Exhibit 10.1

EXECUTION COPY

BASE INDENTURE

PMT ISSUER TRUST – FMSR

as Issuer

and

CITIBANK, N.A.

as Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary

and

PENNYMAC CORP.

as Servicer and Administrator

and

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

as Administrative Agent

Dated as of December 20, 2017

PMT ISSUER TRUST—FMSR

MSR COLLATERALIZED NOTES, ISSUABLE IN SERIES

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page   Article I  

Definitions and Other Provisions of General Application

     5  

Section 1.1.

  Definitions      5  

Section 1.2.

  Interpretation      5  

Section 1.3.

  Compliance Certificates and Opinions      6  

Section 1.4.

  Form of Documents Delivered to Indenture Trustee      6  

Section 1.5.

  Acts of Noteholders      7  

Section 1.6.

  Notices, etc., to Indenture Trustee, Issuer, Administrator, the Administrative
Agent and Note Rating Agencies      8  

Section 1.7.

  Notices to Noteholders; Waiver      9  

Section 1.8.

  Administrative Agent      10  

Section 1.9.

  Effect of Headings and Table of Contents      12  

Section 1.10.

  Successors and Assigns      12  

Section 1.11.

  Severability of Provisions      12  

Section 1.12.

  Benefits of Indenture      12  

Section 1.13.

  Governing Law      12  

Section 1.14.

  Counterparts      12  

Section 1.15.

  Submission to Jurisdiction; Waivers      13   Article II  

The Trust Estate

     14  

Section 2.1.

  Contents of Trust Estate      14  

Section 2.2.

  Asset Files      16  

Section 2.3.

  Duties of Custodian with Respect to the Asset Files      17  

Section 2.4.

  Application of Trust Money      18   Article III  

Administration of Participation Certificates; Reporting to Investors

     19  

Section 3.1.

  Duties of the Calculation Agent      19  

Section 3.2.

  Reports by Administrator and Indenture Trustee      22  

Section 3.3.

  Annual Statement as to Compliance; Notice of Default; Reports      24  

Section 3.4.

  Access to Certain Documentation and Information      27  

Section 3.5.

  Indenture Trustee to Make Reports Available      28   Article IV  

The Trust Accounts; Payments

     29  

Section 4.1.

  Trust Accounts      29  

Section 4.2.

  Collections and Disbursements of Portfolio Collections by Servicer      31  

Section 4.3.

  Fundings      31  

Section 4.4.

  Interim Payment Dates      33  

Section 4.5.

  Payment Dates      34  

Section 4.6.

  Series Reserve Account; Expense Reserve Account      39  

Section 4.7.

  Collection and Funding Account      42  

 

i

--------------------------------------------------------------------------------

Section 4.8.

  Note Payment Account      43  

Section 4.9.

  Securities Accounts      43  

Section 4.10.

  Notice of Adverse Claims      46  

Section 4.11.

  No Gross Up      46  

Section 4.12.

  Advance Rate Trigger Event Trigger Period, Early Amortization Period and Full
Amortization Period      46   Article V  

Note Forms

     47  

Section 5.1.

  Forms Generally      47  

Section 5.2.

  Forms of Notes      47  

Section 5.3.

  Reserved      48  

Section 5.4.

  Book-Entry Notes      48  

Section 5.5.

  Beneficial Ownership of Global Notes      51  

Section 5.6.

  Notices to Depository      52   Article VI  

The Notes

     52  

Section 6.1.

  General Provisions; Notes Issuable in Series; Terms of a Series or
Class Specified in an Indenture Supplement      52  

Section 6.2.

  Denominations      54  

Section 6.3.

  Execution, Authentication and Delivery and Dating      54  

Section 6.4.

  Temporary Notes      55  

Section 6.5.

  Registration, Transfer and Exchange      55  

Section 6.6.

  Mutilated, Destroyed, Lost and Stolen Notes      60  

Section 6.7.

  Payment of Interest; Interest Rights Preserved; Withholding Taxes      61  

Section 6.8.

  Persons Deemed Owners      62  

Section 6.9.

  Cancellation      62  

Section 6.10.

  New Issuances of Notes      62   Article VII  

Satisfaction and Discharge; Cancellation of Notes Held by the Issuer or PMC

     65  

Section 7.1.

  Satisfaction and Discharge of Indenture      65  

Section 7.2.

  Application of Trust Money      66  

Section 7.3.

  Cancellation of Notes Held by the Issuer or PMC      66  

Section 7.4.

  Termination of Servicer’s Servicing Rights; Fannie Mae’s Rights      66  
Article VIII  

Events of Default and Remedies

     68  

Section 8.1.

  Events of Default      68  

Section 8.2.

  Acceleration of Maturity; Rescission and Annulment      71  

Section 8.3.

  Collection of Indebtedness and Suits for Enforcement by Indenture Trustee     
72  

Section 8.4.

  Indenture Trustee May File Proofs of Claim      72  

Section 8.5.

  Indenture Trustee May Enforce Claims Without Possession of Notes      73  

Section 8.6.

  Application of Money Collected      73  

Section 8.7.

  Sale of Collateral Requires Consent of Noteholders      73  

 

ii

--------------------------------------------------------------------------------

Section 8.8.

  Limitation on Suits      74  

Section 8.9.

  Limited Recourse      74  

Section 8.10.

  Restoration of Rights and Remedies      75  

Section 8.11.

  Rights and Remedies Cumulative      75  

Section 8.12.

  Delay or Omission Not Waiver      75  

Section 8.13.

  Control by Noteholders      75  

Section 8.14.

  Waiver of Past Defaults      76  

Section 8.15.

  Sale of Trust Estate      76  

Section 8.16.

  Undertaking for Costs      77  

Section 8.17.

  Waiver of Stay or Extension Laws      78  

Section 8.18.

  Notice of Waivers      78   Article IX  

The Issuer

     78  

Section 9.1.

  Representations and Warranties of Issuer      78  

Section 9.2.

  Liability of Issuer; Indemnities      82  

Section 9.3.

  Merger or Consolidation, or Assumption of the Obligations, of the Issuer     
84  

Section 9.4.

  Issuer May Not Own Notes      85  

Section 9.5.

  Covenants of Issuer      85   Article X  

The Administrator and Servicer

     90  

Section 10.1.

  Representations and Warranties of PMC, as Administrator and as Servicer     
90  

Section 10.2.

  Covenants of PMC, as Administrator and as Servicer      93  

Section 10.3.

  Negative Covenants of PMC      98  

Section 10.4.

  Liability of PMC, as Administrator and as Servicer; Indemnities      99  

Section 10.5.

  Merger or Consolidation, or Assumption of the Obligations, of PMC      101  
Article XI  

The Indenture Trustee

     102  

Section 11.1.

  Certain Duties and Responsibilities      102  

Section 11.2.

  Notice of Defaults      103  

Section 11.3.

  Certain Rights of Indenture Trustee      104  

Section 11.4.

  Not Responsible for Recitals or Issuance of Notes      107  

Section 11.5.

  Indenture Trustee’s Appointment as Attorney-In-Fact      108  

Section 11.6.

  Money Held in Trust      109  

Section 11.7.

  Compensation and Reimbursement, Limit on Compensation, Reimbursement and
Indemnity      109  

Section 11.8.

  Corporate Indenture Trustee Required; Eligibility      111  

Section 11.9.

  Resignation and Removal; Appointment of Successor      111  

Section 11.10.

  Acceptance of Appointment by Successor      113  

Section 11.11.

  Merger, Conversion, Consolidation or Succession to Business      113  

Section 11.12.

  Appointment of Authenticating Agent      113  

Section 11.13.

  Direction to Indenture Trustee under the PC Repo Guaranty and the PMH Repo
Guaranty      115  

 

iii

--------------------------------------------------------------------------------

Section 11.14.

  Representations and Covenants of the Indenture Trustee      115  

Section 11.15.

  Indenture Trustee’s Application for Instructions from the Issuer      115  
Article XII  

Amendments and Indenture Supplements

     116  

Section 12.1.

  Supplemental Indentures and Amendments Without Consent of Noteholders      116
 

Section 12.2.

  Supplemental Indentures and Amendments with Consent of Noteholders      117  

Section 12.3.

  Execution of Amendments      119  

Section 12.4.

  Effect of Amendments      119  

Section 12.5.

  Reference in Notes to Indenture Supplements      119  

Section 12.6.

  Amendments to Appendix A      120   Article XIII  

Early Redemption of Notes

     120  

Section 13.1.

  Optional Redemption      120  

Section 13.2.

  Notice      121   Article XIV  

Miscellaneous

     122  

Section 14.1.

  No Petition      122  

Section 14.2.

  No Recourse      122  

Section 14.3.

  Tax Treatment      122  

Section 14.4.

  Alternate Payment Provisions      123  

Section 14.5.

  Termination of Obligations      123  

Section 14.6.

  Final Payment      123  

Section 14.7.

  Base Servicing Fee      124  

Section 14.8.

  Owner Trustee Limitation of Liability      124  

Section 14.9.

  Communications with Rating Agencies      125  

Section 14.10.

  Authorized Representatives      125  

Section 14.11.

  Performance of the Issuer’s Duties by the Owner Trustee and the Administrator
     126  

Section 14.12.

  Noteholder or Note Owner Communications with the Indenture Trustee      126  

 

iv

--------------------------------------------------------------------------------

SCHEDULES AND EXHIBITS

 

Schedule 1    Participation Certificates Schedule Schedule 2    Participation
Agreements Schedule Schedule 3    Eligible Securities Schedule Schedule 4   
Required Information Regarding Portfolio Mortgage Loans Schedule 5    Wire
Instructions Exhibit A-1    Form of Global Rule 144A Note Exhibit A-2    Form of
Definitive Rule 144A Note Exhibit A-3    Form of Global Regulation S Note
Exhibit A-4    Form of Definitive Regulation S Note Exhibit B-1    Form of
Transferee Certificate for Transfers of Notes pursuant to Rule 144A Exhibit B-2
   Form of Transferee Certificate for Transfer of Notes pursuant to Regulation S
Exhibit C-1    Authorized Representatives of the Indenture Trustee, Calculation
Agent, Paying Agent and Securities Intermediary Exhibit C-2    Authorized
Representatives of PMC, as Servicer and as Administrator Exhibit C-3   
Authorized Representatives of the Administrative Agent Exhibit C-4    Authorized
Representatives of the Issuer Exhibit D    Form of Certificate of Authentication
of Indenture Trustee and Authenticating Agent Exhibit E    Form of Indenture
Supplement Exhibit F    Form of Risk Retention Certification Appendix A   
Defined Terms

 

v

--------------------------------------------------------------------------------

PREAMBLE

This Base Indenture (together with the exhibits and schedules hereto, as
amended, restated, supplemented or otherwise modified from time to time, the
“Base Indenture,” and collectively with the Indenture Supplements (as defined
herein), the “Indenture”), is made and entered into as of December 20, 2017, by
and among PMT ISSUER TRUST—FMSR, a statutory trust organized under the laws of
the State of Delaware (the “Issuer”), CITIBANK, N.A. (“Citibank”), a national
banking association, in its capacity as Indenture Trustee (the “Indenture
Trustee”), and as Calculation Agent, Paying Agent and Securities Intermediary
(in each case, as defined herein), PENNYMAC CORP., a corporation organized under
the laws of the State of Delaware (“PMC”), as Servicer (as defined herein) and
as Administrator (as defined herein), and CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC (“CSFB”), a Delaware limited liability company, as an Administrative
Agent (as defined herein). Capitalized terms used herein have the meanings
specified in Section 1.1.

PRELIMINARY STATEMENT

WHEREAS, pursuant to the Retained Excess Spread Participation Agreement, PMC has
created the Retained MSR Excess Spread PC, which represents a Participation
Interest in Retained MSR Excess Spread;

WHEREAS, pursuant to the Excess Spread Participation Agreement, PMC has created
the Sold MSR Excess Spread PC, which represents a Participation Interest in Sold
MSR Excess Spread related to all Sold MSR Portfolios, and sold such Sold MSR
Excess Spread PC to PMH, and PMH, as Repo Seller, has sold and assigned such
Sold MSR Excess Spread PC back to PMC pursuant to the PMH Repurchase Agreement;

WHEREAS, pursuant to the PC Repurchase Agreement, PMC, as Repo Seller, has sold
to the Issuer, as Repo Buyer, all of its right, title and interest in, to and
under the Retained MSR Excess Spread PC and the Sold MSR Excess Spread PC;

WHEREAS, the Guarantor, has issued the PMH Repo Guaranty in favor of PMC with
respect to the obligations of PMH as Repo Seller under the PMH Repurchase
Agreement, and PMC will assign its rights, but not its obligations, under the
PMH Repurchase Agreement and the PMH Repo Guaranty to the Issuer pursuant to the
PC Repurchase Agreement;

WHEREAS, the Guarantor has issued the PC Repo Guaranty in favor of the Issuer
with respect to the obligations of PMC as Repo Seller under the PC Repurchase
Agreement;

WHEREAS, on the Closing Date, the parties are entering into this Base Indenture,
providing for, among other things, the Issuer’s authority to issue different
Series of Notes from time to time, on the terms and subject to the conditions
set forth herein;

WHEREAS, the Issuer has duly authorized the execution and delivery of this Base
Indenture to provide for the issuance on the date hereof of its Variable Funding
Note and potential future issuance of Term Notes and additional Variable Funding
Notes, in each case, to be issued in one (1) or more Series and/or Classes, as
is or will be specified in the related Indenture Supplement for such Series; and

 

1

--------------------------------------------------------------------------------

WHEREAS, all things necessary to make this Base Indenture a valid agreement of
the Issuer, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows.

GRANTING CLAUSE

Subject to the interests of Fannie Mae as set forth below and in the
Acknowledgment Agreement, the Issuer hereby Grants to the Indenture Trustee for
the benefit and security of the Noteholders and the Indenture Trustee, in its
individual capacity (each, a “Secured Party” and collectively, the “Secured
Parties”), a security interest in all its right, title and interest in and to
the following, whether now owned or hereafter acquired and wheresoever located
(collectively, the “Collateral”), and all monies, “securities,” “instruments,”
“accounts,” “general intangibles,” “payment intangibles,” “goods,” “letter of
credit rights,” “chattel paper,” “financial assets,” “investment property” (the
terms in quotations are defined in the UCC) and other property consisting of,
arising from or relating to any of the following:

(i) all right, title and interest of the Issuer in, to and under (A) the
Retained MSR Excess Spread PC, (B) the Sold MSR Excess Spread PC and (C) all
monies due or to become due thereon, and all amounts received or receivable with
respect thereto, and all proceeds thereof (including “proceeds” as defined in
the UCC in effect in all relevant jurisdictions, including all amounts collected
by the Servicer or any Subservicer on its behalf for servicing compensation (not
including Advance Reimbursement Amounts or Ancillary Income) under any
Participation Certificate);

(ii) all right, title and interest of the Issuer in, to and under any Eligible
Securities and all monies due or to become due thereon, and all amounts received
or receivable with respect thereto, and all proceeds thereof (including
“proceeds” as defined in the Uniform Commercial Code in effect in all relevant
jurisdictions);

(iii) all rights and claims of the Issuer as Repo Buyer under the PC Repurchase
Agreement;

(iv) all rights and claims of the Issuer as buyer under the Dedicated Account
Pledge Agreement;

(v) all rights and claims of the Issuer pursuant to the PC Repo Guaranty;

(vi) all rights and claims of the Issuer, as assignee of PMC, pursuant to the
PMH Repurchase Agreement and the PMH Repo Guaranty;

 

2

--------------------------------------------------------------------------------

(vii) all rights and claims of the Issuer to the additional collateral pledged
to the Issuer to support PMC’s obligations under the PC Repurchase Agreement,
including any and all rights (A) as assignee of PMC of the PMH Repurchase
Agreement and the PMH Repo Guaranty, (B) as assignee of PMC to rights to payment
on the Participation Certificates, and under all related documents, instruments
and agreements pursuant to which PMC acquired, or acquired an interest in, any
of the Participation Certificates and (C) as pledgee of the MSRs;

(viii) all rights and claims of the Issuer under the Acknowledgment Agreement;

(ix) the Trust Accounts and all amounts and property on deposit or credited to
the Trust Accounts (excluding any investment earnings thereon) from time to time
(whether or not constituting or derived from payments, collections or recoveries
received, made or realized in respect of the Participation Certificates);

(x) any rights in the Dedicated Account and to the amounts on deposit therein;

(xi) all other monies, securities, reserves and other property now or at any
time in the possession of the Indenture Trustee or its bailee, agent or
custodian and relating to any of the foregoing; and

(xii) all present and future claims, demands, causes and choses in action in
respect of any and all of the foregoing and all payments on or under, and all
proceeds of every kind and nature whatsoever in respect of, any and all of the
foregoing and all payments on or under, and all proceeds of every kind and
nature whatsoever in conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, checks, deposit accounts, rights to payment of any and
every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.

The Security Interest in the Trust Estate is Granted to secure the Notes issued
pursuant to this Base Indenture (and the obligations under this Base Indenture
and any Indenture Supplement) equally and ratably without prejudice, priority or
distinction between any Note and any other Note by reason of difference in time
of issuance or otherwise, except as otherwise expressly provided in this Base
Indenture or in any Indenture Supplement, and to secure (1) the payment of all
amounts due on such Notes, (2) the payment of all other sums payable by the
Issuer under this Base Indenture or any Indenture Supplement and (3) compliance
by the Issuer with the provisions of this Base Indenture or any Indenture
Supplement. This Base Indenture, as it may be supplemented, including by each
Indenture Supplement, is a security agreement within the meaning of the UCC.

The Indenture Trustee acknowledges the Grant of such Security Interest, and
agrees to perform the duties herein in accordance with the terms hereof.

Notwithstanding anything to the contrary in this Base Indenture or any of the
other Transaction Documents, the security interest of the Indenture Trustee for
the benefit of the Noteholders created hereby with respect to the Participation
Certificates and the MSRs is subject to the following provisions, which
provisions shall be included in each financing statement filed in respect
hereof:

 

3

--------------------------------------------------------------------------------

The Security Interest described in this financing statement is subordinate to
all rights of Fannie Mae under (i) the terms of an Acknowledgment Agreement,
with respect to the Security Interest (as defined therein) among Fannie Mae,
PennyMac Corp. (the “Servicer”), PennyMac Holdings, LLC, PennyMac Mortgage
Investment Trust and Citibank, N.A., solely as Indenture Trustee under the Base
Indenture, dated December 20, 2017, and not in its individual capacity, (ii) the
terms of a Subordination of Interest Agreement, with respect to the Security
Interest (as defined therein), among Fannie Mae, the Servicer and PennyMac
Holdings, LLC, and (iii) the Mortgage Selling and Servicing Contract, the Fannie
Mae Selling Guide, the Fannie Mae Servicing Guide and all supplemental servicing
instructions or directives provided by Fannie Mae, all applicable master
agreements, recourse agreements, repurchase agreements, indemnification
agreements, loss-sharing agreements, and any other agreements between Fannie Mae
and the Servicer, and all as amended, restated or supplemented from time to time
(collectively, the “Fannie Mae Lender Contract”), which rights include the right
of Fannie Mae to terminate the Fannie Mae Lender Contract with or without cause
and the right to sell, or have transferred, the Servicing Rights.

The Issuer hereby authorizes the Administrator, on behalf of the Issuer and the
Indenture Trustee, and its assignees, successors and designees to file one or
more UCC financing statements, financing statement amendments and continuation
statements to perfect the security interest granted above. In addition, the
Issuer hereby consents to the filing of a financing statement describing the
Collateral covered thereby as “all assets of the Debtor, now owned or hereafter
acquired,” or such similar language as the Administrator, on behalf of the
Indenture Trustee, and its assignees, successors and designees may deem
appropriate.

Subject to the interests and rights of Fannie Mae as set forth in this Base
Indenture and in the Acknowledgment Agreement and the Fannie Mae Requirements,
the parties hereto intend that the Security Interest Granted under this Base
Indenture shall give the Indenture Trustee on behalf of the Secured Parties a
first priority perfected security interest in, to and under the Collateral, and
all other property described in this Base Indenture as a part of the Trust
Estate and all proceeds of any of the foregoing in order to secure the
obligations of the Issuer to the Indenture Trustee and the Noteholders under the
Notes, this Base Indenture, the related Indenture Supplement, and all of the
other Transaction Documents. The Indenture Trustee on behalf of the Secured
Parties shall have all the rights, powers and privileges of a secured party
under the UCC. The Issuer agrees to execute and file all filings (including
filings under the UCC) and take all other actions reasonably necessary in any
jurisdiction to provide third parties with notice of the Security Interest
Granted pursuant to this Base Indenture and to perfect such Security Interest
under the UCC.

AGREEMENTS OF THE PARTIES

To set forth or to provide for the establishment of the terms and conditions
upon which the Notes are to be authenticated, issued and delivered, and in
consideration of the premises and the purchase of Notes by the Noteholders
thereof, it is mutually covenanted and agreed as set forth in this Base
Indenture, for the equal and proportionate benefit of all Noteholders of the
Notes or of a Series or Class thereof, as the case may be.

 

4

--------------------------------------------------------------------------------

LIMITED RECOURSE

The obligation of the Issuer to make payments of principal, interest and other
amounts on the Notes is limited in recourse as set forth in Section 8.9.

Article I

Definitions and Other Provisions of General Application

 

Section 1.1. Definitions.

For all purposes of this Indenture, except as otherwise expressly provided
herein or unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the Definitions
attached hereto as Appendix A which is incorporated by reference herein. All
other capitalized terms used herein shall have the meanings specified herein.

 

Section 1.2. Interpretation.

For all purposes of this Base Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

(a) reference to and the definition of any document (including this Base
Indenture) shall be deemed a reference to such document as it may be amended,
restated, supplemented or otherwise modified from time to time;

(b) all references to an “Article,” “Section,” “Schedule” or “Exhibit” are to an
Article or Section hereof or to a Schedule or an Exhibit attached hereto;

(c) defined terms in the singular shall include the plural and vice versa and
the masculine, feminine or neuter gender shall include all genders;

(d) the words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Base Indenture shall refer to this Base Indenture as a whole
and not to any particular provision of this Base Indenture;

(e) unless otherwise specified herein, the term “or” has the inclusive meaning
represented by the term “and/or” and the term “including” is not limiting;

(f) in the computation of periods of time from a specified date to a later
specified date, unless otherwise specified herein, the words “commencing on”
mean “commencing on and including,” the word “from” means “from and including”
and the words “to” and “until” each means “to but excluding”;

(g) periods of days referred to in this Base Indenture shall be counted in days
unless Business Days are expressly prescribed and references in this Base
Indenture to months and years shall be to months and years unless otherwise
specified;

 

5

--------------------------------------------------------------------------------

(h) accounting terms not otherwise defined herein and accounting terms partly
defined herein to the extent not defined, shall have the respective meanings
given to them under GAAP;

(i) “including” and words of similar import will be deemed to be followed by
“without limitation”;

(j) references to any statute, law, rule or regulation shall be deemed a
reference to such statute, law, rule or regulation as it may be amended or
modified from time to time.

 

Section 1.3. Compliance Certificates and Opinions.

Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Base Indenture, the Issuer will furnish
to the Indenture Trustee (1) an Officer’s Certificate stating that all
conditions precedent, if any, provided for in this Base Indenture relating to
the proposed action have been complied with and (2) except as provided below, an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Base Indenture relating to
such particular application or request, no additional certificate or opinion
need be furnished. No such certificate or opinion shall be required in any
instance where 100% of the Noteholders have consented to the related amendment,
modification or action and all of the Noteholders have directed the Indenture
Trustee in writing to execute such amendment or supplement, or with respect to
any other modification or action, directed the Indenture Trustee in writing to
permit such modification or action without receiving such certificate or
opinion.

Every certificate with respect to compliance with a condition or covenant
provided for in this Base Indenture will include:

(a) a statement to the effect that each individual signing such certificate has
read such covenant or condition and the definitions herein relating thereto;

(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate are based;

(c) a statement to the effect that such individual has made such examination or
investigation as is necessary to express an informed opinion as to whether or
not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.

 

Section 1.4. Form of Documents Delivered to Indenture Trustee.

In any case where several matters are required to be certified by, or covered by
an opinion of, one or more specified Persons, one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to the other matters, and any such Person may certify or give an opinion as
to such matters in one or several documents.

 

6

--------------------------------------------------------------------------------

Any certificate or opinion of the Issuer may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel,
unless the Issuer knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations are erroneous. Any such
certificate or opinion of, or representation by, counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, the Issuer stating that the information with respect to such
factual matters is in the possession of the Issuer, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations are erroneous.

Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Base Indenture, they may, but need not, be consolidated and form one
instrument.

 

Section 1.5. Acts of Noteholders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action (each, an “Action”) provided by this Base Indenture to be given or
taken by Noteholders of any Class may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Noteholders in
person or by an agent duly appointed in writing. Except as herein otherwise
expressly provided, such Action will become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments and any such
record (and the Action embodied therein and evidenced thereby) are herein
sometimes referred to as the “Act” of the Noteholders signing such instrument or
instruments and so voting at any meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or the holding by any
Person of a Note, will be sufficient for any purpose of this Base Indenture and
(subject to Section 11.1) conclusive in favor of the Indenture Trustee and the
Issuer, if made in the manner provided in this Section 1.5.

(b) The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness to such execution or by the
certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
an officer of a corporation or a member of a partnership, on behalf of such
corporation or partnership, such certificate or affidavit will also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the person executing the same,
may also be proved in any other manner which the Indenture Trustee deems
sufficient.

(c) The ownership of Notes will be proved by the Note Register.

(d) Any Action by a Noteholder will bind all subsequent Noteholders of such
Noteholder’s Note, in respect of anything done or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon whether or not notation of
such Action is made upon such Note.

 

7

--------------------------------------------------------------------------------

(e) Without limiting the foregoing, a Noteholder entitled hereunder to take any
Action hereunder with regard to any particular Note may do so with regard to all
or any part of the principal amount of such Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount. Any notice given or Action
taken by a Noteholder or its agents with regard to different parts of such
principal amount pursuant to this paragraph shall have the same effect as if
given or taken by separate Noteholders of each such different part.

(f) Without limiting the generality of the foregoing, unless otherwise specified
pursuant to one or more Indenture Supplements, a Noteholder, including a
Depository that is the Noteholder of a Global Note representing Book-Entry
Notes, may make, give or take, by a proxy or proxies duly appointed in writing,
any Action provided in this Base Indenture to be made, given or taken by a
Noteholder, and a Depository that is the Noteholder of a Global Note may provide
its proxy or proxies to the beneficial owners of interests in or security
entitlements to any such Global Note through such Depository’s standing
instructions and customary practices.

(g) The Issuer may fix a record date for the purpose of determining the Persons
who are beneficial owners of interests in or security entitlements to any Global
Note held by a Depository entitled under the procedures of such Depository to
make, give or take, by a proxy or proxies duly appointed in writing, any Action
provided in this Base Indenture to be made, given or taken by Noteholders. If
such a record date is fixed, the Noteholders on such record date or their duly
appointed proxy or proxies, and only such Persons, shall be entitled to make,
give or take such Action, whether or not such Noteholders remain Noteholders
after such record date. No such Action shall be valid or effective if made,
given or taken more than ninety (90) days after such record date.

 

Section 1.6. Notices, etc., to Indenture Trustee, Issuer, Administrator, the
Administrative Agent and Note Rating Agencies.

(a) Any Action of Noteholders or other document provided or permitted by this
Base Indenture to be made upon, given or furnished to, or filed with, the
Indenture Trustee by any Noteholder or by the Issuer will be sufficient for
every purpose hereunder if in writing (which shall include electronic
transmission) and personally delivered, express couriered, electronically
transmitted or mailed by registered or certified mail to the Indenture Trustee
(or the bank serving as Indenture Trustee in any of its capacities) at its
Corporate Trust Office, or the Issuer or the Administrator by the Indenture
Trustee or by any Noteholder will be sufficient for every purpose hereunder
(except with respect to notices to the Indenture Trustee of an Event of Default
as provided in Section 8.1) if in writing (which shall include electronic
transmission) and personally delivered, express couriered, electronically
transmitted or mailed by registered or certified mail, addressed to it at:
(i) in the case of the Indenture Trustee, in any of its capacities: Citibank,
N.A., Corporate and Investment Banking, 388 Greenwich Street, 14th Floor, New
York, NY 10013, Attention: PMT ISSUER TRUST – FMSR Collateralized Notes, email:
valerie.delgado@citi.com; (ii) in the case of Servicer and Administrator: 3043
Townsgate Road, Suite 300, Westlake Village, CA 91361, Attention: PMT ISSUER
TRUST – FMSR Collateralized Notes, email: pamela.marsh@pnmac.com;
josh.smith@pnmac.com; contract.finance@pnmac.com (with a copy to Chris Gavin,
Esq., Cadwalader, Wickersham & Taft LLP, 200 Liberty Street, New York, NY 10281,
email: chris.gavin@cwt.com); (iii) in the case of the Issuer: to the
Administrator (with copy to: Wilmington Savings Fund Society, FSB, as Owner
Trustee, 500 Delaware Avenue, 11th Floor, Wilmington, Delaware 19801, Attention:

 

8

--------------------------------------------------------------------------------

Corporate Trust Administration, email: jeverhart@christianatrust.com); (iv) in
the case of CSFB, as Administrative Agent: Eleven Madison Avenue, New York, NY
10010, email: dominic.obaditch@credit-suisse.com; or (v) in any case at any
other address previously furnished in writing by any such party to the other
parties hereto.

(b) Where this Base Indenture provides for notice to or consent from any Note
Rating Agency, such notice or consent will only be required to the extent that
any Outstanding Class is then currently being rated at the request of PMC, and
as specified in the related Indenture Supplement, and if no Outstanding Class is
being so rated, including in the event ratings unsolicited by PMC are being
issued, such notice or consent provisions shall be of no force or effect. In the
event that an Indenture Supplement provides that one or more Classes obtain a
rating, any notice shall be sufficient for every purpose hereunder (except with
respect to notices to the Indenture Trustee of an Event of Default as provided
in Section 3.3 or Section 8.1) if in writing (which shall include electronic
transmission) and personally delivered, express couriered, electronically
transmitted or mailed by registered or certified mail, addressed to it at the
address set forth in the related Indenture Supplement. Failure to give such
notice will not affect any other rights or obligations created hereunder and
will not under any circumstance constitute an Adverse Effect.

 

Section 1.7. Notices to Noteholders; Waiver.

(a) Where this Base Indenture, any Indenture Supplement or any Note provides for
notice to registered Noteholders of any event, such notice will be sufficiently
given (unless expressly provided otherwise herein, in such Indenture Supplement
or in such Note) if in writing and mailed by overnight courier, sent by
facsimile, sent by electronic transmission or personally delivered to each
Noteholder of a Note affected by such event, at such Noteholder’s address as it
appears in the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Noteholders is given by mail, facsimile, electronic transmission
or delivery, none of the failure to mail, send by facsimile, send by electronic
transmission or deliver such notice, or any defect in any notice so mailed, to
any particular Noteholders will affect the sufficiency of such notice with
respect to other Noteholders and any notice that is mailed, sent by facsimile,
sent by electronic transmission or delivered in the manner herein provided shall
conclusively have been presumed to have been duly given.

Where this Base Indenture, any Indenture Supplement or any Note provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver will be the equivalent of such notice. Waivers of notice by Noteholders
will be filed with the Indenture Trustee, but such filing will not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.

(b) In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or otherwise, it will be impractical to mail notice of
any event to any Noteholder of a Note when such notice is required to be given
pursuant to any provision of this Base Indenture, then any method of
notification as will be satisfactory to the Indenture Trustee and the Issuer
will be deemed to be a sufficient giving of such notice.

 

9

--------------------------------------------------------------------------------

(c) The Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary each agree to accept and act upon instructions or directions
pursuant to this Base Indenture or any document executed in connection herewith
sent by unsecured email, facsimile transmission or other similar unsecured
electronic methods; provided, however, that the Indenture Trustee shall have
received an incumbency certificate (attached hereto as Exhibits C-1 through C-4)
listing such person as a person designated to provide such instructions or
directions, which incumbency certificate may be amended whenever a person is
added or deleted from the listing. If such person elects to give the Indenture
Trustee, Calculation Agent, Paying Agent and Securities Intermediary email or
facsimile instructions (or instructions by a similar electronic method) and the
Indenture Trustee, Calculation Agent, Paying Agent and Securities Intermediary
in its discretion elects to act upon such instructions, the Indenture Trustee’s,
Calculation Agent’s, Paying Agent’s and Securities Intermediary’s reasonable
understanding of such instructions, as applicable, shall be deemed controlling.

(d) None of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be liable for any losses, costs or expenses
arising directly or indirectly from the Indenture Trustee’s reliance upon and
compliance with such instructions notwithstanding such instructions conflicting
with or being inconsistent with a prior written instruction except as a result
of their respective willful misconduct, negligence or bad faith. Any Person
providing such instructions or directions agrees to assume all risks arising out
of the use of such electronic methods to submit instructions and directions to
the Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary, including the risk of Indenture Trustee, Calculation Agent, Paying
Agent and Securities Intermediary acting on unauthorized instructions, and the
risk of interception and misuse by third parties and acknowledges and agrees
that there may be more secure methods of transmitting such instructions than the
method(s) selected by it and agrees that the security procedures (if any) to be
followed in connection with its transmission of such instructions provide to it
a commercially reasonable degree of protection in light of its particular needs
and circumstances.

 

Section 1.8. Administrative Agent.

(a) Discretion of Administrative Agent. Any provision providing for the exercise
of discretion of the Administrative Agent means that such discretion may be
executed in the reasonable discretion of the Administrative Agent. In addition,
as further provided in the definition of “Administrative Agent” herein and
notwithstanding any other provision in this Base Indenture to the contrary, any
approvals, consents, votes or other rights exercisable by the Administrative
Agent under this Base Indenture (other than any Indenture Supplement related to
a specific Series) shall require the approval, consent, vote or other exercise
of rights of each Person specified by name under the definition of
“Administrative Agent” or in its stead its Affiliate or successor as noticed to
the Indenture Trustee, unless otherwise specified in any Indenture Supplement
related to a specific Series.

(b) Nature of Duties. The Administrative Agent shall have no duties or
responsibilities except those expressly set forth in this Base Indenture, a
related Indenture Supplement or in the other Transaction Documents. The
Administrative Agent shall not have by reason of this Base Indenture or any
Transaction Document a fiduciary relationship in respect of any Noteholder.
Nothing in this Base Indenture or any of the Transaction Documents, express or

 

10

--------------------------------------------------------------------------------

implied, is intended to or shall be construed to impose upon the Administrative
Agent any obligations in respect of this Base Indenture or any of the other
Transaction Documents except as expressly set forth herein or therein. Each
Noteholder shall make its own independent investigation of the financial
condition and affairs of the Issuer in connection with the purchase of any Note
and shall make its own appraisal of the creditworthiness of the Issuer and the
value of the Collateral, and the Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Noteholder with any credit or other information with respect thereto, whether
coming into its possession before the Closing Date, as applicable, or at any
time or times thereafter.

(c) Rights, Exculpation, Etc. The Administrative Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by it under or in connection with this Base Indenture or the
other Transaction Documents. Without limiting the generality of the foregoing,
the Administrative Agent: (i) may consult with legal counsel (including counsel
to the Administrative Agent or counsel to the Issuer), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel or experts; (ii) makes no warranty or representation to
any Noteholder and shall not be responsible to any Noteholder for any
statements, certificates, warranties or representations made in or in connection
with this Base Indenture or the other Transaction Documents; (iii) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Base Indenture or the other
Transaction Documents on the part of any Person, the existence or possible
existence of any default or Event of Default, or to inspect the Collateral or
other property (including the books and records) of any Person; (iv) shall not
be responsible to any Noteholder for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Base Indenture or the
other Transaction Documents or any other instrument or document furnished
pursuant hereto or thereto; and (v) shall not be deemed to have made any
representation or warranty regarding the existence, value or collectability of
the Collateral, the existence, priority or perfection of the Indenture Trustee’s
Adverse Claim thereon, or any certificate prepared by the Issuer in connection
therewith, nor shall the Administrative Agent be responsible or liable to the
Noteholders for any failure to monitor or maintain any portion of the
Collateral. Without limiting the foregoing and notwithstanding any understanding
to the contrary, no Noteholder shall have any right of action whatsoever against
the Administrative Agent as a result of the Administrative Agent acting or
refraining from acting under this Base Indenture, the Notes or any of the other
Transaction Documents in its own interests as a Noteholder or otherwise.

(d) Reliance. The Administrative Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Base Indenture or any of the other Transaction
Documents and its duties hereunder or thereunder, upon advice of counsel
selected by it.

 

11

--------------------------------------------------------------------------------

Section 1.9. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for
convenience only and will not affect the construction hereof.

 

Section 1.10. Successors and Assigns.

All covenants and agreements in this Base Indenture by the Issuer will bind its
successors and assigns, whether so expressed or not. All covenants and
agreements of the Indenture Trustee in this Base Indenture shall bind its
successors, co-trustees and agents of the Indenture Trustee.

 

Section 1.11. Severability of Provisions.

In case any provision in this Base Indenture or in the Notes will be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

 

Section 1.12. Benefits of Indenture.

Nothing in this Base Indenture or in any Notes, expressed or implied, will give
to any Person, other than the parties hereto and their successors hereunder, any
Authenticating Agent or Paying Agent, the Note Registrar, the Securities
Intermediary, the Calculation Agent, any Secured Party and the Noteholders of
Notes (or such of them as may be affected thereby), any benefit or any legal or
equitable right, remedy or claim under this Base Indenture.

