Exhibit 10.1

Execution Version

 

SECOND AMENDED AND RESTATED

MANAGEMENT AGREEMENT

by and among

PENNYMAC MORTGAGE INVESTMENT TRUST,

PENNYMAC OPERATING PARTNERSHIP, L.P.

and

PNMAC CAPITAL MANAGEMENT, LLC

Dated as of September 12, 2016

 

 

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Execution Version

SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT, dated as of September 12,
2016, by and among PennyMac Mortgage Investment Trust, a Maryland real estate
investment trust (the “Trust”), PennyMac Operating Partnership, L.P., a Delaware
limited partnership (the “Operating Partnership”), and PNMAC Capital Management,
LLC, a Delaware limited liability company (the “Manager”).

W I T N E S S E T H:

WHEREAS, the Trust is a Maryland real estate investment trust which invests
primarily in residential mortgage loans and mortgage-related assets and has
qualified and intends to continue to qualify as a real estate investment trust
for federal income tax purposes and will elect to receive the tax benefits
accorded by Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the “Code”);

WHEREAS, the Trust conducts substantially all of its operations, and makes
substantially all of its investments, through the Operating Partnership, which
is a Subsidiary of the Trust;

WHEREAS, the Trust, the Operating Partnership and the Manager entered into the
Amended and Restated Management Agreement dated as of February 1, 2013 (the
“Original Agreement”) and Amendment No. 1 to Amended and Restated Management
Agreement, dated as of December 15, 2015 (“Amendment No. 1,” and the Original
Agreement, as amended by Amendment No. 1, the “Existing Management Agreement”),
pursuant to which the Manager manages the business and investment affairs of the
Trust and the Subsidiaries (as defined below) and performs services for the
Trust and the Subsidiaries in the manner and on the terms set forth in the
Existing Management Agreement; and

WHEREAS, the Trust, the Operating Partnership and the Manager have agreed to
amend and restate the Existing Management Agreement on the terms set forth
herein.

NOW THEREFORE, in consideration of the premises and agreements hereinafter set
forth, the parties hereto hereby agree as follows:

Section 1.  Definitions.  (a)  The following terms shall have the meanings set
forth in this Section 1(a):

“AAA” has the meaning set forth in Section 7(f) hereof.

“Affiliate” means (1) any Person directly or indirectly controlling, controlled
by or under common control with such other Person, (2) any executive officer or
general partner of such other Person and (3) any legal entity for which such
Person acts as an executive officer or general partner.

“Agreement” means this Second Amended and Restated Management Agreement, as
amended, supplemented or otherwise modified from time to time.

 

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“Allocation Policy” means the allocation policy for the Trust and the Manager, a
copy of which is attached hereto as Exhibit A, as the same may be amended,
restated, modified, supplemented or waived by the Independent Trustees as
specified therein.

“Arbitrator” has the meaning set forth in Section 7(f) hereof.

“Automatic Renewal Term” has the meaning set forth in Section 11(b) hereof.

“Bankruptcy” means, with respect to any Person, (a) the filing by such Person of
a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
or any other federal, state or foreign insolvency law, or such Person’s filing
an answer consenting to or acquiescing in any such petition, (b) the making by
such Person of any assignment for the benefit of its creditors, (c) the
expiration of 60 days after the filing of an involuntary petition under Title 11
of the Unites States Code, an application for the appointment of a receiver for
a material portion of the assets of such Person, or an involuntary petition
seeking liquidation, reorganization, arrangement or readjustment of its debts
under any other federal, state or foreign insolvency law, provided, that the
same shall not have been vacated, set aside or stayed within such 60-day period
or (d) the entry against it of a final and non-appealable order for relief under
any bankruptcy, insolvency or similar law now or hereinafter in effect.

“Base Management Fee” means the base management fee, calculated and payable (in
cash) quarterly in arrears, in an amount equal to the sum of (a) 1.50% per annum
of the Trust’s Shareholders’ Equity up to $2.0 billion, (b) 1.375% per annum of
the Trust’s Shareholders’ Equity above $2.0 billion and up to $5.0 billion and
(c) 1.250% per annum of the Trust’s Shareholders’ Equity in excess of $5.0
billion.  For purposes of calculating the Base Management Fee, outstanding
limited partnership interests in the Operating Partnership (other than limited
partnership interests held by the Trust) shall be treated as outstanding Common
Shares.

“Board of Trustees” means the board of trustees of the Trust.

“Business Day” means any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to be open.

“Change in Control of the Manager” means the occurrence of any of the following:
(1) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Manager, taken as a whole, to any
Person other than one or more Affiliates of the Manager,  Private National
Mortgage Acceptance Company, LLC, the Trust or a Subsidiary; (2) the acquisition
by any Person or group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act, or any successor provision), including any group
acting for the purpose of acquiring, holding or disposing of securities (within
the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one or more
Affiliates of the Manager, Private National Mortgage Acceptance Company, LLC,
the Trust or a Subsidiary, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of 50% or more of the total voting
power of the voting securities of the

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Manager; or (3) Stanford L. Kurland ceases to be, or perform the duties of,
Chief Executive Officer of the Manager and a replacement Chief Executive
Officer, deemed suitable in the Trust’s discretion, has not been retained within
a six month period from the date on which Stanford L. Kurland ceased to be, or
perform the duties of, Chief Executive Officer.

“Claim” has the meaning set forth in Section 9(c) hereof.

“Code” has the meaning set forth in the Recitals.

“Common Shares” means the common shares of beneficial interest, par value $0.01,
of the Trust.

“Conditional Payments” means the Manager Conditional Payment and the Underwriter
Conditional Payment.

“Conduct Policies” has the meaning set forth in Section 2(t) hereof.

“Confidential Information” has the meaning set forth in Section 6(a) hereof.

“Dispute” has the meaning set forth in Section 7(f) hereof.

“Effective Termination Date” has the meaning set forth in Section 11(c) hereof.

“Excess Funds” has the meaning set forth in Section 2(u) hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fannie MAE MBS Yield” means the average, during the Rolling Four Quarters
Period, of the 30 year Fannie Mae current coupon as reported on Bloomberg under
the function “MTGEFNCL INDEX” or such successor function.

“Fee Amendment” has the meaning set forth in Section 7(e) hereof.

“Fee Negotiations” has the meaning set forth in Section 7(e) hereof.

“GAAP” means generally accepted accounting principles in effect in the United
States on the date such principles are applied.

“Governing Instruments” means, with regard to any entity, the trust instrument
in the case of a trust, the articles of incorporation or certificate of
incorporation and bylaws in the case of a corporation, the certificate of
limited partnership (if applicable) and the partnership agreement in the case of
a general or limited partnership, the certificate of formation and operating
agreement in the case of a limited liability company, or similar governing
documents, in each case as amended.

“High Watermark” means an amount initially equal to zero as of the February 1,
2013 effective date of the Existing Management Agreement, as adjusted pursuant
to the terms thereof and as the same may be further adjusted as provided herein.
If in any fiscal quarter the product of the Equity Amount and the lesser of the
Fannie Mae MBS Yield and 8% exceeds the Return, the

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High Watermark shall be increased by the amount of such excess (the “High
Watermark Rise”), and thereafter, the High Watermark shall be adjusted each
fiscal quarter as follows: (a) if there is a High Watermark Rise for such fiscal
quarter, the High Watermark shall be increased by the amount of such High
Watermark Rise and (b) if the Return exceeds the product of the Equity Amount
and the lesser of the Fannie Mae MBS Yield and 8% for such fiscal quarter, the
High Watermark shall be decreased by the amount of such excess; provided that if
in any fiscal quarter the Incentive Fee is greater than or equal to zero, the
High Watermark shall be reset to zero.

“High Watermark Rise” has the meaning set forth in the definition of “High
Watermark.”

“Incentive Fee” means an incentive management fee calculated and payable (in
cash or Common Shares (subject to reasonable restrictions on sale and transfer,
provided that (i) the Trust shall use commercially reasonable efforts to cause,
at its sole expense, any Common Shares issued in payment of the Incentive Fee to
be registered for sale under the Securities Act,  (ii) the Manager may sell or
distribute such Common Shares in the manner that it determines, consistent with
the Trust’s Policy Against Insider Trading and any applicable securities laws,
including pursuant to Rule 10b5-1 under the Exchange Act, and (iii) the amount
of the Incentive Fee payable in any particular quarter that may be paid in
Common Shares shall be limited to 50% of the Incentive Fee payable for such
quarter), as determined by a majority of the Independent Trustees) each fiscal
quarter in arrears in an amount equal to the sum of:

(a)        10% per annum of the dollar amount by which the Return exceeds the
High Watermark plus the product of:

(1)        the weighted average of the issue price per Common Share of all of
the Trust’s public offerings of Common Shares (including the Initial Public
Offering) multiplied by the weighted average number of Common Shares outstanding
(including, for the avoidance of doubt, restricted share units granted under one
or more of the Trust’s equity incentive plans) in the four-quarter period (the
“Equity Amount”); and

(2)        8.0%,

but is less than or equal to the High Watermark plus the product of (i) the
Equity Amount and (ii) 12%; plus

(b)       15% per annum of the dollar amount by which the Return equals or
exceeds the High Watermark plus the product of:

(1)        the Equity Amount; and

(2)        12%,

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but is less than the High Watermark plus the product of (i) the Equity Amount
and (ii) 16%; plus

(c)       20% per annum of the dollar amount by which the Return exceeds the
High Watermark plus the product of:

(1)        the Equity Amount; and

(2)        16%.

For purposes of calculating the Incentive Fee, outstanding limited partnership
interests in the Operating Partnership (other than limited partnership interests
held by the Trust) shall be treated as outstanding Common Shares.

“Indemnified Party” has the meaning set forth in Section 9(b) hereof.

“Independent Trustee” means a member of the Board of Trustees who is not an
officer or employee of the Manager or any Affiliate thereof and who otherwise is
“independent” in accordance with the rules of the NYSE or such other securities
exchange on which the Common Shares may be listed.

“Initial Public Offering” means the sale by the Trust of 14,706,327 Common
Shares in the initial public offering of the Trust registered with the SEC.

“Initial Term” has the meaning set forth in Section 11(a) hereof.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Policies” means the Trust’s investment policies, a copy of which is
attached hereto as Exhibit B, as the same may be amended, restated, modified,
supplemented or waived by the Board of Trustees as specified therein.

“Losses” has the meaning set forth in Section 9(a) hereof.

“Manager Conditional Payment” means the conditional obligation of the Trust
pursuant to the terms of the Underwriting Fee Reimbursement Agreement to
reimburse the Manager an amount equal to the Manager Offering Payments (as such
term is defined in the Underwriting Agreement) if the conditions set forth in
the Underwriting Fee Reimbursement Agreement are met during the Conditional
Payment Period (as defined in the Underwriting Fee Reimbursement Agreement).

“Manager Indemnified Party” has the meaning set forth in Section 9(a) hereof.

“Manager Permitted Disclosure Parties” has the meaning set forth in Section 6(a)
hereof.

“Manager Related Party” means (a) any person who is, or at any time since the
beginning of the Manager’s last fiscal year was, a manager or executive officer
of the Manager or a nominee to become a manager of the Manager; (b) any person
who is known to be the beneficial owner of more than 5% of any class of the
Manager’s voting securities; (c) any

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immediate family member of any of the foregoing persons (which means any child,
stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law of any of the
foregoing persons); and (d) any firm, corporation or other entity in which any
of the foregoing persons is employed or is a general partner or principal or in
a similar position or in which such person has a 5% or greater beneficial
ownership interest.

 “MBS Agreement” means the Amended and Restated Mortgage Banking Services
Agreement, dated as of September 12, 2016, by and between PennyMac Loan Services
and PennyMac Corp.

