   This Agreement may be executed
in any number of counterparts and all counterparts taken together shall
constitute one instrument.   19.   AMENDMENT; WAIVER   (a)   This Agreement may
not be amended except by an express written instrument duly executed by each of
the Company and the Custodian.   (b)   In no instance shall any delay or failure
to act be deemed to be or effective as a waiver of any right, power or term
hereunder, unless and except to the extent such waiver is set forth in an
expressly written instrument signed by the party against whom it is to be
charged.   20.   SUCCESSOR AND ASSIGNS   (a)   The covenants and agreements set
forth herein shall be binding upon and inure to the benefit of each of the
parties and their respective successors and permitted assigns. Neither party
shall be permitted to assign their rights under this Agreement without the
written consent of the other party (provided, however, that this shall not limit
the ability of the Custodian to delegate certain duties or services to or
perform them through agents or attorneys appointed with due care as expressly
provided in this Agreement).   (b)   Any corporation or association into which
the Custodian may be merged or converted or with which it may be consolidated,
or any corporation or association resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, shall be the successor of
the Custodian hereunder, and shall succeed to all of the rights, powers and
duties of the Cash Custodian hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, except that
the Company may have the right to terminate immediately upon notice of the
effectiveness of such merger or consolidation.   21.   SEVERABILITY

The terms of this Agreement are hereby declared to be severable, such that if
any term hereof is determined to be invalid or unenforceable, such determination
shall not affect the remaining terms.

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22.   INSTRUMENT UNDER SEAL; HEADINGS

This Agreement is intended to take effect as, and shall be deemed to be, an
instrument under seal.

23.   REQUEST FOR INSTRUCTIONS

If, in performing its duties under this Agreement, the Custodian is required to
decide between alternative courses of action, the Custodian may (but shall not
be obliged to) request written instructions from the Company as to the course of
action desired by it. If the Custodian does not receive such instructions within
two (2) days after it has requested them, the Custodian may, but shall be under
no duty to, take or refrain from taking any such courses of action. The
Custodian shall act in accordance with instructions received from the Company in
response to such request after such two-day period except to the extent it has
already taken, or committed itself to take, action inconsistent with such
instructions.

24.   OTHER BUSINESS

Nothing herein shall prevent the Custodian or any of its affiliates from
engaging in other business, or from entering into any other transaction or
financial or other relationship with, or receiving fees from or from rendering
services of any kind to the Company or any other Person. Nothing contained in
this Agreement shall constitute the Company and/or the Custodian (and/or any
other Person) as members of any partnership, joint venture, association,
syndicate, unincorporated business or similar assignment as a result of or by
virtue of the engagement or relationship established by this Agreement.

25.   REPRODUCTION OF DOCUMENTS

This Agreement and all schedules, exhibits, attachments and amendment hereto may
be reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties hereto each agree that any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
production shall likewise be admissible in evidence.

26.   SHAREHOLDER COMMUNICATIONS

Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Company to indicate whether it authorizes the
Custodian to provide the Company’s name, address and share position to
requesting companies whose securities are held in the Company. If the Company
tells the Custodian “no”, the Custodian will not provide this information to
requesting companies. If the Company tells the Custodian “yes” or does not check
either “yes” or “no” below, the Custodian is required by the rule to treat the
Company as consenting to disclosure of this information for all securities owned
by the Company or any

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funds or accounts established by the Company. For the Company’s protection, the
Rule prohibits the requesting company from using the Company’s name and address
for any purpose other than corporate communications. Please indicate below
whether the Company consents or objects by checking one of the alternatives
below.

         
YES
  [   ]   The Custodian is authorized to release the Company’s name, address,
and share positions.
 
       
NO
  [X]   The Custodian is not authorized to release the Company’s name, address,
and share positions.

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     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and delivered by a duly authorized officer, intending the same to take
effect as of the 3rd day of April, 2009.

          Witness:   ALLIED CAPITAL CORPORATION
 
       
/s/ Miriam G. Krieger
  By:   /s/ Shawn C. Stuckey
Name: Miriam G. Krieger
  Name:   Shawn C. Stuckey
Title:   EVP
  Title:   VP-Asst. Treasurer
 
       
Witness:
            U.S. BANK NATIONAL ASSOCIATION
 
       
/s/ Ralph J. Creasia, Jr.
  By:   /s/ Lynora J. Gilligan
Name: Ralph J. Creasia, Jr.
      Lynora J. Gilligan
Title:   Vice President
      Assistant Vice President

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SCHEDULE A
CUSTODIAN’S SCHEDULE OF FEES

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