 

Section 1.13. Governing Law.

THIS BASE INDENTURE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR
RELATED TO OR IN CONNECTION WITH THIS BASE INDENTURE, THE RELATIONSHIP OF THE
PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND
DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW
PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

THE SECURITIES INTERMEDIARY, THE ADMINISTRATOR AND THE ISSUER AGREE THAT THEY
WILL NOT CHANGE THE APPLICABLE LAW IN FORCE WITH RESPECT TO ISSUES REFERRED TO
IN ARTICLE 2(1) OF THE HAGUE SECURITIES CONVENTION TO A STATE OTHER THAN THE
STATE OF NEW YORK.

 

Section 1.14. Counterparts.

This Base Indenture may be executed in any number of counterparts, each of which
so executed will be deemed to be an original, but all such counterparts will
together constitute but one and the same instrument. Delivery of an executed
counterpart of a signature page to this Base Indenture by facsimile or other
electronic means shall be effective as delivery of a manually executed
counterpart of this Base Indenture.

 

12

--------------------------------------------------------------------------------

Section 1.15. Submission to Jurisdiction; Waivers.

EACH OF THE PARTIES HERETO AND THE NOTEHOLDERS, BY THEIR ACCEPTANCE OF THE
NOTES, HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS BASE INDENTURE, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;

(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS
AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;

(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN
NOTIFIED IN WRITING, EXCEPT THAT WITH RESPECT TO THE INDENTURE TRUSTEE,
CALCULATION AGENT, PAYING AGENT AND SECURITIES INTERMEDIARY, SERVICE OF PROCESS
MAY ONLY BE MADE AS REQUIRED BY APPLICABLE LAW;

(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN
ANY OTHER JURISDICTION;

(e) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS BASE
INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY; AND

(f) AGREES THAT IN THE EVENT THAT ANY TERM OR PROVISION CONTAINED HEREIN SHALL
CONFLICT WITH OR BE INCONSISTENT WITH ANY TERM OR PROVISION CONTAINED IN ANY
INDENTURE SUPPLEMENT, THE TERMS AND PROVISIONS OF THE APPLICABLE INDENTURE
SUPPLEMENT SHALL GOVERN WITH RESPECT TO THE RELATED SERIES OF NOTES, TO THE
EXTENT OF SUCH CONFLICT.

 

13

--------------------------------------------------------------------------------

Article II

The Trust Estate

 

Section 2.1. Contents of Trust Estate.

(a) Grant of Trust Estate. The Issuer has Granted the Trust Estate to the
Indenture Trustee, and the Indenture Trustee has accepted this Grant, pursuant
to the Granting Clause.

(b) Addition and Removal of Participation Certificates and Mortgage Loans.

(i) Addition of Participation Certificates and Mortgage Loans.

(A) PMC may at any time designate any Participation Certificates as additional
Participation Certificates to be sold to the Issuer under the PC Repurchase
Agreement, whereupon such Participation Certificate shall be added to the
Collateral for purposes of this Base Indenture if (1) the Administrative Agent
(in its sole discretion) has approved such Participation Certificate for
addition and (2) written notice of such addition has been provided to the Note
Rating Agencies for the Outstanding Notes. Prior to the addition of any
Participation Certificates, as provided in this Section 2.1(b), the
Administrator must certify to the Indenture Trustee in writing that it has filed
all financing statements or amendments to financing statements to ensure that
the Indenture Trustee’s Security Interest in any additional Participation
Certificate, and, if applicable, in the related MSRs, is perfected and of first
priority.

(B) If any Participation Certificates are added as Collateral, the Administrator
shall update the Participation Certificate Schedule and furnish it to the
Indenture Trustee, and the most recently furnished schedule shall be maintained
by the Indenture Trustee as the definitive Participation Certificate Schedule.

(C) From time to time, in accordance with the Retained Excess Spread
Participation Agreement or the Excess Spread Participation Agreement, as
applicable, Mortgage Loans may be added to (i) the Retained MSR Portfolio or
(ii) the Sold MSR Excess Spread PC in connection with a new confirmation being
entered into thereunder, and when such Mortgage Loans are added, PMC shall
provide an updated Participation Certificate Schedule to reflect any such
additions, to the Indenture Trustee and the Administrative Agent, and any new
Participation Certificate Schedule shall automatically become the new updated
schedule thereof.

(ii) Removal of the Participation Certificates and Mortgage Loans.

(A) PMC may remove: (1) the Sold MSR Excess Spread PC from the Collateral,
whereupon such Sold MSR Excess Spread PC and the related MSRs shall no longer
constitute Collateral for purposes of this Base Indenture, if PMH shall have
repurchased such Participation Certificate for the full PMH

 

14

--------------------------------------------------------------------------------

Repurchase Price and such PMH Repurchase Price has been deposited into the
Collection and Funding Account by no later than 10:00 a.m. New York City time on
each Payment Date (or such other time as may be agreed to from time to time by
the Servicer, the Administrator, the Indenture Trustee and the Administrative
Agent), for application in accordance with Section 4.5 (subject to Section 2.06
of the PC Repurchase Agreement); or (2) the Retained MSR Excess Spread PC from
the Collateral, whereupon such Retained MSR Excess Spread PC shall no longer
constitute Collateral for purposes of this Base Indenture, if PMC shall have
repurchased such Participation Certificate for the full PMC Repurchase Price and
such PMC Repurchase Price has been deposited into the Collection and Funding
Account, for application in accordance with Section 4.5.

(B) In accordance with the Retained Excess Spread Participation Agreement or the
Excess Spread Participation Agreement, as applicable, PMC may cause the removal
of the MSRs related to Subject Mortgages underlying a Participation Certificate,
whereupon such MSRs shall no longer constitute Collateral for purposes of this
Base Indenture; provided, that PMC shall have repurchased such MSRs for the full
PMC Repurchase Price and shall have deposited such PMC Repurchase Price into the
Collection and Funding Account by no later than 10:00 a.m. New York City time on
each Payment Date (or such other time as may be agreed to from time to time by
the Servicer, the Administrator, the Indenture Trustee and the Administrative
Agent), for application in accordance with Section 4.5.

(C) If any Participation Certificates are no longer Collateral, the
Administrator shall update the Participation Certificate Schedule and furnish it
to the Indenture Trustee, and the most recently furnished schedule shall be
maintained by the Indenture Trustee as the definitive Participation Certificate
Schedule.

(D) If any MSRs are removed from the Participation Agreements, PMC shall provide
an updated schedule to the Retained MSR Excess Spread PC to reflect any such
removals, to the Indenture Trustee and the Administrative Agent within ten
(10) Business Days of such removal, and any new schedule to the Retained MSR
Excess Spread PC, shall automatically become the new updated schedule thereof.

(c) Protection of Transfers to, and Back-up Security Interests of Issuer. The
Administrator shall take all actions as may be necessary to ensure that the
Trust Estate is Granted to the Indenture Trustee pursuant to this Base
Indenture. The Administrator, at its own expense, shall make (or cause to be
made) all initial filings on or about the Closing Date hereunder and shall
forward a copy of such filing or filings to the Indenture Trustee. In addition,
and without limiting the generality of the foregoing, the Administrator, at its
own expense at the reasonable request of the Administrative Agent, shall prepare
and forward for filing, or shall cause to be forwarded for filing, all filings
necessary to maintain the effectiveness of any original filings necessary under
the relevant UCC to perfect and maintain the first priority status of the
Indenture

 

15

--------------------------------------------------------------------------------

Trustee’s security interest in the Trust Estate, including (i) continuation
statements, and (ii) such other statements as may be occasioned by (A) any
change of name of any of PMC or the Issuer, (B) any change of location of the
jurisdiction of any of PMC or the Issuer, (C) any transfer of any interest of
PMC or the Issuer in any item in the Trust Estate or (D) any change under the
applicable UCC or other applicable laws. The Administrator shall enforce the
Servicer’s obligations pursuant to the PC Repurchase Agreement, on behalf of the
Issuer and the Indenture Trustee.

 

Section 2.2. Asset Files.

(a) Indenture Trustee. The Indenture Trustee agrees to hold, in trust on behalf
of the Noteholders, within two (2) Business Days of the execution and delivery
of this Base Indenture, the following documents relating to each Participation
Certificate:

(i) each original Participation Certificate;

(ii) a copy of each Determination Date Report in electronic form listing each
Participation Certificate Granted to the Trust Estate and any other information
required in any related Indenture Supplement;

(iii) a copy of each Funding Certification delivered by the Administrator, which
shall be maintained in electronic format;

(iv) the current Participation Certificate Schedule; and

(v) any other documentation provided for in any Indenture Supplement;

provided that the Indenture Trustee shall have no responsibility to ensure the
validity or sufficiency of the Participation Certificates.

(b) Administrator as Custodian. To reduce administrative costs, the
Administrator will act as custodian for the benefit of the Noteholders of the
following documents relating to each Participation Certificate:

(i) a copy of the related Participation Certificate and each amendment and
modification thereto;

(ii) any documents other than those identified in Section 2.2(a) received from
or made available by the Servicer, securities administrator or other similar
party in respect of such Participation Certificate; and

(iii) any and all other documents that the Issuer, the Servicer or PMC, as the
case may be, shall keep on file, in accordance with its customary procedures,
relating to such Participation Certificate.

 

16

--------------------------------------------------------------------------------

(c) Delivery of Updated Participation Certificate Schedule and Eligible
Securities Schedule.

(i) The Administrator shall deliver to the Indenture Trustee an updated
Participation Certificate Schedule prior to the addition, modification or
deletion of any Participation Certificate as Collateral and the Indenture
Trustee shall hold the most recently delivered version as the definitive
Participation Certificate Schedule. The Administrator represents and warrants,
as of the date hereof and as of the date any new Participation Certificate is
added as Collateral, that the Participation Certificate Schedule, as it may be
updated by the Administrator from time to time and delivered to the Indenture
Trustee, is a true, complete and accurate list of all Participation
Certificates.

(ii) The Administrator shall deliver to the Indenture Trustee an updated
schedule of Eligible Securities prior to the addition, modification or deletion
of any Eligible Security as Collateral and the Indenture Trustee shall hold the
most recently delivered version as the definitive schedule. The Administrator
represents and warrants, as of the date hereof and as of the date any new
Eligible Security is added as Collateral, that the schedule of Eligible
Securities, as it may be updated by the Administrator from time to time and
delivered to the Indenture Trustee, is a true, complete and accurate list of all
Eligible Securities.

(d) Marking of Records. The Administrator shall ensure that, from and after the
time of the sale or contribution of the Participation Certificates to the Issuer
under the PC Repurchase Agreement and the Grant thereof to the Indenture Trustee
pursuant to this Base Indenture, any records (including any computer records and
back-up archives) maintained by or on behalf of the Servicer that refer to any
Participation Certificate indicate clearly the interest of the Issuer and the
Security Interest of the Indenture Trustee in such Participation Certificate and
that such Participation Certificate is owned by the Issuer and subject to the
Indenture Trustee’s Security Interest. Indication of the Issuer’s ownership of a
Participation Certificate and the Security Interest of the Indenture Trustee
shall be deleted from or modified on such records when, and only when, such
Participation Certificate has been paid in full, repurchased, or assigned by the
Issuer and released by the Indenture Trustee from its Security Interest.

(e) Custodian. PMC, as Repo Seller, the Issuer and the Administrative Agent each
confirm, and each Noteholder is deemed to confirm, that it is treating Citibank,
in its capacity as a Custodian, as holding each original Participation
Certificate as a “custodian” on behalf of the Issuer as a “customer” in
connection with a “securities contract” (as each such term is used in
Section 101(22) of the Bankruptcy Code), and each such Person confirms (or is
deemed to confirm, in the case of the Noteholders) that in such capacity
Citibank is serving as a “financial institution” (as defined in Section 101(22)
of the Bankruptcy Code). Citibank confirms that it is a “commercial bank” (as
such term is used in such Section 101(22) and acknowledges such treatment by
such Persons.

 

Section 2.3. Duties of Custodian with Respect to the Asset Files.

(a) Safekeeping. The Indenture Trustee or the Administrator, in its capacity as
custodian (each, a “Custodian”) pursuant to Section 2.2(b), shall hold the
portion of the Asset Files that it is required to maintain under Section 2.2 in
its possession from time to time for the use and benefit of all present and
future Noteholders, and maintain such accurate and complete accounts, records
and computer systems pertaining to each Asset File as shall enable the

 

17

--------------------------------------------------------------------------------

Calculation Agent and the Indenture Trustee to comply with this Base Indenture.
Each Custodian shall promptly report to the Issuer any failure on its part to
hold the Asset Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
The Indenture Trustee shall have no responsibility or liability for any actions
or omissions of the Administrator in its capacity as Custodian or otherwise.

(b) Maintenance of and Access to Records. Each Custodian shall maintain each
portion of the Asset File that it is required to maintain under this Base
Indenture at its offices at the Corporate Trust Office (in the case of the
Indenture Trustee) or 3043 Townsgate Road, Suite 300, Westlake Village, CA 91361
(in the case of the Servicer) as the case may be, or at such other office as
shall be specified to the Indenture Trustee and the Issuer by thirty (30) days’
prior written notice. The Administrator shall take all actions necessary, or
reasonably requested by the Administrative Agent, the Majority Noteholders of
all Outstanding Notes or the Indenture Trustee, to amend any existing financing
statements and continuation statements, and file additional financing statements
to further perfect or evidence the rights, claims or security interests of the
Indenture Trustee under any of the Transaction Documents (including the rights,
claims or security interests of the Issuer under the PC Repurchase Agreement
which have been assigned to the Indenture Trustee). The Indenture Trustee and
the Administrator, in their capacities as Custodian(s), shall make available to
the Issuer, the Calculation Agent, the Administrative Agent, any group of
Interested Noteholders and the Indenture Trustee (in the case of the
Administrator) or their duly authorized representatives, attorneys or auditors
the portion of the Asset Files that it is required to maintain under this Base
Indenture and the accounts, books and records maintained by the Indenture
Trustee or the Administrator with respect thereto as promptly as reasonably
practicable following not less than two (2) Business Days’ prior written notice
for examination during normal business hours and in a manner that does not
unreasonably interfere with such Person’s ordinary conduct of business.

Neither a Custodian nor any of its directors, officers or employees shall be
liable to anyone for any error of judgment, or for any act done or step taken or
omitted to be taken by it (or any of its directors, officers of employees), or
for any mistake of fact or law, or for anything which it may do or refrain from
doing in connection herewith, unless such action constitutes gross negligence,
willful misconduct or bad faith of such Custodian. Knowledge or information
acquired by Citibank in its capacity as Custodian hereunder shall not be imputed
to Citibank in any other capacity in which it may act hereunder or to any
affiliate of Citibank and vice versa. The Custodian shall be deemed to have the
same rights, immunities and protections as the Indenture Trustee hereunder,
except that the Custodian shall not be subject to a prudent person standard
under any circumstances.

 

Section 2.4. Application of Trust Money.

All money deposited with the Indenture Trustee or the Paying Agent pursuant to
Section 4.2 shall be held in trust and applied by the Indenture Trustee or the
Paying Agent, as the case may be, in accordance with the provisions of the Notes
and this Base Indenture, to the payment to the Persons entitled thereto, of the
principal, interest, fees, costs and expenses (or payments in respect of the
Funding Amount or other amount) for whose payment such money has been deposited
with the Indenture Trustee or the Paying Agent.

 

18

--------------------------------------------------------------------------------

Article III

Administration of Participation Certificates; Reporting to Investors

 

Section 3.1. Duties of the Calculation Agent.

(a) General. The Calculation Agent shall initially be Citibank. The Calculation
Agent is appointed for the purpose of making calculations and verifications as
provided in this Section 3.1(a). The Calculation Agent, as agent for the
Noteholders, shall provide all services necessary to fulfill the role of
Calculation Agent as set forth in this Base Indenture.

By 2:00 p.m. New York City time on each Payment Date (or such other time as may
be agreed to from time to time by the Servicer, the Administrator, the Indenture
Trustee and the Administrative Agent), based upon information provided to the
Indenture Trustee and the Calculation Agent by the Administrator pursuant to the
Fannie Mae Lender Contract and the Transaction Documents, as well as each
applicable Determination Date Report, all available reports issued by the
Servicer, the Market Value Report issued by the MSR Valuation Agent and the
report by the Indenture Trustee as to the Market Value of any Eligible
Securities (to the extent any Eligible Securities are on deposit in the Eligible
Securities Account) as of the Determination Date, the Calculation Agent shall
deliver to the Indenture Trustee to make available on its website (as set forth
in Section 3.5(a)), on a monthly basis, to Noteholders and each Note Rating
Agency, and solely during the Default Period, the Disposition Manager, a report
setting forth the information set forth below plus any Series-specific reporting
items for each Series that are specified in the related Indenture Supplement and
any additional information necessary to prepare the Payment Date Report pursuant
to Section 3.2(b):

(i) any Eligible Securities as of the Determination Date and the unpaid
principal balance of the Portfolio;

(ii) (A) the aggregate Available Funds collected, separately identifying (1) the
aggregate Retained MSR Excess Spread, Retained MSR Excess Spread Collections,
the Sold MSR Excess Spread and the Total Collections included therein, and
(2) the aggregate amount of proceeds collected during the Collection Period
preceding the upcoming Payment Date for all Participation Certificates less any
amounts distributed on any Interim Payment Date during such Collection Period;
and (B) separately identifying any PMH Repurchase Price, PMC Repurchase Price
and any payments under the PC Repo Guaranty;

(iii) an indication (yes or no) as to whether a Borrowing Base Deficiency exists
as of the close of business on the last day of the related Collection Period
preceding the upcoming Payment Date;

(iv) if the Full Amortization Period is in effect, the Series Available Funds
for each Series for the upcoming Payment Date;

(v) if required by any VFN Noteholder, the aggregate Funding Amount to be paid
on the upcoming Funding Date, and the amount to be drawn on each Class of VFNs
Outstanding in respect of such Funding Amount, and the portion of such Funding
Amount that is to be paid using Available Funds pursuant to
Section 4.5(a)(1)(viii);

 

19

--------------------------------------------------------------------------------

(vi) if any Note is Outstanding, the amount, if any, to be paid on each such
Class in reduction of the aggregate principal balance on the upcoming Payment
Date;

(vii) the amount of Fees to be paid on the upcoming Payment Date, the amount
remaining before the applicable Expense Limit is reached (before and after
giving effect to such payments), and, if applicable, any amounts in excess of
the Expense Limit to be carried forward to a subsequent year or Payment Date;

(viii) the Required Available Funds, the Expense Reserve Required Amount and the
Series Reserve Required Amount, if applicable, for each Series of Notes for the
upcoming Payment Date;

(ix) the Weighted Average Advance Rate for the facility to be used in
calculating whether a Borrowing Base Deficiency exists and for each Series and
Class of Variable Funding Notes;

(x) the Series Invested Amount and, if applicable, the Class Invested Amount for
each Series and Class for the upcoming Payment Date;

(xi) the Interest Payment Amount, the Default Supplemental Fee and the Step-Up
Fee for each Class of Outstanding Notes for the upcoming Payment Date, and the
Interest Amount, the Cumulative Interest Shortfall Amount, the Cumulative
Default Supplemental Fee Shortfall Amount and the Cumulative Step-Up Fee
Shortfall Amount for each Class of Notes for the Interest Accrual Period related
to the upcoming Payment Date;

(xii) an indication (yes or no) as to whether an Advance Rate Trigger Event,
Early Amortization Event or Event of Default hereunder has occurred;

(xiii) the calculation of the Stop-Loss Cap and the Stop-Loss Cap Required
Amount for the upcoming Payment Date as of the last day of the immediately
preceding month, which shall be calculated by PMC on a monthly basis and on a
quarterly basis will be calculated using the SDQ Rate provided by Fannie Mae for
such quarter to the extent available from Fannie Mae; and

(xiv) an indication (yes or no) as to whether Servicer is in compliance with the
following Fannie Mae servicer eligibility requirements (collectively, the
“Fannie Mae Eligibility Requirements”):

(A) its Lender Adjusted Net Worth is equal to or greater than the lender
adjusted net worth required by the Fannie Mae Lender Contract;

(B) its Lender Adjusted Net Worth to total assets ratio is equal to or less than
the minimum capital required by the Fannie Mae Lender Contract;

 

20

--------------------------------------------------------------------------------

(C) its Liquidity is equal to or greater than the liquidity requirement set
forth in the Fannie Mae Lender Contract; and

(D) there has been no Servicer Termination Event.

Noteholders of any Series of Term Notes shall receive solely the information
provided above and shall not receive the Market Value Report prepared by the MSR
Valuation Agent.

(b) Termination of Calculation Agent. The Issuer (with the consent of the
Majority Noteholders for each Series) may at any time terminate the Calculation
Agent without cause upon sixty (60) days’ prior notice. If at any time the
Calculation Agent shall fail to resign after written request therefor as set
forth in this Section 3.1(b), or if at any time the Calculation Agent shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of the Calculation Agent or of its property shall be appointed, or if any public
officer shall take charge or Control of the Calculation Agent or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, then
the Majority Noteholders of all Outstanding Notes may remove the Calculation
Agent and if the same entity serves as both Calculation Agent and Indenture
Trustee, the Majority Noteholders of all Outstanding Notes shall also remove the
Indenture Trustee as provided in Section 11.9(c). If the Calculation Agent
resigns or is removed under the authority of the immediately preceding sentence,
then a successor Calculation Agent shall be appointed pursuant to Section 11.9.
The Issuer shall give each Note Rating Agency and the Noteholders notice of any
such resignation or removal of the Calculation Agent and appointment and
acceptance of a successor Calculation Agent. Notwithstanding the foregoing, no
resignation, removal or termination of the Calculation Agent shall be effective
until the resignation, removal or termination of the predecessor Calculation
Agent and until the acceptance of appointment by the successor Calculation Agent
as provided herein. Any successor Indenture Trustee appointed shall also be the
successor Calculation Agent hereunder, if the predecessor Indenture Trustee
served as Calculation Agent and no separate Calculation Agent is appointed.
Notwithstanding anything to the contrary herein, the Indenture Trustee may not
resign as Calculation Agent unless it also resigns as Indenture Trustee pursuant
to Section 11.9(b).

(c) Successor Calculation Agents. Any successor Calculation Agent appointed
hereunder shall execute, acknowledge and deliver to the Issuer and to its
predecessor Calculation Agent an instrument accepting such appointment under
this Base Indenture, and thereupon the resignation or removal of the predecessor
Calculation Agent shall become effective and such successor Calculation Agent,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor under this Base
Indenture, with like effect as if originally named as Calculation Agent. The
predecessor Calculation Agent shall deliver to the successor Calculation Agent
all documents and statements held by it under this Base Indenture. The Issuer
and the predecessor Calculation Agent shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Calculation Agent all such rights,
powers, duties and obligations. Upon acceptance of appointment by a successor
Calculation Agent as provided in this Section 3.1, the Issuer shall mail notice
of the succession of such successor Calculation Agent under this Base Indenture
to all Noteholders at their addresses as shown in the Note Register and shall
give notice by mail to each applicable Note Rating Agency. If the Issuer fails
to mail such notice within ten (10) days after acceptance of appointment by the
successor Calculation Agent, the successor Calculation Agent shall cause such
notice to be mailed at the expense of the Administrator.

 

21

--------------------------------------------------------------------------------

Section 3.2. Reports by Administrator and Indenture Trustee.

(a) Determination Dates; Determination Date Reports. The Indenture Trustee shall
report to the Administrator, by no later than 2:00 p.m. New York City time on
the second (2nd) Business Day before each Funding Date (or such other time as
may be agreed to from time to time by Administrator, the Indenture Trustee and
the Administrative Agent), the amount of Available Funds that will be available
to be applied toward Funding Amounts or to pay principal on any applicable Notes
on the upcoming Payment Date or Interim Payment Date. If the Administrator
supplies no information to the Indenture Trustee in its Determination Date
Report concerning Funding Amounts or payments on any Variable Funding Note in
respect of an Interim Payment Date, then the Indenture Trustee shall apply no
Available Funds to pay Funding Amounts or to make payment on any Note on such
Interim Payment Date, unless an Event of Default has occurred and is continuing,
in which case the Indenture Trustee shall apply the Available Funds pursuant to
Section 4.5(a)(ii).

By no later than 10:00 a.m. New York City time on the first (1st) Business Day
prior to each Funding Date that is an Interim Payment Date and by no later than
2:00 p.m. New York City time on the second (2nd) Business Day prior to each
Funding Date that is a Payment Date (or such other time as may be agreed to from
time to time by the Administrator, the Indenture Trustee and the Administrative
Agent), the Administrator shall prepare and deliver to the Issuer, the Indenture
Trustee, the Calculation Agent, the Administrative Agent, each VFN Noteholder
and the Paying Agent a report (the “Determination Date Report”) (in electronic
form) setting forth each data item required to be reported pursuant to
Section 4.3, plus any additional information necessary to prepare the Payment
Date Report pursuant to Section 3.2(b).

(b) Payment Date Report. By no later than 3:00 p.m. New York City time on each
Payment Date, the Indenture Trustee shall make available on its website to the
Issuer, the Calculation Agent, the Administrator, the Paying Agent, the
Administrative Agent, each VFN Noteholder and each Note Rating Agency, and
solely during the Default Period, the Disposition Manager, a report (the
“Payment Date Report”) reporting the following for such Payment Date and the
related Collection Period preceding such Payment Date:

(i) the amount of Available Funds and Required Available Funds for such Payment
Date (segregating out any cash amounts that are on deposit in the Collection and
Funding Account which the Administrator has instructed the Indenture Trustee to
use in accordance with Section 4.5(a)(1)(viii));

(ii) (A) the aggregate amount of all Collections received and deposited into the
Collection and Funding Account during such Collection Period and (B) the Total
Collections for such Payment Date;

(iii) all Funding Amounts paid during such Collection Period separately
identifying the portion thereof paid from funds in the Collection and Funding
Account and the portion thereof paid using proceeds of fundings of an increase
in VFN Principal Balance(s) for each Class of VFNs;

 

22

--------------------------------------------------------------------------------

(iv) the amount on deposit in any Trust Accounts set forth under any Indenture
Supplement as of the close of business on the last Payment Date;

(v) the amount on deposit in the Series Reserve Account for each Series, and, if
applicable, the amount the Indenture Trustee is to withdraw from each such
Series Reserve Account and deposit into the Note Payment Account on such Payment
Date for application to the related Series of Notes;

(vi) the amount on deposit in the Expense Reserve Account, and, if applicable,
the amount the Indenture Trustee is to withdraw from the Expense Reserve Account
and deposit into the Note Payment Account on such Payment Date for application
to the related Series of Notes;

(vii) the amount of each payment required to be made by the Indenture Trustee or
the Paying Agent pursuant to Section 4.5 on such Payment Date;

(viii) the unpaid Note Balance for each Class and Series of Notes and for all
Outstanding Notes in the aggregate (before and after giving effect to any
principal payments to be made on such Payment Date); and

(ix) a statement indicating whether a Borrowing Base Deficiency existed at such
time and whether it will exist as of the close of business on such Payment Date
after all payments and distributions described in Section 4.5(a).

The Payment Date Report shall also state any other information required pursuant
to any related Indenture Supplement necessary for the Paying Agent and the
Indenture Trustee to make the payments required by Section 4.5(a) and all
information necessary for the Indenture Trustee to make available to Noteholders
pursuant to Section 3.5.

On each day on which a Payment Date Report is to be delivered, PMC shall deliver
to the Indenture Trustee a certification substantially in the form attached
hereto as Exhibit F.

(c) Interim Payment Date Reports. By no later than 3:00 p.m. New York City time
on each Interim Payment Date on which there is a VFN Outstanding and on which
the Full Amortization Periods have not yet begun, the Indenture Trustee shall
prepare and deliver to the Issuer, the Calculation Agent, the Administrator, the
Paying Agent, the Administrative Agent and each VFN Noteholder a report (an
“Interim Payment Date Report”) in electronic form, setting forth the following
for such Interim Payment Date and the Collection Period preceding such Interim
Payment Date:

(i) the amount of Available Funds and Required Available Funds for such Interim
Payment Date;

(ii) the aggregate amount of all Collections received and deposited into the
Collection and Funding Account during such Collection Period;

 

23

--------------------------------------------------------------------------------

(iii) the total of all (A) payments in respect of each Class of Notes
(separately identifying interest and principal paid on each Class of Variable
Funding Notes) made on the Interim Payment Date that occurred during such
Collection Period, (B) all Funding Amounts that were paid in respect of any
Participation Certificate created or acquired on or after the Cut-off Date and
sold by PMC to the Issuer under the PC Repurchase Agreement during such
Collection Period, separately identifying the portion thereof paid from funds on
deposit in the Collection and Funding Account and the portion thereof paid using
proceeds of an increase in VFN Principal Balance(s) for each Class of VFNs, and
(C) all Net Excess Cash Amounts paid to PMC as holder of the Owner Trust
Certificate on the Interim Payment Date that occurred during such Collection
Period;

(iv) the amount on deposit in the Series Reserve Account for each Series and the
Series Reserve Required Amount for such Series Reserve Account, if applicable,
and the amount to be deposited into each Series Reserve Account on such Interim
Payment Date, if applicable;

(v) the amount on deposit in the Expense Reserve Account for each Series and the
Expense Reserve Required Amount for the Expense Reserve Account and the amount
to be deposited into the Expense Reserve Account on such Interim Payment Date,
if applicable;

(vi) the amounts required to be deposited on such Interim Payment Date into any
other Trust Account referenced in any related Indenture Supplement;

(vii) (A) the Collateral Value as of the end of such Collection Period and as of
the close of business on such Interim Payment Date for each Outstanding Series
of Notes, and (B) a calculation demonstrating whether a Borrowing Base
Deficiency exists; and

(viii) any other amounts specified in an Indenture Supplement.

On each day on which an Interim Payment Date Report is to be delivered, PMC
shall deliver to the Indenture Trustee a certification substantially in the form
attached hereto as Exhibit F.

(d) No Duty to Verify or Recalculate. Notwithstanding anything contained herein
to the contrary, none of the Calculation Agent (except as described in
Section 3.1(a)), the Indenture Trustee or the Paying Agent shall have any
obligation to verify or recalculate any information provided to them by the
Administrator or any other Person, and may rely on such information in making
the allocations and payments to be made pursuant to Article IV. The Indenture
Trustee may conclusively rely without investigation on the most recent
Determination Date Report provided to the Indenture Trustee by the Administrator
in preparing the Determination Date Reports and Interim Payment Date Reports (if
any).

 

Section 3.3. Annual Statement as to Compliance; Notice of Default; Reports.

(a) Annual Officer’s Certificates.

 

24

--------------------------------------------------------------------------------

(i) The Servicer shall deliver to each Note Rating Agency and the Indenture
Trustee, on or before March 31 of each year, beginning on March 31, 2018, an
Officer’s Certificate of the Servicer, executed by a Responsible Officer,
stating that (A) a review of the activities of the Servicer during the preceding
12-month period ended December 31 (or, in the case of the first such statement,
from the Closing Date through December 31, 2017) and of its performance under
this Base Indenture and the PC Repurchase Agreement has been made under the
supervision of the officer executing the Officer’s Certificate, and (B) PMC has
fulfilled all its obligations under this Base Indenture and the PC Repurchase
Agreement in all material respects throughout such period or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default and the nature and status thereof.

(ii) The Administrator shall deliver to each Note Rating Agency and the
Indenture Trustee, on or before March 31 of each year, beginning on March 31,
2018, an Officer’s Certificate executed by a Responsible Officer of the
Administrator, stating that (A) a review of the activities of the Issuer and the
Administrator during the preceding 12-month period ended December 31 (or, in the
case of the first such statement, from the Closing Date through December 31,
2017) and of its performance under this Base Indenture and the PC Repurchase
Agreement has been made under the supervision of the officer executing the
Officer’s Certificate, and (B) the Administrator has fulfilled all its
obligations under this Base Indenture in all material respects throughout such
period or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof.

(b) Notice of Advance Rate Trigger Event, Early Amortization Event or Event of
Default. The Indenture Trustee shall deliver to the Noteholders, the Issuer, the
Disposition Manager and each Note Rating Agency promptly after a Responsible
Officer has obtained actual knowledge thereof, but in no event later than five
(5) Business Days thereafter or such shorter time period as may be required by
any Note Rating Agency, written notice specifying the nature and status of any
Advance Rate Trigger Event, Early Amortization Event or any Event of Default, as
applicable.

(c) Annual Regulation AB/USAP Report. The Servicer shall, on or before the last
Business Day of the fifth month following the end of each of the Servicer’s
fiscal years (December 31), beginning with the fiscal year ending on
December 31, 2017, deliver to the Indenture Trustee who shall forward to each
Noteholder a copy of the results of any Regulation AB required attestation
report or Uniform Single Attestation Program for Mortgage Bankers or similar
review conducted on the Servicer by its accountants and any other reports
reasonably requested by the Administrative Agent, including any notices from
Fannie Mae.

(d) Annual Lien Opinion. Within one hundred (100) days after the end of each
fiscal year of the Administrator, beginning with the fiscal year ending on
December 31, 2017, the Administrator shall deliver to the Indenture Trustee an
Opinion of Counsel from outside counsel to the effect that, subject to the
Acknowledgment Agreement and the Fannie Mae Requirements, the Indenture Trustee
has a perfected security interest in the Participation Certificates identified
in an exhibit to such opinion, and that, based on a review of UCC search reports
(copies of which shall be attached thereto) and review of other certifications
and other materials, there are no UCC-1 filings indicating an Adverse Claim with
respect to such Participation Certificates that has not been released.

 

25

--------------------------------------------------------------------------------

(e) Other Information. In addition, the Administrator shall forward to the
Administrative Agent, upon its reasonable request, such other information,
documents, records or reports respecting (i) PMC or any of its Affiliates party
to the Transaction Documents, (ii) the condition or operations, financial or
otherwise, of PMC or any of its Affiliates party to the Transaction Documents,
(iii) the Fannie Mae Lender Contract, the related Mortgage Loans and the
Participation Certificates or (iv) the transactions contemplated by the
Transaction Documents, including access to the Servicer’s management and
records. The Administrative Agent shall and shall cause its respective
representatives to hold in confidence all such information except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) or the Administrative Agent may
reasonably determine that such disclosure is consistent with its obligations
hereunder; provided, however, that the Administrative Agent may disclose on a
confidential basis any such information to its agents, attorneys and auditors in
connection with the performance of its responsibilities hereunder.

(f) MSR Monthly Report. On a monthly basis and in no event later than the
fifteenth (15th) day of each month (or, if such day is not a Business Day, the
Business Day following such day), PMC shall deliver to the Indenture Trustee and
the MSR Valuation Agent the monthly data file with respect to all Mortgage Loans
(the “MSR Monthly Report”) subject to the terms and conditions of this Base
Indenture, which shall include all updates to the Mortgage Loans as of the last
day of the immediately preceding month.

(g) Market Value Report. The MSR Valuation Agent shall calculate the fair market
value and the valuation percentage of the MSRs, the Portfolio Excess Spread and
the Base Servicing Fee on each Borrowing Base Determination Date in accordance
with the MSR Valuation Agent Agreement. The MSR Valuation Agent shall deliver to
the Indenture Trustee, the Servicer, the Administrator and the Administrative
Agent, and solely during the Default Period, the Disposition Manager, a monthly
report (the “Market Value Report”) no later than the Determination Date prior to
the related Payment Date, stating (i) the fair market value and the valuation
percentage of the MSRs, the Portfolio Excess Spread and the Base Servicing Fee
as of the Borrowing Base Determination Date., and (ii) the fair market value and
the valuation percentage of the MSRs, which assumes that the 10-year U.S.
Treasury rate (mid-mark) declines or increases by more than 0.375% from the
10-year U.S. Treasury rate (mid-mark) as of the most recent Borrowing Base
Determination Date (as determined by the MSR Valuation Agent).

(h) In the event that the MSR Valuation Agent does not provide its Market Value
Report by the Determination Date for two (2) consecutive months, PMC shall be
required to terminate the MSR Valuation Agent and appoint a replacement MSR
Valuation Agent who shall be (i) an eligible MSR Valuation Agent and
(ii) required to deliver a Market Value Report no later than the tenth (10th)
day of the month immediately following appointment of the replacement MSR
Valuation Agent.

(i) MSR Valuation Agent. PMC shall have the right to remove and replace the MSR
Valuation Agent without cause with prior written consent of the Administrative
Agent.

 

26

--------------------------------------------------------------------------------

(j) Disposition Manager. The Disposition Manager will have the duties
specifically set forth in the Disposition Management Agreement, including a
requirement to sell the MSRs in accordance with the rights and responsibilities
of the Indenture Trustee as secured party under the Acknowledgment Agreement.
Prior to the occurrence and continuation of an Event of Default, PMC shall have
the right to remove and replace the Disposition Manager without cause with prior
written consent of the Administrative Agent and Fannie Mae. The Disposition
Manager shall have the right to resign under the circumstances described in the
Disposition Management Agreement. No resignation or removal of the Disposition
Manager and no appointment of a successor Disposition Manager will become
effective until the acceptance of appointment by a successor Disposition
Manager. Pursuant to the Disposition Management Agreement, if no successor
Disposition Manager shall have been appointed and shall have accepted
appointment within sixty (60) days after the giving of a notice of resignation,
the resigning Disposition Manager may petition any court of competent
jurisdiction for the appointment of a successor Disposition Manager, and the
costs of the Disposition Manager in connection with such petition shall be
reimbursable in accordance with the Disposition Management Agreement.