“MSR Recapture Agreement” means the Amended and Restated MSR Recapture Agreement
entered into between PennyMac Loan Services and PennyMac Corp., dated as of
September 12, 2016.

“Net Income” means net income or loss calculated in accordance with GAAP, and
adjusted to exclude one-time events pursuant to changes in GAAP and certain
other non-cash charges after discussion between the Manager and the Independent
Trustees and after approval by a majority of the Independent Trustees.

“Net Income Offset” means any portion of a Net Loss from a period prior to the
Rolling Four Quarters Period that has not been taken into account in reducing
the amount of Net Income (but not below zero) from a period subsequent to the
period in which such Net Loss occurred in connection with the calculation of the
Incentive Fee for any period.

“Net Loss” means a net loss with regard to any period as calculated in
accordance with the definition of Net Income.

“Nonrenewal Termination” has the meaning set forth in Section 11(c) hereof.

“Notice of Proposal to Negotiate” has the meaning set forth in Section 11(c)
hereof.

“NYSE” means the New York Stock Exchange, Inc.

“PennyMac Brand” has the meaning set forth in Section 17(a) hereof.

“PennyMac Corp.” means PennyMac Corp., a Delaware corporation and Affiliate of
the Trust.

“PennyMac Loan Services” means PennyMac Loan Services, LLC, a Delaware limited
liability company and Affiliate of the Manager.

“Person” means any natural person, corporation, partnership, association,
limited liability company, estate, trust, joint venture, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof or any other legal entity and any fiduciary acting
in such capacity on behalf of the foregoing.

“Portfolio Management Services” has the meaning set forth in Section 2(b)
hereof.

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“REIT” means a “real estate investment trust” as defined under the Code.

“Return” means the Trust’s Net Income, for the Rolling Four Quarters Period,
plus the amount of any Incentive Fee included in the determination in the amount
of such Net Income, if any, during any of the fiscal quarters in such Rolling
Four Quarters Period and less the amount of any Net Income Offset.

“Rolling Four Quarters Period” means the most recently completed fiscal
quarterly period and the three fiscal quarters immediately preceding the most
recently completed fiscal quarter.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Servicing Agreement” means the Third Amended and Restated Flow Servicing
Agreement between the Operating Partnership and PennyMac Loan Services, dated as
of September 12, 2016.

“Shareholder” means a shareholder of the Trust.

“Shareholders’ Equity” means:

(A)       the sum of the net proceeds from any issuances of the Trust’s equity
securities since inception (allocated on a pro rata daily basis for such
issuances during the fiscal quarter of any such issuance); plus

(B)       the Trust’s retained earnings at the end of such quarter; less

(C)       any amount that the Trust pays for repurchases of its Common Shares
(allocated on a pro rata daily basis for such repurchases during the fiscal
quarter of any such repurchase); excluding

(D)       one-time events pursuant to changes in GAAP and certain other non-cash
charges after discussions between the Manager and the Independent Trustees and
after approval by a majority of the Independent Trustees.

The Conditional Payments shall be taken into account in the calculation of
Shareholders’ Equity only from and after the payment thereof, if any.

For purposes of calculating the Base Management Fee, outstanding limited
partnership interests in the Operating Partnership (other than limited
partnership interests held by the Trust) shall be treated as outstanding Common
Shares.

“Subsidiary” means any subsidiary of the Trust, any partnership (including the
Operating Partnership), the general partner of which is the Trust or any
subsidiary of the Trust; any limited liability company, the managing member of
which is the Trust or any subsidiary of the Trust; and any corporation or other
entity of which a majority of (i) the voting power of the voting

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equity securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by the Trust or any subsidiary of the Trust.

“Termination Fee” means a termination fee equal to three (3) times the sum of
(a) the average annual Base Management Fees and (b) the average annual (or, if
the period is less than 24 months, annualized) Incentive Fees earned by the
Manager during the 24-month period immediately preceding the date of
termination, calculated as of the end of the most recently completed fiscal
quarter before the date of termination.

“Termination Notice” has the meaning set forth in Section 11(c) hereof.

“Trust Account” has the meaning set forth in Section 5 hereof.

“Trust Indemnified Party” has the meaning set forth in Section 9(b) hereof.

“Trust Permitted Disclosure Parties” has the meaning set forth in Section 6(b)
hereof.

“Underwriter Conditional Payment” means the conditional obligation of the Trust
pursuant to the terms of the Underwriting Agreement to pay to the Underwriters
the Conditional Payment (as defined in the Underwriting Agreement) if the
conditions set forth in the Underwriting Agreement are met during the
Conditional Payment Period (as defined in the Underwriting Agreement).

“Underwriters” means the underwriters named in the Underwriting Agreement.

“Underwriting Agreement” means the purchase agreement, dated July 29, 2009 and
as amended, among the Trust, the Operating Partnership, the Manager and the
Underwriters relating to the Initial Public Offering.

“Underwriting Fee Reimbursement Agreement” means the Amended and Restated
Underwriting Fee Reimbursement Agreement, dated as of February 1, 2013, among
the Trust, the Operating Partnership and the Manager.

(b)        As used herein, accounting terms relating to the Trust and the
Subsidiaries, if any, not defined in Section 1(a) and accounting terms partly
defined in Section 1(a), to the extent not defined, shall have the respective
meanings given to them under GAAP.

(c)        The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
this Agreement unless otherwise specified.

(d)        The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.  The words
include, includes and including shall be deemed to be followed by the phrase
“without limitation.”

Section 2.  Appointment and Duties of the Manager.  (a)    The Trust and the
Operating Partnership hereby appoint the Manager to manage the investments and
day-to-day operations of

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the Trust and the Subsidiaries, subject at all times to the further terms and
conditions set forth in this Agreement and to the supervision of, and such
further limitations or parameters as may be imposed from time to time by, the
Board of Trustees.  The Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein, except where a specific
standard of care is specified, in which case such specific standard of care
shall apply.  The appointment of the Manager shall be exclusive to the Manager,
except to the extent that the Manager elects, in its sole and absolute
discretion, in accordance with the terms of this Agreement, to cause the duties
of the Manager as set forth herein to be provided by third parties.

(b)       The Manager, in its capacity as manager of the investments and the
day-to-day operations of the Trust and the Subsidiaries, at all times will be
subject to the supervision and direction of the Board of Trustees and will have
only such functions and authority as the Board of Trustees may delegate to it,
including, without limitation, the functions and authority identified herein and
delegated to the Manager hereby.  The Manager will be responsible for the
day-to-day operations of the Trust and the Subsidiaries and will perform (or
cause to be performed) such services and activities relating to the operations
of the Trust and the Subsidiaries, including the investments of the Trust and
the Subsidiaries and their financing, as may be appropriate, which may include,
without limitation:

(i)        serving as the Trust’s and the Subsidiaries’ consultant with respect
to the periodic review of the Investment Policies and Allocation Policy, which
review shall occur no less often than annually, any modifications to which shall
be approved by a majority of the Independent Trustees, and other policies and
recommendations with respect thereto for approval by a majority of the
Independent Trustees;

(ii)       serving as the Trust’s and the Subsidiaries’ consultant with respect
to the identification, investigation, evaluation, analysis, underwriting,
selection, purchase, origination, negotiation, structuring, monitoring and
disposition of the Trust’s and the Subsidiaries’ investments;

(iii)      serving as the Trust’s and the Subsidiaries’ consultant with respect
to decisions regarding any financings, securitizations and hedging activities
undertaken by the Trust or any Subsidiary, including (1) assisting the Trust or
any Subsidiary in developing criteria for debt and equity financing that is
specifically tailored to the Trust’s or such Subsidiary’s investment objectives,
(2) advising the Trust and the Subsidiaries with respect to obtaining
appropriate short-term financing arrangements for their investments and pursuing
a particular arrangement for each individual investment, if necessary, and (3)
advising the Trust and the Subsidiaries with respect to pursuing and structuring
long-term financing alternatives for their investments, in each case consistent
with the Investment Policies;

(iv)      serving as the Trust’s and the Subsidiaries’ consultant with respect
to arranging for the issuance of mortgage-backed securities from pools of

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mortgage loans or mortgage-backed securities owned by the Trust or any
Subsidiary;

(v)       representing and making recommendations to the Trust and the
Subsidiaries in connection with the purchase and finance and commitment to
purchase and finance investments and the sale and commitment to sell such
investments;

(vi)      negotiating and entering into, on behalf of the Trust or any
Subsidiary, credit finance agreements, repurchase agreements, securitization
agreements, agreements relating to borrowings under temporary programs
established by the U.S. government, commercial paper, interest rate swap
agreements, warehouse facilities and all other agreements and instruments
required for the Trust and the Subsidiaries to conduct their business;

(vii)     advising the Trust and the Subsidiaries on, preparing, negotiating and
entering into, on behalf of the Trust or any Subsidiary, applications and
agreements relating to programs established by the U.S. government;

(viii)    with respect to any prospective investment by the Trust or any
Subsidiary and any sale, exchange or other disposition of any investment by the
Trust or any Subsidiary, conducting negotiations on behalf of the Trust or such
Subsidiary with real estate brokers, sellers and purchasers and their respective
agents, representatives and investment bankers and owners of privately and
publicly held real estate companies;

(ix)      evaluating and recommending to the Trust and the Subsidiaries hedging
strategies and engaging in hedging activities on their behalf that are
consistent with such strategies, as so modified from time to time, and with the
Trust’s qualification as a REIT and with the Investment Policies;

(x)       making available to the Trust and the Subsidiaries the Manager’s
knowledge and experience with respect to mortgage loans, mortgage-related
securities, real estate, real estate securities, other real estate-related
assets and non-real estate-related assets and real estate operating companies;

(xi)      investing and re-investing any funds of the Trust and the Subsidiaries
(including in short-term investments) and advising the Trust and the
Subsidiaries as to its capital structure and capital-raising activities;

(xii)     monitoring the operating performance of the Trust’s and the
Subsidiaries’ investments and providing periodic reports with respect thereto to
the Board of Trustees, including comparative information with respect to such
operating performance and budgeted or projected operating results;

(xiii)    engaging and supervising, on behalf of the Trust or any Subsidiary,
and at the expense of the Operating Partnership (except to the extent determined

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by the Operating Partnership, in its sole discretion, to be the expense of a
Subsidiary other than the Operating Partnership), independent contractors that
provide real estate, investment banking, mortgage brokerage, securities
brokerage, appraisal, engineering, environmental, seismic, insurance, legal,
accounting, transfer agent, registrar, leasing, due diligence and such other
services as may be required relating to the operations of the Trust and the
Subsidiaries, including their investments (or potential investments);

(xiv)    coordinating and managing operations of any joint venture or
co-investment interests held by the Trust or any Subsidiary and conducting all
matters with the joint venture or co-investment partners;

(xv)     providing executive and administrative personnel, office space and
office services required in rendering services to the Trust and the
Subsidiaries;

(xvi)    performing and supervising the performance of administrative functions
necessary in the management of the Trust and the Subsidiaries as may be agreed
upon by the Manager and the Board of Trustees, including, without limitation,
the services in respect of any of the equity incentive plans, the collection of
revenues and the payment of the Trust’s or any Subsidiary’s debts and
obligations and maintenance of appropriate information technology services to
perform such administrative functions;

(xvii)   furnishing reports and statistical and economic research to the Trust
and the Subsidiaries regarding their activities and services performed for the
Trust and the Subsidiaries by the Manager;

(xviii)  counseling the Trust and the Subsidiaries in connection with policy
decisions to be made by the Board of Trustees;

(xix)    communicating on behalf of the Trust or any Subsidiary with the holders
of any equity or debt securities of the Trust or such Subsidiary as required to
satisfy the reporting and other requirements of any governmental bodies or
agencies or trading exchanges or markets and to maintain effective relations
with such holders, including website maintenance, logo design, analyst
presentations, investor conferences and annual meeting arrangements;