 

Section 3.4. Access to Certain Documentation and Information.

(a) Access to Information.

Notwithstanding anything to the contrary contained in this Section 3.4,
Section 2.3, or in any other Section hereof, the Servicer, on reasonable prior
written notice (of not less than five (5) Business Days), shall permit the
Administrative Agent, the Indenture Trustee, the MSR Valuation Agent or any
agent or independent certified public accountants selected by the Indenture
Trustee, during the Servicer’s normal business hours, and in a manner that does
not unreasonably interfere with the Servicer’s conduct of its regular business,
to examine all the books of account, records, reports and other papers of the
Servicer relating to the Portfolio Mortgage Loans, Fannie Mae Lender Contract
and the Participation Certificates, to make copies and extracts therefrom, and
to discuss the Servicer’s affairs, finances and accounts relating to the
Portfolio Mortgage Loans, Fannie Mae Lender Contract and the Participation
Certificates with the Servicer’s officers and employees, all at such times and
as often as reasonably may be requested; provided that any such Person seeking
access to any information or documentation pursuant to this Section 3.4(a) has
agreed with the Servicer to be bound by any confidentiality provisions
reasonably requested by the Servicer and shall upon request execute and deliver
a separate confidentiality agreement memorializing such provisions. Unless an
Event of Default that has not been waived in accordance with the terms hereof
shall have occurred, any out-of-pocket costs and expenses incident to the
exercise by the Indenture Trustee or any Noteholder of any right under this
Section 3.4 shall be borne by the requesting Noteholder(s). The parties hereto
acknowledge that the Indenture Trustee shall not exercise any right pursuant to
this Section 3.4 prior to any event set forth in the preceding sentence unless
directed to do so by a group of Interested Noteholders, and the Indenture
Trustee has been provided with indemnity satisfactory to it by such Interested
Noteholders. The Indenture Trustee shall have no liability for action or
inaction in accordance with the preceding sentence.

 

27

--------------------------------------------------------------------------------

In the event that such rights are exercised following the occurrence of an Event
of Default that has not been waived in accordance with the terms hereof and is
continuing, all reasonable and customary out-of-pocket costs and expenses
actually incurred by the Indenture Trustee shall be borne by PMC. Prior to any
such payment, PMC shall be provided with commercially reasonable documentation
of such costs and expenses. Notwithstanding anything contained in this
Section 3.4 to the contrary, in no event shall the books of account, records,
reports and other papers of PMC or the Issuer relating to the Portfolio Mortgage
Loans and the Participation Certificates be examined by independent certified
public accountants at the direction of the Indenture Trustee or any Interested
Noteholder pursuant to the exercise of any right under this Section 3.4 more
than one time during any 12 month period at the expense of the Administrator,
unless an Event of Default has occurred that has not been waived in accordance
with the terms hereof during such twelve-month period, in which case more than
one examination may be conducted during a twelve-month period, but such extra
audits shall be at the sole expense of the Noteholder(s) requesting such
audit(s).    

(b) Access to Issuer. The Issuer agrees that, on reasonable prior notice, it
will permit any representative of the Indenture Trustee (at the written
direction of the Majority Noteholders), the MSR Valuation Agent or the
Administrative Agent at the expense of the Administrator no more than one time
during any 12-month period (unless an Event of Default has occurred that has not
been waived in accordance with the terms hereof during such twelve-month period,
in which case more than one examination may be conducted during a twelve-month
period, but such extra audits shall be at the sole expense of the party
requesting such audit(s)), to examine all of its books of account, records,
reports, and other papers, to make copies and extracts therefrom, to cause such
books to be audited by independent certified public accountants, and to discuss
its affairs, finances and accounts its officers, employees, and independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee, the MSR Valuation Agent and the
Administrative Agent shall and shall cause their respective representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) or the Indenture Trustee, the MSR Valuation Agent or the
Administrative Agent, as applicable, may reasonably determine that such
disclosure is consistent with its obligations hereunder; provided, however, that
the Indenture Trustee may disclose on a confidential basis any such information
to its agents, attorneys and auditors in connection with the performance of its
responsibilities hereunder. Without limiting the generality of the foregoing,
neither the Indenture Trustee, the MSR Valuation Agent or the Administrative
Agent shall disclose information to any of its Affiliates or any of their
respective directors, officers, employees and agents, that may provide any
servicer advance financing to PMC, the Issuer or any of their Affiliates, except
in such Affiliate’s capacity as Noteholder.

 

Section 3.5. Indenture Trustee to Make Reports Available.

(a) Monthly Reports on Indenture Trustee’s Website. Notwithstanding any other
provision of this Base Indenture that requires Citibank, in any capacity, to
deliver or provide to any Person the Payment Date Report (and, at its option,
any additional files containing the same information in an alternative format),
Citibank, in any capacity, shall be entitled, in lieu of such delivery, to make
such report available each month to any interested parties, including Fannie
Mae, via the Indenture Trustee’s internet website and such other information as
the Indenture Trustee may have in its possession, but only with the use of a
password provided by the Indenture Trustee. In connection with providing access
to the Indenture Trustee’s internet

 

28

--------------------------------------------------------------------------------

website, the Indenture Trustee may require registration and the acceptance of a
disclaimer. The Indenture Trustee’s internet website shall initially be located
at www.sf.citidirect.com. Assistance in using the Indenture Trustee’s website
can be obtained by calling the Indenture Trustee’s investor relations desk at
1-888-855-9695. Parties that are unable to use the above distribution option are
entitled to have a paper copy mailed to them via first class mail or by
overnight courier by calling the investor relations desk and requesting a copy.
The Indenture Trustee shall have the right to change the way the Payment Date
Reports are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Indenture Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes. The Indenture Trustee shall not be required to make available via its
website any information that in its judgment is confidential, may include any
Nonpublic Personal Information or could otherwise violate applicable law, or
could result in personal liability to the Indenture Trustee. In addition, the
Indenture Trustee shall have no liability for the failure to include or post any
information that it has not actually received or is not in a form or format that
will allow it to post any such information on its website.

(b) Notwithstanding any provision herein to the contrary, including Sections
3.1, 3.2 and 3.5 hereof, the Indenture Trustee, the Administrative Agent and any
other party hereto shall not deliver, or make available, the Market Value
Information to any Noteholder of any Series of Term Notes prior to the
occurrence, or following the cure or waiver, of an Event of Default; and prior
to the occurrence, or during the continuation, of an Event of Default, any
Determination Date Report, Interim Payment Date Report, Payment Date Report made
available to any Noteholders of Outstanding Series of Term Notes by Citibank, in
any capacity, pursuant to this Section 3.5 or otherwise hereunder shall be
redacted to remove any Market Value Information prior to being made so
available.

(c) Annual Reports. Within sixty (60) days after the end of each year, the
Indenture Trustee shall furnish to each Person (upon the written request of such
Person), who at any time during the year was a Noteholder a statement containing
(i) information regarding payments of principal, interest and other amounts on
such Person’s Notes, aggregated for such year or the applicable portion thereof
during which such person was a Noteholder and (ii) such other customary
information as may be deemed necessary or desirable for Noteholders to prepare
their tax returns. Such obligation shall be deemed to have been satisfied to the
extent that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force. The Indenture
Trustee shall prepare and provide to the Internal Revenue Service and to each
Noteholder any information reports required to be provided under federal income
tax law, including IRS Form 1099.

Article IV

The Trust Accounts; Payments

 

Section 4.1. Trust Accounts.

The Indenture Trustee shall establish and maintain, or cause to be established
and maintained, (i) the Trust Accounts (other than the Expense Reserve Account),
each of which shall be an Eligible Account, for the benefit of the Secured
Parties, and (ii) an Expense Reserve

 

29

--------------------------------------------------------------------------------

Account, which shall be an Eligible Account, for the benefit of the Indenture
Trustee and the MSR Valuation Agent. All amounts held in the Trust Accounts
shall, to the extent permitted by this Base Indenture and applicable laws, rules
and regulations, be invested in Permitted Investments by the depository
institution or trust company then maintaining such Trust Account only upon
written direction of the Administrator to the Indenture Trustee; provided,
however, that in the event the Administrator fails to provide such written
direction to the Indenture Trustee, and until the Administrator provides such
written direction, the Indenture Trustee shall not invest funds on deposit in
any Trust Account. Funds deposited into a Trust Account on a Business Day after
1:30 p.m. New York City time will not be invested until the following Business
Day. Investments held in Permitted Investments in the Trust Accounts shall not
be sold or disposed of prior to their maturity (unless an Event of Default has
occurred). Earnings on investment of funds in any Trust Account shall be
remitted by the Indenture Trustee upon the Administrator’s request to the
account or other location of the Administrator’s designation on the first (1st)
Business Day of the month following the month in which such earnings on
investment of funds is received. Any losses and investment expenses relating to
any investment of funds in any Trust Account shall be for the account of the
Administrator, which shall deposit or cause to be deposited the amount of such
loss (to the extent not offset by income from other investments of funds in the
related Trust Account) in the related Trust Account promptly upon the
realization of such loss. The taxpayer identification number associated with
each of the Trust Accounts shall be that of the Issuer, and the Issuer shall
report for federal, state and local income tax purposes their respective
portions of the income, if any, earned on funds in the relevant Trust Account.
The Administrator hereby acknowledges that all amounts on deposit in each Trust
Account (excluding investment earnings on deposit in the Trust Accounts) are
held in trust by the Indenture Trustee for the benefit of the Secured Parties,
subject to any express rights of the Issuer set forth herein, and shall remain
at all times during the term of this Base Indenture under the sole dominion and
control of the Indenture Trustee.

So long as the Indenture Trustee complies with the provisions of this
Section 4.1, the Indenture Trustee shall not be liable for the selection of
investments or for investment losses incurred thereon by reason of investment
performance, liquidation prior to stated maturity or otherwise in any Trust
Account. The Indenture Trustee shall have no liability in respect of losses
incurred in any Trust Account as a result of the liquidation of any investment
prior to its stated maturity or the failure to be provided with timely written
investment direction.

In order to comply with the laws, rules, regulations and executive orders in
effect from time to time applicable to banking institutions, including those
relating to the funding of terrorist activities and money laundering, including
Section 326 of the USA Patriot Act of the United States (“Applicable Law”), the
Indenture Trustee is required to obtain, verify, record and update certain
information relating to individuals and entities which maintain a business
relationship with the Indenture Trustee. Accordingly, each of the parties agrees
to provide to the Indenture Trustee upon its request from time to time such
identifying information and documentation as may be available for such party in
order to enable the Indenture Trustee to comply with Applicable Law.

All parties to this Base Indenture agree, and each Noteholder of each Series by
its acceptance of the related Note will be deemed to have agreed, that such
Noteholder shall have no claim or interest in the amounts on deposit in any
Trust Account created under this Base Indenture or any related Indenture
Supplement related to an unrelated Series except as expressly provided herein or
therein.

 

30

--------------------------------------------------------------------------------

The Indenture Trustee or its Affiliates are permitted to receive additional
compensation that could be deemed to be for the Indenture Trustee’s economic
self-interest for (a) serving as investment adviser, administrator, shareholder,
servicing agent with respect to certain of the Permitted Investments, (b) using
Affiliates to effect transactions in certain Permitted Investments and
(c) effecting transactions in certain Permitted Investments. Such compensation
is not payable or reimbursable under this Base Indenture.

The State of New York is the Securities Intermediary’s jurisdiction for purposes
of the UCC, and the laws of the State of New York are applicable to all issues
specified in Article 2(1) of the Hague Securities Convention. This Base
Indenture is the only “account agreement” in respect of the Trust Accounts.

 

Section 4.2. Collections and Disbursements of Portfolio Collections by Servicer.

(a) Daily Deposits of Portfolio Amounts. The Servicer shall remit all Portfolio
Collections in accordance with the respective Participation Certificates,
Participation Agreements and the PC Repurchase Agreement. Any amounts that shall
be remitted to the Issuer shall be remitted directly to the Collection and
Funding Account.

(b) Payment Dates. On each Payment Date, the Indenture Trustee shall transfer
from the Collection and Funding Account to the Note Payment Account all funds
then on deposit therein. Except in the case of Redemption Amounts, which may be
remitted by the Issuer directly to the Note Payment Account, none of the
Servicer, the Administrator, the Issuer, the Calculation Agent nor the Indenture
Trustee shall remit to the Note Payment Account, and each shall take all
reasonable actions to prevent other Persons from remitting to the Note Payment
Account, amounts which do not constitute payments, collections or recoveries
received, made or realized in respect of the Participation Certificates or the
other Collateral or the initial cash, if any, deposited by the Noteholders with
the Indenture Trustee on the date hereof, and the Indenture Trustee will return
to the Issuer or the Servicer any such amounts upon receiving written evidence
reasonably satisfactory to the Indenture Trustee that such amounts are not a
part of the Trust Estate.

 

Section 4.3. Fundings.

(a) Funding Certifications. By no later than 1:00 p.m. New York City time on the
Business Day prior to each Funding Date (or such other time as may be agreed to
from time to time by the Administrator, the Indenture Trustee and the
Administrative Agent), the Administrator shall prepare and deliver to the
Issuer, the Indenture Trustee, the Calculation Agent and the Administrative
Agent (and, on any Interim Payment Date, each applicable VFN Noteholder) a
certification (each, a “Funding Certification”) containing a list of each
Funding Condition and presenting a “yes” or “no” answer beside each indicating
whether such Funding Condition has been satisfied and shall state in writing the
amount to be funded on that Funding Date.

(b) VFN Draws, Discretionary Paydowns and Permanent Reductions.

 

31

--------------------------------------------------------------------------------

With respect to each VFN:

(i) From time to time, the Collateral Value may increase due to (i) the addition
of Mortgage Loans to the Retained MSR Portfolio or the Sold MSR Portfolio, as
applicable, or (ii) increases in the value of the MSRs that underlie the
Retained MSR Portfolio and the Sold MSR Portfolio. By no later than 1:00 p.m.
New York City time on the Business Day prior to any Payment Date or Interim
Payment Date during the Revolving Period for such VFN on which any applicable
Variable Funding Note Class is Outstanding, the Administrator, on behalf of the
Issuer, may deliver, or cause to be delivered, to each Noteholder of such
Variable Funding Notes and to the Indenture Trustee a Funding Certification and
a report (a “VFN Note Balance Adjustment Request”) for such upcoming Funding
Date, requesting such Noteholders to fund a VFN Principal Balance increase on
any Class or Classes of VFNs in the amount(s) specified in such request, which
request shall instruct the Indenture Trustee to recognize an increase in the
related VFN Principal Balance, but not in excess of the lesser of (x) the
related Maximum VFN Principal Balance or (y) the amount that would cause a
Borrowing Base Deficiency. The VFN Note Balance Adjustment Request shall also
state the amount, if any, of any principal payment to be made on each
Outstanding Class of VFNs on the upcoming Interim Payment Date or Payment Date.
The amount to be funded shall be based on the change in Collateral Value from
the most recent Interim Payment Date or Payment Date.

(ii) If the related Funding Certification indicates that all Funding Conditions
have been met, and the Administrative Agent agrees, in its sole discretion, the
applicable VFN Funding Sources shall fund the VFN Principal Balance increase by
remitting pro rata (based on each such VFN Funding Source’s percentage of the
Maximum VFN Principal Balance) the amount stated in the request to the Indenture
Trustee by 12:00 p.m. (noon) New York City time on the related Funding Date,
whereupon the Indenture Trustee shall adjust its records to reflect the increase
of the VFN Principal Balance (which increase shall be the aggregate of the
amounts received by the Indenture Trustee from the applicable VFN Funding
Sources) by the later of (i) 2:00 p.m. New York City time on such Funding Date,
or (ii) two hours after the receipt by the Indenture Trustee of such funds from
the VFN Funding Sources, so long as, after such increase, no Borrowing Base
Deficiency will exist, determined based on the VFN Note Balance Adjustment
Request and Determination Date Report. The Indenture Trustee shall be entitled
to rely conclusively on any VFN Note Balance Adjustment Request and the related
Determination Date Report and Funding Certification. The Indenture Trustee shall
make available on a password-protected portion of its website to the Issuer or
its designee and each applicable VFN Funding Source and any related VFN
Noteholder, notice on such Funding Date as reasonably requested by the Issuer of
any increase in the VFN Principal Balance. The Indenture Trustee shall apply and
remit any such payment by the VFN Funding Sources toward the payment of the
related Funding Amounts as described in Section 4.3(c). If on any Funding Date
there is more than one Series with Outstanding Variable Funding Notes, VFN Draws
on such Funding Date shall be made on a pro rata basis among all applicable
Outstanding Series of VFNs in their Revolving Periods based on their respective
available Borrowing Capacities, unless otherwise provided in the related
Indenture Supplement and any applicable Note Purchase Agreement. If any VFN
Funding Source does not fund its share of a requested VFN Draw, one or more
other VFN Funding Sources may fund all or a portion of such draw, but no other
VFN Funding Source shall have any obligation to do so. Draws on VFNs of
different Classes within the same Series need not be drawn pro rata relative to
each other.

 

32

--------------------------------------------------------------------------------

(c) Payment of Funding Amounts.

(i) Subject to its receipt of a duly executed Funding Certification from the
Administrator pursuant to Section 4.3(a) stating that all Funding Conditions
have been satisfied, and approval by the Administrative Agent in its sole
discretion, the Indenture Trustee shall remit to the Issuer (or the Issuer’s
designee), by the close of business New York City time on each Funding Date, the
amount of the aggregate Funding Amount on such Funding Date without causing the
related VFN Principal Balance to exceed either (I) the related Maximum VFN
Principal Balance or (II) the amount that would cause a Borrowing Base
Deficiency.

(ii) Subject to its receipt of a duly executed Funding Certification from the
Administrator pursuant to Section 4.3(a) indicating that all Funding Conditions
have been satisfied, the Indenture Trustee shall remit to the Issuer (or the
Issuer’s designee) by the close of business on each Interim Payment Date or
Payment Date occurring at any time when not all Outstanding Notes are in Full
Amortization Periods, the amount of the aggregate Funding Amount to be funded on
such Interim Payment Date or Payment Date, using any amounts funded by VFN
Funding Sources in respect of such Funding Amount as described in
Section 4.3(b).

(d) To the extent the Issuance Date for any Series of Term Notes occurs on a
Business Day other than a Payment Date or an Interim Payment Date, the Indenture
Trustee shall pay the proceeds of any such issuance in accordance with the flows
of funds provided to the Indenture Trustee at the joint written direction of the
Administrator and the Administrative Agent, with the consent of each VFN
Noteholder, so long as the Administrator and the Administrative Agent confirm in
such direction (x) that the specified flow of funds is correct; (y) whether
there will be an Additional Note Payment made or deemed to have been made in
connection with the issuance of such Series, and after giving effect to such
payment, if any, the amount of VFN Principal Balance; and (z) that after giving
effect to the payment of amounts in accordance with the specified flow of funds
and the reduction of the VFN Principal Balance, if any, no Borrowing Base
Deficiency will exist. No consent or instruction of any Holder of any Series of
Term Notes shall be required in connection with payment amounts in accordance
such joint written direction for any Series of Term Notes.    

 

Section 4.4. Interim Payment Dates.

(a) On each Interim Payment Date, the Indenture Trustee shall allocate and pay
or deposit (as specified below) all Available Funds held in the Collection and
Funding Account as set forth below, in the following order of priority and in
the amounts set forth in the Interim Payment Date Report for such Interim
Payment Date:

 

33

--------------------------------------------------------------------------------

(i) pro rata, to (A) to the extent required pursuant to the related Indenture
Supplement, the Series Reserve Account for each Series, the amount required to
be deposited therein so that, after giving effect to such deposit, the amount on
deposit in such Series Reserve Account shall be equal to the related Series
Reserve Required Amount, and (B) to the Expense Reserve Account, the amount
required to be deposited therein so that, after giving effect to such deposit,
the amount on deposit in the Expense Reserve Account shall be equal to the
related Expense Reserve Required Amount;

(ii) to be retained in the Collection and Funding Account, the Required
Available Funds;

(iii) at the direction of the Administrator, (A) to pay down the VFN Principal
Balance of each Outstanding Class of VFNs pro rata, based on their respective
Note Balances, to remove any Borrowing Base Deficiency on an Interim Payment
Date that is an Interim Borrowing Base Payment Date and/or such other amount as
may be designated by the Administrator or (B) to reserve cash in the Collection
and Funding Account;

(iv) any Net Excess Cash Amount or Eligible Securities to or at the written
direction of PMC as holder of the Owner Trust Certificate, it being understood
that no such Net Excess Cash Amounts may be paid to PMC under this clause (iv)
if, after the payment of such cash amounts, such payment would result in a
Borrowing Base Deficiency; provided, that amounts due and owing to the Owner
Trustee and not previously paid hereunder or under any other Transaction
Document shall be paid prior to such payment; and

(b) To the extent provided in the related Indenture Supplement, during the
Revolving Period, on each Interim Payment Date, with the prior written consent
of the Administrative Agent (such consent not to be unreasonably withheld), the
owner of the Owner Trust Certificate may make Additional Note Payments to a
Noteholder of a Series or Class of VFNs. Such Additional Note Payments shall be
applied to pay down the VFN Principal Balance of each Outstanding Class of VFNs
pro rata, based on their respective Note Balances, such amount as may be
designated by the Administrator.

 

Section 4.5. Payment Dates.

(a) On each Payment Date, the Indenture Trustee shall transfer all funds on
deposit in the Collection and Funding Account for such Payment Date to the Note
Payment Account. On each Payment Date, the Paying Agent shall apply such
Available Funds, VFN Series Available Funds or Term Note Series Available Funds,
as applicable (and other amounts as specifically noted in clause (a)(1)(iv)
below), in the following order of priority and in the amounts set forth in the
Payment Date Report for such Payment Date:

(1) Prior to commencement of the Full Amortization Period, the Available Funds
shall be allocated in the following order of priority:

(i) to the Indenture Trustee (in all its capacities), the Indenture Trustee Fee,
to the Owner Trustee and the Owner Trustee Fee plus, (subject, in the case of
expenses and indemnification amounts, to the applicable Expense Limit) all
reasonable out-of-pocket expenses and indemnification amounts owed to the
Indenture Trustee (in all capacities) and the Owner Trustee (in all capacities)
on such Payment Date;

 

34

--------------------------------------------------------------------------------

(ii) to each Person (other than the Indenture Trustee or the Owner Trustee)
entitled to receive Fees on such date, the Fees payable to any such Person with
respect to the related Collection Period or Interest Accrual Period, plus
(subject, in the case of expenses and indemnification amounts, to the applicable
Expense Limit, and allocated pro rata based on the amounts due to each such
Person) all reasonable out-of-pocket expenses and indemnification amounts owed
for Administrative Expenses of the Issuer, pursuant to the Transaction Documents
or owed or payable by the Indenture Trustee, in its capacity as such, to Fannie
Mae or any other Person pursuant to the Transaction Documents with respect to
expenses, indemnification amounts, and other amounts to the extent such
expenses, indemnification amounts and other amounts have been invoiced or
noticed to the Administrator and the Indenture Trustee, and thereafter from
other Available Funds, if necessary;

(iii) to the Noteholders of each Series of Notes, pro rata based on their
respective interest entitlement amounts, the Interest Payment Amount (for all
Series) and the Step-Up Fee (for all Series, if any) for the current Payment
Date, for each such Series; provided that if the amount of Available Funds on
deposit in the Collection and Funding Account on such day is insufficient to pay
all amounts in respect of any Series pursuant to this clause (iii), the
Indenture Trustee shall withdraw from the Series Reserve Account for such Series
an amount equal to the lesser of the amount then on deposit in such Series
Reserve Account and the amount of such shortfall for disbursement to the
Noteholders of such Series in reduction of such shortfall, with all such amounts
paid to a Series under this clause (iii) allocated among the Classes of such
Series as provided in the related Indenture Supplement;

(iv) pro rata, to (A) the Series Reserve Account for each Series, any amount
required to be deposited therein so that, after giving effect to such deposit,
the amount on deposit in such Series Reserve Account on such day equals the
related Series Reserve Required Amount, if applicable, and (B) the Expense
Reserve Account, any amount required to be deposited therein so that, after
giving effect to such deposit, the amount on deposit in the Expense Reserve
Account on such day equals the Expense Reserve Required Amount;

(v) the Early Amortization Event Payment Amount to be paid on such Payment Date
on each Class of Outstanding Notes that is in its Early Amortization Period, if
applicable;

(vi) to the Noteholders of each Series of Term Notes, pro rata, the Scheduled
Principal Payment Amount;

 

35

--------------------------------------------------------------------------------

(vii) to the extent necessary to avoid any Borrowing Base Deficiency, at the
direction of the Administrator, either (1) to pay down the respective VFN
Principal Balances of each Outstanding Class of VFNs, until the earlier of the
removal of any Borrowing Base Deficiency with respect to each Outstanding
Class of VFNs or reduction of all VFN Principal Balances to zero, paid pro rata
among each VFN Class based on their respective Class Invested Amounts, or (2) to
reserve cash in the Collection and Funding Account;

(viii) pro rata, based on their respective invoiced or reimbursable amounts and
without regard to the applicable Expense Limit, (A) to the Indenture Trustee (in
all its capacities) and the Owner Trustee (in all capacities) for any amounts
payable to the Indenture Trustee and the Owner Trustee pursuant to this Base
Indenture or the Trust Agreement, as applicable, to the extent not paid under
clause (i) above, (B) to the MSR Valuation Agent for any amounts payable to the
MSR Valuation Agent pursuant to this Base Indenture to the extent not paid under
clause (ii) above, (C) to the Securities Intermediary for any indemnification
amounts owed to the Securities Intermediary as described in Section 4.9; (D) all
Administrative Expenses of the Issuer not paid under clause (ii) above; or
(E) any other amounts payable pursuant to this Base Indenture or any other
Transaction Document and not paid under clause (ii) above;

(ix) if and to the extent so directed in writing by the Administrator on behalf
of the Issuer, to the Noteholders of each Class of VFNs, an amount to be applied
to pay down the respective VFN Principal Balances equal to the lesser of (A) the
amount specified by the Administrator and (B) the amount necessary to reduce the
VFN Principal Balances to zero, paid pro rata among each VFN Class based on
their respective Note Balances; and

(x) any Net Excess Cash Amount or Eligible Securities to or at the direction of
PMC as holder of the Owner Trust Certificate, to the extent that following any
such payment, there would not be a Borrowing Base Deficiency; provided that
amounts due and owing to the Owner Trustee and not previously paid hereunder or
under any other Transaction Document shall be paid prior to such payment.

(2) On and after the commencement of the Full Amortization Period, all Available
Funds for each Series shall be allocated in the following order of priority:

(i) to the Indenture Trustee (in all its capacities), the Indenture Trustee Fee,
to the Owner Trustee, the Owner Trustee Fee, and to the Disposition Manager, the
Disposition Manager Fee payable on such Payment Date, plus (without regard, in
the case of expenses and indemnification amounts, to the applicable Expense
Limit) all reasonable out-of-pocket expenses and indemnification amounts owed to
the Indenture Trustee (in all capacities), the Owner Trustee (in all capacities)
and the Disposition Manager on such Payment Date, with respect to expenses and
indemnification amounts to the extent such expenses and indemnification amounts
have been invoiced or noticed to the

 

36

--------------------------------------------------------------------------------

Administrator; provided that if the amount of Available Funds is not sufficient
to pay the full amounts owed to the Indenture Trustee pursuant to this clause
(i), the Indenture Trustee shall withdraw from the Expense Reserve Account an
amount equal to the lesser of the amount then on deposit in the Expense Reserve
Account and the amount of such shortfall for disbursement to the Indenture
Trustee in reduction of such shortfall;

(ii) to each Person (other than the Indenture Trustee, the Owner Trustee or the
Disposition Manager) entitled to receive Fees on such date, the Fees payable to
any such Person with respect to the related Collection Period or Interest
Accrual Period, as applicable, plus (subject, in the case of expenses and
indemnification amounts, to the applicable Expense Limit and allocated pro rata
based on the amounts due to each such Person) all reasonable out-of-pocket
expenses and indemnification amounts owed for Administrative Expenses of the
Issuer with respect to expenses, indemnification amounts and other amounts to
the extent such expenses, indemnification amounts and other amounts have been
invoiced or noticed to the Administrator and the Indenture Trustee;

(iii) thereafter, the VFN Series Available Funds or the Term Note Series
Available Funds, as applicable, for each Outstanding Series shall be allocated
in the following order of priority (or in such other order of priority as
specified in the related Indenture Supplement):

(A) to pay any costs, reasonable out-of-pocket expenses and indemnification
amounts owed with respect to any Hedging Instruments for such Series;

(B) to the Noteholders of the related Series of Notes, (a) the related
Cumulative Interest Shortfall Amounts attributable to unpaid Interest Amounts
(for all Series) from prior Payment Dates, and (b) the Interest Amounts (for all
Series) for the current Payment Date, for each such Class; provided that if the
amount of related VFN Series Available Funds or Term Note Series Available
Funds, as applicable, is insufficient for any Class pursuant to this clause
(iii)(B), the Indenture Trustee shall withdraw from the Series Reserve Account
for such Class an amount equal to the lesser of the amount then on deposit in
such Series Reserve Account and the amount of such shortfall for disbursement to
the Noteholders of such Class in reduction of such shortfall, with all such
amounts paid to a Series under this clause (iii)(B) allocated among the Classes
of such Series as provided in the related Indenture Supplement;

(C) to the Noteholders of the related Series of Notes, remaining VFN Series
Available Funds or Term Note Series Available Funds, as applicable, up to the
aggregate unpaid Note Balances to reduce Note Balances in the order specified in
the related Indenture Supplement, until all such Note Balances have been reduced
to zero;

 

37

--------------------------------------------------------------------------------

(D) to the Noteholders of the related Series of Notes, remaining Series
Available Funds up to the Default Supplemental Fee and the Step-Up Fee for the
current Payment Date and related shortfalls, for each such Class in the order
specified in the related Indenture Supplement; and

(E) to be allocated to other Series in accordance with the applicable priority
of payments for such Series, to the extent the VFN Series Available Funds or the
Term Note Series Available Funds, as applicable, for such other Series were
insufficient to make such payments, allocated among such other Series pro rata
based on the amounts of their respective shortfalls;

(iv) out of all remaining VFN Series Available Funds and Term Note Series
Available Funds for all Series, pro rata, based on their respective invoiced or
reimbursable amounts and without regard to the applicable Expense Limit, (A) to
the MSR Valuation Agent for any amounts payable to the MSR Valuation Agent
pursuant to this Base Indenture to the extent not paid under clause (ii) above,
(B) to the Securities Intermediary for any indemnification amounts owed to the
Securities Intermediary as described in Section 4.9, and (C) all Administrative
Expenses of the Issuer not paid under clause (ii) above; provided that if the
amount of related VFN Series Available Funds or Term Note Series Available
Funds, as applicable, is not sufficient to pay the full amounts owed to the MSR
Valuation Agent pursuant to subclause (A) of this clause (iv), the Indenture
Trustee shall withdraw from the Expense Reserve Account an amount equal to the
lesser of the amount then on deposit in the Expense Reserve Account and the
amount of such shortfall for disbursement to the MSR Valuation Agent in
reduction of such shortfall;

(v) out of all remaining VFN Series Available Funds and Term Note Series
Available Funds for all Series, to pay any other amounts required to be paid
before Net Excess Cash Amounts pursuant to one or more Indenture Supplements;
and

(vi) out of all remaining VFN Series Available Funds and Term Note Series
Available Funds for all Series, any Net Excess Cash Amount to or at the written
direction of PMC as holder of the Owner Trust Certificate.

The amounts payable under clause (i) or (ii) of Section 4.5(a)(2) above shall be
paid out of each Series’ VFN Series Available Funds or Term Note Series
Available Funds, as applicable, based on such Series’ Series Allocation
Percentage of such amounts payable on such Payment Date. If, on any Payment
Date, the VFN Series Available Funds or Term Note Series Available Funds, as
applicable, for any Series is less than the amount payable under clauses (i) and
(ii) above out of such Series’ VFN Series Available Funds or Term Note Series
Available Funds, as applicable (any such difference, a “Shortfall Amount”), the
amount of such Shortfall Amount shall be paid out of the VFN Series Available
Funds or Term Note Series Available Funds, as applicable, for each Series that
does not have a Shortfall Amount, in each case, based on such Series’ relative
Series Invested Amount.

 

38

--------------------------------------------------------------------------------

(b) On each Payment Date, the Indenture Trustee shall instruct the Paying Agent
to pay to, or as directed by, each Noteholder of record on the related Record
Date the amount to be paid to such Noteholder in respect of the related Note on
such Payment Date by wire transfer if appropriate instructions are provided to
the Indenture Trustee in writing no later than five (5) Business Days prior to
the related Record Date, or, if a wire transfer cannot be effected, by check
delivered to each Noteholder of record on the related Record Date at the address
listed on the records of the Note Registrar.

(c) Notwithstanding anything to the contrary in this Base Indenture, the
Indenture Supplement providing for the issuance of any Series of Notes within
which there are one or more Classes of Notes may specify the allocation of
payments among such Classes payable pursuant to Section 4.5 hereof, providing
for the subordination of such payments on the subordinated Series or Class, and
any such provision in such an Indenture Supplement shall have the same effect as
if set forth in this Base Indenture and any related Indenture Supplement, all to
the extent an Issuer Tax Opinion is delivered as to such Series at its issuance.

(d) On each Payment Date, the Indenture Trustee shall make available, in the
same manner as described in Section 3.5, a report stating all amounts paid to
the Indenture Trustee (in all its capacities) or Citibank (in all its
capacities) pursuant to this Section 4.5 on such Payment Date.

(e) To the extent provided in the related Indenture Supplement, during the
Revolving Period, on each Payment Date, and with the prior written consent of
the Administrative Agent, the owner of the Owner Trust Certificate may make
Additional Note Payments to a Noteholder of a Series or Class of VFNs. Such
Additional Note Payments shall be applied to pay down the VFN Principal Balance
of each Outstanding Class of VFNs pro rata, based on their respective Note
Balances, such amount as may be designated by the Administrator.

 

Section 4.6. Series Reserve Account; Expense Reserve Account.

(a) Series Reserve Account.

(i) Pursuant to Section 4.1, the Indenture Trustee shall establish and maintain
a Series Reserve Account or Trust Accounts for each Series, each of which shall
be an Eligible Account, for the benefit of the Secured Parties of such Series.
If any such account loses its status as an Eligible Account, the funds in such
account shall be moved to an account that qualifies as an Eligible Account
within thirty (30) days. On or prior to the Issuance Date for each Series, the
Issuer shall cause an amount equal to the related Series Reserve Required
Amount(s), if applicable, to be deposited into the related Series Reserve
Account(s). Thereafter, on each Payment Date and Interim Payment Date, the
Indenture Trustee shall withdraw Available Funds from the Note Payment Account
and deposit them into each such Series Reserve Account pursuant to, and to the
extent required by, Section 4.5(a) and the related Indenture Supplement.

 

39

--------------------------------------------------------------------------------

(ii) On each Payment Date, an amount equal to the aggregate of amounts described
in clauses (i), (ii) and (iii) of Section 4.5(a)(1) or clauses (i) and (ii) of
Section 4.5(a)(2) allocable to the related Series, as appropriate, and which is
not payable out of Available Funds or the related VFN Series Available Funds or
Term Note Series Available Funds, as applicable, due to an insufficiency of
Available Funds or VFN Series Available Funds or Term Note Series Available
Funds, as applicable, shall be withdrawn from such Series Reserve Account by the
Indenture Trustee and remitted to the Note Payment Account for payment in
respect of the related Class’ allocable share of such items as described in
Section 4.5(a) or the related Indenture Supplement. On any Payment Date on which
amounts are withdrawn from such Series Reserve Account pursuant to
Section 4.5(a), no funds shall be withdrawn from the Collection and Funding
Account (or from the Note Payment Account for deposit into the Collection and
Funding Account) to pay Funding Amounts or amounts to the Issuer pursuant to
Section 4.3 if, after giving effect to the withdrawals described in the
preceding sentences, the amount then on deposit in such Series Reserve Account
is less than the related Series Reserve Required Amount, if applicable. All
Collections received in the Collection and Funding Account shall be deposited
into the related Series Reserve Accounts until the amount on deposit in each
Series Reserve Account equals the related Series Reserve Required Amount, if
applicable, as described in Section 4.5 and the related Indenture Supplement.
For purposes of the foregoing, the portion of any such fees and expenses payable
under Section 4.5(a)(1)(i) or (ii) shall equal the related Series Allocation
Percentage of the amounts payable under such clause.

(iii) If on any Payment Date the amount on deposit in a Series Reserve Account
is equal to or greater than the aggregate Note Balance for the related Series
(after payment on such Payment Date of the amounts described in Section 4.5) the
Indenture Trustee will withdraw from such Series Reserve Account the aggregate
Note Balance for such Series and remit it to the Noteholders of the Notes of
such Series in reduction of the aggregate Note Balance for all Classes of Notes
of such Series that are Outstanding. On the Stated Maturity Date for the latest
maturing Class in a Series, the balance on deposit in the related Series Reserve
Account shall be applied as a principal payment on the Notes of that Series to
the extent necessary to reduce the aggregate Note Balance for that Series to
zero. On any Payment Date after payment of principal on the Notes and when no
Event of Default has occurred, the Indenture Trustee shall withdraw from each
Series Reserve Account the amount by which the balance of the Series Reserve
Account exceeds the related Series Reserve Required Amount, if applicable, and
pay such amount to PMC as holder of the Owner Trust Certificate.

(iv) Amounts held in a Series Reserve Account shall be invested in Permitted
Investments to the extent the Administrator provides written direction to the
Indenture Trustee, as provided in Section 4.1; provided, however, if no such
direction is provided, all amounts shall remain uninvested.

(v) On any Payment Date, after payment of all amounts pursuant to
Section 4.5(a), during the Full Amortization Period, the Indenture Trustee shall
withdraw from each Series Reserve Account the amount by which the amount on
deposit in such Series Reserve Account exceeds the related Series Reserve
Required Amount, if

 

40

--------------------------------------------------------------------------------

applicable, and shall apply such excess to reduce the Note Balances of the Notes
of the related Series, pursuant to Section 4.5. Such principal payment shall be
made in accordance with the terms and provisions of the related Indenture
Supplement. On any Payment Date following the payment in full of all principal
payable in respect of the related Series or Class of Notes, the Indenture
Trustee shall withdraw any remaining amounts from the related Series Reserve
Account and distribute it to PMC as holder of the Owner Trust Certificate.
Amounts paid to PMC or its designee pursuant to the preceding sentence shall be
released from the Security Interest.

(vi) If on any Funding Date, the amount on deposit in one or more Series Reserve
Accounts is less than the related Series Reserve Required Amounts, if
applicable, then the Administrator may direct the Indenture Trustee to transfer
from the Collection and Funding Account to such Series Reserve Accounts an
amount equal to the amount by which the respective Series Reserve Required
Amounts, if applicable, exceed the respective amounts then on deposit in the
related Series Reserve Accounts.

(vii) Any funds on deposit in any Series Reserve Account are to be applied to
make any required payments in respect of the related Series or Class of Notes
only, and no other Series or Class of Notes shall have any interest or claim
against such amounts on deposit. Notwithstanding the foregoing, if any Series or
Class of Notes is deemed to have an interest or claim on the funds on deposit in
the Series Reserve Account established for another Series, it shall not receive
any amounts on deposit in such Series Reserve Account unless and until the
Series or Class of Notes related to such Series Reserve Account are paid in full
and are no longer Outstanding. The provisions of this Section 4.6(a)(vii)
constitute a “subordination agreement” for purposes of Section 510(a) of the
Bankruptcy Code.

(b) Expense Reserve Account.

(i) Pursuant to Section 4.1, the Indenture Trustee shall establish and maintain
an Expense Reserve Account, which shall be an Eligible Account, for the benefit
of the Indenture Trustee and the MSR Valuation Agent. If any such account loses
its status as an Eligible Account, the funds in such account shall be moved to
an account that qualifies as an Eligible Account within thirty (30) days. On or
prior to the Closing Date, the Issuer shall cause an amount equal to the related
Expense Reserve Required Amount to be deposited into the Expense Reserve
Account. Thereafter, on each Payment Date and Interim Payment Date, the
Indenture Trustee shall withdraw Available Funds from the Note Payment Account
and deposit them into the Expense Reserve Account pursuant to, and to the extent
required by Section 4.5(a).

(ii) On each Payment Date, an amount equal to the aggregate of amounts described
in clause (i) of Section 4.5(a)(2) which is not payable out of Series Available
Funds due to an insufficiency of Series Available Funds shall be withdrawn from
the Expense Reserve Account by the Indenture Trustee and remitted to the Note
Payment Account for payment in respect of the related Class’ allocable share of
such items as described in Section 4.5(a). On any Payment Date on which amounts
are withdrawn from the Expense Reserve Account pursuant to Section 4.5(a), no
funds shall be

 

41

--------------------------------------------------------------------------------

withdrawn from the Collection and Funding Account (or from the Note Payment
Account for deposit into the Collection and Funding Account) to pay Funding
Amounts or amounts to the Issuer pursuant to Section 4.3 if, after giving effect
to the withdrawals described in the preceding sentences, the amount then on
deposit in the Expense Reserve Account is less than the Expense Reserve Required
Amount. All Collections received in the Collection and Funding Account shall be
deposited into the Expense Reserve Account until the amount on deposit in the
Expense Reserve Account equals the Expense Reserve Required Amount, as described
in Section 4.5.

(iii) Amounts held in the Expense Reserve Account shall be invested in Permitted
Investments at the direction of the Administrator as provided in Section 4.1.

(iv) On any Payment Date, after payment of all amounts pursuant to
Section 4.5(a), during the Full Amortization Period, the Indenture Trustee shall
withdraw from the Expense Reserve Account the amount by which the amount on
deposit in the Expense Reserve Account exceeds the Expense Reserve Required
Amount, if applicable, and shall apply such excess to reduce the Note Balances
of the Notes of all Series, pursuant to Section 4.5. Such principal payment
shall be made in accordance with the terms and provisions of the related
Indenture Supplement. On any Payment Date following the payment in full of all
principal payable in respect of all Series or Classes of Notes and the payment
in full of all amounts payable to the Indenture Trustee and the MSR Valuation
Agent, the Indenture Trustee shall withdraw any remaining amounts from the
Expense Reserve Account and distribute it to PMC as holder of the Owner Trust
Certificate. Amounts paid to PMC or its designee pursuant to the preceding
sentence shall be released from the Security Interest.

(v) If on any Funding Date, the amount on deposit in the Expense Reserve
Accounts is less than the Expense Reserve Required Amount, if applicable, then
the Administrator may direct the Indenture Trustee to transfer from the
Collection and Funding Account to the Expense Reserve Account an amount equal to
the amount by which the Expense Reserve Required Amount exceeds the amounts then
on deposit in the Expense Reserve Account.

 

Section 4.7. Collection and Funding Account; Eligible Securities Account.

Pursuant to Section 4.1, the Indenture Trustee shall establish and maintain the
Collection and Funding Account and the Eligible Securities Account, each of
which shall be an Eligible Account, for the benefit of the Secured Parties. If
any such account loses its status as an Eligible Account, the funds or
securities, as applicable, in such account shall be moved to an account that
qualifies as an Eligible Account within thirty (30) days. The Indenture Trustee
shall deposit and withdraw Available Funds from the Collection and Funding
Account pursuant to, and to the extent required by Section 4.5.

Amounts held in the Collection and Funding Account shall be invested in
Permitted Investments at the written direction of the Administrator as provided
in Section 4.1; provided, however, if no such direction is provided, all amounts
shall remain uninvested.

 

42

--------------------------------------------------------------------------------

Section 4.8. Note Payment Account.

(a) Pursuant to Section 4.1, the Indenture Trustee shall establish and maintain
the Note Payment Account, which shall be an Eligible Account, for the benefit of
the Secured Parties. If the Note Payment Account loses its status as an Eligible
Account, the funds in such account shall be moved to an account that qualifies
as an Eligible Account within thirty (30) days. The Note Payment Account shall
be funded to the extent that (i) the Issuer shall remit to the Indenture Trustee
the Redemption Amount for a Class of Notes pursuant to Section 13.1, (ii) the
Indenture Trustee shall remit thereto any Available Funds from the Collection
and Funding Account pursuant to Section 4.2(b), (iii) the Indenture Trustee
shall transfer amounts from an applicable Series Reserve Account pursuant to,
and to the extent required by, Section 4.6, and (iv) the Indenture Trustee shall
transfer amounts from the Expense Reserve Account pursuant to, and to the extent
required by, Section 4.6.

(b) On each Payment Date, an amount equal to the aggregate of amounts described
in Section 4.5(a) shall be withdrawn from the Note Payment Account by the
Indenture Trustee and remitted to the Noteholders and other Persons or accounts
described therein for payment as described in that Section, and upon payments of
all sums payable hereunder as described in Section 4.5(a), as applicable, any
remaining amounts then on deposit in the Note Payment Account shall be released
from the Security Interest and paid to PMC or its designee unless it would cause
a Borrowing Base Deficiency.

(c) Amounts held in the Note Payment Account may be invested in Permitted
Investments at the direction of the Administrator as provided in Section 4.1.

 

Section 4.9. Securities Accounts.

(a) Securities Intermediary. The Issuer and the Indenture Trustee hereby appoint
Citibank, as Securities Intermediary with respect to the Trust Accounts. The
Security Entitlements and all Financial Assets credited to the Trust Accounts,
including all amounts, securities, investments, Financial Assets, investment
property and other property from time to time deposited in or credited to such
account and all proceeds thereof, held from time to time in the Trust Accounts
will continue to be held by the Securities Intermediary for the Indenture
Trustee for the benefit of the Secured Parties. Upon the termination of this
Base Indenture, the Indenture Trustee shall inform the Securities Intermediary
of such termination. By acceptance of their Notes or interests therein, the
Noteholders and all beneficial owners of Notes shall be deemed to have appointed
Citibank, as Securities Intermediary. Citibank hereby accepts such appointment
as Securities Intermediary.

(i) With respect to any portion of the Trust Estate that is credited to the
Trust Accounts, the Securities Intermediary agrees that:

(A) with respect to any portion of the Trust Estate that is held in deposit
accounts, each such deposit account shall be subject to the security interest
granted pursuant to this Base Indenture, and the Securities Intermediary shall
comply with instructions originated by the Indenture Trustee directing
dispositions of funds in the deposit accounts without further consent of the
Issuer and otherwise shall be subject to the exclusive custody and control of
the Securities Intermediary, and the Securities Intermediary shall have sole
signature authority with respect thereto;

 

43

--------------------------------------------------------------------------------

(B) any and all property credited to the Trust Accounts shall be treated by the
Securities Intermediary as Financial Assets;

(C) any portion of the Trust Estate that is, or is treated as, a Financial Asset
shall be physically delivered (accompanied by any required endorsements) to, or
credited to an account in the name of, the Securities Intermediary or other
eligible institution maintaining any Trust Account in accordance with the
Securities Intermediary’s customary procedures such that the Securities
Intermediary or such other institution establishes a Security Entitlement in
favor of the Indenture Trustee with respect thereto over which the Securities
Intermediary or such other institution has “control” (as defined in the UCC);
and

(D) it will use reasonable efforts to promptly notify the Indenture Trustee and
the Issuer if any other Person claims that it has a property interest in a
Financial Asset in any Trust Account and that it is a violation of that Person’s
rights for anyone else to hold, transfer or deal with such Financial Asset.

(ii) The Securities Intermediary hereby confirms that (A) each Trust Account is
an account to which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Base Indenture treat the
Indenture Trustee as entitled to exercise the rights that comprise any Financial
Asset credited to any Trust Account, (B) any portion of the Trust Estate in
respect of any Trust Account will be promptly credited by the Securities
Intermediary to such account, and (C) all securities or other property
underlying any Financial Assets credited to any Trust Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary, and in no case will any
Financial Asset credited to any Trust Account be registered in the name of the
Issuer or the Administrator, payable to the order of the Issuer or the
Administrator or specially endorsed to any of such Persons.

(iii) If at any time the Securities Intermediary shall receive an Entitlement
Order from the Indenture Trustee directing transfer or redemption of any
Financial Asset relating to any Trust Account, the Securities Intermediary shall
comply with such Entitlement Order without further consent by the Issuer or the
Administrator or any other Person. If at any time the Indenture Trustee notifies
the Securities Intermediary in writing that this Base Indenture has been
discharged in accordance herewith, then thereafter if the Securities
Intermediary shall receive any order from the Issuer directing transfer or
redemption of any Financial Asset relating to any Trust Account, the Securities
Intermediary shall comply with such Entitlement Order without further consent by
the Indenture Trustee or any other Person.

 

44

--------------------------------------------------------------------------------

(iv) In the event that the Securities Intermediary has or subsequently obtains
by agreement, operation of law or otherwise a security interest in any Trust
Account or any Financial Asset or Security Entitlement credited thereto, the
Securities Intermediary hereby agrees that such security interest shall be
subordinate to the security interest of the Indenture Trustee. The Financial
Assets and Security Entitlements credited to the Trust Accounts will not be
subject to deduction, set-off, banker’s lien, or any other right in favor of any
Person other than (i) the Indenture Trustee in the case of the Trust Accounts
and (ii) the Owner Trustee Lien.

(v) There are no other agreements entered into between the Securities
Intermediary in such capacity, and the Securities Intermediary agrees that it
will not enter into any agreement with, the Issuer, the Administrator, or any
other Person (other than the Indenture Trustee) with respect to any Trust
Account. In the event of any conflict between this Base Indenture (or any
provision of this Base Indenture) and any other agreement now existing or
hereafter entered into, the terms of this Base Indenture shall prevail.

(vi) The rights and powers granted herein to the Indenture Trustee have been
granted in order to perfect its interest in the Trust Accounts and the Security
Entitlements to the Financial Assets credited thereto, and are powers coupled
with an interest and will not be affected by the bankruptcy of the Issuer, the
Administrator or PMC nor by the lapse of time. The obligations of the Securities
Intermediary hereunder shall continue in effect until the interest of the
Indenture Trustee in the Trust Accounts and in such Security Entitlements, has
been terminated pursuant to the terms of this Base Indenture and the Indenture
Trustee has notified the Securities Intermediary of such termination in writing.

(b) Definitions; Choice of Law. Capitalized terms used in this Section 4.9 and
not defined herein shall have the meanings assigned to such terms in the New
York UCC. For purposes of Section 8-110(e) of the New York UCC, the “securities
intermediary’s jurisdiction” shall be the State of New York. The Securities
Intermediary, the Administrator and the Issuer agree that they will not change
the applicable law in force with respect to issues referred to in Article 2(1)
of the Hague Securities Convention to a state other than the State of New York.

(c) Limitation on Liability. None of the Securities Intermediary or any
director, officer, employee or agent of the Securities Intermediary shall be
under any liability to the Indenture Trustee or the Noteholders for any action
taken, or not taken, in good faith pursuant to this Base Indenture, or for
errors in judgment; provided, however, that this provision shall not protect the
Securities Intermediary against any liability to the Indenture Trustee or the
Noteholders which would otherwise be imposed by reason of the Securities
Intermediary’s willful misconduct, bad faith or negligence in the performance of
its obligations or duties hereunder. The Securities Intermediary and any
director, officer, employee or agent of the Securities Intermediary may rely in
good faith on any document of any kind which, on its face, is properly executed
and submitted by any Person respecting any matters arising hereunder. The
Securities Intermediary shall be under no duty to inquire into or investigate
the validity, accuracy or content of such document.

 

45

--------------------------------------------------------------------------------

(d) Representations, Warranties and Covenants of the Securities Intermediary.
The Securities Intermediary represents and warrants that, as of the date hereof,
the Securities Intermediary has a physical office in the United States and is
engaged in a business or other regular activity of maintaining securities
accounts. The Securities Intermediary agrees that, at all times while this
Indenture is in effect, it shall maintain a physical office in the United States
that satisfies the criteria set forth in Article 4(1)(a) or (b) of the Hague
Securities Convention.

 

Section 4.10. Notice of Adverse Claims.

Except for the claims and interests of the Secured Parties in the Trust
Accounts, the Securities Intermediary has no actual knowledge of any claim to,
or interest in, any Trust Account or in any financial asset credited thereto. If
any Person asserts any Adverse Claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against any Trust Account
or in any financial asset carried therein of which a Responsible Officer of the
Securities Intermediary has actual knowledge, the Securities Intermediary will
promptly notify the Noteholders, the Indenture Trustee and the Issuer thereof.

 

Section 4.11. No Gross Up.

No Person, including the Issuer, shall be obligated to pay any additional
amounts to the Noteholders or Note Owners as a result of any withholding or
deduction for, or on account of, any present or future taxes, duties,
assessments or governmental charges.

 

Section 4.12. Advance Rate Trigger Event Trigger Period, Early Amortization
Period and Full Amortization Period.

Upon the occurrence of an Advance Rate Trigger Event, the Advance Rate Trigger
Event shall continue, unless, the Majority Noteholders for each Series of
Variable Funding Notes that are Outstanding, plus the Administrative Agent,
notify the Indenture Trustee and the Disposition Manager that either (i) they
have waived the occurrence of such Advance Rate Trigger Event or (ii) they have
acknowledged that the Advance Rate Trigger Event has been cured for each
Outstanding Series of Variable Funding Notes that is still in its Revolving
Period.

Upon the occurrence of an Early Amortization Event, the Revolving Period for all
Classes and Series of the Notes shall automatically terminate and the Early
Amortization Period for all Outstanding Notes shall commence without further
action on the part of any Person, unless, together, the Majority Noteholders of
all Outstanding Notes that are not Variable Funding Notes and the Majority
Noteholders for each Series of Variable Funding Notes that are Outstanding, plus
the Administrative Agent, notify the Indenture Trustee and the Disposition
Manager that either (i) they have waived the occurrence of such Early
Amortization Event and consent to the continuation of the Revolving Period for
each Outstanding Series that is still in its Revolving Period or (ii) they
acknowledge that the Early Amortization Event has been cured and consent to the
continuation of the Revolving Period for each Outstanding Series that is still
in its Revolving Period.

 

46

--------------------------------------------------------------------------------

Upon the occurrence of an Event of Default, the Revolving Period for all Classes
and Series of the Notes shall automatically terminate and the Full Amortization
Period for all Outstanding Notes shall commence without further action on the
part of any Person, unless, together, the Majority Noteholders of all
Outstanding Notes that are not Variable Funding Notes and the Majority
Noteholders for each Series of Variable Funding Notes that are Outstanding, plus
the Administrative Agent, notify the Indenture Trustee and the Disposition
Manager that either (i) they have waived the occurrence of such Event of Default
and consent to the continuation of the Revolving Period for each Outstanding
Series that is still in its Revolving Period or (ii) they acknowledge that the
Event of Default has been cured and consent to the continuation of the Revolving
Period for each Outstanding Series that is still in its Revolving Period.

The obligation of the Issuer to pay or reserve any Default Supplemental Fee,
Step-Up Fee, Cumulative Interest Shortfall Amount, Cumulative Default
Supplemental Fee Shortfall Amount or Cumulative Step-Up Fee Shortfall Amount
shall begin only upon the occurrence of an Early Amortization Event or Event of
Default, as applicable, and commencement of the Early Amortization Period or
Full Amortization Period, as applicable, as described in this Section 4.12.

Article V

Note Forms

 

Section 5.1. Forms Generally.

The Notes will have such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Base Indenture or the
applicable Indenture Supplement and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon, as may
be required to comply with applicable laws or regulations or with the rules of
any securities exchange, or as may, consistently herewith, be determined by the
Issuer, as evidenced by the Issuer’s execution of such Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.

The Definitive Notes and the Global Notes representing the Book-Entry Notes will
be typewritten, printed, lithographed or engraved or produced by any combination
of these methods (with or without steel engraved borders) or may be produced in
any other manner, all as determined by the Issuer, as evidenced by the Issuer’s
execution of such Notes.

 

Section 5.2. Forms of Notes.

(a) Forms Generally. Subject to Section 5.2(b), each Note will be in one of the
forms approved from time to time by or pursuant to this Base Indenture. Without
limiting the generality of the foregoing, the Indenture Supplement for any
Series of Notes shall specify whether the Notes of such Series, or of any
Class within such Series, shall be issuable as Definitive Notes or as Book-Entry
Notes.

(b) Issuer Certificate. Before the delivery of a Note to the Indenture Trustee
for authentication in any form approved by or pursuant to an Issuer Certificate,
the Issuer will deliver to the Indenture Trustee the Issuer Certificate by or
pursuant to which such form of Note has been approved, which Issuer Certificate
will have attached thereto a true and correct copy of the form of Note which has
been approved thereby. Any form of Note approved by or pursuant to an Issuer
Certificate must be acceptable as to form to the Indenture Trustee, such
acceptance to be evidenced by the Indenture Trustee’s authentication of Notes in
that form of a Certificate of Authentication signed by an Indenture Trustee
Authorized Officer and delivered to the Issuer.

 

47

--------------------------------------------------------------------------------

(c) (i) Rule 144A Notes. Notes sold by the Issuer (other than Regulation S
Notes) shall bear a legend generally to the effect that resales of such Notes or
interests therein may be made only to qualified institutional buyers in
transactions exempt from the registration requirements of the 1933 Act in
reliance on Rule 144A (“each, a “Rule 144A Note”) and shall be issued initially
in the form of (A) one or more permanent Global Notes in fully registered form
(each, a “Rule 144A Global Note”), substantially in the form attached hereto as
Exhibit A-1 or (B) one or more permanent Definitive Notes in fully registered
form (each, a “Rule 144A Definitive Note”), substantially in the form attached
hereto as Exhibit A-2. The aggregate principal amounts of the Rule 144A Global
Notes or Rule 144A Definitive Notes may from time to time be increased or
decreased by adjustments made on the records of the Indenture Trustee, or the
Depository or its nominee, as the case may be, as hereinafter provided.

(ii) Regulation S Notes. Notes sold in offshore transactions in reliance on
Regulation S (each, a “Regulation S Note”) shall be issued in the form of
(A) one or more permanent Global Notes in fully registered form (each, a
“Regulation S Global Note”), substantially in the form attached hereto as
Exhibit A-3 or (B) one or more permanent Definitive Notes in fully registered
form (each, a “Regulation S Definitive Note”), substantially in the form
attached hereto as Exhibit A-4. The aggregate principal amounts of the
Regulation S Global Notes or the Regulation S Definitive Notes may from time to
time be increased or decreased by adjustments made on the records of the
Indenture Trustee or the Depository or its nominee, as the case may be, as
hereinafter provided.

 

Section 5.3. Reserved.

 

Section 5.4. Book-Entry Notes.

(a) Issuance of Book-Entry Notes. If the Issuer establishes pursuant to
Sections 5.2 and 6.1 that the Notes of a particular Series or Class are to be
issued as Book-Entry Notes, then the Issuer will execute and the Indenture
Trustee or its agent will, in accordance with Section 6.3 and with the Issuer
Certificate delivered to the Indenture Trustee or its agent under Section 6.3,
authenticate and deliver, one or more definitive Global Notes, which, unless
otherwise provided in the applicable Indenture Supplement (1) will represent,
and will be denominated in an amount equal to the aggregate, Initial Note
Balance of the Outstanding Notes of such Series or Class to be represented by
such Global Note or Notes, or such portion thereof as the Issuer will specify in
an Issuer Certificate, (2) will be registered in the name of the Depository for
such Global Note or Notes or its nominee, (3) will be delivered by the Indenture
Trustee or its agent to the Depository or pursuant to the Depository’s
instruction (and which may be held by the Indenture Trustee as custodian for the
Depository, if so specified in the related Indenture Supplement or Depository
Agreement), (4) if applicable, will bear a legend substantially to the following
effect: “Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as

 

48

--------------------------------------------------------------------------------

is requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), any transfer, pledge or other use hereof for value or
otherwise by or to any person is wrongful inasmuch as the registered owner
hereof, Cede & Co., has an interest herein” and (5) may bear such other legend
as the Issuer, upon advice of counsel, deems to be applicable.

(b) The Note Registrar and the Indenture Trustee may deal with the Depository as
the sole Noteholder of the Book-Entry Notes for all purposes of this Indenture
and will not be obligated to the Note Owners, except as stated in Section 14.11.

(c) The rights of the Note owners may be exercised only through the Depository
and will be limited to those established by law and agreements between the Note
Owners and the Depository and/or its participants under the Depository
Agreement.

(d) If this Section 5.4(a) conflicts with other terms of this Indenture, this
Section 5.4(a) will control.

(e) The Depository will make book-entry transfers among its participants and
receive and transmit payments of principal of and interest on the Book-Entry
Notes to the participants.

(f) The Indenture Trustee, the Note Registrar, and the Paying Agent shall have
no responsibility or liability for any actions taken or not taken by the
Depository.

(g) If this Indenture requires or permits actions to be taken based on
instructions or directions of the Noteholders of a stated percentage of Note
Balance of the Notes, the Depository will be deemed to represent those
Noteholders only if it has received instructions to that effect form Note Owners
and/or the Depository’s participants owning or representing, the required
percentage of the beneficial interest of the Notes and has delivered the
instructions to the Indenture Trustee.

(h) The Issuer in issuing Notes may use “CUSIP” numbers (if then generally in
use), and, if so, the Indenture Trustee shall use “CUSIP” numbers in notices of
redemption as a convenience to Noteholders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuer will promptly notify the Indenture Trustee
in writing of any change in the “CUSIP” numbers.

(i) Transfers of Global Notes only to Depository Nominees. Notwithstanding any
other provisions of this Section 5.4 or of Section 6.5, and subject to the
provisions of paragraph (c) below, unless the terms of a Global Note or the
applicable Indenture Supplement expressly permit such Global Note to be
exchanged in whole or in part for individual Notes, a Global Note may be
transferred, in whole but not in part and in the manner provided in Section 6.5,
only to a nominee of the Depository for such Global Note, or to the Depository,
or a successor Depository for such Global Note selected or approved by the
Issuer, or to a nominee of such successor Depository.

 

49

--------------------------------------------------------------------------------

(j) Limited Right to Receive Definitive Notes. Except under the limited
circumstances described below, Note Owners of beneficial interests in Global
Notes will not be entitled to receive Definitive Notes. With respect to Notes
issued within the United States, unless otherwise specified in the applicable
Indenture Supplement, or with respect to Notes issued outside the United States,
if specified in the applicable Indenture Supplement:

(i) If at any time the Depository for a Global Note notifies the Issuer that it
is unwilling or unable to continue to act as Depository for such Global Note or
if at any time the Depository for the Notes for such Series or Class ceases to
be a Clearing Corporation, the Issuer will appoint a successor Depository with
respect to such Global Note. If a successor Depository for such Global Note is
not appointed by the Issuer within ninety (90) days after the Issuer receives
such notice or becomes aware of such ineligibility, the Issuer will execute, and
the Indenture Trustee or its agent will, in accordance with Section 6.3 and with
the Issuer Certificate delivered to the Indenture Trustee or its agent under
Section 6.3 requesting the authentication and delivery of individual Notes of
such Series or Class in exchange for such Global Note, will authenticate and
deliver, individual Notes of such Series or Class of like tenor and terms in an
aggregate Initial Note Balance equal to the Initial Note Balance of the Global
Note in exchange for such Global Note.

(ii) The Issuer may at any time and in its sole discretion determine that the
Notes of any Series or Class or portion thereof issued or issuable in the form
of one or more Global Notes will no longer be represented by such Global Note or
Notes. In such event the Issuer will execute, and the Indenture Trustee or its
agent in accordance with Section 6.3 and with the Issuer Certificate delivered
to the Indenture Trustee or its agent under Section 6.3 for the authentication
and delivery of individual Notes of such Series or Class in exchange in whole or
in part for such Global Note, will authenticate and deliver individual Notes of
such Series or Class of like tenor and terms in definitive form in an aggregate
Initial Note Balance equal to the Initial Note Balance of such Global Note or
Notes representing such Series or Class or portion thereof in exchange for such
Global Note or Notes.

(iii) If specified by the Issuer pursuant to Sections 5.2 and 6.1 with respect
to Notes issued or issuable in the form of a Global Note, the Depository for
such Global Note may surrender such Global Note in exchange in whole or in part
for individual Notes of such Series or Class of like tenor and terms in
definitive form on such terms as are acceptable to the Issuer and such
Depository. Thereupon the Issuer will execute, and the Indenture Trustee or its
agent will, in accordance with Section 6.3 and with the Issuer Certificate
delivered to the Indenture Trustee or its agent under Section 6.3, authenticate
and deliver, without service charge, (A) to each Person specified by such
Depository a new Note or Notes of the same Series or Class of like tenor and
terms and of any authorized denomination as requested by such Person in an
aggregate Initial Note Balance equal to the Initial Note Balance of the portion
of the Global Note or Notes specified by the Depository and in exchange for such
Person’s beneficial interest in the Global Note; and (B) to such Depository a
new Global Note of like tenor and terms and in an authorized denomination equal
to the difference, if any, between the Initial Note Balance of the surrendered
Global Note and the aggregate Initial Note Balance of Notes delivered to the
Noteholders thereof.

 

50

--------------------------------------------------------------------------------

(iv) If any Event of Default has occurred with respect to such Global Notes, and
Owners of Notes evidencing more than 50% of the Global Notes of that Series or
Class (measured by Voting Interests) advise the Indenture Trustee and the
Depository that a Global Note is no longer in the best interest of the Note
Owners, the Owners of Global Notes of that Series or Class may exchange their
beneficial interests in such Notes for Definitive Notes in accordance with the
exchange provisions herein.

(v) In any exchange provided for in any of the preceding four paragraphs, the
Issuer will execute and the Indenture Trustee or its agent will, in accordance
with Section 6.3 and with the Issuer Certificate delivered to the Indenture
Trustee or its agent under Section 6.3, authenticate and deliver Definitive
Notes in definitive registered form in authorized denominations. Upon the
exchange of the entire Initial Note Balance of a Global Note for Definitive
Notes, such Global Note will be canceled by the Indenture Trustee or its agent.
Except as provided in the preceding paragraphs, Notes issued in exchange for a
Global Note pursuant to this Section will be registered in such names and in
such authorized denominations as the Depository for such Global Note, pursuant
to instructions from its direct or indirect participants or otherwise, will
instruct the Indenture Trustee or the Note Registrar. The Indenture Trustee or
the Note Registrar will deliver such Notes to the Persons in whose names such
Notes are so registered.

 

Section 5.5. Beneficial Ownership of Global Notes.

Until Definitive Notes have been issued to the applicable Noteholders to replace
any Global Notes with respect to a Series or Class pursuant to Section 5.4 or as
otherwise specified in any applicable Indenture Supplement:

(a) the Issuer and the Indenture Trustee may deal with the applicable clearing
agency or Depository and the Depository Participants for all purposes (including
the making of payments) as the authorized representatives of the respective Note
Owners; and

(b) the rights of the respective Note Owners will be exercised only through the
applicable Depository and the Depository Participants and will be limited to
those established by law and agreements between such Note Owners and the
Depository and/or the Depository Participants. Pursuant to the operating rules
of the applicable Depository, unless and until Definitive Notes are issued
pursuant to Section 5.4, the Depository will make book-entry transfers among the
Depository Participants and receive and transmit payments of principal and
interest on the related Notes to such Depository Participants.

For purposes of any provision of this Base Indenture requiring or permitting
actions with the consent of, or at the direction of, Noteholders evidencing a
specified percentage of the Note Balance of Outstanding Notes, such direction or
consent may be given by Note Owners (acting through the Depository and the
Depository Participants) owning interests in or security entitlements to Notes
evidencing the requisite percentage of principal amount of Notes.

 

51

--------------------------------------------------------------------------------

Section 5.6. Notices to Depository.

Whenever any notice or other communication is required to be given to
Noteholders with respect to which Book-Entry Notes have been issued, unless and
until Definitive Notes will have been issued to the related Note Owners, the
Indenture Trustee will give all such notices and communications to the
applicable Depository, and shall have no obligation to report directly to such
Note Owners.

Article VI

The Notes

 

Section 6.1. General Provisions; Notes Issuable in Series; Terms of a Series or
Class Specified in an Indenture Supplement.

(a) Amount Unlimited. The aggregate Initial Note Balance of Notes which may be
authenticated and delivered and Outstanding under this Base Indenture is not
limited.

(b) Series and Classes. The Notes may be issued in one or more Series or Classes
up to an aggregate Note Balance for such Series or Class as from time to time
may be authorized by the Issuer. All Notes of each Series or Class under this
Base Indenture will in all respects be equally and ratably entitled to the
benefits hereof with respect to such Series or Class without preference,
priority or distinction on account of (1) the actual time of the authentication
and delivery, or (2) Stated Maturity Date of the Notes of such Series or Class,
except as specified in the applicable Indenture Supplement for such Series or
Class of Notes.

Each Note issued must be part of a Series of Notes for purposes of allocations
pursuant to the related Indenture Supplement. A Series of Notes is created
pursuant to an Indenture Supplement. A Class of Notes is created pursuant to an
Indenture Supplement for the applicable Series.

Each Series and Class of Notes will be secured by the Trust Estate.

Each Series of Notes may, but need not be, subdivided into multiple Classes.
Notes belonging to a Class in any Series may be entitled to specified payment
priorities over other Classes of Notes in that Series.

(c) Provisions Required in Indenture Supplement. Before the initial issuance of
Notes of each Series, there shall also be established in or pursuant to an
Indenture Supplement provision for:

(i) the Series designation;

(ii) the Initial Note Balance of such Series of Notes and of each Class, if any,
within such Series, and the Maximum VFN Principal Balance for such Series (if it
is a Series or Class of Variable Funding Notes);

(iii) whether such Notes are subdivided into Classes;

 

52

--------------------------------------------------------------------------------

(iv) whether such Series of Notes are Term Notes, Variable Funding Notes or a
combination thereof;

(v) the Note Interest Rate at which such Series of Notes or each related
Class of Notes will bear interest, if any, or the formula or index on which such
rate will be determined, including all relevant definitions, and the date from
which interest will accrue;

(vi) the Stated Maturity Date for such Series of Notes or each related Class of
Notes;

(vii) if applicable, the appointment by the Indenture Trustee of an
Authenticating Agent in one or more places other than the location of the office
of the Indenture Trustee with power to act on behalf of the Indenture Trustee
and subject to its direction in the authentication and delivery of such Notes in
connection with such transactions as will be specified in the provisions of this
Base Indenture or in or pursuant to the applicable Indenture Supplement creating
such Series;

(viii) if such Series of Notes or any related Class will be issued in whole or
in part in the form of a Global Note or Global Notes, the terms and conditions,
if any, in addition to those set forth in Section 5.4, upon which such Global
Note or Global Notes may be exchanged in whole or in part for other Definitive
Notes; and the Depository for such Global Note or Global Notes (if other than
the Depository specified in Section 1.1);

(ix) the subordination, if any, of such Series of Notes or any related Class(es)
to any other Notes of any other Series or of any other Class within the same
Series;

(x) the Record Date for any Payment Date of such Series of Notes or any related
Class, if different from the last day of the month before the related Payment
Date;

(xi) any Default Supplemental Fee Rate, if applicable;

(xii) any Step-Up Fee Rate, if applicable;

(xiii) if applicable, under what conditions any additional amounts will be
payable to Noteholders of the Notes of such Series;

(xiv) the Administrative Agent for such Series of Notes;

(xv) any other terms of such Notes as stated in the related Indenture
Supplement; and

(xvi) all upon such terms as may be determined in or pursuant to an Indenture
Supplement with respect to such Series or Class of Notes.

(d) Forms of Series or Classes of Notes. The form of the Notes of each Series or
Class will be established pursuant to the provisions of this Base Indenture and
the related Indenture Supplement creating such Series or Class. The Notes of
each Series or Class will be distinguished from the Notes of each other Series
or Class in such manner, reasonably satisfactory to the Indenture Trustee, as
the Issuer may determine.

 

53

--------------------------------------------------------------------------------

Section 6.2. Denominations.

Except as provided in Section 6.1(b), the Notes of each Series or Class will be
issuable in such denominations and currency as will be provided in the
provisions of this Base Indenture or in or pursuant to the applicable Indenture
Supplement. In the absence of any such provisions with respect to the Term Notes
of any Series or Class, the Term Notes of that Series or Class will be issued in
minimum denominations of $100,000 and integral multiples of $1,000 in excess
thereof. In the absence of any such provisions with respect to the Variable
Funding Notes of any Series or Class, the Variable Funding Notes of that Series
or Class will be issued in accordance with the terms of the related Indenture
Supplement.

 

Section 6.3. Execution, Authentication and Delivery and Dating.

(a) The Notes will be executed on behalf of the Issuer by an Issuer Authorized
Officer, by manual or facsimile signature.

(b) Notes bearing the manual or facsimile signatures of individuals who were at
any time an Issuer Authorized Officer will bind the Issuer, notwithstanding that
such individuals or any of them have ceased to hold such offices before the
authentication and delivery of such Notes or did not hold such offices at the
date of issuance of such Notes.

(c) At any time and from time to time after the execution and delivery of this
Base Indenture, the Issuer may deliver Notes executed by the Issuer to the
Indenture Trustee for authentication; and the Indenture Trustee will, upon
delivery of an Issuer Certificate, authenticate and deliver such Notes as
provided in this Base Indenture and not otherwise.

(d) Before any such authentication and delivery, the Indenture Trustee will be
entitled to receive, in addition to any Officer’s Certificate and Opinion of
Counsel required to be furnished to the Indenture Trustee pursuant to
Section 1.3, the Issuer Certificate and any other opinion or certificate
relating to the issuance of the Series or Class of Notes required to be
furnished pursuant to Section 5.2 or Section 6.10.

(e) The Indenture Trustee will not be required to authenticate such Notes if the
issue thereof will adversely affect the Indenture Trustee’s own rights, duties
or immunities under the Notes and this Base Indenture.

(f) Unless otherwise provided in the form of Note for any Series or Class, all
Notes will be dated the date of their authentication.

(g) No Note will be entitled to any benefit under this Base Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
Certificate of Authentication substantially in the form provided for herein
executed by the Indenture Trustee by manual signature of an authorized
signatory, and such certificate upon any Note will be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder.

 

54

--------------------------------------------------------------------------------

Section 6.4. Temporary Notes.

(a) Pending the preparation of definitive Notes of any Series or Class, the
Issuer may execute, and, upon receipt of the documents required by Section 6.3,
together with an Issuer’s Certificate, the Indenture Trustee will authenticate
and deliver, temporary Notes which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the Issuer may determine, as evidenced by the Issuer’s execution
of such Notes.