(xx)     counseling the Trust and the Subsidiaries regarding the maintenance of
their exclusions and, if applicable, exemptions from status as an investment
company under the Investment Company Act, monitoring compliance with the
requirements for maintaining such exclusions and exemptions and using
commercially reasonable efforts to cause the Trust and the Subsidiaries to
maintain their exclusions and exemptions from such status;

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(xxi)    assisting the Trust and the Subsidiaries in complying with all
regulatory requirements applicable to them in respect of their business
activities, including preparing or causing to be prepared all financial
statements required under applicable regulations and all reports and documents,
if any, required under the Exchange Act, the Securities Act and by the NYSE;

(xxii)   counseling the Trust regarding the maintenance of its qualification as
a REIT and monitoring compliance with the various REIT qualification tests and
other rules set out in the Code and Treasury Regulations promulgated thereunder;

(xxiii)  causing the Trust and the Subsidiaries to retain qualified accountants
and legal counsel, as applicable, to (1) assist in developing appropriate
accounting procedures, compliance procedures and testing systems with respect to
financial reporting obligations and compliance with the provisions of the Code
applicable to REITs and, if applicable, taxable REIT subsidiaries and (2)
conduct quarterly compliance reviews with respect thereto;

(xxiv)  taking all necessary actions to enable the Trust and any Subsidiary to
make required tax filings and reports, including soliciting Shareholders or
interest holders in any such Subsidiary for required information to the extent
necessary under the Code and Treasury Regulations promulgated thereunder
applicable to REITs;

(xxv)   causing the Trust and the Subsidiaries to qualify to do business in all
jurisdictions in which such qualification is required or advisable and to obtain
and maintain all appropriate licenses;

(xxvi)  using commercially reasonable efforts to cause the Trust and the
Subsidiaries to comply with all applicable laws;

(xxvii) handling and resolving on the Trust’s or any Subsidiary’s behalf all
claims, disputes or controversies (including all litigation, arbitration,
settlement or other proceedings or negotiations) in which the Trust or such
Subsidiary may be involved or to which the Trust or such Subsidiary may be
subject arising out of its day-to-day operations (other than with the Manager or
its Affiliates), subject to such limitations or parameters as may be imposed
from time to time by the Board of Trustees;

(xxviii)arranging marketing materials, advertising, industry group activities
(such as conference participations and industry organization memberships) and
other promotional efforts designed to promote the Trust’s and the Subsidiaries’
business;

(xxix)  using commercially reasonable efforts to cause expenses incurred by or
on behalf of the Trust and the Subsidiaries to be commercially reasonable or

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commercially customary and within any budgeted parameters or expense guidelines
set by the Board of Trustees from time to time; and

(xxx)   performing such other services as may be required from time to time for
the management and other activities relating to the operations, including
investments, of the Trust and the Subsidiaries as the Board of Trustees
reasonably requests or the Manager deems appropriate under the particular
circumstances.

Without limiting the foregoing, the Manager will perform portfolio management
services (the “Portfolio Management Services”) on behalf of the Trust and the
Subsidiaries with respect to their investments. Such services will include, but
not be limited to, consulting with the Trust and the Subsidiaries on the
purchase and sale of, and other investment opportunities in connection with, the
Trust’s and the Subsidiaries’ portfolio of assets; the collection of information
and the submission of reports pertaining to the Trust’s and the Subsidiaries’
assets, interest rates and general economic conditions; periodic review and
evaluation of the performance of the Trust’s and the Subsidiaries’ portfolio of
assets; acting as liaison between the Trust and the Subsidiaries and banking,
mortgage banking, investment banking and other parties with respect to the
purchase, financing and disposition of assets; and other customary functions
related to portfolio management.

(c)       For the period and on the terms and conditions set forth in this
Agreement, each of the Trust and the Operating Partnership hereby constitutes,
appoints and authorizes the Manager as its true and lawful agent and
attorney-in-fact and as the true and lawful agent and attorney-in-fact of any
other Subsidiary, in its name, place and stead, to negotiate, execute, deliver
and enter into such credit agreements, repurchase agreements, securitization
agreements, agreements relating to borrowings under temporary programs
established by the U.S. government, commercial paper, interest rate swap
agreements, warehouse facilities, brokerage agreements, custodial agreements and
such other agreements, instruments and authorizations on their behalf, on such
terms and conditions as the Manager, acting in its sole and absolute discretion,
deems necessary or appropriate. This power of attorney is deemed to be coupled
with an interest.

(d)       The Manager may enter into agreements with other parties, including
its Affiliates, for the purpose of engaging one or more parties for and on
behalf of the Trust and/or one or more of the Subsidiaries, and at the sole cost
and expense of the Operating Partnership (except to the extent determined by the
Operating Partnership, in its sole discretion, to be the expense of a Subsidiary
other than the Operating Partnership), to provide property management, asset
management, securitization, leasing, development and/or other services to the
Trust and the Subsidiaries (including, without limitation, Portfolio Management
Services) pursuant to agreement(s) with terms which are then customary for
agreements regarding the provision of services to companies that have assets
similar in type, quality and value to the assets of the Trust and the
Subsidiaries; provided, that (i) any agreements entered into with Affiliates of
the Manager or any Manager Related Party shall be (A) on terms no more favorable
to such Affiliates than would be obtained from a third party on an arm’s-length
basis and (B) approved in advance by a majority of the Independent
Trustees, (ii) with respect to Portfolio Management Services, (A) any such
agreements shall be subject to the Trust’s prior written approval and (B)

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the Manager shall remain liable for the performance of such Portfolio Management
Services, and (iii) with respect to all agreements or other arrangements with
other parties, the Manager shall comply with the requirements of the Trust’s
Related Party Transactions Policy.

(e)       To the extent that the Manager deems necessary or advisable, the
Manager may, from time to time, propose to retain one or more additional
entities for the provision of sub-advisory services to the Manager in order to
enable the Manager to provide the services to the Trust and the Subsidiaries
specified by this Agreement; provided, that any such agreement (1) shall be on
terms and conditions substantially identical to the terms and conditions of this
Agreement or otherwise not adverse to the Trust and the Subsidiaries, (2) shall
not result in an increased Base Management Fee, Incentive Fee or expenses
payable hereunder and (3) shall be approved by a majority of the Independent
Trustees.

(f)        The Manager may retain, for and on behalf of the Trust and/or one or
more of the Subsidiaries, and at the sole cost and expense of the Operating
Partnership (except to the extent determined by the Operating Partnership, in
its sole discretion, to be the expense of a Subsidiary other than the Operating
Partnership), such services of accountants, legal counsel, appraisers, insurers,
brokers, transfer agents, registrars, financial printers, developers, investment
banks, financial advisors, internal audit service providers, due diligence
firms, underwriting review firms, banks and other lenders, surveyors, engineers,
environmental and seismic consultants, information technology consultants, tax
advisors and preparers, other consultants, agents, contractors, vendors,
advisors and others as the Manager deems necessary or advisable in connection
with the management and operations of the Trust and the Subsidiaries.
Notwithstanding anything contained herein to the contrary, the Manager shall
have the right to cause any such services to be rendered by its employees or
Affiliates. Except as otherwise provided herein, the Operating Partnership (or
such other Subsidiary) shall pay or reimburse the Manager or its Affiliates
performing such services for the cost thereof; provided, that such costs and
reimbursements are no greater than those which would be payable to outside
professionals or consultants engaged to perform such services pursuant to
agreements negotiated on an arm’s-length basis.

(g)        The Manager may effect transactions by or through the agency of
another person with it or its Affiliates which have an arrangement under which
that party or its Affiliates will from time to time provide to or procure for
the Manager and/or its Affiliates goods, services or other benefits (including,
but not limited to, research and advisory services; economic and political
analysis, including valuation and performance measurement; market analysis, data
and quotation services; computer hardware and software incidental to the above
goods and services; clearing and custodian services and investment related
publications), the nature of which is such that provision can reasonably be
expected to benefit the Trust and the Subsidiaries as a whole and may contribute
to an improvement in the performance of the Trust and the Subsidiaries or the
Manager or its Affiliates in providing services to the Trust and the
Subsidiaries on terms that no direct payment is made but instead the Manager
and/or its Affiliates undertake to place business with that party.

(h)        In executing portfolio transactions and selecting brokers or dealers,
the Manager will use its best efforts to seek on behalf of the Trust and the
Subsidiaries the best overall terms available. In assessing the best overall
terms available for any transaction, the

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Manager shall consider all factors that it deems relevant, including, without
limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker or dealer to execute a particular
transaction, the Manager may also consider whether such broker or dealer
furnishes research and other information or services to the Manager.

(i)        The Manager has no duty or obligation to seek in advance competitive
bidding for the most favorable commission rate applicable to any particular
purchase, sale or other transaction, or to select any broker-dealer on the basis
of its purported or “posted” commission rate, but will endeavor to be aware of
the current level of charges of eligible broker-dealers and to minimize the
expense incurred for effecting purchases, sales and other transactions to the
extent consistent with the interests and policies of the Trust and the
Subsidiaries.  Although the Manager will generally seek competitive commission
rates, it is not required to pay the lowest commission or commission equivalent,
provided, that such decision is made in good faith to promote the best interests
of the Trust and the Subsidiaries.

(j)        The Manager shall refrain from any action that, in its sole judgment
made in good faith, (1) is not in compliance with the Investment Policies, (2)
would adversely affect the qualification of the Trust as a REIT under the Code
or the status of the Trust or any Subsidiary as an entity excluded or exempted
from investment company status under the Investment Company Act, or (3) would
violate any law, rule or regulation of any governmental body or agency having
jurisdiction over the Trust or any Subsidiary or of any exchange on which the
securities of the Trust may be listed or that would otherwise not be permitted
by the Governing Instruments of the Trust or such Subsidiary.  If the Manager is
ordered to take any action by the Board of Trustees, the Manager shall promptly
notify the Board of Trustees if it is the Manager’s judgment that such action
would adversely affect such status or violate any such law, rule or regulation
or the Governing Instruments.  Notwithstanding the foregoing, the Manager, its
Affiliates and their respective managers, officers, trustees, directors,
employees and members and any Person providing sub-advisory services to the
Manager shall not be liable to the Trust, the Subsidiaries, the Board of
Trustees, the Shareholders or the interest holders in any Subsidiary for any act
or omission by such Person except as provided in Section 9 of this Agreement.

(k)       The Trust (including the Board of Trustees) and the Operating
Partnership agree to take all actions reasonably required to permit and enable
the Manager to carry out its duties and obligations under this Agreement,
including, without limitation, all steps reasonably necessary to allow the
Manager to file any registration statement or other filing required to be made
under the Securities Act, the Exchange Act, rules of the NYSE or such other
securities exchange on which the Common Shares may be listed, the Code or other
applicable law, rule or regulation on behalf of the Trust and any applicable
Subsidiary in a timely manner.  The Trust and the Operating Partnership further
agree to use commercially reasonable efforts to make available to the Manager
all resources, information and materials reasonably requested by the Manager to
enable the Manager to satisfy its obligations hereunder, including its
obligations to deliver financial statements and any other information or reports
with respect to the Trust and the Subsidiaries.  If the Manager is not able to
provide a service, or in the reasonable judgment of the

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Manager it is not prudent to provide a service, without the approval of the
Board of Trustees, as applicable, then the Manager shall be excused from
providing such service (and shall not be in breach of this Agreement) until the
applicable approval has been obtained, which the Manager shall seek promptly
upon determining an approval is required.

(l)       The Manager shall require each seller or transferor of investment
assets to the Trust and the Subsidiaries to make such representations and
warranties regarding such assets as may, in the judgment of the Manager, be
necessary and appropriate. In addition, the Manager shall take such other action
as it deems necessary or appropriate with regard to the protection of the
investments of the Trust and the Subsidiaries.