(b) If temporary Notes of any Series or Class are issued, the Issuer will cause
permanent Notes of such Series or Class to be prepared without unreasonable
delay. After the preparation of permanent Notes, the temporary Notes of such
Series or Class will be exchangeable for permanent Notes of such Series or
Class upon surrender of the temporary Notes of such Series or Class at the
office or agency of the Issuer in a Place of Payment, without charge to the
Noteholder; and upon surrender for cancellation of any one or more temporary
Notes the Issuer will execute and the Indenture Trustee or its agent will, in
accordance with Section 6.3 and with the Issuer Certificate delivered to the
Indenture Trustee or its agent under Section 6.3, authenticate and deliver in
exchange therefore a like Initial Note Balance of permanent Notes of such Series
or Class of authorized denominations and of like tenor and terms. Until so
exchanged the temporary Notes of such Series or Class will in all respects be
entitled to the same benefits under this Base Indenture as permanent Notes of
such Series or Class.

 

Section 6.5. Registration, Transfer and Exchange.

(a) Note Register. The Indenture Trustee, acting as Note Registrar, shall keep
or cause to be kept a register (herein sometimes referred to as the “Note
Register”) in which, subject to such reasonable regulations as it may prescribe,
the Issuer will provide for the registration of Notes, or of Notes of a
particular Series or Class, and for transfers of Notes. Any such register will
be in written form or in any other form capable of being converted into written
form within a reasonable time. At all reasonable times the information contained
in such register or registers will be available for inspection by the Issuer or
the Indenture Trustee at the Corporate Trust Office. The Issuer, the Indenture
Trustee, the Note Registrar, the Paying Agent and any agents of any of them, may
treat a Person in whose name a Note is registered as the owner of such Note for
the purpose of receiving payments in respect of such Note and for all other
purposes, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any agent of any of them, shall be affected by notice to the
contrary. None of the Issuer, the Indenture Trustee, any agent of the Indenture
Trustee, any Paying Agent or the Note Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership of a Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership.

 

55

--------------------------------------------------------------------------------

(b) Exchange of Notes. Subject to Section 5.4, upon surrender for transfer of
any Note of any Series or Class at the Place of Payment, the Issuer may execute,
and, upon receipt of the documents required by Section 6.3 and such surrendered
Note, together with an Issuer’s Certificate, the Indenture Trustee will
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of such Series or Class of any authorized
denominations, of a like aggregate Initial Note Balance and Stated Maturity Date
and of like terms. Subject to Section 5.4, Notes of any Series or Class may be
exchanged for other Notes of such Series or Class of any authorized
denominations, of a like aggregate Initial Note Balance and Stated Maturity Date
and of like terms, upon surrender of the Notes to be exchanged at the Place of
Payment. Whenever any Notes are so surrendered for exchange, the Issuer will
execute, and the Indenture Trustee or the related Authenticating Agent will
authenticate and deliver the Notes which the Noteholders making the exchange are
entitled to receive.

(c) Issuer Obligations. All Notes issued upon any transfer or exchange of Notes
shall be the valid and legally binding obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Base Indenture, as the
Notes surrendered upon such transfer or exchange.

(d) Endorsement of Notes to be Transferred or Exchanged. Every Note presented or
surrendered for transfer or exchange will (if so required by the Issuer, the
Note Registrar or the Indenture Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Issuer, the
Indenture Trustee, and the Note Registrar duly executed, by the Noteholder
thereof or such Noteholder’s attorney duly authorized in writing, with such
signature guaranteed by an “eligible guarantor institution” meeting the
requirements of the Securities Transfer Agent’s Medallion Program (“STAMP”).

(e) No Service Charge. Unless otherwise provided in the Note to be transferred
or exchanged, no service charge will be assessed against any Noteholder for any
transfer or exchange of Notes, but the Issuer, the Indenture Trustee, and the
Note Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes before the transfer or exchange will be complete, other than
exchanges pursuant to Section 5.4 not involving any transfer.

(f) Deemed Representations by Transferees of Rule 144A Notes. Each transferee
(including the initial Noteholder or Owner) of a Rule 144A Note or of a
beneficial interest therein shall be deemed by accepting such Note or beneficial
interest, to have made all the certifications, representations and warranties
set forth in the Rule 144A Note Transfer Certificate attached to Exhibit B-1
attached hereto.

(g) Deemed Representations by Transferees of Regulation S Notes. Each transferee
(including the initial Noteholder or Owner) of a Regulation S Note or of a
beneficial therein shall be deemed by accepting such Note or beneficial
interest, to have made all the certifications, representations and warranties
set forth in the Regulation S Note Transfer Certificate attached to Exhibit B-2
attached hereto.

(h) Conditions to Transfer. No sale, pledge or other transfer (a “Transfer”) of
any Notes shall be made unless that Transfer is made pursuant to an effective
registration statement under the 1933 Act and effective registration or
qualification under applicable state securities laws or is made in a transaction
that does not require such registration or qualification. If a Transfer is made
without registration under the 1933 Act (other than in connection with the
initial issuance thereof by the Issuer), then the Note Registrar, the Indenture
Trustee, Administrator, on behalf of the Issuer, shall refuse to register such
Transfer unless the Note Registrar receives either:

 

56

--------------------------------------------------------------------------------

(i) the Regulation S Note Transfer Certificate or Rule 144A Note Transfer
Certificate and such other information as may be required pursuant to this
Section 6.5; or

(ii) if the Transfer is to be made to an Issuer Affiliate in a transaction that
is exempt from registration under the 1933 Act, an Opinion of Counsel reasonably
satisfactory to the Issuer and the Note Registrar to the effect that such
Transfer may be made without registration under the 1933 Act (which Opinion of
Counsel shall not be an expense of the Trust Estate or of the Issuer, the
Indenture Trustee or the Note Registrar in their respective capacities as such).

None of the Administrator, the Issuer, the Indenture Trustee or the Note
Registrar is obligated to register or qualify the Notes under the 1933 Act or
any other securities law or to take any action not otherwise required under this
Base Indenture to permit the transfer of any Note without registration or
qualification. Any Noteholder of a Note desiring to effect such a Transfer
shall, and upon acquisition of such a Note shall be deemed to have agreed to,
indemnify the Indenture Trustee, the Note Registrar, the Administrator, the
Servicer and the Issuer against any liability that may result if the Transfer is
not so exempt or is not made in accordance with the 1933 Act and applicable
state securities laws.

In connection with any Transfer of Notes in reliance on Rule 144A, the
Administrator shall furnish upon request of a Noteholder to such Noteholder and
any prospective purchaser designated by such Noteholder the information required
to be delivered under paragraph (d)(4) of Rule 144A.

In the event that a Note is transferred to a Person that does not meet the
requirements of this Section 6.5 and/or the requirements of the related
Indenture Supplement, such transfer will be of no force and effect, will be void
ab initio, and will not operate to transfer any right to such Person,
notwithstanding any instructions to the contrary to the Issuer, the Indenture
Trustee or any intermediary; and the Indenture Trustee shall not make any
payment on such Note for as long as such Person is the Noteholder of such Note
and the Indenture Trustee shall have the right to compel such Person to transfer
such Note to a Person who does meet the requirements of this Section 6.5.

(i) Transfers of Ownership Interests in Global Notes. Transfers of beneficial
interests in a Global Note representing Book-Entry Notes may be made only in
accordance with the rules and regulations of the Depository (and, in the case of
a Regulation S Global Note only to beneficial owners who are not “U.S. persons”
(as such term is defined in Regulation S) in accordance with the rules and
regulations of Euroclear or Clearstream) and the transfer restrictions contained
in the legend on such Global Note and exchanges or transfers of interests in a
Global Note may be made only in accordance with the following:

(i) General Rules Regarding Transfers of Global Notes. Subject to clauses
(ii) through (vii) of this Section 6.5(i), Transfers of a Global Note
representing Book-Entry Notes shall be limited to Transfers of such Global Note
in whole, but not in part, to nominees of the Depository or to a successor of
the Depository or such successor’s nominee.

 

57

--------------------------------------------------------------------------------

(ii) Rule 144A Global Note to Regulation S Global Note. If an owner of a
beneficial interest in a Rule 144A Global Note related to a Series and/or
Class deposited with or on behalf of the Depository wishes at any time to
exchange its interest in such Rule 144A Global Note for an interest in a
Regulation S Global Note for that Series and/or Class, or to transfer its
interest in such Rule 144A Global Note to a Person who wishes to take delivery
thereof in the form of an interest in a Regulation S Global Note for that Series
and/or Class, such Note Owner (or transferee), provided such Note Owner (or
transferee) is not a “U.S. person” (as such term is defined in Regulation S),
may, subject to the rules and procedures of the Depository, exchange or cause
the exchange of such interest in such Rule 144A Global Note for a beneficial
interest in the Regulation S Global Note for that Series and/or Class. Upon the
receipt by the Indenture Trustee of (A) instructions from the Depository
directing the Indenture Trustee to cause to be credited a beneficial interest in
a Regulation S Global Note in an amount equal to the beneficial interest in such
Rule 144A Global Note to be exchanged but not less than the minimum denomination
applicable to the owner’s Notes held through a Regulation S Global Note, (B) a
written order given in accordance with the Depository’s procedures containing
information regarding the participant account of the Depository and, in the case
of a transfer pursuant to and in accordance with Regulation S, the Euroclear or
Clearstream account to be credited with such increase and (C) a certificate
(each, a “Regulation S Note Transfer Certificate”) in the form of Exhibit B-2
hereto given by the Note Owner or its transferee stating that the exchange or
transfer of such interest has been made in compliance with the transfer
restrictions applicable to the Global Notes, including the requirements that the
Note Owner or its transferee is not a “U.S. person” (as such term is defined in
Regulation S) and the transfer is made pursuant to and in accordance with
Regulation S, then the Indenture Trustee and the Note Registrar, shall reduce
the principal amount of the Rule 144A Global Note for the related Series and/or
Class and increase the principal amount of the Regulation S Global Note for the
related Series and/or Class by the aggregate principal amount of the beneficial
interest in the Rule 144A Global Note to be exchanged, and shall instruct
Euroclear or Clearstream, as applicable, concurrently with such reduction, to
credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Regulation S Global Note for the
related Series and/or Class equal to the reduction in the principal amount of
the Rule 144A Global Note for the related Series and/or Class.

(iii) Regulation S Global Note to Rule 144A Global Note. If an owner of a
beneficial interest in a Regulation S Global Note related to a Series and/or
Class deposited with or on behalf of the Depository wishes at any time to
transfer its interest in such Regulation S Global Note to a Person who wishes to
take delivery thereof in the form of an interest in a Rule 144A Global Note for
such Series and/or Class, such owner’s transferee may, subject to the rules and
procedures of the Depository, exchange or cause the exchange of such interest
for an equivalent beneficial interest in a Rule 144A Global Note for such Series
and/or Class. Upon the receipt by the Indenture Trustee and the Note Registrar,
of (A) instructions from the Depository directing the Indenture Trustee and the
Note Registrar, to cause to be credited a beneficial interest in a Rule

 

58

--------------------------------------------------------------------------------

144A Global Note in an amount equal to the beneficial interest in such
Regulation S Global Note to be exchanged but not less than the minimum
denomination applicable to such owner’s Notes held through a Rule 144A Global
Note, to be exchanged, such instructions to contain information regarding the
participant account with the Depository to be credited with such increase, and
(B) a certificate (each, a “Rule 144A Note Transfer Certificate”) in the form of
Exhibit B-1 hereto given by the transferee of such beneficial interest, then the
Indenture Trustee will reduce the principal amount of the Regulation S Global
Note and increase the principal amount of the Rule 144A Global Note for the
related Series and/or Class by the aggregate principal amount of the beneficial
interest in the Regulation S Global Note for the related Series and/or Class to
be transferred and the Indenture Trustee and the Note Registrar, shall instruct
the Depository, concurrently with such reduction, to credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the Rule 144A Global Note for the related Series and/or
Class equal to the reduction in the principal amount of the Regulation S Global
Note for the related Series and/or Class.

(iv) Transfers of Interests in Rule 144A Global Note. An owner of a beneficial
interest in a Rule 144A Global Note may transfer such interest in the form of a
beneficial interest in such Rule 144A Global Note in accordance with the
procedures of the Depository without the provision of written certification.

(v) Transfers of Interests in Regulation S Global Note. An owner of a beneficial
interest in a Regulation S Global Note may transfer such interest in the form of
a beneficial interest in such Regulation S Global Note in accordance with the
applicable procedures of Euroclear and Clearstream without the provision of
written certification.

(vi) Regulation S Global Note to Regulation S Definitive Note. Subject to
Section 5.4(j) hereof, an owner of a beneficial interest in a Regulation S
Global Note for the related Series and/or Class deposited with or on behalf of a
Depository may at any time transfer such interest for a Regulation S Definitive
Note upon provision to the Indenture Trustee, the Issuer and the Note Registrar
of a Regulation S Note Transfer Certificate.

(vii) Rule 144A Global Note to Rule 144A Definitive Note. Subject to
Section 5.4(j) hereof, an owner of a beneficial interest in a Rule 144A Global
Note deposited with or on behalf of a Depository may at any time transfer such
interest for a Rule 144A Definitive Note, upon provision to the Indenture
Trustee, the Issuer and the Note Registrar of a Rule 144A Note Transfer
Certificate.

(j) Transfers of Definitive Notes. In the event of any Transfer of a Regulation
S Definitive Note, a Regulation S Note Transfer Certificate shall be provided
prior to the Indenture Trustee’s or Note Registrar’s registration of such
Transfer. In the event of any Transfer of a Rule 144A Definitive Note, a Rule
144A Note Transfer Certificate shall be provided prior to the Indenture
Trustee’s or Note Registrar’s registration of such Transfer.

 

59

--------------------------------------------------------------------------------

(k) ERISA Restrictions. Neither the Note Registrar nor the Indenture Trustee
shall register the Transfer of any Definitive Notes unless the prospective
transferee has delivered to the Indenture Trustee and the Note Registrar a
certification to the effect that either (i) it is not, and is not acquiring,
holding or transferring the Notes, or any interest therein, or on behalf of, or
using assets of, an “employee benefit plan” as defined in Section 3(3) of ERISA,
a plan described in section 4975(e)(1) of the Code, an entity which is deemed to
hold the assets of any such employee benefit plan or plan pursuant to 29 C.F.R.
Section 2510.3-101 as modified by Section 3(42) of ERISA (the “Plan Asset
Regulations”), which employee benefit plan, plan or entity is subject to Title I
of ERISA or section 4975 of the Code, or a governmental, non-U.S., church or
other plan which is subject to any U.S. federal, state, local or other law that
is substantially similar to Title I of ERISA or section 4975 of the Code
(“Similar Law”), or (ii) (A) as of the date of transfer or purchase, it believes
that such Notes are properly treated as indebtedness without substantial equity
features for purposes of the Plan Asset Regulations and agrees to so treat such
Notes and (B) the transferee’s acquisition, holding or disposition of the Notes
or any interest therein will satisfy the requirements of Prohibited Transaction
Class Exemption (“PTCE”) 84-14 (relating to transactions effected by a qualified
professional asset manager), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts), PTCE 91-38 (relating to investments in bank
collective investment funds), PTCE 95-60 (relating to transactions involving
insurance company general accounts), PTCE 96-23 (relating to transactions
directed by an in-house professional asset manager) or the statutory prohibited
transaction exemption for service providers set forth in section 408(b)(17) of
ERISA and section 4975(d)(20) of the Code or a similar class, statutory or
administrative exemption and will not result in a non-exempt prohibited
transaction under section 406 of ERISA or section 4975 of the Code (or, in the
case of a governmental, non-U.S., church or other plan subject to such Similar
Law, will not violate any such Similar Law). In the case of any Book-Entry Note,
each transferee of such Note or any beneficial interest therein by virtue of its
acquisition of such Note will be deemed to represent either (i) or (ii) above.

(l) No Liability of Indenture Trustee for Transfers. To the extent permitted
under applicable law, the Indenture Trustee (in any of its capacities) shall be
under no liability to any Person for any registration of transfer of any Note
that is in fact not permitted by this Section 6.5 or for making any payments due
to the Noteholder thereof or taking any other action with respect to such
Noteholder under the provisions of this Base Indenture so long as the transfer
was registered by the Indenture Trustee and the Note Registrar in accordance
with the requirements of this Base Indenture.

 

Section 6.6. Mutilated, Destroyed, Lost and Stolen Notes.

(a) If (1) any mutilated Note is surrendered to the Indenture Trustee or the
Note Registrar, or the Issuer, the Note Registrar or the Indenture Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (2) there is delivered to the Issuer, the Note Registrar or the
Indenture Trustee such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a
protected purchaser, the Issuer may execute, and, upon receipt of the documents
required by Section 6.3, together with an Issuer’s Certificate, the Indenture
Trustee will authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor, Series or
Class, Stated Maturity Date and Initial Note Balance, bearing a number not
contemporaneously Outstanding.

 

60

--------------------------------------------------------------------------------

(b) In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Issuer in its discretion may, instead of
issuing a new Note, pay such Note on a Payment Date in accordance with
Section 4.5.

(c) Upon the issuance of any new Note under this Section, the Issuer, the
Indenture Trustee, or the Note Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Indenture Trustee) connected therewith.

(d) Every new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note will constitute an original additional
contractual obligation of the Issuer, whether or not the mutilated, destroyed,
lost or stolen Note will be at any time enforceable by anyone, and will be
entitled to all the benefits of this Base Indenture equally and proportionately
with any and all other Notes of the same Series or Class duly issued hereunder.

(e) The provisions of this Section are exclusive and will preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

 

Section 6.7. Payment of Interest; Interest Rights Preserved; Withholding Taxes.

(a) Unless otherwise provided with respect to such Note pursuant to Section 6.1,
interest payable on any Note will be paid to the Person in whose name that Note
(or one or more Predecessor Notes) is registered at the close of business on the
most recent Record Date.

(b) Subject to Section 6.7(a), each Note delivered under this Base Indenture
upon transfer of or in exchange for or in lieu of any other Note will carry the
rights to interest and fees accrued or principal accreted and unpaid, and to
accrue or accrete, which were carried by such other Note.

(c) The right of any Noteholder to receive interest and fees on or principal of
any Note shall be subject to any applicable withholding or deduction imposed
pursuant to the Code or other applicable tax law, including foreign withholding
and deduction. Any amounts properly so withheld or deducted shall be treated as
actually paid to the appropriate Noteholder. In addition, in order to receive
payments on its Notes free of U.S. federal withholding and backup withholding
tax, each Noteholder shall timely furnish the Indenture Trustee on behalf of the
Issuer, (1) any applicable IRS Form W-9, W-8BEN, W-8BEN-E, W-8ECI or W-8IMY
(with any applicable attachments) and (2) any documentation that is required
under FATCA to enable the Issuer, the Indenture Trustee and any other agent of
the Issuer to determine their duties and liabilities with respect to any taxes
they may be required to withhold in respect of such Note or the Noteholder of
such Note or beneficial interest therein, in each case, prior to the first
Payment Date after such Noteholder’s acquisition of Notes and at such time or
times required by law or that the Indenture Trustee on behalf of the Issuer or
their respective agents may reasonably request, and shall update or replace such
IRS form or documentation in accordance with its terms or its subsequent
amendments. Each Noteholder will provide the applicable replacement IRS form or
documentation every three (3) years (or sooner if there is a transfer to a new
Noteholder or if required by applicable law). In each case above, the applicable
IRS form or documentation shall be properly completed and signed under penalty
of perjury.

 

61

--------------------------------------------------------------------------------

Section 6.8. Persons Deemed Owners.

The Issuer, the Indenture Trustee, the Note Registrar and any agent of the
Issuer, the Indenture Trustee or the Note Registrar may treat the Person in
whose name the Note is registered in the Note Registrar as the owner of such
Note for the purpose of receiving payment of principal of and (subject to
Section 6.7) interest on such Note and for all other purposes whatsoever,
whether or not such Note is overdue, and neither the Issuer, the Indenture
Trustee, the Note Registrar, nor any agent of the Issuer, the Indenture Trustee,
or the Note Registrar will be affected by notice to the contrary.

 

Section 6.9. Cancellation.

All Notes surrendered for payment, redemption, transfer, conversion or exchange
will, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and, if not already canceled, will be
promptly canceled by it. The Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered will be promptly canceled by the Indenture Trustee. No Note
will be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section, except as expressly permitted by this Base Indenture.
The Indenture Trustee will dispose of all canceled Notes in accordance with its
customary procedures.

 

Section 6.10. New Issuances of Notes.

(a) Issuance of New Notes. The Issuer may, from time to time, direct the
Indenture Trustee, on behalf of the Issuer, to issue new Notes of any Series or
Class, so long as the conditions precedent set forth in Section 6.10(b) are
satisfied if, at the time of issuance, other Notes have already been issued and
remain Outstanding. On or before the Issuance Date of new Notes of any Series or
Class of Notes, the Issuer shall execute and deliver the required Indenture
Supplement which shall incorporate the principal terms with respect to such
additional Series or Class of Notes. The Indenture Trustee shall execute any
such Indenture Supplement without the consent of any Noteholders, the Issuer
shall execute the Notes of such Series or Class and the Notes of such Series or
Class shall be delivered to the Indenture Trustee (along with the other
deliverables required hereunder) for authentication and delivery.
Notwithstanding the foregoing, the conditions to the issuance of the new Notes
contemplated by Section 6.10(b) shall not apply to the issuance of any Series of
Notes on the Closing Date.

(b) Conditions to Issuance of New Notes. The issuance of the Notes of any Series
or Class after the Closing Date pursuant to this Section 6.10 shall be subject
to the satisfaction of the following conditions:

(i) no later than ten (10) Business Days before the date that the new issuance
is to occur, the Issuer delivers to the Indenture Trustee, each VFN Noteholder
and each Note Rating Agency that has rated any Outstanding Note that will remain
Outstanding after the new issuance, notice of such new issuance;

 

62

--------------------------------------------------------------------------------

(ii) on or prior to the date that the new issuance is to occur, the Issuer
delivers to the Indenture Trustee and each Note Rating Agency that has rated any
Outstanding Note that will remain Outstanding after the new issuance, an Issuer
Certificate to the effect that (x) the Issuer reasonably believes that the new
issuance will not cause a material Adverse Effect on any Outstanding Notes or a
Secured Party, and (y) all conditions precedent set forth in this Base Indenture
to the issuance of such Notes have been met, an Issuer Tax Opinion with respect
to such proposed issuance, and an Opinion of Counsel:

(A) to the effect that all instruments furnished to the Indenture Trustee
conform to the requirements of this Base Indenture for the Indenture Trustee to
authenticate and deliver such Notes;

(B) to the effect that the form and terms of such Notes have been established in
conformity with the provisions of this Base Indenture; and

(C) covering such other matters as the Indenture Trustee may reasonably request;

(iii) on or prior to the date that the new issuance is to occur, the Issuer will
have delivered to the Indenture Trustee and each Note Rating Agency that is at
that time rating Outstanding Notes that will remain Outstanding after the new
issuance, an Opinion of Counsel to the effect that the Issuer has the requisite
power and authority to issue such Notes and such Notes have been duly authorized
and delivered by the Issuer and, assuming due authentication and delivery by the
Indenture Trustee, constitute legal, valid and binding obligations of the Issuer
enforceable in accordance with their terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws and legal principles affecting creditors’ rights generally from time
to time in effect and to general equitable principles, whether applied in an
action at law or in equity) and are entitled to the benefits of this Base
Indenture, equally and ratably with all other Outstanding Notes, if any, of such
Series or Class subject to the terms of this Base Indenture and each Indenture
Supplement;

(iv) if any additional conditions to the new issuance are specified in writing
to the Issuer by a Note Rating Agency that is at that time rating any
Outstanding Note that will remain Outstanding after the new issuance, the Issuer
satisfies such conditions, if they are applicable to such Notes;

(v) either (1) the Issuer obtains written confirmation from each Note Rating
Agency that is at that time rating any Outstanding Note at the request of the
Issuer that will remain Outstanding after the new issuance that the new issuance
will not have a Ratings Effect on any Outstanding Notes that are rated by such
Note Rating Agency at the request of the Issuer or (2) if the Administrator and
the Administrative Agents determine in their reasonable judgment that an
applicable Note Rating Agency no longer provides such written confirmation
described in the foregoing clause (1), (a) the Administrator shall provide
notice of such new issuance to the related Note Rating Agency and (b) each of
the parties that would be Administrative Agents after giving effect to the new
issuance shall have provided their prior written consent to such new issuance
which may be given in reliance in part on the Issuer’s Certificate delivered
pursuant to Section 6.10(b)(ii) above;

 

63

--------------------------------------------------------------------------------

(vi) no Event of Default shall have occurred and be continuing, as evidenced by
an Issuer’s Certificate, unless (a) the proceeds of such new Notes are applied
in whole or in part to redeem all other Outstanding Notes and/or (b) the
Noteholders of any Notes that will remain Outstanding consent to such issuance
of new Notes;

(vii) on or prior to the date that the new issuance is to occur, the Issuer will
have delivered to the Indenture Trustee an Indenture Supplement and, if
applicable, the Issuer Certificate;

(viii) any Class of VFN must have the same Stated Maturity Date and Interim
Payment Date as any and all other Outstanding Classes of VFNs;

(ix) if any Class of VFNs is beneficially owned by the beneficial owner of the
Issuer, all Classes of VFNs must be beneficially owned by the beneficial owner
of the Issuer for United States federal income tax purposes and the financing of
such Class of VFNs shall be subject to the requirement for an Issuer Tax
Opinion;

(x) for any new Series with respect to which there is a new Administrative Agent
not currently set forth under the terms of the definition of “Administrative
Agent,” the Administrative Agent shall have consented to the issuance of such
Series, unless the Notes in respect of which the existing Administrative Agent’s
consent is required, are paid in full and all related commitments terminated in
writing by the Issuer and any remaining accrued commitment fees paid in full to
such terminated Administrative Agent, in connection with the issuance of the new
Series with the different Administrative Agent; and

(xi) any other conditions specified in the applicable Indenture Supplement;
provided, however, that any one of the aforementioned conditions may be
eliminated (other than clause (v) above and the requirement for an Issuer Tax
Opinion) or modified as a condition precedent to any new issuance of a Series or
Class of Notes if the Issuer has obtained approval from each Note Rating Agency
that is at that time rating any Outstanding Notes that will remain Outstanding
after the new issuance.

(c) No Notice or Consent Required to or from Existing Noteholders and Owners.
Except as provided in Section 6.10(b) above, the Issuer and the Indenture
Trustee will not be required to provide prior notice to or to obtain the consent
of any Noteholder or Note Owner of Notes of any Outstanding Series or Class to
issue any additional Notes of any Series or Class.

(d) Other Provisions. There are no restrictions on the timing or amount of any
additional issuance of Notes of an Outstanding Series or Class within a Series,
of Notes, so long as the conditions described in Section 6.10(b) are met or
waived.

 

64

--------------------------------------------------------------------------------

(e) Sale Proceeds. The proceeds of sale of any new Series of Notes shall be
wired to the Collection and Funding Account, and the Indenture Trustee shall
disburse such sale proceeds at the direction of the Administrator on behalf of
the Issuer, except to the extent such funds are needed to ensure that no the
Borrowing Base Deficiency exists. The Administrator on behalf of the Issuer may
direct the Issuer to apply such proceeds to reduce pro rata based on Invested
Amounts, the VFN Principal Balance of any Classes of Variable Funding Notes, or
to redeem any Series of Notes in accordance with Section 13.1. In the absence of
any such direction, the proceeds of such sale shall be distributed to PMC or at
PMC’s direction on the Issuance Date for the newly issued Notes. The
Administrator shall deliver to the Indenture Trustee a report demonstrating that
the release of sale proceeds pursuant to the Issuer’s direction will not cause a
Borrowing Base Deficiency, as a precondition to the Indenture Trustee releasing
such proceeds.

(f) Increase or Reduction in Maximum VFN Principal Balance. The increase or
reduction in the Maximum VFN Principal Balance in respect of any Outstanding
Class of Notes, the increase or decrease of any Advance Rates in respect thereof
and/or the increase or decrease of interest rates in respect thereof shall not
constitute an issuance of “new Notes” for purpose of this Section 6.10.

Article VII

Satisfaction and Discharge; Cancellation of Notes Held by the Issuer or PMC

 

Section 7.1. Satisfaction and Discharge of Indenture.

This Base Indenture will cease to be of further effect with respect to any
Series or Class of Notes (except as to any surviving rights of transfer or
exchange of Notes of that Series or Class expressly provided for herein or in
the form of Note for that Series or Class), and the Indenture Trustee, on demand
of and at the expense of the Issuer, will execute proper instruments
acknowledging satisfaction and discharge of this Base Indenture, when:

(a) all Notes of that Series or Class theretofore authenticated and delivered
(other than (i) Notes of that Series or Class which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 6.6, and
(ii) Notes of that Series or Class for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from that trust) have been delivered to the
Indenture Trustee canceled or for cancellation or have been redeemed in
accordance with Article XIII hereof or the applicable Indenture Supplement (in
which case, such redeemed Notes shall be deemed to have been canceled and shall
be immediately surrendered to the Indenture Trustee in exchange for the related
redemption price);

(b) with respect to the discharge of this Base Indenture for each Series or
Class, the Issuer has paid or caused to be paid all sums payable hereunder
(including payments to the Indenture Trustee (in all its capacities) pursuant to
Section 11.7 with respect to the Notes or in respect of Fees, and any and all
other amounts due and payable pursuant to this Base Indenture; and

(c) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Base Indenture
with respect to the Notes of that Series or Class have been complied with.

 

65

--------------------------------------------------------------------------------

Notwithstanding the satisfaction and discharge of this Base Indenture with
respect to any Series or Class of Notes, the obligations of the Administrator to
the Indenture Trustee with respect to any Series or Class of Notes under
Section 11.7 and of the Issuer to the Securities Intermediary under Section 4.9
and the obligations and rights of the Indenture Trustee under Section 7.2 and
Section 11.3, respectively, will survive such satisfaction and discharge.

 

Section 7.2. Application of Trust Money.

All money and obligations deposited with the Indenture Trustee pursuant to
Section 7.1 and all money received by the Indenture Trustee in respect of such
obligations will be held in trust and applied by it or the Paying Agent, in
accordance with the provisions of the Class of Notes in respect of which it was
deposited and this Base Indenture and the related Indenture Supplement, to the
payment to the Persons entitled thereto, of the principal and interest for whose
payment that money and obligations have been deposited with or received by the
Indenture Trustee or the Paying Agent.

 

Section 7.3. Cancellation of Notes Held by the Issuer or PMC.

If the Issuer, PMC or any of their respective Affiliates holds any Notes, that
Noteholder may, subject to any provision of a related Indenture Supplement
limiting the repayment of such Notes by notice from that Noteholder to the
Indenture Trustee, cause the Notes to be repaid and canceled, whereupon the
Notes will no longer be Outstanding; provided, that, such repayment and
cancelation shall be subject to the written consent of the Administrative Agent.

 

Section 7.4. Termination of Servicer’s Servicing Rights; Fannie Mae’s Rights.

(a) The Security Interest is subject and subordinate to all rights, remedies,
and prerogatives of Fannie Mae under and in connection with the Acknowledgment
Agreement and the Fannie Mae Requirements and each Noteholder acknowledges such
senior rights, remedies and prerogatives upon the acquisition of an interest in
a Note. Notwithstanding anything to the contrary in this Indenture or any other
Transaction Document, each Noteholder agrees to the following:

(1) the rights of any Noteholder will be subject and subordinate in all respects
to all rights, powers, and prerogatives of Fannie Mae under the Fannie Mae
Lender Contract, and no Noteholder enjoys privity of contract with Fannie Mae or
is entitled to any benefit under the Acknowledgment Agreement except to the
extent that the Indenture Trustee is entering into and shall perform under the
Acknowledgment Agreement in its capacity as Indenture Trustee for the benefit of
the Noteholders;

(2) Fannie Mae has the right to terminate the Servicer with or without cause and
controls the process for the disposition of assets under the Acknowledgement
Agreement in the event of a termination of the Servicer or other transfer of
MSRs; and

 

66

--------------------------------------------------------------------------------

(3) pursuant to the Fannie Mae Lender Contract, Fannie Mae has the right to
offset liabilities owed to it subject to the Acknowledgment Agreement against
fees and compensation paid to the Servicer prior to any distribution of excess
servicing to any Noteholder.

(b) As a result of the termination of the Servicer’s Servicing Rights in all or
a portion of the Collateral, Issuer acknowledges that:

(1) the Indenture Trustee, on behalf of the Noteholders, shall have rights
pursuant to and in accordance with the Acknowledgment Agreement with respect to
the MSRs related to the Subject Mortgages (including, (i) the ability to retain
the servicing of, with the consent of Fannie Mae, the Subject Mortgages and
(ii) the ability to appoint, with the consent of Fannie Mae, a Proposed New
Servicer that will assume the duties rights and obligations of the Servicer with
respect to the Subject Mortgages); and

(2) notwithstanding such rights, none of the Indenture Trustee, the
Administrative Agent or the Noteholders shall have any responsibility, express
or implied, to protect or consider Servicer’s rights or interests in connection
with any of the Indenture Trustee’s actions or inactions pursuant to the
Acknowledgment Agreement, including the receipt of any amounts with respect to
the Subject Mortgages following any transfer of Issuer responsibility.

(c) Any Net Proceeds received by the Indenture Trustee shall be applied first,
to satisfy any costs and expenses of the Indenture Trustee, the transferee
servicer or any of their affiliates in connection with any of the transactions
contemplated by any of the Transaction Documents and second, to reduce the other
obligations.

(d) The Servicer acknowledges that, notwithstanding the termination of its
Servicing Rights under the Fannie Mae Lender Contract, it remains obligated in
accordance with the terms hereof to the extent that any amounts payable to the
Indenture Trustee, the Administrative Agent, the Noteholders or any Indemnified
Party hereunder have not been paid in full.

(e) Any provision providing for the exercise of any action or discretion by the
Indenture Trustee, (i) with respect to Sections 5, 6 or 7 of the Acknowledgment
Agreement as a result of a Transfer/Engagement Request or termination of
Servicing Rights under the Fannie Mae Lender Contract, shall be exercised by the
Indenture Trustee at the written direction of 100% of the VFN Noteholders, and
(ii) with respect to any other provision of the Acknowledgment Agreement (other
than Sections 5, 6 and 7 thereof), shall be exercised by the Indenture Trustee
at the written direction of the Majority Noteholders of all Outstanding Notes.

 

67

--------------------------------------------------------------------------------

Article VIII

Events of Default and Remedies

 

Section 8.1. Events of Default.