(m)      The Board of Trustees shall periodically review the Investment Policies
and the Trust’s and the Subsidiaries’ portfolio of investments but will not
review each proposed investment, except as otherwise provided herein. If a
majority of the Independent Trustees determines in such periodic review of
transactions that a particular transaction does not comply with the Investment
Policies, then a majority of the Independent Trustees will consider what
corrective action, if any, can be taken. The Manager shall be permitted to rely
upon the direction of the Secretary of the Trust to evidence the approval of the
Board of Trustees or the Independent Trustees with respect to a proposed
investment.

(n)       Neither the Trust nor the Subsidiaries shall invest in any security
structured or issued by an entity managed by the Manager or any Affiliate
thereof, unless (i) the investment is made in accordance with the Investment
Policies; (ii) such investment is approved in advance by a majority of the
Independent Trustees; and (iii) the investment is made in accordance with
applicable laws.

(o)       Reporting Requirements.

(i)        As frequently as the Manager may deem reasonably necessary or
advisable, or at the direction of the Board of Trustees, the Manager shall
prepare, or, at the sole cost and expense of the Operating Partnership (except
to the extent determined by the Operating Partnership, in its sole discretion,
to be the expense of a Subsidiary other than the Operating Partnership), cause
to be prepared, with respect to any investment, reports and other information
with respect to such investment as may be reasonably requested by the Trust.

(ii)       The Manager shall prepare, or, at the sole cost and expense of the
Operating Partnership (except to the extent determined by the Operating
Partnership, in its sole discretion, to be the expense of a Subsidiary other
than the Operating Partnership), cause to be prepared, all reports, financial or
otherwise, with respect to the Trust and the Subsidiaries reasonably required by
the Board of Trustees in order for the Trust and the Subsidiaries to comply with
their Governing Instruments, or any other materials required to be filed with
any governmental body or agency, and shall prepare, or, at the sole cost and
expense of the Operating Partnership (except to the extent determined by the
Operating Partnership, in its sole

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discretion, to be the expense of a Subsidiary other than the Operating
Partnership), cause to be prepared, all materials and data necessary to complete
such reports and other materials including, without limitation, an annual audit
of the Trust’s and the Subsidiaries’ books of account by a nationally recognized
independent accounting firm.

(iii)      The Manager shall prepare, or, at the sole cost and expense of the
Operating Partnership (except to the extent determined by the Operating
Partnership, in its sole discretion, to be the expense of a Subsidiary other
than the Operating Partnership), cause to be prepared, and deliver to the Board
of Trustees (i) every three (3) months a reasonably detailed report regarding
(A) the Trust’s and the Subsidiaries’ acquisitions, portfolio composition and
characteristics, credit quality, performance and compliance with the Investment
Policies and policies approved by the Board of Trustees, (B) the Manager’s
financial results, and (C) such other matters as the Board of Trustees or a
majority of the Independent Trustees shall reasonably request, and (ii)
annually, relevant market data regarding management and servicing fees.

(p)       Managers, officers, trustees, directors, members, employees and agents
of the Manager or Affiliates of the Manager may serve as trustees, officers,
agents, nominees or signatories for the Trust and the Subsidiaries, to the
extent permitted by their Governing Instruments, as from time to time amended,
or by any resolutions duly adopted by the Board of Trustees pursuant to the
Trust’s Governing Instruments or, to the extent applicable, the governing body
of any Subsidiary, pursuant to the Governing Instruments of such
Subsidiary.  When executing documents or otherwise acting in such capacities for
the Trust or any Subsidiary, such Persons shall indicate in what capacity they
are executing on behalf of the Trust or such Subsidiary.  Without limiting the
foregoing, but subject to Section 13 below, the Manager will be obligated to
supply the Trust with a management team, including a Chief Executive Officer,
Chief Financial Officer and Chief Operating Officer or similar positions, along
with appropriate support personnel, to provide the management services to be
provided by the Manager to the Trust and the Subsidiaries hereunder, who shall
devote such of their time to the management of the Trust and the Subsidiaries as
is necessary and appropriate, commensurate with the level of activity of the
Trust from time to time.

(q)       The Manager shall provide personnel for service on an investment or
similar type of committee.

(r)        The Manager shall maintain reasonable and customary “errors and
omissions” insurance coverage and other customary insurance coverage, in an
amount which is comparable to that customarily maintained by other managers or
servicers of similar assets.

(s)        The Manager shall provide such internal audit, compliance and control
services as may be required for the Trust and the Subsidiaries to comply with
applicable law (including the Securities Act and the Exchange Act), regulation
(including SEC regulations) and the rules and requirements of the NYSE or such
other securities exchange on which the Common

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Shares may be listed and as otherwise reasonably requested by the Trust, the
Operating Partnership or the Board of Trustees from time to time.

(t)        The Manager acknowledges receipt of the Trust’s Code of Business
Conduct and Ethics and Policy Against Insider Trading (collectively, the
“Conduct Policies”) and agrees to require its officers and employees who provide
services to the Trust to comply with such Conduct Policies in the performance of
such services hereunder or such comparable policies as shall in substance hold
officers and employees of the Manager to at least the standards of conduct set
forth in the Conduct Policies.

(u)        Notwithstanding anything contained in this Agreement to the contrary,
except to the extent that the payment of additional moneys is proven by the
Trust to have been required as a direct result of the Manager’s acts or
omissions which result in the right of the Trust to terminate this Agreement
pursuant to Section 13 of this Agreement, the Manager shall not be required to
expend money (“Excess Funds”) in connection with any expenses that are required
to be paid for or reimbursed by the Operating Partnership (or any other
Subsidiary) pursuant to Section 8 in excess of that contained in any applicable
Trust Account (as herein defined) or otherwise made available by the Operating
Partnership (or such other Subsidiary) to be expended by the Manager
hereunder.  Failure of the Manager to expend Excess Funds out-of-pocket shall
not give rise or be a contributing factor to the right of the Trust under
Section 11(c) of this Agreement to terminate this Agreement due to the Manager’s
unsatisfactory performance.

(v)        In performing its duties under this Section 2, the Manager shall be
entitled to rely reasonably on qualified experts and professionals (including,
without limitation, accountants, legal counsel and other professional service
providers) hired by the Manager at the sole cost and expense of the Operating
Partnership (except to the extent determined by the Operating Partnership, in
its sole discretion, to be the expense of a Subsidiary other than the Operating
Partnership).

Section 3.  Additional Activities of the Manager; Right of First Refusal. 
Except as otherwise provided in this Section 3, the Allocation Policy and the
Investment Policies, nothing in this Agreement shall (i) prevent the Manager or
any of its Affiliates, managers, officers, trustees, directors, employees or
members from engaging in other businesses or from rendering services of any kind
to any other Person or entity, whether or not the investment objectives or
policies of any such other Person or entity are similar to those of the Trust or
(ii) in any way bind or restrict the Manager or any of its Affiliates, managers,
officers, trustees, directors, employees or members from buying, selling or
trading any securities or commodities for their own accounts or for the account
of others for whom the Manager or any of its Affiliates, managers, officers,
trustees, directors, employees or members may be acting.  Notwithstanding the
foregoing, during the term of this Agreement, (i) the Manager and its Affiliates
shall perform the services identified herein exclusively for the benefit of the
Trust and (ii) neither the Manager nor any of its Affiliates may act as the
manager to, or otherwise provide investment advisory services to, any other
entity a primary investment objective of which is to invest in distressed
residential mortgage loans, in each case excluding (a) the two private fund
vehicles managed by the Manager as of the date of this Agreement, (b) any entity
in which the Trust or any of its Subsidiaries is an investor and (c) any
government-related entity; provided,  however, that the Manager and/or any of
its Affiliates may act as manager to an entity that it would otherwise not

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be permitted to manage pursuant to the foregoing if the Trust and its
Subsidiaries are not able to pursue additional investment in distressed
residential mortgage loans due to limitations on available capital and the Trust
and its Subsidiaries determine not to raise additional capital, as long as the
Independent Trustees do not determine that such activities would be detrimental
to the Trust and its Subsidiaries.

Prior to the undertaking by the Manager or its Affiliates of any new investment
opportunity or any other business opportunity requiring a source of capital with
respect to which the Manager or its Affiliates will earn a management, advisory,
consulting or similar fee, the Manager shall present to the Trust such new
opportunity and the material terms on which the Manager proposes to provide
services to the Trust in pursuing such opportunity on behalf of the Trust.  If
the Board of Trustees determines that it is in the best interest of the Trust to
pursue such opportunity, the Trust shall cause notice of such determination to
be given to the Manager within 10 days of the presentation of such opportunity
by the Manager to the Trust.  If the Manager provides such notice, the Trust and
the Manager shall negotiate in good faith to agree to the terms and
documentation on which the Manager would provide services to the Trust in
pursuing the opportunity.  In the event the Trust and the Manager are unable to
reach agreement on such terms and documentation after such good faith
negotiations, the Manager may pursue the opportunity with third parties,
provided, however, that under such circumstances the material terms on which the
Manager provides services to third parties in pursuing the opportunity shall be
no more favorable to such parties than the terms offered to the Trust unless the
Manager presents such more favorable terms to the Trust to reconsider such
opportunity in accordance with this paragraph prior to proceeding with the third
parties.

While information and recommendations supplied to the Trust and the Subsidiaries
shall, in the Manager’s reasonable and good faith judgment, be appropriate under
the circumstances and in light of the investment objectives and policies of the
Trust and the Subsidiaries, they may be different from the information and
recommendations supplied by the Manager or any Affiliate of the Manager to
others.  The Trust and the Subsidiaries shall be entitled to equitable treatment
under the circumstances in receiving information, recommendations and any other
services, but the Trust and the Operating Partnership recognize that the Trust
and the Subsidiaries are not entitled to receive preferential treatment as
compared with the treatment given by the Manager or any Affiliate of the Manager
to others.  The Trust and the Subsidiaries shall have the benefit of the
Manager’s best judgment and effort in rendering services hereunder and, in
furtherance of the foregoing, the Manager shall not undertake activities that,
in its good faith judgment, will adversely affect the performance of its
obligations under this Agreement.

Section 4.  Agency. The Manager shall act as agent of the Trust and the
Subsidiaries in making, acquiring, financing and disposing of investments,
disbursing and collecting the funds of the Trust and the Subsidiaries, paying
the debts and fulfilling the obligations of the Trust and the Subsidiaries,
supervising the performance of professionals engaged by or on behalf of the
Trust and the Subsidiaries and handling, prosecuting and settling any claims of
or against the Trust and the Subsidiaries, the Board of Trustees, holders of the
Trust’s or any Subsidiary’s securities or representatives or properties of the
Trust and the Subsidiaries.

Section 5.  Bank Accounts.  At the direction of the Board of Trustees, the
Manager may establish and maintain one or more bank accounts in the name of the
Trust or any Subsidiary

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(any such account, a “Trust Account”), and may collect and deposit into any such
account or accounts, and disburse funds from any such account or accounts, under
such terms and conditions as the Board of Trustees may approve; and the Manager
shall from time to time render appropriate accountings of such collections and
payments to the Board of Trustees and, upon request, to the auditors of the
Trust or any Subsidiary.