“Event of Default” means, any one of the following events (whatever the reason
for such Event of Default, and whether it is voluntary or involuntary, or
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

(a) unless otherwise specified in any Indenture Supplement with respect to any
Class, default (which default continues for a period of two (2) Business Days
following written notice (which may be in electronic form) from the Indenture
Trustee or the Administrative Agent), in the payment: (1) of (i) any interest or
any Fees due and owing on any Payment Date, (ii) any Scheduled Principal Payment
Amount due and owing on any date, or (iii) any Early Amortization Event Payment
Amount due and owing on any date; or (2) in full of all accrued and unpaid
interest and the outstanding Note Balance of the Notes of any Series or Class on
or before the applicable Stated Maturity Date;

(b) the occurrence of an Insolvency Event as to the Issuer, the Administrator or
the Servicer;

(c) the Issuer or the Trust Estate shall have become subject to registration as
an “investment company” within the meaning of the Investment Company Act as
determined by a court of competent jurisdiction in a final and non-appealable
order;

(d) PMC sells, transfers, pledges or otherwise disposes of the Owner Trust
Certificate (except to a wholly-owned subsidiary of PMC) other than pursuant to
the terms and provisions of the Transaction Documents, whether voluntarily or by
operation of law, foreclosure or other enforcement by a Person of its remedies
against PMC, except with the consent of the Administrative Agent;

(e) (i) any material provision of any Transaction Document shall at any time for
any reason (other than pursuant to the express terms thereof) cease to be valid
and binding on or enforceable against the Issuer, the Administrator, the
Servicer or any of their respective Affiliates intended to be a party thereto,
(ii) the validity or enforceability of any Transaction Document shall be
contested by the Issuer, the Administrator, the Servicer or any of their
respective Affiliates, (iii) a proceeding shall be commenced by the Issuer, the
Administrator, the Servicer or any of their respective Affiliates or any
governmental body having jurisdiction over the Issuer, the Administrator, the
Servicer or any of their respective Affiliates, seeking to establish the
invalidity or unenforceability of any Transaction Document, or (iv) the Issuer,
the Administrator, the Servicer or any of their respective Affiliates shall deny
in writing that it has any liability or obligation purported to be created under
any Transaction Document;

 

68

--------------------------------------------------------------------------------

(f) the Administrator or any Affiliate thereof has taken any action which, or
failed to take any action, the omission of which could reasonably be expected to
materially impair the interests of the Issuer in the Participation Certificates
or the security interest or rights of the Indenture Trustee in the Trust Estate,
subject only to the interests and rights of Fannie Mae; provided, however, that
if the event is capable of being cured in all respects by corrective action and
has not resulted in a material adverse effect on the Noteholders’ interests in
the Trust Estate, such event shall not become an Event of Default unless it
remains uncured for two (2) Business Days following its occurrence;

(g) following a Payment Date on which a draw is made on a Series Reserve
Account, the amount on deposit in such Series Reserve Account is not increased
back to the related Series Reserve Required Amount (if applicable) within the
time frame set forth in the related Indenture Supplement;

(h) (A) any United States federal income tax is imposed on the Issuer as an
association (or publicly traded partnership) taxable as a corporation or a
taxable mortgage pool taxable as a corporation, each for United States federal
income tax purposes or any U.S. withholding tax is imposed on payments to the
Issuer with respect to the Participation Certificates or (B) a tax, ERISA, or
other government lien, in any case, other than Permitted Liens, is imposed on
the Participation Certificates or any property of the Issuer;

(i) the occurrence of a Borrowing Base Deficiency which continues for a period
of two (2) Business Days following written notice from the Indenture Trustee or
the Administrative Agent;

(j) the occurrence and continuation of an “Event of Default” (as defined in the
PC Repurchase Agreement) under the PC Repurchase Agreement;

(k) the occurrence of an “Event of Default” (as defined in the PC Repo Guaranty)
under the PC Repo Guaranty or the occurrence of an “Event of Default” (as
defined in the PMH Repo Guaranty) under the PMH Repo Guaranty unless, with
respect to the PMH Repo Guaranty, PMC has (i) repurchased or foreclosed upon its
security interest in the Sold MSR Excess Spread PC in satisfaction of its
obligation to pay the PMH Repurchase Price, or (ii) removed the Sold MSR Express
Spread PC and the related Sold MSR Portfolio from the Collateral pursuant to
Section 2.1(b)(ii)(A)(1);

(l) any failure by PMC to deliver (i) any Determination Date Report pursuant to
Section 3.2 or (ii) any MSR Monthly Report pursuant to Section 3.3(f), which
continues unremedied for a period of five (5) Business Days after a Responsible
Officer of PMC shall have obtained actual knowledge of such failure, or shall
have received written or electronic notice from the Indenture Trustee or any
Noteholder of such failure;

(m) (i) (A) PMC shall fail to materially comply with the requirements of
Sections 10.2(n), 10.3(a), 10.3(b), 10.3(c) or 10.3(d), or (B) PMC shall fail to
provide notice of an Event of Default pursuant to the requirements set forth in
Section 4.12; or (ii) the Issuer, the Servicer or the Administrator shall breach
or default in the due observance or performance of any of its other covenants or
agreements in this Base Indenture, any Indenture Supplement or any other
Transaction Document in any material respect (subject to any cure period
provided therein), and any such default shall continue for a period of five
(5) Business Days after the earlier to occur of (a) actual discovery by a
Responsible Officer of the Issuer, the Servicer or the Administrator, as
applicable, or (b) the date on which written or electronic notice of such
failure, requiring the same to be remedied, shall have been given from the
Indenture Trustee or any Noteholder to a Responsible Officer of the Issuer, the
Servicer or the Administrator;

 

69

--------------------------------------------------------------------------------

(n) (i) any representation or warranty of the Issuer, the Servicer or the
Administrator made in this Base Indenture, any Indenture Supplement or any other
Transaction Document in any material respect (other than under the PC Repurchase
Agreement) shall prove to have been breached in any material respect as of the
time when the same shall have been made or deemed made, and continues uncured
and unremedied for a period of ten (10) Business Days after the earlier to occur
of (a) actual discovery by a Responsible Officer of the Issuer, the Servicer or
the Administrator, as applicable, or (b) the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to a
Responsible Officer of the Issuer, the Servicer or the Administrator, as
applicable;

(o) (a) a final judgment or judgments for the payment of money in excess of
$50,000 in the aggregate shall be rendered against the Issuer by one or more
courts, administrative tribunals or other bodies having jurisdiction over them,
(b) an order of any court, administrative agency, arbitrator or governmental
body rendered against PMC or the Issuer, which would have a material Adverse
Effect on the transactions contemplated hereunder or (c) an event has occurred
which with notice or lapse of time or both would constitute such a default under
clause (b) herein with respect to any such order of any court, administrative
agency, arbitrator or governmental body;

(p) following a Payment Date on which a draw is made on the Expense Reserve
Account, the amount on deposit in the Expense Reserve Account is not increased
back to the related Expense Reserve Required Amount prior to the next Payment
Date;

(q) the occurrence of any action by Fannie Mae pursuant to the Acknowledgment
Agreement to terminate the rights of PMC as servicer;

(r) the occurrence of a Subservicer Termination Event;

(s) the occurrence of any other event designated as an Event of Default in the
related Indenture Supplement.

Upon the occurrence of any such event none of the Administrator nor the Servicer
shall be relieved from performing its obligations in a timely manner in
accordance with the terms of this Base Indenture, and each of the Administrator
and the Servicer shall provide the Indenture Trustee, each Note Rating Agency
for each Note then Outstanding, the Disposition Manager and the Noteholders
prompt notice of such failure or delay by it, together with a description of its
effort to perform its obligations. Each of the Administrator, the Servicer and
the Disposition Manager shall promptly notify the Indenture Trustee in writing
of any Event of Default or an event which with notice, the passage of time or
both would become an Event of Default of which it has actual knowledge. For
purposes of this Section 8.1, the Indenture Trustee shall not be deemed to have
knowledge of an Event of Default unless a Responsible Officer of the Indenture
Trustee assigned to and working in the Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such an
Event of Default is received by the Indenture Trustee from the Administrative
Agent and such notice references the Notes, the Trust Estate or this Base
Indenture. The Indenture Trustee shall provide notice of defaults in accordance
with Section 3.3(b) and Section 11.2.

 

70

--------------------------------------------------------------------------------

Section 8.2. Acceleration of Maturity; Rescission and Annulment.

(a) If an Event of Default of the kind specified in clauses (b), (c) or (q) of
Section 8.1 occurs, the unpaid principal amount of all of the Notes shall
automatically become immediately due and payable without notice, presentment or
demand of any kind. If any other Event of Default occurs and is continuing, then
and in each and every such case, the Indenture Trustee, at the written direction
of (i) any of the Administrative Agent, (ii) the Majority Noteholders of all
Outstanding Notes that are not Variable Funding Notes (excluding any Retained
Notes) or (iii) the Majority Noteholders for any Series of Variable Funding
Notes Outstanding (excluding any Retained Notes), may declare the Note Balance
of all the Outstanding Notes and all interest and principal accrued and unpaid
(if any) thereon and all other amounts due and payable under any Transaction
Document to be due and payable immediately, and upon any such declaration each
Note will become and will be immediately due and payable and the Revolving
Period with respect to such Series or Class shall immediately terminate,
anything in this Base Indenture, the related Indenture Supplement(s) or in the
Notes to the contrary notwithstanding. Such payments are subject to the
allocation, deposits and payment sections of this Base Indenture and of the
related Indenture Supplement(s).

(b) At any time after such a declaration of acceleration has been made or an
automatic acceleration has occurred with respect to the Notes of any Series or
Class and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereafter provided in this Article VIII,
the Majority Noteholders of all Outstanding Notes, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:

(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient
to pay (A) all overdue installments of interest on such Notes, (B) the principal
of such Notes which has become due otherwise than by such declaration of
acceleration, and interest thereon at the rate or rates prescribed therefor by
the terms of such Notes, to the extent that payment of such interest is lawful,
(C) interest upon overdue installments of interest at the rate or rates
prescribed therefore by the terms of such Notes to the extent that payment of
such interest is lawful, and (D) all sums paid by the Indenture Trustee
hereunder and the reasonable compensation, expenses and disbursements of the
Indenture Trustee or the bank serving as Indenture Trustee (in any of its
capacities), their agents and counsel, all other amounts due under Section 4.5;
and

(ii) all Events of Default, other than the nonpayment of the principal of such
Notes which has become due solely by such acceleration, have been cured or
waived as provided in Section 8.14.

No such rescission will affect any subsequent default or impair any right
consequent thereon.

 

71

--------------------------------------------------------------------------------

Section 8.3. Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee.

The Issuer covenants that if:

(a) the Issuer defaults in the payment of interest on any Notes when such
interest becomes due and payable, which default continues for a period of two
(2) Business Days following written notice from the Indenture Trustee of such
default; or

(b) the Issuer defaults in the payment of the principal of any Series or
Class of Notes on the Stated Maturity Date thereof; then

the Issuer will, upon demand of the Indenture Trustee, pay (subject to the
allocation provided in Section 4.5(a)(2) hereof and any related Indenture
Supplement) to the Indenture Trustee, for the benefit of the Noteholders of any
such Notes, the whole amount then due and payable on any such Notes for
principal and interest, together with any Cumulative Interest Shortfall Amounts,
unless otherwise specified in the applicable Indenture Supplement, and in
addition thereto, will pay such further amount as will be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee and the bank
serving as Indenture Trustee (in any of its capacities), their agents and
counsel and all other amounts due under Section 4.5.

If the Issuer fails to pay such amounts forthwith upon such demand, the
Indenture Trustee may, in its own name and as trustee of an express trust,
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may directly prosecute such proceeding to judgment or final decree,
and the Indenture Trustee may enforce the same against the Issuer or any other
obligor upon the Notes and collect the money adjudged or decreed to be payable
in the manner provided by law and this Base Indenture.

Section 8.4. Indenture Trustee May File Proofs of Claim.

In case of the pendency of any Insolvency Event or other similar proceeding or
event relative to the Issuer or any other obligor upon the Notes or the property
of the Issuer or of such other obligor, the Indenture Trustee (irrespective of
whether the principal of the Notes will then be due and payable as therein
expressed or by declaration or otherwise) will be entitled and empowered by
intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of principal and interest
owing and unpaid in respect of the Notes and to file such other papers or
documents as may be necessary and advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel and all other amounts due under Section 4.5) and of the Noteholders
allowed in such judicial proceeding; and

(b) to collect and receive any funds or other property payable or deliverable on
any such claims and to distribute the same; and any receiver, assignee, trustee,
liquidator or other similar official in any such proceeding is hereby authorized
by each Noteholder to make such payment to the Indenture Trustee and the bank
serving as Indenture Trustee (in all its capacities),

 

72

--------------------------------------------------------------------------------

and in the event that the Indenture Trustee consents to the making of such
payments directly to the Noteholders, to pay to the Indenture Trustee and the
bank serving as Indenture Trustee (in all its capacities) any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and the bank serving as Indenture Trustee (in all its
capacities), their agents and counsel, and any other amounts due the Indenture
Trustee and the bank serving as Indenture Trustee (in all its capacities) under
Section 4.5.

Nothing herein contained will be deemed to authorize the Indenture Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Noteholder thereof, or to authorize the Indenture Trustee to
vote in respect of the claim of any Noteholder in any such proceeding.

 

Section 8.5. Indenture Trustee May Enforce Claims Without Possession of Notes.

All rights of action and claims under this Base Indenture or the Notes of any
Series or Class are subject to the Acknowledgment Agreement and the Fannie Mae
Requirements and may be prosecuted and enforced by the Indenture Trustee,
without the possession of any of the Notes of such Series or Class or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Indenture Trustee, will be brought in its own name as trustee
of an express trust, and any recovery of judgment will, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its respective agents and counsel, be for the ratable
benefit of the Noteholders of the Notes of such Series or Class in respect of
which such judgment has been recovered.

 

Section 8.6. Application of Money Collected.

Any money or other property collected by the Indenture Trustee pursuant to this
Article VIII will be applied in accordance with Section 4.5(a)(2), at the Final
Payment Date fixed by the Indenture Trustee and, in case of the payment of such
money on account of principal, interest or fees, upon presentation of the Notes
of the related Series or Class and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid.

 

Section 8.7. Sale of Collateral Requires Consent of Noteholders.

Subject to the Acknowledgment Agreement and the Fannie Mae Requirements, the
Indenture Trustee shall not sell Collateral or cause the Issuer to sell
Collateral following any Event of Default, except with the written consent, or
at the direction of, the Noteholders as set forth in Section 8.13; provided,
that the Indenture Trustee shall, subject to the consent of Fannie Mae, sell
Collateral or cause the Issuer to sell Collateral without prior consent of any
of the Noteholders if an Event of Default under clauses (b), (c) or (q) of
Section 8.1 occurs. Notwithstanding the foregoing, the consent of 100% of the
Noteholders of the Outstanding Notes of each Series shall be required for any
sale that does not generate sufficient proceeds to pay the Note Balance of all
such Notes plus all accrued and unpaid interest and other amounts owed in
respect of such Notes and the Transaction Documents. If such direction has been
given by the Noteholders of the requisite percentage of all Outstanding Notes,
the Indenture Trustee shall, subject to the Acknowledgment Agreement and the
Fannie Mae Requirements and the terms of the Acknowledgment Agreement, cause the
Issuer to sell Collateral pursuant to Section 8.15, and shall provide notice of
this to each Note Rating Agency of then Outstanding Notes.

 

73

--------------------------------------------------------------------------------

Section 8.8. Limitation on Suits.

No Noteholder will have any right to institute any proceeding, judicial or
otherwise, with respect to this Base Indenture or any Note, or for the
appointment of a receiver or trustee or similar official, or for any other
remedy hereunder, unless:

(a) such Noteholder has previously given written notice to the Indenture Trustee
of a continuing Event of Default with respect to Notes of such Noteholder’s
Notes’ Series or Class;

(b) the Noteholders of more than 50% of the Note Balance of the Outstanding
Notes of each Series, measured by Voting Interests, have made written request to
the Indenture Trustee to institute proceedings in respect of such Event of
Default in the name of the Indenture Trustee hereunder;

(c) such Noteholder or Noteholders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such request; and

(d) the Indenture Trustee, for sixty (60) days after the Indenture Trustee has
received such notice, request and offer of indemnity, has failed to institute
any such proceeding; it being understood and intended that no one or more
Noteholders of Notes of such Series or Class will have any right in any manner
whatsoever by virtue of, or by availing of, any provision of this Base Indenture
or any Note to affect, disturb or prejudice the rights of any other Noteholders
of Notes, or to obtain or to seek to obtain priority or preference over any
other such Noteholders or to enforce any right under this Base Indenture or any
Note, except in the manner herein provided and for the equal and proportionate
benefit of all the Noteholders of all Notes.

The rights set out in this Section 8.8 are further subject to Section 7.4(a).

 

Section 8.9. Limited Recourse.

Notwithstanding any other terms of this Base Indenture, the Notes, any other
Transaction Documents or otherwise, the obligations of the Issuer under the
Notes, this Base Indenture and each other Transaction Document to which it is a
party are limited recourse obligations of the Issuer, payable solely from the
Trust Estate, and following realization of the Trust Estate and application of
the proceeds thereof in accordance with the terms of this Base Indenture, none
of the Noteholders, the Indenture Trustee or any of the other parties to the
Transaction Documents shall be entitled to take any further steps to recover any
sums due but still unpaid hereunder or thereunder, all claims in respect of
which shall be extinguished and shall not thereafter revive. Subject to the
foregoing and to the terms of the applicable Indenture Supplement, each
Noteholder will, however, have the absolute and unconditional right to receive
payment of all amounts due with respect to the Notes pursuant and respect to the
terms of the Indenture, which right shall not be impaired without the consent of
each Noteholder and to initiate suit for the enforcement of any such payment,
which right shall not be impaired without the consent of such Noteholder. No
recourse shall be had for the payment of any amount owing in respect of the

 

74

--------------------------------------------------------------------------------

Notes or this Base Indenture or for any action or inaction of the Issuer against
any officer, director, employee, equity holder or organizer of the Issuer or any
of their successors or assigns for any amounts payable under the Notes or this
Base Indenture. It is understood that the foregoing provisions of this
Section 8.9 shall not (i) prevent recourse to the Trust Estate for the sums due
or to become due under any security, instrument or agreement which is part of
the Trust Estate, (ii) prevent recourse to the Guarantor under the PC Repo
Guaranty or under the PMH Repo Guaranty or (iii) save as specifically provided
therein, constitute a waiver, release or discharge of any indebtedness or
obligation evidenced by the Notes or secured by this Base Indenture. It is
further understood that the foregoing provisions of this Section 8.9 shall not
limit the right of any Person, to name the Issuer as a party defendant in any
proceeding or in the exercise of any other remedy under the Notes or this Base
Indenture, so long as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked for or (if obtained) enforced against
any such Person or entity.

 

Section 8.10. Restoration of Rights and Remedies.

If the Indenture Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Base Indenture and such proceeding has
been discontinued or abandoned for any reason, then and in every such case the
Issuer, the Indenture Trustee and the Noteholders will, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders will continue as though no such proceeding
had been instituted.

 

Section 8.11. Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Indenture Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy will, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, will not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

 

Section 8.12. Delay or Omission Not Waiver.

No delay or omission of the Indenture Trustee or of any Noteholder to exercise
any right or remedy accruing upon any Event of Default will impair any such
right or remedy or constitute a waiver of any such Event of Default or
acquiescence therein. Every right and remedy given by this Article or by law to
the Indenture Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.

 

Section 8.13. Control by Noteholders.

Either 100% of the VFN Noteholders or the Majority Noteholders of all
Outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee with respect to
such Notes; provided that:

 

75

--------------------------------------------------------------------------------

(a) the Indenture Trustee will have the right to decline to follow any such
direction if the Indenture Trustee, being advised by counsel, determines that
the action so directed may violate applicable law or would conflict with this
Base Indenture or if the Indenture Trustee in good faith determines that the
proceedings so directed would have a substantial likelihood of involving it in
personal liability or be unjustly prejudicial to the Noteholders not taking part
in such direction, unless the Indenture Trustee has received indemnity
satisfactory to it from the Noteholders;

(b) the Indenture Trustee may take any other action permitted hereunder deemed
proper by the Indenture Trustee which is not inconsistent with such direction;
and

(c) to the extent there are conflicting directions between 100% of the VFN
Noteholders and the Majority Noteholders, the Indenture Trustee will take its
direction from 100% of the VFN Noteholders (excluding any Retained Notes).

The rights of the Noteholders set out in this Section 8.13 are further subject
to Section 7.4(a).

 

Section 8.14. Waiver of Past Defaults.

Together, the Majority Noteholders of all Outstanding Notes that are not
Variable Funding Notes, the Majority Noteholders for any Series of Variable
Funding Notes Outstanding and the Administrative Agent may on behalf of the
Noteholders of all such Notes waive any past default hereunder and its
consequences, except a default not theretofore cured:

(a) in the payment of the principal of or interest on any Note, or

(b) in respect of a covenant or provision hereof which under Article XII cannot
be modified or amended without the consent of the Noteholder of each Outstanding
Note.

Upon any such waiver, such default will cease to exist, and any Event of Default
arising therefrom will be deemed to have been cured, for every purpose of this
Base Indenture; but no such waiver will extend to any subsequent or other
default or impair any right consequent thereon.

 

Section 8.15. Sale of Trust Estate.

(a) The power to effect any Sale of any portion of the Trust Estate shall not be
exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this Base
Indenture with respect thereto shall have been paid. The Indenture Trustee may
from time to time postpone any public Sale by public announcement made at the
time and place of such Sale.

(b) Unless the Majority Noteholders of all Outstanding Series have otherwise
provided its written consent to the Indenture Trustee, at any public Sale of all
or any portion of the Trust Estate at which a minimum bid equal to or greater
than all amounts due to the Indenture Trustee hereunder and the entire amount
which would be payable to the Noteholders in full payment thereof in accordance
with Section 8.6, on the Payment Date next succeeding the date of such sale, has
not been received, the Indenture Trustee shall prevent such sale by bidding an
amount at least $1.00 more than the highest other bid in order to preserve the
Trust Estate.

 

76

--------------------------------------------------------------------------------

(c) In connection with a Sale of all or any portion of the Trust Estate:

(i) any of the Noteholders may bid for and purchase the property offered for
Sale, and upon compliance with the terms of sale may hold, retain and possess
and dispose of such property, without further accountability;

(ii) the Indenture Trustee may bid for and acquire the property offered for Sale
in connection with any Sale thereof;

(iii) the Indenture Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust Estate in
connection with a Sale thereof;

(iv) the Indenture Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Trust Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and

(v) no purchaser or transferee at such a Sale shall be bound to ascertain the
Indenture Trustee’s authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.

(d) Notwithstanding anything to the contrary in this Base Indenture, and subject
to the Acknowledgment Agreement and the Fannie Mae Requirements, if an Event of
Default has occurred and is continuing and the Notes have become due and payable
or have been declared due and payable and such declaration and its consequences
have not been rescinded and annulled, any proceeds received by the Indenture
Trustee with respect to a foreclosure, sale or other realization resulting from
a transfer of the assets of the Trust Estate shall be allocated in accordance
with Section 4.5(a)(2) hereof. The amount, if any, so allocated to the Issuer
shall be paid by the Indenture Trustee to or to the order of the Issuer free and
clear of the Adverse Claim of this Base Indenture and the Noteholders shall have
no claim or rights to the amount so allocated.

 

Section 8.16. Undertaking for Costs.

All parties to this Base Indenture agree, and each Noteholder by its acceptance
thereof will be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this Base
Indenture, or in any suit against the Indenture Trustee for any action taken or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section will not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder or group

 

77

--------------------------------------------------------------------------------

of Noteholders holding in the aggregate more than 25% of the Note Balance of the
Outstanding Notes of each Series (measured by Voting Interests) to which the
suit relates, or to any suit instituted by any Noteholders for the enforcement
of the payment of the principal of or interest on any Note on or after the
applicable Stated Maturity Date expressed in such Note.

 

Section 8.17. Waiver of Stay or Extension Laws.

The Issuer covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Base Indenture; and the Issuer (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

Section 8.18. Notice of Waivers.

Promptly (and in no event later than two (2) Business Days following the
occurrence thereof), after any waiver of an Event of Default pursuant to
Section 4.12, or any rescission or annulment of a declaration of acceleration
pursuant to Section 8.2(b), or any waiver of past default pursuant to
Section 8.14, the Issuer will notify all related Note Rating Agencies and the
Disposition Manager in writing.

Article IX

The Issuer

 

Section 9.1. Representations and Warranties of Issuer.

The Issuer hereby makes the following representations and warranties for the
benefit of the Servicer, the Indenture Trustee and the Noteholders. The
representations shall be made as of the execution and delivery of this Base
Indenture and of each Indenture Supplement, and as of each Funding Date and as
of each date of Grant and shall survive the Grant of a Security Interest in the
Participation Certificates to the Indenture Trustee.

(a) Organization and Good Standing. The Issuer is duly organized and validly
existing as a statutory trust and is in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted. The Issuer has appointed the Administrator as the Issuer’s
agent where notices and demands to or upon the Issuer in respect of the Notes of
this Base Indenture may be served.

(b) Power and Authority. The Issuer has and will continue to have the power and
authority to execute and deliver this Base Indenture and the other Transaction
Documents to which it is or will be a party, and to carry out their respective
terms; the Issuer had and has had at all relevant times and now has full power,
authority and legal right to acquire, own, hold and Grant a Security Interest in
the Trust Estate and has duly authorized such Grant to the Indenture Trustee by
all necessary action; and the execution, delivery and performance by the Issuer
of this Base Indenture and each of the other Transaction Documents to which it
is a party has been duly authorized by all necessary action of the Issuer.

 

78

--------------------------------------------------------------------------------

(c) Valid Transfers; Binding Obligations. This Base Indenture creates a valid
Grant of a Security Interest in the Participation Certificates which has been
validly perfected and is a first priority Security Interest under the UCC, and
in such other portion of the Collateral as to which a Security Interest may be
granted under the UCC, which security interest is enforceable against creditors
of and purchasers from the Issuer, subject to applicable law. Each of the
Transaction Documents to which the Issuer is a party constitutes a legal, valid
and binding obligation of the Issuer enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’ rights generally or by
general equity principles.

(d) No Violation. The execution and delivery by the Issuer of this Base
Indenture and each other Transaction Document to which it is a party and the
consummation of the transactions contemplated by this Base Indenture and the
other Transaction Documents and the fulfillment of the terms of this Base
Indenture and the other Transaction Documents do not conflict with, result in
any breach of any of the terms or provisions of, or constitute (with or without
notice or lapse of time or both) a default under the Organizational Documents of
the Issuer or any indenture, agreement or other material instrument to which the
Issuer is a party or by which it is bound, or result in the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the terms
of any such indenture, agreement or other instrument (other than this Base
Indenture), or violate any law, order, judgment, decree, writ, injunction,
award, determination, rule or regulation applicable to the Issuer of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Issuer or its
properties, which breach, default, conflict, Adverse Claim or violation could
reasonably be expected to have a material Adverse Effect.

(e) No Proceedings. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or to
the Issuer’s knowledge, threatened, against or affecting the Issuer:
(i) asserting the invalidity of this Base Indenture, the Notes or any of the
other Transaction Documents to which the Issuer is a party, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by this Base Indenture, or any of the other Transaction Documents,
(iii) seeking any determination or ruling which could reasonably be expected to
have a material Adverse Effect or could reasonably be expected to materially and
adversely affect the condition (financial or otherwise), business or operations
of the Issuer, or (iv) relating to the Issuer and which could reasonably be
expected to adversely affect the United States federal income tax attributes of
the Notes.

(f) No Subsidiaries. The Issuer has no subsidiaries.

(g) All Tax Returns True, Correct and Timely Filed. All tax returns required to
be filed by the Issuer in any jurisdiction have in fact been filed and all
taxes, assessments, fees and other governmental charges upon the Issuer or upon
any of its properties, and all income of franchises, shown to be due and payable
on such returns have been paid except for any such

 

79

--------------------------------------------------------------------------------

taxes, assessments, fees and charges the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Issuer had established adequate reserves in accordance
with GAAP. All such tax returns were true and correct in all material respects
and the Issuer knows of no proposed additional tax assessment against it that
could reasonably be expected to have a material adverse effect upon the ability
of the Issuer to perform its obligations hereunder nor of any basis therefor.
The provisions for taxes on the books of the Issuer are in accordance with GAAP.

(h) No Restriction on Issuer Affecting its Business. The Issuer is not a party
to any contract or agreement, or subject to any charter or other restriction,
which materially and adversely affects its business, and the Issuer has not
agreed or consented to cause any of its assets or properties to become subject
to any Adverse Claim other than the Security Interest or any Permitted Liens.

(i) Title to Participation Certificates. As represented by PMC in the PC
Repurchase Agreement, immediately prior to the Grant thereof to the Indenture
Trustee as contemplated by this Base Indenture, subject to the Acknowledgment
Agreement and the Fannie Mae Requirements with respect thereto, the Issuer had
good and marketable title to each Participation Certificate, free and clear of
all Adverse Claims other than any Permitted Liens and rights of others.

(j) Perfection of Security Interest. All filings and recordings that are
necessary to perfect the interest of the Issuer in the Participation
Certificates and such other portion of the Trust Estate as to which a sale or
security interest may be perfected by filing under the UCC, have been
accomplished and are in full force and effect. All filings and recordings
against the Issuer required to perfect the Security Interest of the Indenture
Trustee in such Participation Certificates and such other portion of the Trust
Estate as to which a Security Interest may be perfected by filing under the UCC,
have been accomplished and are in full force and effect, and all such filings
and recordings against the Issuer include the legends set forth as clauses
(i) through (iii) of the fourth full paragraph of the Granting Clause. Subject
to the rights of Fannie Mae with respect thereto, other than the Security
Interest granted to the Indenture Trustee pursuant to this Base Indenture, the
Issuer has not pledged, assigned, sold, granted a Security Interest in, or
otherwise conveyed any of the Participation Certificates or any other
Collateral. The Issuer has not authorized the filing of and is not aware of any
financing statement filed against the Issuer that includes a description of
collateral covering the Participation Certificates other than (1) any financing
statement related to the Security Interest granted to the Indenture Trustee
hereunder or (2) that has been terminated.

(k) Notes Authorized, Executed, Authenticated, Validly Issued and Outstanding.
The Notes have been duly and validly authorized and, when duly and validly
executed and authenticated by the Indenture Trustee in accordance with the terms
of this Base Indenture and delivered to and paid for by each purchaser as
provided herein, will be validly issued and outstanding and entitled to the
benefits hereof.

(l) Location of Chief Executive Office and Records. The chief executive office
of the Issuer and the office where Issuer maintains copies of its corporate
records, is located at the offices of the Administrator at 3043 Townsgate Road,
Suite 300, Westlake Village, CA, 91361;

 

80

--------------------------------------------------------------------------------

provided that, at any time after the Closing Date, upon thirty (30) days’ prior
written notice to the Indenture Trustee and the Noteholders, the Issuer may
relocate its jurisdiction of formation, and/or its principal place of business
and chief executive office, and/or the office where it maintains all of its
records, to another location or jurisdiction, as the case may be, within the
United States to the extent that the Issuer shall have taken all actions
necessary or reasonably requested by the Indenture Trustee or the Majority
Noteholders of all Outstanding Notes to amend its existing financing statements
and continuation statements, and file additional financing statements and to
take any other steps reasonably requested by the Indenture Trustee or the
Majority Noteholders of all Outstanding Notes to further perfect or evidence the
rights, claims or security interests of the Indenture Trustee and the
Noteholders under any of the Transaction Documents.

(m) Solvency. The Issuer: (i) is not “insolvent” (as such term is defined in
§ 101(32)(A) of the Bankruptcy Code); (ii) is able to pay its debts as they
become due; and (iii) does not have unreasonably small capital for the business
in which it is engaged or for any business or transaction in which it is about
to engage. The Issuer is not Granting the Trust Estate to the Indenture Trustee
with the intent to defraud, delay or hinder any of its creditors.

(n) Separate Identity. The Issuer is operated as an entity separate from the
Servicer and the Administrator. The Issuer has complied with all covenants set
forth in its Organizational Documents.

(o) Name. The legal name of the Issuer is as set forth in this Base Indenture
and the Issuer does not use and has not used any other trade names, fictitious
names, assumed names or “doing business as” names.

(p) Governmental Authorization. Other than the filing of the financing
statements (or financing statement amendments) required hereunder or under any
other Transaction Document, no authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required for (i) the due execution and delivery by Issuer of this Base Indenture
and each other Transaction Document to which it is a party and (ii) the
performance of its obligations hereunder and thereunder.

(q) Accuracy of Information. All information heretofore furnished by the Issuer
or any of its Affiliates to the Indenture Trustee or the Noteholders for
purposes of or in connection with this Base Indenture, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by the Issuer or any of its Affiliates
to the Indenture Trustee or the Noteholders will be, true and accurate in every
material respect on the date such information is stated or certified.

(r) Use of Proceeds. No proceeds of any issuance of Notes or funding under a VFN
hereunder will be used for a purpose that violates, or would be inconsistent
with, Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time.

 

81

--------------------------------------------------------------------------------

(s) Investment Company. The Issuer is not required to be registered as an
“investment company” within the meaning of the Investment Company Act, or any
successor statute.

(t) Compliance with Law. The Issuer has complied in all material respects with
all applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject.

(u) Investments. The Issuer does not own or hold, directly or indirectly (i) any
capital stock or equity security of, or any equity interest in, any Person or
(ii) any debt security or other evidence of indebtedness of any Person.

(v) Transaction Documents. The PC Repurchase Agreement is the only agreement
pursuant to which the Issuer directly or indirectly purchases and receives
contributions of Participation Certificates from PMC and the PC Repurchase
Agreement represents the only agreement between PMC and the Issuer relating to
the transfer of the Participation Certificates from PMC to the Issuer.

(w) Limited Business. Since its formation, the Issuer has conducted no business
other than entering into and performing its obligations under the Transaction
Documents to which it is a party, and such other activities as are incidental to
the foregoing. The Transaction Documents to which it is a party, and any
agreements entered into in connection with the transactions that are permitted
thereby, are the only agreements to which the Issuer is a party.

 

Section 9.2. Liability of Issuer; Indemnities.

(a) Obligations. The Issuer shall be liable in accordance with this Base
Indenture only to the extent of the obligations in this Base Indenture
specifically undertaken by the Issuer in such capacity under this Base Indenture
and shall have no other obligations or liabilities hereunder. The Issuer shall
indemnify, defend and hold harmless the Indenture Trustee (in all its
capacities), the Calculation Agent, the Paying Agent, the Securities
Intermediary, the Note Registrar, the Disposition Manager, the Noteholders (as
applicable, with respect to the related Series of Notes) and the Trust Estate
(each an “Issuer Indemnified Party”) from and against any taxes that may at any
time be asserted against the Indenture Trustee, the Calculation Agent, the
Paying Agent, the Securities Intermediary, the Note Registrar, the Disposition
Manager or the Trust Estate with respect to the transactions contemplated in
this Base Indenture or any of the other Transaction Documents, including any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the transfer of the Participation
Certificates to the Trust Estate, the issuance and original sale of the Notes of
any Class, or asserted with respect to ownership of the Participation
Certificates, or federal, state or local income or franchise taxes or any other
tax, or other income taxes arising out of payments on the Notes of any Class, or
any interest or penalties with respect thereto or arising from a failure to
comply therewith) and costs and expenses in defending against the same and in
connection with the Issuer Indemnified Parties’ enforcement of any rights
hereunder or under any Transaction Document, except that in no event shall the
Issuer be required to indemnify any Issuer Indemnified Party if the
indemnification obligation under this Section 9.2(a) to such Issuer Indemnified
Party is the result of a violation of law, gross negligence or willful
misconduct by such Issuer Indemnified Party.

 

82

--------------------------------------------------------------------------------

(b) Notification and Defense. Promptly after any Issuer Indemnified Party shall
have been served with the summons or other first legal process or shall have
received written notice of the threat of a claim in respect of which a claim for
indemnity may be made against the Issuer under this Section 9.2, the Issuer
Indemnified Party shall notify the Issuer and the Administrator in writing of
the service of such summons, other legal process or written notice, giving
information therein as to the nature and basis of the claim, but failure so to
notify the Issuer shall not relieve the Issuer from any liability which it may
have hereunder or otherwise, except to the extent that the Issuer is prejudiced
by such failure so to notify the Issuer. The Issuer will be entitled, at its own
expense, to participate in the defense of any such claim or action and, to the
extent that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such Issuer Indemnified Party, and, after notice from the Issuer
to such Issuer Indemnified Party that the Issuer wishes to assume the defense of
any such action, the Issuer will not be liable to such Issuer Indemnified Party
under this Section 9.2 for any legal or other expenses subsequently incurred by
such Issuer Indemnified Party in connection with the defense of any such action
unless (i) the defendants in any such action include both the Issuer Indemnified
Party and the Issuer, and the Issuer Indemnified Party (upon the advice of
counsel) shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those available to the
Issuer, or one or more Issuer Indemnified Parties, and which in the reasonable
judgment of such counsel are sufficient to create a conflict of interest for the
same counsel to represent both the Issuer and such Issuer Indemnified Party,
(ii) the Issuer shall not have employed counsel reasonably satisfactory to the
Issuer Indemnified Party to represent the Issuer Indemnified Party within a
reasonable time after notice of commencement of the action, or (iii) the Issuer
has authorized the employment of counsel for the Issuer Indemnified Party at the
expense of the Issuer; then, in any such event, such Issuer Indemnified Party
shall have the right to employ its own counsel in such action, and the
reasonable fees and expenses of such counsel shall be borne by the Issuer;
provided, however, that the Issuer shall not in connection with any such action
or separate but substantially similar or related actions arising out of the same
general allegations or circumstances, be liable for any fees and expenses of
more than one firm of attorneys at any time for all Issuer Indemnified Parties.
Each Issuer Indemnified Party, as a condition of the indemnity agreement
contained herein, shall use its commercially reasonable efforts to cooperate
with the Issuer in the defense of any such action or claim. The Issuer shall
not, without the prior written consent of any Issuer Indemnified Party, effect
any settlement of any pending or threatened proceeding in respect of which such
Issuer Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Issuer Indemnified Party, unless such settlement
includes an unconditional release of such Issuer Indemnified Party from all
liability on claims that are the subject matter of such proceeding or threatened
proceeding.

(c) Expenses. Indemnification under this Section shall include, without
limitation, reasonable and customary out-of-pocket fees and expenses of counsel
and expenses of litigation. If the Issuer has made any indemnity payments
pursuant to this Section and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts collected
to the Issuer, without interest.

 

83

--------------------------------------------------------------------------------

(d) Survival. The provisions of this Section 9.2 shall survive the termination
of this Base Indenture.

 

Section 9.3. Merger or Consolidation, or Assumption of the Obligations, of the
Issuer.

Any Person (a) into which the Issuer may be merged or consolidated, (b) which
may result from any merger, conversion or consolidation to which the Issuer
shall be a party, or (c) which may succeed to all or substantially all of the
business or assets of the Issuer, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Issuer
under this Base Indenture, shall be the successor to the Issuer under this Base
Indenture without the execution or filing of any document or any further act on
the part of any of the parties to this Base Indenture, except that if the Issuer
in any of the foregoing cases is not the surviving entity, then the surviving
entity shall execute an agreement of assumption to perform every obligation of
the Issuer under the Transaction Documents, and the surviving entity shall have
taken all actions necessary or reasonably requested by the Issuer, the Majority
Noteholders of all Outstanding Notes or the Indenture Trustee to amend its
existing financing statements and continuation statements, and file additional
financing statements and to take any other steps reasonably requested by the
Issuer, the Majority Noteholders of all Outstanding Notes or the Indenture
Trustee to further perfect or evidence the rights, claims or security interests
of the Issuer, the Noteholders or the Indenture Trustee under any of the
Transaction Documents. The Issuer (i) shall provide notice of any merger,
consolidation or succession pursuant to this Section 9.3 to each Note Rating
Agency that has rated any then-Outstanding Notes, the Indenture Trustee and the
Noteholders, (ii) for so long as the Notes are Outstanding, (1) shall receive
from each Note Rating Agency rating Outstanding Notes a letter to the effect
that such merger, consolidation or succession will not result in a
qualification, downgrading or withdrawal of the then current ratings assigned by
such Note Rating Agency to any Outstanding Notes or (2) if the Administrator and
the Administrative Agents determine in their reasonable judgment that an
applicable Note Rating Agency no longer provides such letters as described in
the foregoing clause (1), (a) the Administrator shall provide notice of such new
merger, consolidation or succession to the related Note Rating Agency and
(b) each Administrative Agent shall have provided its prior written consent to
such merger, consolidation or succession; provided, that the Issuer provides an
Issuer Certificate to the effect that any such merger, consolidation or
succession will not have a material Adverse Effect on the Outstanding Notes,
(iii) shall obtain an Opinion of Counsel addressed to the Indenture Trustee and
reasonably satisfactory to the Indenture Trustee, that such merger,
consolidation or succession complies with the terms hereof and one or more
Opinions of Counsel updating or restating all opinions delivered on the date of
this Base Indenture with respect to corporate matters, enforceability of
Transaction Documents against the Issuer, and the grant by the Issuer of a valid
security interest in the Participation Certificates to the Indenture Trustee and
the perfection of such security interest and related matters, (iv) shall receive
from the Majority Noteholders of all Outstanding Notes their prior written
consent to such merger, consolidation or succession, absent which consent, which
may not be unreasonably withheld or delayed, the Issuer shall not become a party
to such merger, consolidation or succession and (v) shall obtain an Issuer Tax
Opinion.