Section 6.  Records; Confidentiality.  (a)    The Manager shall maintain
appropriate books of accounts and records relating to services performed
hereunder, and such books of account and records shall be accessible for
inspection by representatives of the Trust or any Subsidiary at any time during
normal business hours upon reasonable advance notice.  The Manager shall keep
confidential any and all non-public information, written or oral, obtained by it
in connection with the services rendered hereunder (“Confidential Information”)
and shall not use Confidential Information except in furtherance of its duties
under this Agreement or disclose Confidential Information, in whole or in part,
to any Person other than (1) to its Affiliates, managers, officers, trustees,
directors, employees, members, agents, representatives or advisors who need to
know such Confidential Information for the purpose of rendering services
hereunder, (2) to appraisers, financing sources and others in the ordinary
course of the Trust’s and any Subsidiary’s business ((1) and (2) collectively,
“Manager Permitted Disclosure Parties”), (3) in connection with any governmental
or regulatory filings of the Trust or any Subsidiary or disclosure or
presentations to Trust investors, (4) to governmental officials having
jurisdiction over the Trust, (5) as required by law or legal process to which
the Manager or any Person to whom disclosure is permitted hereunder is a party,
or (6) with the consent of the Board of Trustees.  The Manager agrees to inform
each of its Manager Permitted Disclosure Parties of the non-public nature of the
Confidential Information and to direct such Persons to treat such Confidential
Information in accordance with the terms hereof.  Nothing herein shall prevent
the Manager from disclosing Confidential Information (1) upon the order of any
court or administrative agency, (2) upon the request or demand of, or pursuant
to any law or regulation, any regulatory agency or authority, (3) to the extent
reasonably required in connection with the exercise of any remedy hereunder, or
(4) to its legal counsel or independent auditors; provided,  however, that with
respect to clauses (1) and (2), it is agreed that the Manager will provide the
Trust and the Operating Partnership with prompt written notice of such order,
request or demand so that the Trust and the Operating Partnership may seek an
appropriate protective order and/or waive the Manager’s compliance with the
provisions of this Agreement.  If, failing the entry of a protective order or
the receipt of a waiver hereunder, the Manager is, in the opinion of counsel,
required to disclose Confidential Information, the Manager may disclose only
that portion of such information that its counsel advises is legally required
without liability hereunder; provided, that the Manager agrees to exercise its
best efforts to obtain reliable assurance that confidential treatment will be
accorded such information.  Notwithstanding anything herein to the contrary,
each of the following shall be deemed to be excluded from the provisions
hereof:  any Confidential Information that (A) is available to the public from a
source other than the Manager, (B) is released in writing by the Trust to the
public or to Persons who are not under similar obligation of confidentiality to
the Trust and the Subsidiaries, or (C) is obtained by the Manager from a third
party without breach by such third party of an obligation of confidence with
respect to the Confidential Information disclosed.

(b)        Each of the Trust and the Operating Partnership shall keep
confidential, and shall cause any other Subsidiary to keep confidential, any and
all Confidential Information

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and shall not use, and shall cause any other Subsidiary not to use, Confidential
Information except in furtherance of the terms of this Agreement or disclose
Confidential Information, in whole or in part, to any Person other than (1) to
its Affiliates, officers, trustees, directors, employees, members, agents,
representatives or advisors who need to know such Confidential Information for
the purpose of fulfilling the Trust’s and the Operating Partnership’s
obligations hereunder (collectively, “Trust Permitted Disclosure Parties”), (2)
as required by law or legal process to which the Trust or any Subsidiary or any
Person to whom disclosure is permitted hereunder is a party, or (3) with the
consent of the Manager.  Each of the Trust and the Operating Partnership agrees
to (1) inform each of its Trust Permitted Disclosure Parties of the non-public
nature of the Confidential Information and to direct such Persons to treat such
Confidential Information in accordance with the terms hereof and (2) not
disclose any Confidential Information to its Trust Permitted Disclosure Parties
upon the termination of this Agreement in accordance with Section 11
hereof.  Nothing herein shall prevent the Trust or any Subsidiary from
disclosing Confidential Information (1) upon the order of any court or
administrative agency, (2) upon the request or demand of, or pursuant to any law
or regulation, any regulatory agency or authority, (3) to the extent reasonably
required in connection with the exercise of any remedy hereunder, or (4) to its
legal counsel or independent auditors; provided,  however, that with respect to
clauses (1) and (2), it is agreed that the Trust and the Operating Partnership
will provide the Manager with prompt written notice of such order, request or
demand so that the Manager may seek an appropriate protective order and/or waive
the Trust’s and the Operating Partnership’s compliance with the provisions of
this Section.  If, failing the entry of a protective order or the receipt of a
waiver hereunder, the Trust or any Subsidiary is, in the opinion of counsel,
required to disclose Confidential Information, the Trust or such Subsidiary may
disclose only that portion of such information that its counsel advises is
legally required without liability hereunder; provided, that each of the Trust
and the Operating Partnership shall exercise, and shall cause any other
Subsidiary to exercise, its best efforts to obtain reliable assurance that
confidential treatment will be accorded such information.  Notwithstanding
anything herein to the contrary, each of the following shall be deemed to be
excluded from the provisions hereof:  any Confidential Information that (A) is
available to the public from a source other than the Trust or any Subsidiary,
(B) is released in writing by the Manager to the public or to Persons who are
not under similar obligation of confidentiality to the Manager, or (C) is
obtained by the Trust or any Subsidiary from a third party without breach by
such third party of an obligation of confidence with respect to the Confidential
Information disclosed.  For the avoidance of doubt, information about the
systems, employees, policies, procedures and investment portfolio (other than
investments in which the Trust or any Subsidiary and the Manager have
co-invested) shall be deemed to be included within the meaning of “Confidential
Information” for purposes of the Trust’s and the Subsidiaries’ obligations
pursuant to this Section 6(b).

(c)        The provisions of this Section 6 shall survive the expiration or
earlier termination of this Agreement for a period of one year.

Section 7.  Compensation.  (a)    For the services rendered under this
Agreement, the Operating Partnership shall pay to the Manager the Base
Management Fee and the Incentive Fee.  Notwithstanding the foregoing or any
other provision contained in this Agreement, in the event that any of the
services provided hereunder by the Manager are rendered to or for the benefit of
any Subsidiary other than the Operating Partnership, then, in the sole
discretion of the Operating

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Partnership, a portion of the Base Management Fee and/or the Incentive Fee, as
determined by the Operating Partnership, shall be payable by such Subsidiary.

(b)        The parties acknowledge that the Base Management Fee is intended to
compensate the Manager for the costs and expenses of its executive officers and
employees (and certain related overhead and employee costs not otherwise
reimbursable under Section 8 below) incurred in providing to the Trust the
investment advisory services and certain general management services rendered
under this Agreement.

(c)        The Base Management Fee shall be payable in arrears in cash, in
quarterly installments commencing with the fiscal quarter in which this
Agreement was executed (with such initial payment pro-rated based on the number
of days during such quarter that this Agreement was in effect).   The Manager
shall calculate each installment of the Base Management Fee within thirty (30)
days after the end of the fiscal quarter with respect to which such installment
is payable.  A copy of the computations made by the Manager to calculate such
installment shall thereafter, for informational purposes only, promptly be
delivered to the Board of Trustees and, upon such delivery, payment of such
installment of the Base Management Fee shown therein shall be due and payable no
later than the date which is five (5) Business Days after the date of delivery
to the Board of Trustees of such computations.

(d)        The Manager shall compute each installment of the Incentive Fee
within 30 days after the end of the fiscal quarter with respect to which such
installment is payable.  A copy of the computations made by the Manager to
calculate such installment shall thereafter, for informational purposes only,
promptly be delivered to the Board of Trustees and, upon such delivery, payment
of such installment of the Incentive Fee shown therein shall be due and payable
no later than the date which is five (5) Business Days after the date of
delivery to the Board of Trustees of such computations.

(e)        Notwithstanding anything to the contrary contained herein, upon the
written request (a “Fee Negotiation Request”) of the Company or the Manager
following a determination by the Company or the Manager that the rates of
compensation payable to the Manager hereunder differ materially from market
rates of compensation for services comparable to those provided hereunder, which
request includes a proposal for revised rates of compensation hereunder, the
parties hereto shall negotiate in good faith to amend the provisions of this
Agreement relating to the compensation of the Manager  in order to cause such
compensation to be materially consistent with market rates of compensation for
services comparable to those provided hereunder (a “Fee Amendment”); provided,
however, that no such request shall be made until the second anniversary of the
effective date of this Agreement, after which time each party may make such
request (i) once with respect to fees to be paid during the remainder of the
Initial Term, which request shall be made prior to the expiration of the Initial
Term, and (ii) once with respect to fees to be paid during any Automatic Renewal
Term, which request shall be made at least 210 days prior to the start of such
Automatic Renewal Term.  If the parties are unable to reach agreement on the
terms of a Fee Amendment within thirty (30) days of the date of delivery of the
relevant Fee Negotiation Request, then the terms of such Fee Amendment shall be
determined by final and binding arbitration in accordance with Section 7(f).    

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(f)        All disputes, differences and controversies of the Company or the
Manager relating to a Fee Amendment (individually, a “Dispute” and,
collectively, “Disputes”) shall be resolved by final and binding arbitration
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules, subject to the following provisions:

(i)        Following the delivery of a written demand for arbitration by either
the Company or the Manager, each party shall choose one (1) arbitrator within
ten (10) Business Days after the date of such written demand and the two chosen
arbitrators shall mutually, within ten (10) Business Days after selection select
a third (3rd) arbitrator (each, an “Arbitrator” and together, the
“Arbitrators”), each of whom shall be a retired judge selected from a roster of
arbitrators provided by the AAA. If the third (3rd) Arbitrator is not selected
within fifteen (15) Business Days after delivery of the written demand for
arbitration (or such other time period as the Company and the Manager may
agree), the Company and the Manager shall promptly request that the commercial
panel of the AAA select an independent Arbitrator meeting such criteria.

(ii)       The rules of arbitration shall be the Commercial Rules of the
American Arbitration Association; provided,  however, that notwithstanding any
provisions of the Commercial Arbitration Rules to the contrary, unless otherwise
mutually agreed to by the Company and the Manager, the sole discovery available
to each party shall be its right to conduct up to two (2) non-expert depositions
of no more than three (3) hours of testimony each.

(iii)     The Arbitrators shall render a decision by majority decision within
three (3) months after the date of appointment, unless the Company and the
Manager agree to extend such time. The decision shall be final and binding upon
the Company and the Manager;  provided,  however, that such decision shall not
restrict either the Company or the Manager from terminating this Agreement
pursuant to the terms hereof.

(iv)      Each party shall pay its own expenses in connection with the
resolution of Disputes, including attorneys’ fees, unless determined otherwise
by the Arbitrator.

(v)       The Company and the Manager agree that the existence, conduct and
content of any arbitration pursuant to this Section 7(f) shall be kept
confidential and neither the Company nor the Manager shall disclose to any
Person any information about such arbitration, except in connection with such
arbitration or as may be required by law or by any regulatory authority (or any
exchange on which such party’s securities are listed) or for financial reporting
purposes in such party’s financial statements.

Section 8.  Expenses of the Trust.  (a)    The Manager shall be responsible for
compensation and related expenses of the Manager’s employees (including the
officers of the

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Trust who are also employees of the Manager), including, without limitation,
salaries, bonus and other wages, payroll taxes and the cost of employee benefit
plans of such personnel; provided, however, that the Operating Partnership (or
any other Subsidiary, as provided below) shall pay or reimburse the Manager or
any Affiliate of the Manager for the costs and expenses (including any
employment expenses) incurred in connection with the performance by the Manager
or such Affiliate of any services performed by the Manager or such Affiliate
pursuant to Section 2(d) or 2(f) hereof.

(b)       The Trust and the Subsidiaries shall pay all of their costs and
expenses and the Operating Partnership (or any other Subsidiary, as provided
below) shall reimburse the Manager or its Affiliates for expenses of the Manager
and its Affiliates incurred on behalf of the Trust or any Subsidiary, excepting
only those expenses that are specifically the responsibility of the Manager
pursuant to Section 8(a) of this Agreement.  Without limiting the generality of
the foregoing, it is specifically agreed that the following costs and expenses
of the Trust or any Subsidiary shall be paid by the Operating Partnership (or
such other Subsidiary) and shall not be paid by the Manager or Affiliates of the
Manager:

(i)        all costs and expenses associated with the formation and capital
raising activities of the Trust and the Subsidiaries, if any, including, without
limitation, the costs and expenses of the preparation of the Trust’s
registration statements, any and all costs and expenses of the Initial Public
Offering, any subsequent offerings and any filing fees and costs of being a
public company, including, without limitation, filings with the SEC, the
Financial Industry Regulatory Authority and the NYSE (or any other exchange or
over-the-counter market), among other such entities;

(ii)       all costs and expenses in connection with the acquisition,
origination, disposition, development, modification, protection, maintenance,
financing, refinancing, hedging, administration and ownership of the Trust’s or
any Subsidiary’s investment assets (including costs and expenses incurred for
transactions that are not subsequently completed), including, without
limitation, costs and expenses incurred in contracting with third parties,
including Affiliates of the Manager, to provide such services, such as legal
fees, accounting fees, consulting fees, loan servicing fees, trustee fees,
appraisal fees, insurance premiums, commitment fees, brokerage fees, guaranty
fees, ad valorem taxes, costs of diligence, foreclosure, maintenance, repair and
improvement of property and premiums for insurance on property owned or leased
by the Trust or any Subsidiary;

(iii)      all legal, audit, accounting, consulting, underwriting, brokerage,
listing, filing, custodian, transfer agent, rating agency, registration and
other fees and charges, printing, engraving and other expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration
and stock exchange listing of the Trust’s or any Subsidiary’s equity securities
or debt securities;

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(iv)      all costs and expenses in connection with legal, accounting, due
diligence (including due diligence costs for assets that are not subsequently
acquired), asset management, securitization, property management, brokerage,
leasing and other services that outside professionals or outside consultants
perform or otherwise would perform on the Trust’s behalf and that are performed
by the Manager or an Affiliate thereof, as provided in Section 2(d) or 2(f), it
being understood that the Manager and its Affiliates shall allocate a portion of
their personnel’s time to provide certain legal, tax and investor relations
services for the direct benefit of the Trust and for which the Manager shall be
reimbursed $120,000 per fiscal quarter, such amount to be reviewed annually and
not preclude reimbursement for any other services performed by the Manager or an
Affiliate as contemplated by this Section 8(b)(iv);

(v)       all expenses relating to communications to holders of equity
securities or debt securities issued by the Trust or any Subsidiary and the
other third party services utilized in maintaining relations with holders of
such securities and in complying with the continuous reporting and other
requirements of governmental bodies or agencies (including, without limitation,
the SEC), including any costs of computer services in connection with this
function, the cost of printing and mailing certificates for such securities and
proxy solicitation materials and reports to holders of the Trust’s or any
Subsidiary’s securities and the cost of any reports to third parties required
under any indenture to which the Trust or any Subsidiary is a party;

(vi)      all costs and expenses of money borrowed by the Trust or any
Subsidiary, including, without limitation, principal, interest and the costs
associated with the establishment and maintenance of any credit facilities,
warehouse loans, repurchase agreements and other indebtedness of the Trust or
any Subsidiary (including commitment fees, accounting fees, legal fees, closing
and other costs and expenses);

(vii)     all taxes and license fees applicable to the Trust or any Subsidiary,
including interest and penalties thereon;

(viii)    all fees paid to and expenses of third-party advisors and independent
contractors, consultants, managers and other agents (including real estate
underwriters, brokers and special servicers) engaged by the Trust or any
Subsidiary or by the Manager for the account of the Trust or any Subsidiary;

(ix)      all insurance costs incurred by the Trust or any Subsidiary,
including, without limitation, any costs to obtain liability or other insurance
to indemnify the Manager and underwriters of any securities of the Trust;

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(x)       all costs and expenses relating to the acquisition of, and maintenance
and upgrades to, the portfolio accounting systems of the Trust or any
Subsidiary;

(xi)      all compensation and fees paid to trustees or directors of the Trust
or any Subsidiary (excluding those trustees or directors who are also officers
or employees of the Manager), all expenses of trustees or directors of the Trust
or any Subsidiary (including those trustees or directors who are also employees
of the Manager), the cost of trustees and officers liability insurance and
premiums for errors and omissions insurance, and any other insurance deemed
necessary or advisable by the Board of Trustees for the benefit of the Trust and
its trustees and officers (including those trustees who are also employees of
the Manager);

(xii)     all third-party legal, accounting and auditing fees and expenses and
other similar services relating to the Trust’s or any Subsidiary’s operations
(including, without limitation, all quarterly and annual audit or tax fees and
expenses);

(xiii)    all third-party legal, expert and other fees and expenses relating to
any actions, proceedings, lawsuits, demands, causes of action and claims,
whether actual or threatened, made by or against the Trust or any Subsidiary, or
which the Trust or any Subsidiary is authorized or obligated to pay under
applicable law or its Governing Instruments or by the Board of Trustees;

(xiv)    subject to Section 9 below, any judgment or settlement of pending or
threatened proceedings (whether civil, criminal or otherwise) against the Trust
or any Subsidiary, or against any trustee, director or officer of the Trust or
any Subsidiary in his capacity as such for which the Trust or any Subsidiary is
required to indemnify such trustee, director or officer by any court or
governmental agency, or settlement of pending or threatened proceedings;

(xv)     all travel and related expenses of trustees, directors, officers and
employees of the Trust or any Subsidiary and the Manager, incurred in connection
with attending meetings of the Board of Trustees or holders of securities of the
Trust or any Subsidiary or performing other business activities that relate to
the Trust or any Subsidiary, including, without limitations, travel and expenses
incurred in connection with the purchase, consideration for purchase, financing,
refinancing, sale or other disposition of any investment or potential investment
of the Trust or any Subsidiary; provided,  however, that the Operating
Partnership (or any other Subsidiary, as provided below) shall only be
responsible for a proportionate share of such expenses, as determined by the
Manager in good faith, where such expenses were not incurred solely for the
benefit of the Trust or any Subsidiary;

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(xvi)    all expenses of organizing, modifying or dissolving the Trust or any
Subsidiary and costs preparatory to entering into a business or activity, or of
winding up or disposing of a business activity of the Trust or any Subsidiary,
if any;

(xvii)   all expenses relating to payments of dividends or interest or
distributions in cash or any other form made or caused to be made by the Board
of Trustees to or on account of holders of the securities of the Trust or any
Subsidiary, including, without limitation, in connection with any dividend
reinvestment plan;

(xviii)  all costs and expenses related to the design and maintenance of the
Trust’s website or sites and associated with any computer software, hardware,
electronic equipment or purchased information technology services from third
party vendors that is used primarily for the Trust or any Subsidiary;

(xix)    costs and expenses incurred with respect to market information systems
and publications, research publications and materials, and settlement, clearing
and custodial fees and expenses; provided,  however, that the Operating
Partnership (or any other Subsidiary, as provided below) shall only be
responsible for a proportionate share of such expenses, as determined by the
Manager in good faith, where such expenses were not incurred solely for the
benefit of the Trust or any Subsidiary;

(xx)     the costs and expenses incurred with respect to administering the
Trust’s incentive plans;

(xxi)    the costs and expenses of maintaining compliance with all U.S. federal,
state, local and applicable regulatory body rules and regulations; provided,
 however, that the Operating Partnership (or any other Subsidiary, as provided
below) shall only be responsible for a proportionate share of such costs and
expenses, as determined by the Manager in good faith, where such costs and
expenses were not incurred solely for the benefit of the Trust or any
Subsidiary;

(xxii)   expenses relating to any office or office facilities, including
disaster backup recovery sites and facilities, maintained for the Trust or any
Subsidiary separate from the offices of the Manager;

(xxiii)  all other expenses of the Trust or any Subsidiary relating to the
business and investment operations of the Trust and the Subsidiaries, including,
without limitation, the costs and expenses of acquiring, originating, owning,
protecting, maintaining, financing, refinancing, developing, modifying and
disposing of investments that are not the responsibility of the Manager under
Section 9(a) of this Agreement; and

(xxiv)  all other expenses actually incurred by the Manager or its Affiliates or
their respective managers, officers, trustees, directors, employees,

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members, representatives or agents, or any Affiliates thereof, that are
reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement.

In addition, the Operating Partnership (or any other Subsidiary, as provided
below) will be required to pay the Trust’s and the Subsidiaries’ pro rata
portion of rent, telephone, utilities, office furniture, equipment, machinery
and other office, internal and overhead expenses of the Manager and its
Affiliates required for the Trust’s and the Subsidiaries’ operations. These
expenses will be allocated between the Manager, on the one hand, and the
Operating Partnership (or such other Subsidiary), on the other hand, based on
the ratio of the Trust’s and the Subsidiaries’ proportion of gross assets
compared to all remaining gross assets managed by the Manager as calculated at
each fiscal quarter end. The Manager, the Trust and the Operating Partnership
will modify this allocation methodology, subject to the Board of Trustees’
approval, if the allocation becomes inequitable.

Notwithstanding the foregoing or any other provision contained in this
Agreement, in the event that any of the services provided hereunder by the
Manager are rendered to or for the benefit of any Subsidiary other than the
Operating Partnership, then, in the sole discretion of the Operating
Partnership, a portion of the expense reimbursements to the Manager and/or its
Affiliates hereunder, as determined by the Operating Partnership, shall be
payable by such Subsidiary.

(c)       Costs and expenses incurred by the Manager or an Affiliate thereof on
behalf of the Trust or any Subsidiary shall be reimbursed quarterly to the
Manager.  The Manager shall prepare a written statement in reasonable detail
documenting the costs and expenses of the Trust and the Subsidiaries and those
incurred by the Manager on behalf of the Trust or any Subsidiary during each
fiscal quarter, and shall deliver such written statement to the Trust within 30
days after the end of each fiscal quarter.  The Operating Partnership (or any
other Subsidiary, as provided in the immediately preceding paragraph) shall pay
all amounts payable to the Manager pursuant to this Section 8 within five (5)
Business Days after the date of delivery of such written statement without
demand, deduction, offset or delay.  Cost and expense reimbursement to the
Manager shall be subject to adjustment at the end of each calendar year in
connection with the annual audit of the Trust and the Subsidiaries.  The
provisions of this Section 8 shall survive the expiration or earlier termination
of this Agreement to the extent such expenses have previously been incurred or
are incurred in connection with such expiration or termination.

(d)       Notwithstanding the foregoing, the Manager may, at its option, elect
not to seek reimbursement for certain expenses during a given quarterly period,
which determination shall not be deemed to construe a waiver of reimbursement
for similar expenses in future periods.

Section 9.  Limits of the Manager’s Responsibility; Indemnification.  (a)    The
Manager assumes no responsibility under this Agreement other than to provide the
services specified hereunder in good faith and shall not be responsible for any
action of the Board of Trustees in following or declining to follow any advice
or recommendations of the Manager; provided that to the extent that officers of
the Manager also serve as officers of the Trust, such

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officers shall owe the Trust duties under Maryland law in their capacity as
officers of the Trust, which may include the duty to exercise reasonable care in
the performance of such officers’ responsibilities, as well as duties of
loyalty,  good faith and candid disclosure.  None of the Manager or its
Affiliates or their respective managers, officers, trustees, directors,
employees or members or any Person providing sub-advisory services to the
Manager will be liable to the Trust, any Subsidiary, the Board of Trustees, or
the Shareholders or interest holders of any Subsidiary for any acts or omissions
performed under this Agreement, except because of acts constituting bad faith,
willful misconduct, gross negligence or reckless disregard of the Manager’s
duties under this Agreement.  The Trust and the Operating Partnership shall, to
the full extent lawful, reimburse, indemnify and hold harmless the Manager and
its Affiliates and their respective managers, officers, trustees, directors,
employees and members and any Person providing sub-advisory services to the
Manager (each, a “Manager Indemnified Party”), with respect to all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever (including reasonable attorneys’ fees) (collectively “Losses”) in
respect of or arising from any acts or omissions of such Manager Indemnified
Party, performed in good faith under this Agreement and not constituting bad
faith, willful misconduct, gross negligence or reckless disregard of the duties
of the Manager under this Agreement.