 

84

--------------------------------------------------------------------------------

Section 9.4. Issuer May Not Own Notes.

The Issuer may not become the owner or pledgee of one or more of the Notes
(other than any Retained Note). Any Person Controlling, Controlled by or under
common Control with the Issuer may, in its individual or any other capacity,
become the owner or pledgee of one or more Notes with the same rights as it
would have if it were not an Affiliate of the Issuer, except as otherwise
specifically provided in the definition of the term “Noteholder.” The Notes so
owned by or pledged to such Controlling, Controlled or commonly Controlled
Person shall have an equal and proportionate benefit under the provisions of
this Base Indenture, without preference, priority or distinction as among any of
the Notes, except as set forth herein with respect to, among other things,
rights to vote, consent or give directions to the Indenture Trustee as a
Noteholder.

 

Section 9.5. Covenants of Issuer.

(a) Organizational Documents; Unanimous Consent. The Issuer hereby covenants
that its Organizational Documents provide that they may not be amended or
modified without (i) notice to the Indenture Trustee and each Note Rating Agency
that is at that time rating any Outstanding Notes, and (ii) the prior written
consent of the Administrative Agent, unless and until this Base Indenture shall
have been satisfied, discharged and terminated. The Issuer will at all times
comply with the terms of its Organizational Documents. In addition,
notwithstanding any other provision of this Section 9.5 and any provision of
law, the Issuer shall not take any action described in Section 4.1 of the
Issuer’s Organizational Documents or do any of the following unless the Owners
(as such term is defined in the Issuer’s Organizational Documents), the
Administrative Agent and the applicable Majority Noteholders as set forth in the
Transaction Documents consent to such action: (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking, or consent to,
reorganization or relief under any applicable federal, state or foreign law
relating to bankruptcy or similar matters, (D) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Issuer or a substantial part of its property, (E) make any
assignment for the benefit of creditors, (F) admit in writing its inability to
pay its debts generally as they become due, or (G) take any action in
furtherance of the actions set forth in clauses (A) through (F) above; or
(1) merge or consolidate with or into any other person or entity or sell or
lease its property or all or substantially all of its assets to any person or
entity; or (2) modify any provision of its Organizational Documents.

(b) Preservation of Existence. The Issuer hereby covenants to do or cause to be
done all things necessary on its part to preserve and keep in full force and
effect its rights and franchises as a statutory trust under the laws of the
State of Delaware, and to maintain each of its licenses, approvals, permits,
registrations or qualifications in all jurisdictions in which its ownership or
lease of property or the conduct of its business requires such licenses,
approvals, registrations or qualifications, except for failures to maintain any
such licenses, approvals, registrations or qualifications which, individually or
in the aggregate, would not have a material Adverse Effect.

 

85

--------------------------------------------------------------------------------

(c) Compliance with Laws. The Issuer hereby covenants to comply in all material
respects with all applicable laws, rules and regulations and orders of any
governmental authority, the noncompliance with which would have a material
Adverse Effect or a material adverse effect on the business, financial condition
or results of operations of the Issuer.

(d) Payment of Taxes. The Issuer hereby covenants to pay and discharge promptly
or cause to be paid and discharged promptly all taxes, assessments and
governmental charges or levies imposed upon the Issuer or upon its income and
profits, or upon any of its property or any part thereof, before the same shall
become in default, provided that the Issuer shall not be required to pay and
discharge any such tax, assessment, charge or levy so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Issuer shall have set aside on its books adequate reserves with respect to
any such tax, assessment, charge or levy so contested.

(e) Investments. The Issuer hereby covenants that it will not, without the prior
written consent of the Majority Noteholders of all Outstanding Notes, acquire or
hold any indebtedness for borrowed money of another person, or any capital
stock, debentures, partnership interests or other ownership interests or other
securities of any Person, other than Permitted Investments as provided hereunder
and the Participation Certificates acquired under the PC Repurchase Agreement.

(f) Keeping Records and Books of Account. The Issuer hereby covenants and agrees
to maintain and implement administrative and operating procedures (including an
ability to recreate records evidencing the Participation Certificates in the
event of the destruction or loss of the originals thereof) and keep and
maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of all Participation Certificates
(including records adequate to permit the daily identification of all
collections with respect to, and adjustments of amounts payable under, each
Participation Certificate). The Administrator shall ensure compliance with this
Section 9.5(f).

(g) Employee Benefit Plans. The Issuer hereby covenants and agrees to comply in
all material respects with the provisions of ERISA, the Code, and all other
applicable laws, and the regulations and interpretations thereunder to the
extent applicable, with respect to each “employee benefit plan” as defined in
section 3(3) of ERISA.

(h) No Release. The Issuer shall not take any action and shall use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person’s covenants or obligations under any Transaction
Document, Fannie Mae Lender Contract or other document, instrument or agreement
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such document, instrument or agreement.

(i) Separate Identity. The Issuer acknowledges that the Secured Parties are
entering into the transactions contemplated by this Base Indenture in reliance
upon the Issuer’s identity as a legal entity that is separate from the
Administrator or the Servicer (each, a “Facility Entity”). Therefore, from and
after the date of execution and delivery of this Base Indenture, the Issuer
shall take all reasonable steps to maintain the Issuer’s identity as a separate
legal entity and to make it manifest to third parties that the Issuer is an
entity with assets and liabilities distinct from those of each Facility Entity
and not a division of a Facility Entity.

 

86

--------------------------------------------------------------------------------

(j) Compliance with and Enforcement of Transaction Documents. The Issuer hereby
covenants and agrees to comply in all respects with the terms of, employ the
procedures outlined in and enforce the obligations of the parties to all of the
Transaction Documents to which the Issuer is a party, and take all such action
to such end as may be from time to time reasonably requested by the Indenture
Trustee, and/or the Majority Noteholders of all Outstanding Notes, maintain all
such Transaction Documents in full force and effect and make to the parties
thereto such reasonable demands and requests for information and reports or for
action as the Issuer is entitled to make thereunder and as may be from time to
time reasonably requested by the Indenture Trustee.

(k) No Sales, Liens, etc. Against Participation Certificates and Trust Property.
The Issuer hereby covenants and agrees, except for releases specifically
permitted hereunder, not to sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist, any Adverse Claim (other
than the Security Interest created hereby or any Permitted Liens) upon or with
respect to, any Participation Certificate or Trust Property, or any interest in
either thereof, or upon or with respect to any Trust Account, or assign any
right to receive income in respect thereof. The Issuer shall promptly, but in no
event later than two (2) Business Days after a Responsible Officer has obtained
actual knowledge thereof, notify the Indenture Trustee of the existence of any
Adverse Claim on any Participation Certificate or Trust Estate, and the Issuer
shall defend the right, title and interest of each of the Issuer and the
Indenture Trustee in, to and under the Participation Certificates and Trust
Estate, against all claims of third parties.

(l) No Change in Business. The Issuer covenants that it shall not make any
change in the character of its business.

(m) No Change in Name, etc.; Preservation of Security Interests. The Issuer
covenants that it shall not make any change to its company name, or use any
trade names, fictitious names, assumed names or “doing business as” names. The
Issuer will from time to time, at its own expense, execute and file such
additional financing statements (including continuation statements) as may be
necessary to ensure that at any time, the interest of the Issuer in all of the
Participation Certificates and such other portion of the Trust Estate as to
which a sale or Security Interest may be perfected by filing under the UCC, and
the Security Interest of the Indenture Trustee in all of the Participation
Certificates and such other portion of the Trust Estate as to which a Security
Interest may be perfected by filing under the UCC, are fully protected.

(n) No Institution of Insolvency Proceedings. The Issuer covenants that it shall
not institute Insolvency Proceedings with respect to the Issuer or any Affiliate
thereof or consent to the institution of Insolvency Proceedings against the
Issuer or any Affiliate thereof or take any action in furtherance of any such
action, or seek dissolution or liquidation in whole or in part of the Issuer or
any Affiliate thereof.

 

87

--------------------------------------------------------------------------------

(o) Money for Note Payments To Be Held in Trust. The Issuer shall cause each
Paying Agent other than the Indenture Trustee to execute and deliver to the
Indenture Trustee an instrument in which such Paying Agent shall agree with the
Indenture Trustee, subject to the provisions of this Section, that such Paying
Agent shall:

(i) hold all sums held by it in respect of payments on Notes in trust for the
benefit of the Noteholders entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;

(ii) give the Indenture Trustee notice of any default by the Issuer (or any
other obligor upon the Notes) in the making of any payment; and

(iii) at any time during the continuance of any such default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture Trustee all
sums so held in trust by such Paying Agent.

The Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Base Indenture or for any other purpose, pay, or direct any
Paying Agent to pay, to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which such sums were held by such Paying Agent; and, upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

(p) Protection of Trust Estate. The Issuer shall from time to time execute and
deliver to the Indenture Trustee and the Administrative Agent all such
supplements and amendments hereto (a copy of which shall be provided to the
Noteholders) and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action as is necessary or advisable to:

(i) Grant more effectively all or any portion of the Trust Estate;

(ii) maintain or preserve the Security Interest or carry out more effectively
the purposes hereof;

(iii) perfect, publish notice of, or protect the validity of any Grant made or
to be made by this Base Indenture;

(iv) enforce any of the Participation Certificates or, where appropriate, any
Security Interest in the Trust Estate and the proceeds thereof;

(v) promptly to amend, or to cause to be amended, as necessary, any filings or
recordings against the Issuer relating to the Grant necessary to conform to the
requirements of Fannie Mae, including any legend required by Fannie Mae to be
included in such filings or recordings; or

(vi) preserve and defend title to the Trust Estate and the rights of the
Indenture Trustee and the Noteholders therein against the claims of all persons
and parties.

 

88

--------------------------------------------------------------------------------

(q) Investment Company Act. The Issuer shall conduct its operations in a manner
which shall not subject it to registration as an “investment company” under the
Investment Company Act.

(r) Payment of Review and Renewal Fees. The Issuer shall pay or cause to be paid
to each Note Rating Agency that has rated Outstanding Notes, the annual rating
review and renewal fee in respect of such Notes, if any.

(s) No Subsidiaries. The Issuer shall not form or hold interests in any
subsidiaries.

(t) No Indebtedness. The Issuer shall not incur any indebtedness other than the
Notes, and shall not guarantee any other Person’s indebtedness or incur any
capital expenditures.

(u) Cooperation with Effectuating a Release. If any filing or recordings against
the Issuer have been made relating to the Grant, within five (5) Business Days
after the earliest of any of the following dates or events that occur: (i) the
effective date of any transfer of Issuer responsibility pursuant to the
Acknowledgment Agreement; (ii) the date on which the Secured Party receives
notice from Fannie Mae of any termination of Secured Party’s or Servicer’s
rights under the Acknowledgment Agreement, or otherwise; or (iii) the date on
which Secured Party receives notice of the termination by Fannie Mae of
Servicer’s redemption, equitable, legal or other right, title or interest in the
Subject Mortgages, then the Issuer shall, or shall cause to be filed for
recording, in the appropriate recording office, a fully and complete release of
such security interest, and of any other right, title or interest of Secured
Party in the Subject Mortgages, and shall deliver to Fannie Mae written
confirmation of such filing. Notwithstanding the foregoing, if the Issuer
believes the Secured Party’s Security Interest is being challenged or is likely
to be challenged by anyone other than Fannie Mae, then the Issuer may request
that Fannie Mae agree to a deferral of the filings required by this subsection,
which deferral shall be granted at the sole discretion of Fannie Mae.

(v) Issuer Tax Opinion. No undertaking that would cause a Retained Note to
become issued and outstanding for United States federal income tax purposes will
be permitted without the delivery of an Issuer Tax Opinion.

(w) Delivery of the Asset File. The Issuer shall deliver the items set forth in
Section 2.2(a) to the Indenture Trustee within two (2) Business Days of the
execution and delivery of this Base Indenture.

 

89

--------------------------------------------------------------------------------

Article X

The Administrator and Servicer

 

Section 10.1. Representations and Warranties of PMC, as Administrator and as
Servicer.

PMC, as Administrator and as Servicer, hereby makes the following
representations and warranties for the benefit of the Indenture Trustee, as of
the Closing Date, and as of the date of each Grant of Participation Certificates
to the Indenture Trustee pursuant to this Base Indenture.

(a) Organization and Good Standing. PMC is a corporation, duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
PMC, as Servicer, is duly qualified to do business and is in good standing (or
is exempt from such requirements) and has obtained all necessary licenses and
approvals in each jurisdiction in which the failure so to qualify, or to obtain
such licenses or approvals, would have a material Adverse Effect.

(b) Power and Authority; Binding Obligation. PMC has the power and authority to
make, execute, deliver and perform its obligations under this Base Indenture and
any related Indenture Supplement and each other Transaction Document to which it
is a party and all of the transactions contemplated hereunder and thereunder,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Base Indenture and each Indenture Supplement
and each other Transaction Document to which it is a party; this Base Indenture
and each Indenture Supplement and each other Transaction Document to which it is
a party constitutes a legal, valid and binding obligation of PMC, enforceable
against PMC in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors’ rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity) or by public policy with respect to indemnification under applicable
securities laws.

(c) No Violation. The execution and delivery of this Base Indenture and each
Indenture Supplement and each other Transaction Document to which it is a party
by PMC and its performance of its obligations under this Base Indenture and each
Indenture Supplement and each other Transaction Document to which it is a party
will not (i) violate PMC’s certificate of incorporation, bylaws or other
organizational documents or (ii) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in the breach of, any material contract, agreement or other instrument to which
PMC is a party or which may be applicable to PMC or any of its assets, or any
and all instruments, agreements, invoices or other writings which give rise to
or otherwise evidence any of the MSRs, or (iii) violate any statute, ordinance
or law or any rule, regulation, order, writ, injunction or decree of any court
or of any public, governmental or regulatory body, agency or authority
applicable to PMC or its properties except, with respect to clauses (ii) and
(iii), for such defaults, breaches or violations that would not reasonably be
expected to have a material Adverse Effect.

(d) No Proceedings. No proceedings, investigations or litigation before any
court, tribunal or governmental body is currently pending, nor to the knowledge
of PMC is threatened against PMC, nor is there any such proceeding,
investigation or litigation currently pending, nor,

 

90

--------------------------------------------------------------------------------

to the knowledge of PMC, is any such proceeding, investigation or litigation
threatened against PMC with respect to this Base Indenture, any Indenture
Supplement or any other Transaction Document or the transactions contemplated
hereby or thereby that could reasonably be expected to have a material Adverse
Effect.

(e) No Consents Required; Fannie Mae Approvals. Except with respect to the
Acknowledgment Agreement, no authorization, consent, approval, or other action
by, and no notice to or filing with, any court, governmental authority or
regulatory body or other Person domestic or foreign, including HUD or Fannie
Mae, is required for the execution, delivery and performance by PMC of or
compliance by PMC with this Base Indenture, any Indenture Supplement or the
consummation of the transactions contemplated by this Base Indenture, any
Indenture Supplement except for (i) consents, approvals, authorizations and
orders which have obtained in connection with transactions contemplated by the
Transaction Documents (including the Acknowledgment Agreement), (ii) filings to
perfect the security interest created by this Base Indenture, and
(iii) authorizations, consents, approvals, filings, notices, or other actions
the failure to obtain such consents, approvals, authorizations and orders would
not reasonably be expected to have a material Adverse Effect.

(f) Information. No written statement, report or other document furnished or to
be furnished pursuant to this Base Indenture or any other Transaction Document
to which it is a party by PMC contains or will contain any statement that is or
will be inaccurate or misleading in any material respect.

(g) Default. The Administrator is not in default with respect to any material
contract under which a default should reasonably be expected to have a material
adverse effect on the ability of the Administrator or the Servicer to perform
its duties under this Base Indenture or any Indenture Supplement, or with
respect to any order of any court, administrative agency, arbitrator or
governmental body which would have a material adverse effect on the transactions
contemplated hereunder, and no event has occurred which with notice or lapse of
time or both would constitute such a default with respect to any such contract
or order of any court, administrative agency, arbitrator or governmental body.

(h) Foreign Corrupt Practices Act. To the extent applicable, neither PMC nor any
subsidiary thereof (collectively, the “FCPA Entities” and individually a “FCPA
Entity”), or any employees, directors, or officers of any FCPA Entity, or to the
knowledge of any FCPA Entity, any of its agents or representatives or any
subsidiary of any FCPA Entity, is aware of, has taken, or will take any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”); and PMC and its subsidiaries and Affiliates have
conducted their businesses in compliance with the FCPA and have instituted and
maintained policies and procedures designed to ensure continued compliance
therewith.

(i) Anti-Money Laundering. The operations of PMC are conducted and, to its
knowledge, have been conducted in all material respects in compliance with the
applicable anti-money laundering statutes of all jurisdictions to which PMC is
subject and the rules and regulations thereunder, including the Bank Secrecy
Act, as amended by Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct

 

91

--------------------------------------------------------------------------------

Terrorism Act of 2001 (USA PATRIOT Act) (collectively, the “U.S. Anti-Money
Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving PMC with
respect to the U.S. Anti-Money Laundering Laws is pending or, to the knowledge
of PMC, threatened.

(j) Sanctions. Neither PMC nor its Subsidiaries, nor, to its knowledge, any of
its or its Subsidiaries’ directors, officers, agents, Subsidiaries or employees,
is a Person that is, or is owned or controlled by Persons that are (1) the
subject of any sanctions administered or enforced by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S.
Department of State, the U.S. Department of Commerce, the United Nations
Security Council, the European Union or Her Majesty’s Treasury (collectively,
“Sanctions”) or (2) located, organized or resident in a country or territory
that is, or whose government is, the subject of Sanctions; including the Crimea
region of Ukraine, Cuba, Iran, North Korea and Syria.

(k) No Adverse Actions. PMC has not received a notice from Fannie Mae indicating
any adverse fact or circumstance in respect of PMC which adverse fact or
circumstance may reasonably be expected to entitle Fannie Mae to terminate PMC
with cause or with respect to which such adverse fact or circumstance has caused
Fannie Mae to threaten to terminate, or consider the termination of, PMC in such
notice.

(l) Fannie Mae Set Off Rights. PMC has no actual notice, including any notice
received from Fannie Mae, or any reason to believe, that, other than in the
normal course of PMC’s business, any circumstances exist that would result in
PMC being liable to Fannie Mae for any amount due by reason of: (i) any breach
of its obligations to Fannie Mae under the Fannie Mae Lender Contract or any
other similar contracts relating to any of the Portfolio Mortgage Loans,
(ii) any unperformed obligation with respect to any of the Portfolio Mortgage
Loans, and (iii) any other unmet obligations to Fannie Mae under the Fannie Mae
Lender Contract or any other similar contracts relating to the Portfolio
Mortgage Loans.

(m) Fannie Mae. PMC is a seller/servicer approved by Fannie Mae and a lender
approved by HUD. PMC is in good standing to service mortgages for Fannie Mae and
HUD, as applicable. PMC has not been suspended as a seller/servicer by Fannie
Mae or HUD on and after the date on which PMC first obtained such approval from
Fannie Mae or HUD, as applicable. PMC is not under review or investigation
outside of due course and does not have knowledge of imminent or future
investigation outside of due course, by Fannie Mae or HUD on and after the date
on which PMC became a Fannie Mae or HUD approved seller/servicer or lender, as
the context may require. The requirements of this Section 10.1(m) shall only be
applicable to PMC with respect to HUD if and to the extent that any FHA Loans,
USDA Loans or VA Loans are Subject Mortgages.

(n) Fannie Mae Remittance and Reporting. With respect to each Portfolio Mortgage
Loan, PMC has remitted to Fannie Mae and applicable investors in the securities
representing interests in the Portfolio Mortgage Loans and all other applicable
Persons (i) all principal and interest payments received to which an investor or
such other Person is entitled under the Fannie Mae Lender Contract, including
any guaranty fees, and (ii) all advances of principal and interest required by
such Fannie Mae Lender Contract. In accordance with the Fannie Mae Lender
Contract, PMC has prepared and submitted all reports in connection with such
payments required by the Fannie Mae Lender Contract.

 

92

--------------------------------------------------------------------------------

Section 10.2. Covenants of PMC, as Administrator and as Servicer.

(a) Amendments to PC Documents. The Servicer hereby covenants and agrees not to
amend any PC Documents without the prior written consent of the Majority
Noteholders of all Outstanding Notes, except for the following purposes and with
(i) the consent of the Issuer (evidenced by its execution of such amendment),
the Indenture Trustee and the Administrative Agent, (ii) upon delivery of an
Issuer Tax Opinion (unless such Issuer Tax Opinion is waived by either 100% of
the VFN Noteholders or the Majority Noteholders of all Outstanding Notes) and
(iii) upon delivery by the Issuer to the Indenture Trustee of an Officer’s
Certificate to the effect that the Issuer reasonably believes that such
amendment could not have a material Adverse Effect and is not reasonably
expected to have a material Adverse Effect on the Noteholders of the Notes at
any time in the future:

(A) to evidence the succession of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer in the PC
Documents;

(B) to add to the covenants of the Issuer, or to surrender any right or power
under the PC Documents conferred upon the Issuer, for the benefit of the
Noteholders;

(C) to cure any ambiguity, to correct or supplement any provision under the PC
Documents which may be inconsistent with any other provision therein, or to make
any other provisions with respect to matters or questions arising under the PC
Repurchase Agreement;

(D) to prevent the Issuer from being subject to tax on its net income as an
association (or publicly traded partnership) taxable as a corporation or a
taxable mortgage pool taxable as a corporation, each for United States federal
income tax purposes;

(E) determined by the Administrator to be reasonably necessary to maintain the
rating currently assigned by the applicable Note Rating Agency and/or to avoid
such Class of Notes being placed on negative watch by such Note Rating Agency;
or

(F) as otherwise provided in the related PC Documents.

(b) Maintenance of Security Interest. The Administrator shall from time to time,
at its own expense, file such additional financing statements (including
continuation statements) as may be necessary to ensure that at any time, the
Security Interest of the Indenture Trustee (on behalf of itself and the
Noteholders) in all of the Participation Certificates and the other Collateral
is fully protected in accordance with the UCC and that the Security Interest of
the Indenture Trustee in the Participation Certificates and the rest of the
Trust Estate remains perfected and of first priority. The Administrator shall
take all steps necessary to ensure compliance with Section 9.5(m).

 

93

--------------------------------------------------------------------------------

(c) Regulatory Reporting Compliance. The Servicer shall, on or before the last
Business Day of the fifth (5th) month following the end of each of the
Servicer’s fiscal years (December 31), beginning with the fiscal year ending in
2017, deliver to the Indenture Trustee and the Interested Noteholders, as
applicable, a copy of the results of any Uniform Single Attestation Program for
Mortgage Bankers or an Officer’s Certificate that satisfies the requirements of
Item 1122(a) of Regulation AB, an independent public accountant’s report that
satisfies the requirements of Item 1123 of Regulation AB, or similar review
conducted on the Servicer by its accountants, and such other reports as the
Servicer may prepare relating to its servicing functions as the Servicer.

(d) Compliance with PC Documents. The Servicer shall not fail to comply with any
obligation as the servicer under each of the PC Documents, if such failure would
have a material Adverse Effect. The Servicer shall immediately notify the
Indenture Trustee, the Disposition Manager and the Administrative Agent of its
receipt of a notice of termination under the Fannie Mae Lender Contract. The
Indenture Trustee shall forward any such notification to each Noteholder.

(e) Compliance with Obligations. PMC shall comply with all of its other
obligations and duties set forth in this Base Indenture and any other
Transaction Document. The Administrator shall not permit the Issuer to engage in
activities that could violate its covenants in this Base Indenture.

(f) No Transfer of Servicing. Servicer shall not voluntarily transfer servicing
under the Fannie Mae Lender Contract, except with prior written consent of the
Administrative Agent, in its sole discretion. If PMH repurchases the Sold MSR
Excess Spread PC pursuant to the PMH Repurchase Agreement, PMC shall not release
the Sold MSR Excess Spread PC unless and until the PMH Repurchase Price has been
deposited in the Collection and Funding Account.

(g) Notice of Servicer Termination Event. The Servicer shall provide written
notice to the Indenture Trustee, the Disposition Manager and each VFN Noteholder
of any Servicer Termination Event, within one (1) Business Day of receipt by the
Servicer of notice of such Servicer Termination Event.

(h) Administrator Instructions and Functions Performed by Issuer. The
Administrator shall perform the administrative or ministerial functions
specifically required of the Issuer pursuant to this Base Indenture and any
other Transaction Document.

(i) Adherence to Servicing Standards. Unless otherwise consented to by the
Administrative Agent and the Administrator (the following collectively, the
“Servicing Standards”):

(i) the Servicer shall cooperate with the Indenture Trustee acting as
Calculation Agent in its duties set forth in the Transaction Documents;

 

94

--------------------------------------------------------------------------------

(ii) the Servicer shall cooperate with the MSR Valuation Agent and the
Disposition Manager with respect to its duties set forth in the Transaction
Documents; and

(iii) the Servicer shall service all Portfolio Mortgage Loans without regard to
ownership by PMC or its Affiliates of such Portfolio Mortgage Loans.

(j) Performance and Compliance with the Fannie Mae Lender Contract. PMC will
comply with all terms, provisions, covenants and other promises required to be
observed by it under the Fannie Mae Lender Contract and the Transaction
Documents to which it is a party, maintain the Transaction Documents to which it
is a party in full force and effect in all material respects.

(k) Due Diligence. PMC acknowledges that the Indenture Trustee or the
Administrative Agent, at PMC’s expense, has the right to perform and/or appoint
a third party to perform, continuing due diligence reviews with respect to the
Collateral, for purposes of verifying compliance with the representations,
warranties, and specifications made hereunder and under the other Transaction
Documents, or otherwise. PMC agrees that the Indenture Trustee or the
Administrative Agent and their Authorized Representatives will be permitted
during normal business hours, upon not less than three (3) Business Days advance
written notice, to examine, inspect, make copies of, and make extracts of, any
and all documents, records, agreements (including any subservicing contracts),
instruments or information relating to the Collateral or Fannie Mae in the
possession of PMC; provided, however, that the foregoing shall not apply with
respect to any information that PMC is required by Fannie Mae to keep
confidential. Notwithstanding anything to the contrary herein, PMC shall
reimburse the Indenture Trustee and the Administrative Agent for any and all
reasonable and out-of-pocket costs and expenses reasonably incurred by the such
party and its respective designees and appointees in connection with the ongoing
due diligence and auditing activities; provided, that PMC shall not be required
to permit more than one due diligence trip or audit during any twelve month
period unless an Event of Default is continuing.

(l) Changes in the Fannie Mae Lender Contract. PMC shall provide written notice
to the Indenture Trustee and the Administrative Agent of any changes in the
Fannie Mae Lender Contract that may materially affect the Collateral within
three (3) Business Days after PMC receives notice thereof.

(m) Fannie Mae Approval. PMC shall at all times maintain copies of relevant
portions of all final written HUD and Fannie Mae audits, examinations,
evaluations, monitoring reviews and reports of its origination and servicing and
subservicing operations (including those prepared on a contract basis for any
such agency) in which there are material adverse findings, including notices of
defaults, notices of termination of approved status, notices of imposition of
supervisory agreements or interim servicing agreements, and notices of
probation, suspension, or non-renewal, and all necessary approvals from each of
HUD and Fannie Mae. PMC shall not take any action, or fail to take any action,
that would permit HUD or Fannie Mae to terminate or threaten to terminate its
right to issue MBS or service loans for HUD or Fannie Mae with cause. The
requirements of this Section 10.2(m) shall only be applicable to PMC with
respect to HUD if and to the extent that any FHA Loans, USDA Loans or VA Loans
are Subject Mortgages.

 

95

--------------------------------------------------------------------------------

(n) Quality Control. PMC shall conduct quality control reviews of its servicing
operations in accordance with industry standards and Fannie Mae Requirements.
Upon the reasonable request of the Indenture Trustee or the Administrative
Agent, PMC shall report its quality control findings as such final reports are
produced, excluding internal audit reports or information subject to the
attorney-client work product or attorney-client privilege or other applicable
privilege.

(o) Special Affirmative Covenants Concerning Collateral.

(i) Subject to the Acknowledgment Agreement and the Fannie Mae Requirements, PMC
warrants and shall defend the right, title and interest of the Indenture
Trustee, on behalf of the Noteholders, in and to the Collateral to the Indenture
Trustee against the claims and demands of all Persons whomsoever.

(ii) PMC shall preserve the security interests granted hereunder and upon
request by the Indenture Trustee or the Administrative Agent undertake all
actions which are necessary or appropriate, in the reasonable judgment of the
Indenture Trustee or the Administrative Agent, as applicable, to (x) maintain
the security interest of the Indenture Trustee on behalf of the Noteholders
(including the priority thereof) in the Collateral in full force and effect at
all times prior to the satisfaction of all obligations under this Base Indenture
and the release of the Noteholders’ lien in accordance with the terms and
provisions of this Base Indenture, and (y) preserve and protect the Collateral
and protect and enforce the rights of the Indenture Trustee to the Collateral,
including the making or delivery of all filings and recordings (of financing or
continuation statements), or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate, cause to be
marked conspicuously its master data processing records with a legend,
acceptable to the Indenture Trustee, evidencing that such security interest has
been granted in accordance with this Base Indenture.

(iii) PMC shall diligently fulfill its duties and obligations under the Fannie
Mae Lender Contract in all material respects and shall not default in any
material respect under any of the Fannie Mae Lender Contract or the
Acknowledgment Agreement.

(p) Maintenance of Property; Insurance. PMC shall keep all property useful and
necessary in its business in good working order and condition except to the
extent that the failure to do so could not reasonably be expected to result in a
material Adverse Effect. PMC shall maintain a fidelity bond and be covered by
insurance of the kinds and in the amounts customarily maintained by such
similarly situated entities in the same jurisdiction and industry as PMC, in
amounts acceptable to Fannie Mae except to the extent that the failure to do so
could not reasonably be expected to result in a material Adverse Effect.

(q) Use of Proceeds. PMC shall not use the proceeds of the Notes in
contravention of the requirements, if any, of Fannie Mae or Applicable Law.

(r) Reimbursement of Advance Reimbursement Amounts. With respect to any
Portfolio Mortgage Loan and collections received with respect thereto, PMC shall
reimburse itself for any unreimbursed Advances or seek reimbursement from Fannie
Mae only as provided by the Fannie Mae Lender Contract.

 

96

--------------------------------------------------------------------------------

(s) Portfolio Mortgage Loan Information. PMC shall deliver to the to the
Administrative Agent within seven (7) Business Days after the end of each month,
the information relating to the Portfolio Mortgage Loans required pursuant to
Schedule 4 hereto.

(t) Agency Notices. PMC shall promptly furnish the Administrative Agent copies
of all notices it receives from HUD or Fannie Mae indicating any adverse fact or
circumstance in respect of PMC which adverse fact or circumstance may entitle
HUD or Fannie Mae, respectively, to terminate or to threaten to terminate PMC
with cause or that may entitle HUD or Fannie Mae to conduct any inspection or
investigation of PMC, PMC’s files or PMC’s facilities. The requirements of this
Section 10.2(t) shall only be applicable to PMC with respect to HUD if and to
the extent that any FHA Loans, USDA Loans or VA Loans are Subject Mortgages.

(u) Fannie Mae Notices. PMC shall promptly furnish the Administrative Agent
copies of all notices it receives from Fannie Mae that materially affect the
Servicing Fees, including any notice received with respect to the events set
forth in Section 10.1(l). Within forty-five (45) days after each calendar month,
PMC will provide a schedule of repurchases, indemnifications and early payment
defaults to Administrative Agent in a format similar to such schedule in PMC’s
standard lender certification package.

(v) Fannie Mae Requirements. PMC shall furnish the Administrative Agent notice
of any change in Fannie Mae Eligibility Requirements on the twenty-fourth (24th)
day of each month, or such later date as PMC receives reconciled delinquency
ratio information from Fannie Mae.

(w) Legal Existence, etc. PMC shall (i) preserve and maintain its legal
existence and all of its material rights, privileges, licenses and franchises;
and (ii) keep adequate records and books of account.

(x) Interim Borrowing Base Determination Date Reporting. PMC shall report the
occurrence of an Interim Borrowing Base Determination Date promptly after a
Responsible Officer of the Administrator shall have obtained actual knowledge of
such occurrence, and in any event within one (1) Business Day of obtaining such
knowledge.

(y) Subservicer Administration. If PMC at any time uses or intends to use, as
applicable, an independent third party subservicer (other than as provided in
the PLS Subservicing Agreement or another Eligible Subservicing Agreement in
accordance with this Section 10.2(y)) to fulfill its obligations as Servicer
hereunder, PMC shall, prior to the related servicing transfer date, (i) provide
the Administrative Agent and the Indenture Trustee with the related Eligible
Subservicing Agreement pursuant to which such subservicer shall service such
Mortgage Loans, which Eligible Subservicing Agreement shall be acceptable to
Administrative Agent in all respects, (ii) obtain Administrative Agent’s prior
written consent to the use of such subservicer in the performance of such
servicing duties and obligations, which consent may not be unreasonably withheld
by the Administrative Agent and (iii) provide the Administrative Agent with a
fully executed Eligible Subservicing Agreement with respect to such subservicer.
In no event shall PMC’s use of a subservicer relieve PMC of its obligations
hereunder, and PMC shall remain liable under this Base Indenture as if PMC were
servicing such Mortgage Loans directly.

 

97

--------------------------------------------------------------------------------

(z) Separateness. PMC shall make appropriate notation in its consolidated
financial statements to indicate the separateness of the Issuer from PMC and to
indicate that the Issuer’s assets and credit are separate from those of PMC and
its other consolidated subsidiaries.

 

Section 10.3. Negative Covenants of PMC.

PMC covenants and agrees with the Indenture Trustee, the Administrative Agent
and each Noteholder that, so long as any Note is Outstanding and until all
obligations have been paid in full, PMC shall not:

(a) other than in accordance with Section 10.3(c), take any action that would
directly or indirectly materially impair or materially adversely affect PMC’s
title to, or the value of, the Collateral;

(b) create, incur or permit or allow Subservicer to create, incur or permit to
exist any Lien in or on the Collateral except (i) the security interest granted
hereunder in favor of the Indenture Trustee on behalf of the Noteholders,
(ii) the rights of Fannie Mae under the Fannie Mae Lender Contract, (iii) with
respect to the Sold MSR Excess Spread, the rights of PMH under the PMH
Repurchase Agreement, (iv) the Owner Trustee Lien or (v) any Permitted Lien, or
assign any right to receive income in respect thereof except to the Sold MSR
Excess Spread to PMH pursuant to the Excess Spread Participation Agreement;

(c) sell, lease or otherwise dispose of any Collateral (other than sales or
dispositions of MSRs (i) resulting from the payoff of the related Mortgages or
the purchase of the related Mortgage by PMC, (ii) as required by Fannie Mae or
(iii) in the ordinary course of PMC’s servicing business) except as expressly
permitted by this Base Indenture;

(d) engage to any substantial extent in any line or lines of business activity
other than the businesses related to mortgage origination and servicing carried
on by it as of the Closing Date;

(e) (i) cancel or terminate any Transaction Documents to which it is a party or
consent to or accept any cancellation or termination thereof, (ii) amend, amend
and restate, supplement or otherwise modify any Transaction Document, other than
an amendment of the Fannie Mae Lender Contract done unilaterally by Fannie Mae,
(iii) consent to any amendment, modification or waiver of any term or condition
of any Transaction Document, without the prior written consent of the
Administrative Agent, provided that if the amendment of the Fannie Mae Lender
Contract is done unilaterally by Fannie Mae, the prior written consent of the
Administrative Agent is not required, (iv) waive any material default under or
breach of the Fannie Mae Lender Contract, or (v) take any other action in
connection with any such Transaction Documents that would impair in any material
respect the value of the interests or rights of PMC thereunder or that would
impair in any material respect the interests or rights of the Indenture Trustee,
the Administrative Agent or any Noteholder;

 

98

--------------------------------------------------------------------------------

(f) change the state of its organization unless PMC shall have given the
Administrative Agent at least thirty (30) days’ prior written notice thereof and
unless, prior to any such change, PMC shall have filed, or caused to be filed,
such financing statements or amendments as the Indenture Trustee determines may
be reasonably necessary to continue the perfection of the Indenture Trustee’s
interest in the Collateral;

(g) appoint any subservicers (other than as provided in any Eligible
Subservicing Agreement) with respect to any MSRs pledged to the Indenture
Trustee pursuant to this Base Indenture;

(h) amend the PLS Subservicing Agreement or any other Eligible Subservicing
Agreement after the Closing Date in any way that could reasonably be expected to
have a material adverse effect on the rights of the Noteholders without the
prior written consent of the Administrative Agent;

(i) take any action that would directly or indirectly materially impair or
materially adversely affect PMC’s title to, or the value, of the Servicing Fees
or materially increase the duties, responsibilities or obligations of PMC in
respect of the Collateral;

(j) make any Restricted Payments at any time while an Event of Default has
occurred and is continuing; and

(k) not enter into any transaction, including any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (i) in the ordinary course of PMC’s business and (ii) upon
fair and reasonable terms no less favorable to PMC than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate.