(b)       The Manager shall, to the full extent lawful, reimburse, indemnify and
hold harmless the Trust (or any Subsidiary), and the trustees, officers and
Shareholders and each Person, if any, controlling the Trust (each, a “Trust
Indemnified Party”; a Manager Indemnified Party and a Trust Indemnified Party
are each sometimes hereinafter referred to as an “Indemnified Party”) with
respect to all Losses in respect of or arising from any acts or omissions under
this Agreement constituting bad faith, willful misconduct, gross negligence or
reckless disregard of the duties of the Manager under this Agreement or any
claims by the Manager’s employees relating to the terms and conditions of their
employment by the Manager.

(c)       In case any such claim, suit, action or proceeding (a “Claim”) is
brought against any Indemnified Party in respect of which indemnification may be
sought by such Indemnified Party pursuant hereto, the Indemnified Party shall
give prompt written notice thereof to the indemnifying party, which notice shall
include all documents and information in the possession of or under the control
of such Indemnified Party reasonably necessary for the evaluation and/or defense
of such Claim and shall specifically state that indemnification for such Claim
is being sought under this Section; provided,  however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not limit or affect
such Indemnified Party’s rights to be indemnified pursuant to this
Section.  Upon receipt of such notice of Claim (together with such documents and
information from such Indemnified Party), the indemnifying party shall, at its
sole cost and expense, in good faith defend any such Claim with counsel
reasonably satisfactory to such Indemnified Party, which counsel may, without
limiting the rights of such Indemnified Party pursuant to the next succeeding
sentence of this Section, also represent the indemnifying party in such
investigation, action or proceeding.  In the alternative, such Indemnified Party
may elect to conduct the defense of the Claim, if (1) such Indemnified Party
reasonably determines that the conduct of its defense by the indemnifying party
could be materially prejudicial to its interests, (2) the indemnifying party
refuses to defend (or fails to give written notice to the Indemnified Party
within ten (10) days of receipt of a notice of Claim that the indemnifying party
assumes such defense), or (3) the indemnifying party shall have failed, in such
Indemnified Party’s reasonable judgment, to defend the Claim in good faith.  The

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indemnifying party may settle any Claim against such Indemnified Party without
such Indemnified Party’s consent, provided, (1) such settlement is without any
Losses whatsoever to such Indemnified Party, (2) the settlement does not include
or require any admission of liability or culpability by such Indemnified Party
and (3) the indemnifying party obtains an effective written release of liability
for such Indemnified Party from the party to the Claim with whom such settlement
is being made, which release must be reasonably acceptable to such Indemnified
Party, and a dismissal with prejudice with respect to all claims made by the
party against such Indemnified Party in connection with such Claim.  The
applicable Indemnified Party shall reasonably cooperate with the indemnifying
party, at the indemnifying party’s sole cost and expense, in connection with the
defense or settlement of any Claim in accordance with the terms hereof.  If such
Indemnified Party is entitled pursuant to this Section to elect to defend such
Claim by counsel of its own choosing and so elects, then the indemnifying party
shall be responsible for any good faith settlement of such Claim entered into by
such Indemnified Party.  Except as provided in the immediately preceding
sentence, no Indemnified Party may pay or settle any Claim and seek
reimbursement therefor under this Section.

(d)       The provisions of this Section 9 shall survive the expiration or
earlier termination of this Agreement.

Section 10.  No Joint Venture.  The Trust, the Operating Partnership and the
Manager are not partners or joint venturers with each other and nothing herein
shall be construed to make them such partners or joint venturers or impose any
liability as such on any of them.

Section 11.  Term; Termination.

(a)       Initial Term.  This Agreement shall become effective on the date
hereof and shall continue in operation, unless terminated in accordance with the
terms hereof, until September 12, 2020 (the “Initial Term”).

(b)       Automatic Renewal Terms.  After the Initial Term, this Agreement shall
be deemed renewed automatically every 18 months for an additional 18 month
period (an “Automatic Renewal Term”) unless the Trust or the Manager terminates
this Agreement in accordance with Section 11(c) of this Agreement.

(c)       Termination of this Agreement.  Notwithstanding any other provision of
this Agreement to the contrary, upon the expiration of the Initial Term or any
Automatic Renewal Term and upon at least 180 days’ prior written notice to the
Manager or the Trust, as applicable (the “Termination Notice”), either (A) the
Trust (without cause), upon the affirmative vote of at least two-thirds of the
Independent Trustees or by a vote of the holders of at least two-thirds of the
Trust’s outstanding Common Shares (other than those Common Shares held by the
Manager or any Affiliate thereof), in each case based upon (1) unsatisfactory
performance by the Manager that is materially detrimental to the Trust and the
Subsidiaries or (2) the determination that the compensation payable to the
Manager under this Agreement is not fair; or (B) the Manager (without cause)
may, in connection with the expiration of the Initial Term or any Automatic
Renewal Term, decline to renew this Agreement (any such nonrenewal, a
“Nonrenewal Termination”); provided, that the Trust shall not have the right to
terminate this Agreement under clause (2) above if the Manager agrees to
continue to provide services under

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this Agreement at fees that at least two-thirds of the Independent Trustees
determine to be fair pursuant to the procedures set forth below.

If the Trust (but not the Manager) issues the Termination Notice, the Operating
Partnership shall be obligated to pay the Manager the Termination Fee within 90
days of the last day of the Initial Term or Automatic Renewal Term, as
applicable (the “Effective Termination Date”); provided,  however, that in the
event a Termination Notice is given in connection with a determination that the
compensation payable to the Manager is not fair, the Manager shall have the
right to renegotiate such compensation by delivering to the Trust and the
Operating Partnership, no fewer than 45 days prior to the prospective Effective
Termination Date, written notice (any such notice, a “Notice of Proposal to
Negotiate”) of its intention to renegotiate its compensation under this
Agreement.  Thereupon, the Trust (represented by the Independent Trustees), the
Operating Partnership and the Manager shall endeavor to negotiate in good faith
the revised compensation payable to the Manager under this Agreement. Provided
that the Manager, the Trust and the Operating Partnership agree to the terms of
the revised compensation to be payable to the Manager within 45 days following
the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall
be deemed of no force and effect and this Agreement shall continue in full force
and effect on the terms stated in this Agreement, except that the compensation
payable to the Manager hereunder shall be the revised compensation then agreed
upon by the parties to this Agreement. The Trust, the Operating Partnership and
the Manager agree to execute and deliver an amendment to this Agreement setting
forth such revised compensation promptly upon reaching an agreement regarding
the same. In the event that the Trust, the Operating Partnership and the Manager
are unable to agree to the terms of the revised compensation to be payable to
the Manager during such 45-day period, this Agreement shall terminate, such
termination to be effective on the date which is the later of (A) 10 days
following the end of such 45-day period and (B) the Effective Termination Date
originally set forth in the Termination Notice.  In the event of any Nonrenewal
Termination, after delivery of the Termination Notice, the Manager shall
thereafter have the authority to invest only such capital that represents the
return of capital resulting from the liquidation or repayment of investments of
the Trust or any Subsidiary existing at the time of the Termination Notice, and
subject to the Investment Policies and all other existing investment and other
policies of the Trust.  The Manager shall cooperate with the Trust and the
Subsidiaries in executing an orderly transition of the management of the Trust’s
assets to a new manager.  The Trust may terminate this Agreement for cause
pursuant to Section 13 of this Agreement even after a Nonrenewal Termination and
no Termination Fee shall be payable.

(d)       If (i) either of the MBS Agreement or the MSR Recapture Agreement is
terminated by PennyMac Corp. without cause as provided in each such agreement or
(ii) the Servicing Agreement is terminated by the Operating Partnership without
cause as provided in such agreement, the Manager shall have the right to
terminate this Agreement without cause upon notice to the Trust, provided that
if such termination occurs due to a termination of the MBS Agreement, MSR
Recapture Agreement or Servicing Agreement at any time other than at the end of
the Initial Term or any Automatic Renewal Term, the Operating Partnership shall
be obligated to pay the Manager the Termination Fee within 90 days of receipt of
such notice from the Manager.

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(e)       If any of the MBS Agreement, the MSR Recapture Agreement or the
Servicing Agreement is terminated by PennyMac Loan Services without cause as
provided in each such agreement, the Trust shall have the right to terminate
this Agreement without cause upon notice to the Manager, provided that under
such circumstances the Operating Partnership shall not be obligated to pay the
Termination Fee.

(f)       If this Agreement is terminated pursuant to this Section 11 or
pursuant to Section 12, 13 or 14, such termination shall be without any further
liability or obligation of any party to the other, except with respect to the
payment of a Termination Fee, if applicable, and except as provided in Sections
6, 8 and 15 of this Agreement; provided that notwithstanding the foregoing, the
Manager shall be liable to the Trust for any breach of this Agreement, and
nothing herein shall limit the Trust from pursuing any and all remedies
available to it at law or equity in connection with any such breach. In
addition, Sections 9, 17(b) and 18(e) of this Agreement shall survive
termination of this Agreement.

Section 12.  Assignments.  (a)    Except as set forth in Section 12(b) of this
Agreement, this Agreement shall terminate automatically without payment of the
Termination Fee in the event of its assignment, in whole or in part, by the
Manager, unless such assignment is consented to in writing by the Trust with the
consent of a majority of the Independent Trustees.  Any such permitted
assignment shall bind the assignee under this Agreement in the same manner as
the Manager is bound, and the Manager shall be liable to the Trust and the
Subsidiaries for all errors or omissions of the assignee under any such
assignment.  In addition, the assignee shall execute and deliver to the Trust
and the Operating Partnership a counterpart of this Agreement naming such
assignee as the Manager.  This Agreement shall not be assigned by the Trust or
the Operating Partnership without the prior written consent of the Manager,
except in the case of assignment by the Trust or the Operating Partnership to
another REIT (in the case of the Trust) or other organization which is a
successor (by merger, consolidation, purchase of assets, or similar transaction)
to the Trust or the Operating Partnership, in which case such successor
organization shall be bound under this Agreement and by the terms of such
assignment in the same manner as the Trust and the Operating Partnership are
bound under this Agreement.

(b)       Notwithstanding any provision of this Agreement, the Manager may
subcontract and assign any or all of its responsibilities under this Agreement
to any of its Affiliates in accordance with the terms of this Agreement
applicable to any such subcontract or assignment, and the Trust and the
Operating Partnership hereby consent to any such assignment and subcontracting.
In addition, provided that the Manager provides prior written notice to the
Trust and the Operating Partnership for informational purposes only, nothing
contained in this Agreement shall preclude any pledge, hypothecation or other
transfer of any amounts payable to the Manager under this Agreement. In
addition, the Manager may assign one or more of its duties under this Agreement
to any of its Affiliates without the Trust’s or the Operating Partnership’s
approval if such assignment does not require their approval under the Investment
Advisers Act of 1940, as amended.

Section 13.  Termination by the Trust for Cause.  At the option of the Trust and
at any time during the term of this Agreement, this Agreement shall be and
become terminated upon at least 30 days’ prior written notice of termination
from the Board of Trustees to the Manager,

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without payment of the Termination Fee, if any of the following events shall
occur, which shall be determined by a majority of the Independent Trustees:

(i)        the Manager shall materially breach any provision of this Agreement
and such breach shall continue for a period of 30 days after the Manager’s
receipt of written notice thereof specifying such breach and requesting that the
same be remedied in such 30-day period (or 45 days after the Manager’s receipt
of written notice of such breach if the Manager takes steps to cure such breach
within 30 days of the written notice);

(ii)       the Manager shall commit any act of fraud, misappropriation of funds,
or embezzlement against the Trust or any Subsidiary;

(iii)      the Manager shall commit any act of gross negligence in the
performance of its duties under this Agreement;

(iv)      upon the commencement of any proceeding relating to the Manager’s
Bankruptcy or insolvency;

(v)       upon the dissolution of the Manager;

(vi)      upon a Change in Control of the Manager;

(vii)     the termination of the MBS Agreement for “cause” thereunder; or

(viii)    the Manager is unable under applicable law or regulation to perform
its obligations under this Agreement.

If any of the events specified above shall occur, the Manager shall give prompt
written notice thereof to the Board of Trustees.  The Board of Trustees may
exercise its right to terminate the Manager as provided in this Section 13 for a
period of 60 days following receipt of such notice.

Section 14.  Termination by the Manager for Cause.

(a)        At the option of the Manager and at any time during the term of this
Agreement, this Agreement shall be and become terminated upon at least 60 days’
prior written notice of termination from the Manager to the Trust and the
Operating Partnership, with payment of the Termination Fee, if the Trust or the
Subsidiaries shall have defaulted in the performance of any material term of
this Agreement, and such default has continued uncured for a period of 30 days
after the Trust’s and the Operating Partnership’s receipt of written notice of
such default from the Manager.

(b)        At the option of the Manager and at any time during the term of this
Agreement, this Agreement shall be and become terminated, without payment of the
Termination Fee, if the Trust becomes required to register as an investment
company under the Investment Company Act, with such termination deemed to occur
immediately before such event.

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Section 15.  Action Upon Termination.  From and after the effective date of
termination of this Agreement pursuant to Sections 11, 12, 13 or 14 of this
Agreement, the Manager shall not be entitled to compensation for further
services hereunder, but shall be paid all compensation accruing to the date of
termination and, if the Manager is so entitled in accordance with the terms of
this Agreement, the Termination Fee.  Upon any such termination, the Manager
shall forthwith:

(a)        after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled, pay over to the Trust or a Subsidiary all
money collected and held for the account of the Trust or a Subsidiary pursuant
to this Agreement;

(b)        deliver to the Board of Trustees a full accounting, including a
statement showing all payments collected by it and a statement of all money held
by it, covering the period following the date of the last accounting furnished
to the Board of Trustees with respect to the Trust and any Subsidiary;

(c)        deliver to the Board of Trustees all property and documents of the
Trust and any Subsidiary then in the custody of the Manager; and

Section 16.  Release of Money or Other Property Upon Written Request.  The
Manager agrees that any money or other property of the Trust or any Subsidiary
held by the Manager shall be held by the Manager as custodian for the Trust or
such Subsidiary, and the Manager’s records shall be appropriately and clearly
marked to reflect the ownership of such money or other property by the Trust or
such Subsidiary.  Upon the receipt by the Manager of a written request signed by
a duly authorized officer of the Trust requesting the Manager to release to the
Trust any money or other property then held by the Manager for the account of
the Trust or any Subsidiary under this Agreement, the Manager shall release such
money or other property to the Trust or any Subsidiary within a reasonable
period of time, but in no event later than 45 days following such request.  Upon
delivery of such money or other property to the Trust, the Manager shall not be
liable to the Trust, any Subsidiary, the Board of Trustees, or the Shareholders
or the interest holders of any Subsidiary for any acts or omissions by the Trust
or any Subsidiary in connection with the money or other property released in
accordance with this Section.  The Trust and the Operating Partnership shall
indemnify the Manager and its Affiliates and their respective managers,
officers, trustees, directors, employees and members and any Person providing
sub-advisory services to the Manager against any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever,
which arise in connection with the Manager’s release of such money or other
property in accordance with the terms of this Section 16.  Indemnification
pursuant to this provision shall be in addition to any right of the Manager to
indemnification under Section 9 of this Agreement.

Section 17.  Use of Name.

(a)        The Manager hereby grants to the Trust and the Subsidiaries during
the term of this Agreement a non-exclusive, royalty-free license to use the
“PennyMac” brand, trademark, logo and service marks and any derivation thereof
related thereto (the “PennyMac Brand”) in the United States.  Notwithstanding
the foregoing, it is acknowledged and agreed that the Manager and its other
Affiliates retain the right to continue to use the PennyMac Brand

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during the term of this Agreement.  It is further acknowledged and agreed that
under no circumstances shall the Manager be prohibited from licensing or
transferring the ownership of the PennyMac Brand to third parties.

(b)        In the event of the termination of this Agreement, the Trust shall be
required to cease using the PennyMac Brand as promptly as possible, including by
changing its name to remove the word “PennyMac” therefrom as promptly as
practicable.  The provisions of this Section 17(b) shall survive the expiration
or earlier termination of this Agreement.

Section 18.  Miscellaneous.

(a)        Notices.  All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered against receipt or upon actual receipt of (1)
personal delivery, (2) delivery by reputable overnight courier, (3) delivery by
facsimile transmission with telephonic confirmation or (4) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below (or to such other address as may be hereafter
notified by the respective parties hereto in accordance with this Section 18):

The Trust and the

 

 

Operating Partnership:

PennyMac Mortgage Investment Trust

 

PennyMac Operating Partnership, L.P.

 

3043 Townsgate Road

 

Westlake Village, CA 91361

 

Attention:  Chief Executive Officer

 

Fax:  (818) 936-0283

 

 

with copies to:

PennyMac Mortgage Investment Trust

 

PennyMac Operating Partnership, L.P.

 

3043 Townsgate Road

 

Westlake Village, CA 91361

 

Attention:  Chief Legal Officer

 

Fax:  (818) 936-0283

 

 

 

and

 

 

 

Stoner Fox Law Group, LLP

 

120 Vantis, Suite 300

 

Aliso Viejo, California 92656

 

Attention: John E. Stoner

 

 

The Manager:

PNMAC Capital Management, LLC

 

3043 Townsgate Road

 

Westlake Village, CA 91361

 

Attention:  Chief Executive Officer

 

Fax:  (818) 936-0283

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with a copy to:

PNMAC Capital Management, LLC

 

3043 Townsgate Road

 

Westlake Village, CA 91361

 

Attention:  Chief Legal Officer

 

Fax:  (818) 936-0283

(b)        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 heirs, personal representatives, successors and assigns as provided
herein.

(c)        Integration.  This Agreement contains the entire agreement and
understanding among 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 and/or usage of the trade
inconsistent with any of the terms hereof.  Without limiting the foregoing, the
Trust and the Operating Partnership shall not have any obligations to the
Manager, monetary or otherwise, with respect to any agreement or arrangement
entered into prior to the date hereof. 

(d)        Amendments.  Neither this Agreement, nor any terms hereof, may be
amended, supplemented or modified except in an instrument in writing executed by
the parties hereto.

(e)        GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND THE
UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE
OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

(f)        [Reserved.]

(g)       No Waiver; Cumulative Remedies.  No failure to exercise and no delay
in exercising, on the part of a party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

(h)       Costs and Expenses.  Each party hereto shall bear its own costs and
expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matters incident thereto.

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(i)       Section Headings.  The section and subsection headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.

(j)       Counterparts.  This Agreement may be executed by the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

(k)       Severability.  Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, each of the parties hereto have executed this Second Amended
and Restated Management Agreement as of the date first written above.

 

 

 

 

 

 

 

PENNYMAC MORTGAGE INVESTMENT TRUST

 

 

 

 

 

By:

/s/ Andrew S. Chang

 

 

Name:

Andrew S. Chang

 

 

Title:

Senior Managing Director and
Chief Business Development Officer

 

 

 

 

 

PENNYMAC OPERATING PARTNERSHIP, L.P.

 

 

 

 

 

By:

PENNYMAC GP OP, INC.,

 

 

its General Partner

 

 

 

 

 

By:

/s/ Andrew S. Chang

 

 

Name:

Andrew S. Chang

 

 

Title:

Senior Managing Director and
Chief Business Development Officer

 

 

 

 

 

 

 

 

 

PNMAC CAPITAL MANAGEMENT, LLC

 

 

 

 

 

By:

/s/ Anne D. McCallion

 

 

Name:

Anne D. McCallion

 

 

Title:

Senior Managing Director and

 

 

 

Chief Financial Officer

 

 

38

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Execution Version

Exhibit A

Allocation Policy

Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in that certain Second Amended and Restated Management Agreement, dated
as of September 12, 2016, as may be amended from time to time (the “Management
Agreement”), by and among PennyMac Mortgage Investment Trust, PennyMac Operating
Partnership, L.P. and PNMAC Capital Management, LLC.

Investment opportunities in pools of mortgage loans that are consistent with the
investment objective of the Trust and the Subsidiaries, on the one hand, and the
investment objectives of the two private fund vehicles managed by the Manager as
of the date of the Management Agreement (the “PennyMac funds”) and other future
entities or accounts managed by the Manager, on the other hand, will be
allocated among the Trust and the Subsidiaries and the PennyMac funds and such
other entities or accounts generally pro rata based upon relative amounts of
investment capital (including undrawn capital commitments) available for new
investments by the Trust and the Subsidiaries, the PennyMac funds and any other
relevant entities or accounts managed by the Manager or by assigning
opportunities among the relevant entities such that investments assigned among
the Trust and the Subsidiaries, the PennyMac funds and such entities or accounts
are fair and equitable over time; provided, that the Manager, in its sole
discretion, may allocate investment opportunities in any other manner that it
deems to be fair and equitable.

In the case of the assignment of investment opportunities, the Manager will
consider a number of factors. These factors include:

a.   investment objective or strategies for particular entities or accounts,

b.   tax considerations of an entity or account,

c.   risk or investment concentration parameters for an entity or account,

d.   supply or demand for an investment at a given price level,

e.   size of available investment,

f.    cash availability and liquidity requirements for an entity or account,

g.   regulatory restrictions,

h.   minimum investment size of an entity or account,

i.    relative size or “buying power” of an entity or account,

j.    regulatory considerations, including the impact on an entity’s status
under the Investment Company Act, and, in the case of the Trust, its REIT
status, and

Ex.A-1

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k.   such other factors as may be relevant to a particular transaction.

In the case of pro rata purchases of pools of loans where the pool is allocated
among the Trust and the Subsidiaries, the PennyMac funds and other entities or
accounts managed by the Manager, the Manager will, at the time of purchase, seek
to allocate the hundreds, or potentially thousands, of individual mortgage loans
in the pools among the Trust and the Subsidiaries, the PennyMac funds and such
other entities or accounts such that the overall allocation of acquired mortgage
loans in the pools will target reasonable symmetry with reference to, among
other factors, the following:

l.   unpaid principal balances,

m. default status,

n.  discounts from purchase price,

o.  lien position,

p.  expected cash flows,

q.  geography, and

r.   such other factors as may be relevant to a particular transaction.

This Allocation Policy may be amended, restated, modified, supplemented or
waived only by a majority of the Independent Trustees.

 

Ex. A-2

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Exhibit B

Investment Policies

Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in that certain Second Amended and Restated Management Agreement, dated
as of September 12, 2016, as may be amended from time to time, by and among
PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and
PNMAC Capital Management, LLC.

1.          No investment shall be made that would cause the Trust to fail to
qualify as a REIT under the Code;

2.          No investment shall be made that would cause the Trust to be
regulated as an investment company under the Investment Company Act;  and

3.          With the exception of real estate and housing, no single industry
shall represent greater than 20% of the investments or aggregate risk exposure
in the portfolio of the Trust.

These Investment Policies may be amended, restated, modified, supplemented or
waived by the Board of Trustees (which must include a majority of the
Independent Trustees) without the approval of, or prior notice to, the
Shareholders.

Ex.  B-1

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