 

Section 10.4. Liability of PMC, as Administrator and as Servicer; Indemnities.

(a) Obligations. Each of the Administrator and the Servicer, severally and not
jointly, shall indemnify, defend and hold harmless the Indenture Trustee (in all
its capacities), the Securities Intermediary, the Note Registrar, the
Calculation Agent, the Paying Agent, the Securities Intermediary, the
Disposition Manager, the Trust Estate, the Owner Trustee and the Noteholders (as
applicable, with respect to the related Series of Notes) (each an “Indemnified
Party”) from and against any and all costs, expenses, losses, claims, damages
and liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, and was imposed upon, the Indenture Trustee, the
Securities Intermediary, the Note Registrar, the Disposition Manager, the Owner
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary,
the Trust Estate or any Noteholder (i) in the case of indemnification by the
Administrator, by reason of a violation of law, gross negligence or willful
misconduct of the Administrator (or of the Issuer as a result of a direction,
act or omission by the Administrator), in the performance of their respective
obligations under this Base Indenture and the other Transaction Documents or
(ii) in the case of indemnification by the Servicer, by reason of a violation of
law, gross negligence or willful misconduct of the Servicer, in the performance
of its respective obligations under this Base Indenture and the other
Transaction Documents or as servicer or subservicer under the Fannie Mae Lender
Contracts, or by reason of the breach by the

 

99

--------------------------------------------------------------------------------

Servicer of any of its representations, warranties or covenants hereunder or
under the Fannie Mae Lender Contracts; provided, that any indemnification
amounts payable by the Administrator or the Servicer, as the case may be, to the
Owner Trustee hereunder shall not be duplicative of any indemnification amount
paid by the Administrator to the Owner Trustee in accordance with the Trust
Agreement or under the Administration Agreement.

(b) Notification and Defense. Promptly after any Indemnified Party shall have
been served with the summons or other first legal process or shall have received
written notice of the threat of a claim in respect of which a claim for
indemnity may be made against PMC under this Section 10.4, the Indemnified Party
shall notify the Indemnifying Party in writing of the service of such summons,
other legal process or written notice, giving information therein as to the
nature and basis of the claim, but failure so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability which it may have
hereunder or otherwise, except to the extent that the Indemnifying Party is
prejudiced by such failure so to notify the Indemnifying Party. The Indemnifying
Party will be entitled, at its own expense, to participate in the defense of any
such claim or action and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and,
after notice from the Indemnifying Party to such Indemnified Party that the
Indemnifying Party wishes to assume the defense of any such action, the
Indemnifying Party will not be liable to such Indemnified Party under this
Section 10.4 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of any such action unless
(i) the defendants in any such action include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party (upon the advice of counsel) shall
have reasonably concluded that there may be legal defenses available to it that
are different from or additional to those available to the Indemnifying Party,
or one or more Indemnified Parties, and which in the reasonable judgment of such
counsel are sufficient to create a conflict of interest for the same counsel to
represent both the Indemnifying Party and such Indemnified Party, (ii) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action, or (iii) the Indemnifying Party
has authorized the employment of counsel for the Indemnified Party at the
expense of the Indemnifying Party; then, in any such event, such Indemnified
Party shall have the right to employ its own counsel in such action, and the
reasonable fees and expenses of such counsel shall be borne by the Indemnifying
Party; provided, however, that the Indemnifying Party shall not in connection
with any such action or separate but substantially similar or related actions
arising out of the same general allegations or circumstances, be liable for any
fees and expenses of more than one firm of attorneys at any time for all
Indemnified Parties. Each Indemnified Party, as a condition of the indemnity
agreement contained herein, shall use its commercially reasonable efforts to
cooperate with the Indemnifying Party in the defense of any such action or
claim. The Indemnifying Party shall not, without the prior written consent of
any Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which such Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding or threatened proceeding.

 

100

--------------------------------------------------------------------------------

(c) Expenses. Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation
(including such fees and expenses incurred in enforcing the Indemnifying Party’s
right to indemnification). If the Indemnifying Party has made any indemnity
payments pursuant to this Section and the recipient thereafter collects any of
such amounts from others, the recipient shall promptly repay such amounts
collected to the Indemnifying Party, without interest.

(d) Survival. The provisions of this Section 10.4 shall survive the resignation
or removal of the Indenture Trustee, the Calculation Agent and the Paying Agent
and the termination of this Base Indenture.

 

Section 10.5. Merger or Consolidation, or Assumption of the Obligations, of PMC.

Any Person (a) into which PMC may be merged or consolidated, (b) which may
result from any merger, conversion or consolidation to which PMC shall be a
party, or (c) which may succeed to all or substantially all of the business or
assets of PMC which Person in any of the foregoing cases executes an agreement
of assumption to perform every obligation of PMC under this Base Indenture,
shall be the successor to PMC under this Base Indenture without the execution or
filing of any paper or any further act on the part of any of the parties to this
Base Indenture; provided, however, that (i) if any of the Notes are then rated
by a Note Rating Agency, then prior to any such merger, consolidation or
conversion (1) PMC shall have provided to the Indenture Trustee and the
Noteholders a letter from each Note Rating Agency that rated Outstanding Notes
indicating that such merger, consolidation or conversion will not result in the
qualification, reduction or withdrawal of the then current ratings of the
Outstanding Notes or (2) if the Administrator and the Administrative Agents
determine in their reasonable judgment that an applicable Note Rating Agency no
longer provides such letters as described in the foregoing clause (1), (a) the
Administrator shall provide notice of such merger, consolidation or conversion
to the related Note Rating Agency and (b) each Administrative Agent shall have
provided its prior written consent to merger, consolidation or conversion;
provided, that the Issuer provides an Issuer Certificate to the effect that any
such merger, consolidation or conversion will not have a material Adverse Effect
on the Outstanding Notes, and (ii) prior to any such merger, consolidation or
conversion the Administrator shall have delivered to the Indenture Trustee an
Opinion of Counsel to the effect that such merger, consolidation or conversion
complies with the terms of this Base Indenture and one or more Opinions of
Counsel updating or restating all opinions delivered on the date of this Base
Indenture with respect to corporate matters and the enforceability of
Transaction Documents against PMC true sale as to the transfers of the
Participation Certificates from the Servicer to the Issuer and non-consolidation
of the Servicer with the Issuer and security interest and tax and any additional
opinions required under any related Indenture Supplement; provided, further,
that the conditions specified in clauses (i) and (ii) above shall not apply to
any transaction (i) in which an Affiliate of PMC assumes the obligations of PMC
and otherwise satisfies the eligibility criteria applicable to the Servicer
under the Fannie Mae Lender Contracts or (ii) in which an Affiliate of PMC is
merged into or is otherwise combined with PMC and PMC is the sole survivor of
such merger or other combination. PMC shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Indenture Trustee,
the Noteholders and each Note Rating Agency.

Except as described in the preceding paragraph, PMC may not assign or delegate
any of its rights or obligations under this Base Indenture or any other
Transaction Document.

 

101

--------------------------------------------------------------------------------

Article XI

The Indenture Trustee

 

Section 11.1. Certain Duties and Responsibilities.

(a) The Indenture Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Base Indenture with respect to the Notes,
and no implied covenants, duties (including fiduciary duties) or obligations
will be read into this Base Indenture against the Indenture Trustee.

(b) In the absence of bad faith on its part, the Indenture Trustee may, with
respect to Notes, conclusively rely upon certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this Base Indenture,
as to the truth of the statements and the correctness of the opinions expressed
therein; but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Indenture
Trustee, the Indenture Trustee will be under a duty to examine the same to
determine whether or not they conform on their face to the requirements of this
Base Indenture but need not confirm or investigate the accuracy of any
mathematical calculations or other facts stated therein.

(c) If an Event of Default has occurred and is continuing, with respect to the
Notes of which a Responsible Officer of the Indenture Trustee has been given
written notice in the manner set forth in this Indenture or of which a
Responsible Officer of the Indenture Trustee has actual knowledge, the Indenture
Trustee will exercise such of the rights and powers vested in it by this Base
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs; provided that the foregoing shall not be deemed to
require the Indenture Trustee to take any action, or have any liability for the
failure to take any action, where the terms of this Base Indenture or any
Supplement provide that the Indenture Trustee only takes action at the direction
of a certain percentage of the Noteholders or other Person or if the Indenture
Trustee is permitted to refrain from taking action unless it has been provided
with adequate indemnity.

(d) No provision of this Base Indenture will be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(i) this subsection (d) will not be construed to limit the effect of
subsection (a) of this Section 11.1;

(ii) the Indenture Trustee will not be liable for any error of judgment made in
good faith by an Indenture Trustee Authorized Officer, unless it will be proved
that the Indenture Trustee was negligent in ascertaining the pertinent facts;

(iii) the Indenture Trustee will not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Majority Noteholders or the Administrative Agent relating to the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee, or exercising any trust or power conferred upon the Indenture
Trustee, under this Base Indenture with respect to the Notes of any Class, to
the extent consistent with Sections 8.7 and 8.8;

 

102

--------------------------------------------------------------------------------

(iv) no provision of this Base Indenture will require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it has reasonable grounds for believing that repayment of
such funds or indemnity satisfactory to the Indenture Trustee against such risk
or liability is not reasonably assured to it;

(v) whether or not therein expressly so provided, every provision of this Base
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee will be subject to the provisions of this
Section; and

(vi) the Indenture Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Issuer or of Noteholders, as applicable, in accordance with the terms of
this Indenture, relating to the time, method or place of conducting any
proceeding for any remedy available to the Indenture Trustee or with respect to
the exercise of any trust or power conferred upon such party under this
Indenture or with respect to the Notes.

(e) Upon the occurrence of an Event of Default under the PC Repurchase
Agreement, the Indenture Trustee may (and at the direction of the Administrative
Agent or the Series Required Noteholders) send an Activation Notice to the
Account Bank pursuant to which the Indenture Trustee shall exercise its control
over the Dedicated Account, as applicable.    

 

Section 11.2. Notice of Defaults.

Except as otherwise provided in Section 3.3(b), within ninety (90) days after
the occurrence of any Event of Default hereunder,

(a) the Indenture Trustee will transmit by mail to all registered Noteholders,
as their names and addresses appear in the Note Register, notice of such default
hereunder known to the Indenture Trustee, and

(b) the Indenture Trustee will give prompt written notification thereof to each
Note Rating Agency, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of or interest on any Note of any Series or Class, the Indenture
Trustee will be protected in withholding such notice if and so long as an
Indenture Trustee Responsible Officer in good faith determines that the
withholding of such notice is in the interests of the Noteholders of such Series
or Class. For the purpose of this Section, the term “default” means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.

 

103

--------------------------------------------------------------------------------

Section 11.3. Certain Rights of Indenture Trustee.

Except as otherwise provided in Section 11.1:

(a) the Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary may conclusively rely and will be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document (whether in its original or facsimile form) believed by it to
be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Certificate;

(c) whenever in the administration of this Base Indenture the Indenture Trustee,
Calculation Agent, Paying Agent and Securities Intermediary deems it desirable
that a matter be proved or established before taking, suffering or omitting any
action hereunder, the Indenture Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officer’s Certificate;

(d) each of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary may consult with counsel of its own selection, at the
expense of the Issuer, and the advice of such counsel or any Opinion of Counsel
will be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;

(e) none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be under obligation to exercise any of the rights
or powers vested in it by this Base Indenture at the request or direction of any
of the Noteholders pursuant to this Base Indenture, unless such Noteholders
shall have offered to the Indenture Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;

(f) none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document; but such party in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
any of the Indenture Trustee, the Paying Agent, the Note Registrar or the
Securities Intermediary shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney, upon reasonable notice of not
less than three (3) Business Days;

(g) each of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it hereunder;

 

104

--------------------------------------------------------------------------------

(h) none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be required to provide any surety or bond of any
kind in connection with the execution or performance of its duties hereunder;

(i) none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall be deemed to make any representations as to the
validity or sufficiency of this Indenture;

(j) none of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary shall at any time have any responsibility or liability
other than as may be expressly set forth in this Indenture for or with respect
to the legality, validity or enforceability of any of the Notes;

(k) in order to comply with their respective duties under the USA Patriot Act of
2001, the Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary shall obtain and verify certain information and documentation from
the other parties to this Indenture including such party’s name, address, and
other identifying information;

(l) the Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary shall not be under any obligation to (i) institute, conduct, defend
or otherwise participate in any litigation or other legal Proceeding hereunder
or in relation hereto at the request, order or direction of any of the
Noteholders pursuant to the provisions of this Indenture, or (ii) undertake an
investigation of any party to any transaction agreement, unless, in each case,
such Noteholders shall have offered to the Indenture, Calculation Agent, Paying
Agent and Securities Intermediary security or indemnity satisfactory to it
against the costs, expenses and liabilities which may be incurred therein or
thereby;

(m) the Indenture Trustee shall not have any duty or responsibility in respect
to (i) any recording, filing or depositing of this Indenture or any other
agreement or instrument, monitoring or filing any financing statement or
continuation statement evidencing a security interest, the maintenance of any
such recording, filing or depositing or any re-recording, re-filing or
re-depositing of any thereof, or otherwise monitoring the perfection,
continuation of perfection or the sufficiency or validity of any security
interest in or related to the Collateral, (ii) the acquisition or maintenance of
any insurance or (iii) the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with respect
to, assessed or levied against, any part of the Collateral. The Indenture
Trustee shall be authorized to, but shall in no event have any duty or
responsibility to, file any financing or continuation statements or record any
documents or instruments in any public office at any time or times or otherwise
perfect or maintain any security interest in the Collateral;

(n) the Indenture Trustee shall not be deemed to have notice of any default,
Event of Default, Funding Interruption Event or Servicer Termination Event
unless an Indenture Trustee Responsible Officer has actual knowledge thereof or
unless written notice of any event which is in fact such a default, Event of
Default, Funding Interruption Event or Servicer Termination

 

105

--------------------------------------------------------------------------------

Event is received by the Indenture Trustee at the Corporate Trust Office of the
Indenture Trustee, and such notice references the Notes and this Base Indenture;
in the absence of receipt of such notice or actual knowledge, the Indenture
Trustee may conclusively assume that there is no default, Event of Default,
Funding Interruption Event or Servicer Termination Event;

(o) the rights, privileges, protections, immunities and benefits given to the
Indenture Trustee hereunder and under each Transaction Document, including its
right to be indemnified, are extended to, and shall be enforceable (without
duplication) by, the Indenture Trustee or the bank serving as Indenture Trustee,
as applicable, in each of its capacities hereunder and thereunder (including
Calculation Agent, Custodian, Paying Agent, Securities Intermediary and Note
Registrar), and each agent and other person employed to act hereunder and
thereunder;

(p) none of the provisions contained in this Base Indenture shall in any event
require the Indenture Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer or any other Person under
this Base Indenture;

(q) the Indenture Trustee shall have no duty (A) to see to any recording,
filing, or depositing of this Base Indenture or any agreement referred to herein
or any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Estate
other than from funds available in the Trust Accounts or (D) to confirm or
verify the contents of any reports or certificates of the Servicer or the
Administrator delivered to the Indenture Trustee pursuant to this Base Indenture
believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties;

(r) the Indenture Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Base
Indenture;

(s) the right of the Indenture Trustee to perform any discretionary act
enumerated in this Base Indenture or the other Transaction Documents shall not
be construed as a duty, and the Indenture Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of such act;

(t) the Indenture Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder;

(u) in making or disposing of any investment permitted by this Base Indenture,
the Indenture Trustee is authorized to deal with itself (in its individual
capacity) or with any one or more of its Affiliates, in each case on an
arm’s-length basis and on standard market terms, whether it or such Affiliate is
acting as a subagent of the Indenture Trustee or for any third Person or dealing
as principal for its own account;

(v) the Indenture Trustee shall not be responsible for delays or failures in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including strikes, work stoppages,
accidents, acts of war or terrorism, civil or military disturbances, nuclear or
natural catastrophes or acts or God, and interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; and

 

106

--------------------------------------------------------------------------------

(w) None of the Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary (i) shall be responsible for and make any representation
as to the validity, legality, enforceability, sufficiency or adequacy of this
Indenture, the Notes or any other Transaction Document or as to the correctness
of any statement thereof, (ii) shall be accountable for the Issuer’s use of the
proceeds from the Notes, or (iii) shall be responsible for any statement of the
Issuer in this Indenture or in any document issued in connection with the sale
of the Notes or in the Notes. The recitals contained herein and in the Notes
shall be construed as the statements of the Issuer. The Indenture Trustee shall
not be responsible for any statement of the Issuer in this Indenture or any
statement in any document, including any offering memorandum, issued in
connection with the sale of any Notes or in the Notes other than information
provided by the Indenture Trustee and the Indenture Trustee’s certificate of
authentication or for the use or application of any funds received by any Paying
Agent other than the Indenture Trustee.

(x) In no event will the Indenture Trustee have any responsibility to monitor
compliance with or enforce compliance with the credit risk retention rules under
Regulation RR or other rules or regulations relating to risk retention. The
Indenture Trustee will not be charged with knowledge of such rules, nor will it
be liable to any Noteholder, Certificateholder, the Servicer or any other Person
for violation of such rules now or hereinafter in effect. The Indenture Trustee
will not be required to monitor, initiate or conduct any proceedings to enforce
the obligations of the Servicer or any other Person with respect to any breach
of representation or warranty under any Transaction Document, and the Indenture
Trustee will not have any duty to conduct any investigation as to the occurrence
of any condition requiring the repurchase or substitution of any security by any
Person pursuant to any Transaction Document.

(y) The Indenture Trustee is hereby authorized and directed to enter into the
Transaction Documents to which it is a party.

Section 11.4. Not Responsible for Recitals or Issuance of Notes.

The recitals contained herein and in the Notes, except the certificates of
authentication, will be taken as the statements of the Issuer, and the Indenture
Trustee assumes no responsibility for their correctness. The Indenture Trustee
makes no representations as to the validity or sufficiency of this Base
Indenture or of the Notes. The Indenture Trustee will not be accountable for the
use or application by the Issuer of Notes or the proceeds thereof, or for the
use or application of any funds paid to the Servicer in respect of any amounts
deposited in or withdrawn from the Trust Accounts or the custodial accounts by
the Servicer. The Indenture Trustee shall not be responsible for the legality or
validity of this Base Indenture or the validity, priority, perfection or
sufficiency of the security for the Notes issued or intended to be issued
hereunder.

 

107

--------------------------------------------------------------------------------

Section 11.5. Indenture Trustee’s Appointment as Attorney-In-Fact.

(a) The Servicer hereby irrevocably constitutes and appoints the Indenture
Trustee and any officer or agent thereof, during the continuation of an Event of
Default, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Servicer and in the name of the Servicer, for the purpose of
carrying out the terms of this Base Indenture and each Indenture Supplement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Base Indenture, each Indenture Supplement, the PC Repo Guaranty, the PMH
Repo Guaranty, the Fannie Mae Lender Contract, the Acknowledgment Agreement,
and, without limiting the generality of the foregoing, the Issuer hereby gives
the Indenture Trustee the power and right:

(1) to take possession of and endorse and collect any wired funds, checks,
drafts, notes, acceptances or other instruments for the payment of monies due
under any Participation Certificates Granted by the Issuer to the Indenture
Trustee from the Obligors on underlying Mortgage Loans or the Servicer, as the
case may be;

(2) to file any claim or proceeding in any court of law or equity or take any
other action otherwise deemed appropriate by the Indenture Trustee for the
purpose of collecting any and all such monies due from the Obligors on
underlying Mortgage Loans or the Servicer under such Participation Certificate
whenever payable and to enforce any other right in respect of any Participation
Certificate Granted by the Issuer or related to the Trust Estate;

(3) to direct the related Servicer to make payment of any and all monies due or
to become due under the Participation Certificate Granted by the Issuer directly
to the Indenture Trustee or as the Indenture Trustee shall direct;

(4) to ask or demand for, collect, receive payment of and receipt for, any and
all monies, claims and other amounts due or to become due from the Servicer at
any time in respect of or arising out of any Participation Certificate Granted
by the Issuer;

(5) to sign and endorse any assignments, notices and other documents in
connection with the Participation Certificates Granted by the Issuer or the
Trust Estate;

(6) to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with the Participation Certificates Granted by the Issuer and the
Trust Estate as fully and completely as though the Indenture Trustee were the
absolute owner thereof for all purposes, and do, at the Indenture Trustee’s
option and at the expense of the Issuer, at any time, or from time to time, all
acts and things which the Indenture Trustee deems necessary to protect, preserve
or realize upon the Participation Certificate Granted by the Issuer or the Trust
Estate and the Indenture Trustee’s and the Issuer’s respective security
interests and ownership interests therein and to effect the intent of this Base
Indenture, all as fully and effectively as the Issuer might do;

(7) to perform or cause to be performed, the Servicer’s obligations under the
Fannie Mae Lender Contract to the extent permitted by the Acknowledgment
Agreement;

 

108

--------------------------------------------------------------------------------

(8) upon and after the occurrence of a default by the Servicer under the Fannie
Mae Lender Contract, the Servicer also authorizes the Indenture Trustee, or
other party appointed by the Indenture Trustee, to have on site access to the
Servicer’s operation sites, sufficient for the Administrative Agent or other
party appointed by it, to begin the process of transferring the portfolio to a
“Standby Issuer” as required pursuant to the Acknowledgment Agreement;

(9) the Servicer also authorizes the Administrative Agent, at any time and from
time to time, to execute, in connection with the sale provided for in
Section 8.15 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; provided that the
exercise of such powers are in accordance with the Acknowledgment Agreement; and

(10) the powers conferred on the Indenture Trustee are solely to protect the
Noteholders’ interest in the Collateral and shall not impose any duty upon the
Indenture Trustee to exercise any such powers.

(b) The Indenture Trustee shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither the Indenture
Trustee nor any of its officers, directors, or employees shall be responsible to
the Issuer for any act or failure to act hereunder; provided, that the Indenture
Trustee shall exercise such powers only in accordance with the Acknowledgment
Agreement. Nothing contained herein shall in any way be deemed to be a grant of
power or authority to the Indenture Trustee or any officer or agent thereof to
take any of the actions described in this paragraph with respect to any
underlying Obligor under any Portfolio Mortgage Loan.

Section 11.6. Money Held in Trust.

The Indenture Trustee will be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Issuer.

Section 11.7. Compensation and Reimbursement, Limit on Compensation,
Reimbursement and Indemnity.

Except as otherwise provided in this Base Indenture:

(a) The Indenture Trustee (including in all of its capacities) will be paid the
Indenture Trustee Fee on each Payment Date pursuant to Section 4.5 as
compensation for its services (in all capacities hereunder).

(b) The Indenture Trustee (including in all of its capacities) shall be
indemnified and held harmless by the Trust Estate as set forth in Section 4.5
and Section 8.6, and shall be secondarily indemnified and held harmless by the
Administrator for, from and against, as the case may be, any loss, liability or
expense incurred without negligence or willful misconduct on its part, arising
out of, or in connection with, the acceptance and administration of the Trust
Estate, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against any claim in connection with the exercise
or performance of any of its powers or duties under this Base Indenture,
provided that:

 

109

--------------------------------------------------------------------------------

(i) with respect to any such claim, the Indenture Trustee shall have given the
Administrator written notice thereof promptly after a Responsible Officer of the
Indenture Trustee shall have actual knowledge thereof; provided, however that
failure to give such written notice shall not affect the Trust Estate’s or the
Administrator’s obligation to indemnify the Indenture Trustee, unless such
failure materially prejudices the Trust Estate’s or the Administrator’s rights;

(ii) the Administrator may, at its option, assume the defense of any such claim
using counsel reasonably satisfactory to the Indenture Trustee; and

(iii) notwithstanding anything in this Base Indenture to the contrary, the
Administrator shall not be liable for settlement of any claim by the Indenture
Trustee, as the case may be, entered into without the prior consent of the
Administrator, which consent shall not be unreasonably withheld.

Notwithstanding the foregoing, in no event shall the Trust Estate or the
Administrator be required to indemnify the Indenture Trustee if the
indemnification obligation under this Section 11.7 is the result of gross
negligence or willful misconduct by the Indenture Trustee.

No termination of this Base Indenture, or the resignation or removal of the
Indenture Trustee, shall affect the obligations created by this Section 11.7(b)
of the Administrator to indemnify the Indenture Trustee under the conditions and
to the extent set forth herein.

Notwithstanding the foregoing, the indemnification provided in this
Section 11.7(b) with respect to the Administrator shall not pertain to any loss,
liability or expense of the Indenture Trustee, including the costs and expenses
of defending itself against any claim, incurred in connection with any actions
taken by the Indenture Trustee at the direction of the Noteholders pursuant to
the terms of this Base Indenture.

The Indenture Trustee agrees fully to perform its duties under this Base
Indenture notwithstanding its failure to receive any payments of Indenture
Trustee Fees pursuant to this Section 11.7(b) subject to its rights to resign in
accordance with the terms of this Base Indenture.

Anything in this Base Indenture to the contrary notwithstanding, in no event
shall the Indenture Trustee (in any of its capacities) be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including lost
profits), even if the Indenture Trustee has been advised of the likelihood of
such a loss or damage and regardless of the form of action.

The Securities Intermediary, the Paying Agent, the Custodian and the Calculation
Agent shall be indemnified by the Trust Estate pursuant to Section 4.5 and
Section 8.6, and secondarily by the Administrator, in respect of the matters
described in Section 4.9 to the same extent as the Indenture Trustee.

Neither of the Indenture Trustee nor the Securities Intermediary will have any
recourse to any asset of the Issuer or the Trust Estate other than funds
available pursuant to Section 4.5 and Section 8.6 or to any Person other than
the Issuer (or the Administrator pursuant to this Section 11.7). Except as
specified in Section 4.5 and Section 8.6, any such payment to the Indenture
Trustee shall be subordinate to payments to be made to Noteholders.

 

110

--------------------------------------------------------------------------------

The Indenture Trustee is not responsible for any action or inaction of the
Administrative Agent.

 

Section 11.8. Corporate Indenture Trustee Required; Eligibility.

There will at all times be an Indenture Trustee hereunder with respect to all
Classes of Notes, which will be either a bank or a corporation organized and
doing business under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by a federal or state authority of the United States, and the
long-term unsecured debt obligation of which are rated at least BBB from each
Note Rating Agency then rating Outstanding Notes if such institution is rated by
the Note Rating Agency, as applicable, or if such Note Rating Agency downgrades
the Indenture Trustee below such minimum rating, the Indenture Trustee may
obtain, at its own expense, a confirmation from such Note Rating Agency that
downgraded the Indenture Trustee below such rating category that there is no
Ratings Effect by reason of such downgrade to a lower rating. If such bank or
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such bank
or corporation will be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Issuer may not,
nor may any Person directly or indirectly Controlling, Controlled by, or under
common Control with the Issuer, serve as Indenture Trustee. If at any time the
Indenture Trustee ceases to be eligible in accordance with the provisions of
this Section 11.8, it shall resign upon failure to obtain such confirmation
within a reasonable time (not to exceed thirty (30) Business Days) after such
ineligibility in the manner and with the effect hereinafter specified in this
Article.

 

Section 11.9. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee pursuant to this Article will become effective until
the acceptance of appointment by the successor Indenture Trustee under
Section 11.10.

(b) The Indenture Trustee and the bank serving as Indenture Trustee (in all
capacities) may resign with respect to all, but not less than all, such
capacities and all, but not less than all of the Outstanding Notes at any time
by giving written notice thereof to the Issuer. If an instrument of acceptance
by a successor Indenture Trustee, Calculation Agent, Paying Agent or Securities
Intermediary shall not have been delivered to the Indenture Trustee within
thirty (30) days after the giving of such notice of resignation, the resigning
Indenture Trustee, Calculation Agent, Paying Agent or Securities Intermediary
may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary. Written notice of resignation by the Indenture Trustee under this
Base Indenture shall also constitute notice of resignation as Calculation Agent,
Securities Intermediary, Paying Agent, and Note Registrar hereunder, to the
extent the Indenture Trustee serves in such a capacity at the time of such
resignation.

 

111

--------------------------------------------------------------------------------

(c) The Indenture Trustee or Calculation Agent may be removed with respect to
all Outstanding Notes at any time by Action of the Majority Noteholders of all
Outstanding Notes, delivered to the Indenture Trustee and to the Issuer. Removal
of the Indenture Trustee shall also constitute removal of the Calculation Agent,
Securities Intermediary, Note Registrar and Paying Agent hereunder, to the
extent the Indenture Trustee serves in such a capacity at the time of such
resignation. If an instrument of acceptance by a successor Indenture Trustee or
Calculation Agent shall not have been delivered to the Indenture Trustee within
thirty (30) days after the giving of such notice of removal, the Indenture
Trustee or Calculation Agent being removed may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee or Calculation
Agent.

(d) If at any time:

(i) the Indenture Trustee ceases to be eligible under Section 11.8 and fails to
resign after written request therefore by the Issuer or by any Noteholder; or

(ii) the Indenture Trustee becomes incapable of acting with respect to any
Series or Class of Notes; or

(iii) the Indenture Trustee is adjudged bankrupt or insolvent or a receiver of
the Indenture Trustee or of its property is appointed or any public officer
takes charge or Control of the Indenture Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Issuer may remove the Indenture Trustee, or
(B) subject to Section 8.8, any Noteholder who has been a bona fide Noteholder
of a Note for at least six (6) months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(e) If the Indenture Trustee or Calculation Agent resigns, is removed or becomes
incapable of acting with respect to any Notes, or if a vacancy shall occur in
the office of the Indenture Trustee or Calculation Agent for any cause, the
Issuer, subject to the Administrative Agent’s consent, will promptly appoint a
successor Indenture Trustee or Calculation Agent. If, within one year after such
resignation, removal or incapacity, or the occurrence of such vacancy, a
successor Indenture Trustee or Calculation Agent is appointed by Act of the
Majority Noteholders of all Outstanding Notes, delivered to the Issuer and the
retiring Indenture Trustee or Calculation Agent, the successor Indenture Trustee
or Calculation Agent so appointed will, forthwith upon its acceptance of such
appointment, become the successor Indenture Trustee or Calculation Agent and
supersede the successor Indenture Trustee or Calculation Agent appointed by the
Issuer. If no successor Indenture Trustee or Calculation Agent shall have been
so appointed by the Issuer or the Noteholders and accepted appointment in the
manner hereinafter provided, any Noteholder who has been a bona fide Noteholder
of a Note for at least six (6) months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee or Calculation Agent.

(f) The Issuer will give written notice of each resignation and each removal of
the Indenture Trustee and each appointment of a successor Indenture Trustee to
each Noteholder as provided in Section 1.7 and to each Note Rating Agency that
is then rating Outstanding Notes.

 

112

--------------------------------------------------------------------------------

To facilitate delivery of such notice, upon request by the Issuer, the Note
Registrar shall provide to the Issuer a list of the relevant registered
Noteholders. Each notice will include the name of the successor Indenture
Trustee and the address of its principal Corporate Trust Office.

 

Section 11.10. Acceptance of Appointment by Successor.

Every successor Indenture Trustee appointed hereunder will execute, acknowledge
and deliver to the Issuer and to the predecessor Indenture Trustee an instrument
accepting such appointment, with a copy to each Note Rating Agency then rating
any Outstanding Notes, and thereupon the resignation or removal of the
predecessor Indenture Trustee will become effective, and such successor
Indenture Trustee, without any further act, deed or conveyance, will become
vested with all the rights, powers, trusts and duties of the predecessor
Indenture Trustee, Calculation Agent, Securities Intermediary, Note Registrar
and Paying Agent; but, on request of the Issuer or the successor Indenture
Trustee, such predecessor Indenture Trustee will, upon payment of its reasonable
charges, if any, execute and deliver an instrument transferring to such
successor Indenture Trustee all the rights, powers and trusts of the predecessor
Indenture Trustee, Calculation Agent, Securities Intermediary, Note Registrar
and Paying Agent, and will duly assign, transfer and deliver to such successor
Indenture Trustee all property and money held by such predecessor Indenture
Trustee hereunder, subject nevertheless to its rights to payment pursuant to
Section 11.7. Upon request of any such successor Indenture Trustee, the Issuer
will execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Indenture Trustee all such rights, powers and
trusts.

No successor Indenture Trustee will accept its appointment unless at the time of
such acceptance such successor Indenture Trustee will be qualified and eligible
under this Article XI.

 

Section 11.11. Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Indenture Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party, or
any Person succeeding to all or substantially all of the corporate trust
business of the Indenture Trustee, will be the successor of the Indenture
Trustee hereunder, provided that such Person shall be otherwise qualified and
eligible under this Article XI, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. The Indenture Trustee
will give prompt written notice of such merger, conversion, consolidation or
succession to the Issuer and each Note Rating Agency that is then rating
Outstanding Notes. If any Notes shall have been authenticated, but not
delivered, by the Indenture Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Indenture Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Indenture Trustee had itself authenticated such Notes.

 

Section 11.12. Appointment of Authenticating Agent.

At any time when any of the Notes remain Outstanding the Indenture Trustee, with
the approval of the Issuer, may appoint an Authenticating Agent with respect to
one or more Series or Classes of Notes which will be authorized to act on behalf
of the Indenture Trustee to

 

113

--------------------------------------------------------------------------------

authenticate Notes of such Series or Classes issued upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 6.5, and Notes
so authenticated will be entitled to the benefits of this Base Indenture and
will be valid and obligatory for all purposes as if authenticated by the
Indenture Trustee hereunder. Wherever reference is made in this Base Indenture
to the authentication and delivery of Notes by the Indenture Trustee or an
Indenture Trustee Authorized Signatory or to the Indenture Trustee’s Certificate
of Authentication, such reference will be deemed to include authentication and
delivery on behalf of the Indenture Trustee by an Authenticating Agent and a
Certificate of Authentication executed on behalf of the Indenture Trustee by an
Authenticating Agent. Each Authenticating Agent will be acceptable to the Issuer
and will at all times be a Person organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as an Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and, if other than the Issuer
itself, subject to supervision or examination by a federal or state authority of
the United States. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent will be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent will cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent will
resign immediately in the manner and with the effect specified in this Section.

Any Person into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent will be a party,
or any Person succeeding to the corporate agency or corporate trust business of
an Authenticating Agent, will continue to be an Authenticating Agent, provided
that such Person will be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Indenture
Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof
to the Indenture Trustee and to the Issuer. The Indenture Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Issuer. Upon receiving such a
notice of resignation or upon such a termination, or if at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Indenture Trustee, with the approval of the Issuer, may
appoint a successor Authenticating Agent which will be acceptable to the Issuer
and will give notice to each Noteholder as provided in Section 1.7. Any
successor Authenticating Agent upon acceptance of its appointment hereunder will
become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent will be appointed unless eligible under the
provisions of this Section.

The Indenture Trustee agrees to pay to each Authenticating Agent (other than an
Authenticating Agent appointed at the request of the Issuer, the Noteholders or
the Administrator from time to time or appointed due to a change in law or other
circumstance beyond the Indenture Trustee’s control) reasonable compensation for
its services under this Section, out of the Indenture Trustee’s own funds
without reimbursement pursuant to this Base Indenture. The Indenture Trustee
shall be the initial Authenticating Agent.

 

114

--------------------------------------------------------------------------------

Section 11.13. Direction to Indenture Trustee under the PC Repo Guaranty and the
PMH Repo Guaranty.

In the event the Administrative Agent, on behalf of the Noteholders, determines
that the Indenture Trustee, as a beneficiary under the PC Repo Guaranty or the
PMH Repo Guaranty, as applicable, should take certain action to preserve any
interests of, or release any lien or security interest of, the Noteholders under
the terms of the PC Repo Guaranty or the PMH Repo Guaranty, as applicable, with
respect to the Collateral, the Noteholders acknowledge and agree that the
Indenture Trustee shall only take such action as may be directed by the
Administrative Agent in writing.

 

Section 11.14. Representations and Covenants of the Indenture Trustee.

The Indenture Trustee, in its individual capacity and not as Indenture Trustee,
represents, warrants and covenants that:

(a) Citibank is a national banking association duly organized and validly
existing under the laws of the United States;

(b) Citibank has full power and authority to deliver and perform this Base
Indenture and has taken all necessary action to authorize the execution,
delivery and performance by it of this Base Indenture and other documents to
which it is a party;

(c) each of this Base Indenture and the other Transaction Documents to which
Citibank is a party has been duly executed and delivered by Citibank and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms; and

(d) Citibank has a minimum aggregate capital, surplus and undivided profits of
at least $500,000.

 

Section 11.15. Indenture Trustee’s Application for Instructions from the Issuer.

Any application by the Indenture Trustee for written instructions from the
Issuer may, at the option of the Indenture Trustee, set forth in writing any
action proposed to be taken or omitted by the Indenture Trustee under and in
accordance with this Base Indenture and the date on and/or after which such
action shall be taken or such omission shall be effective, provided that such
application shall make specific reference to this Section 11.15. The Indenture
Trustee shall not be liable for any action taken by, or omission of, the
Indenture Trustee in accordance with a proposal included in such application on
or after the date specified in such application (which date shall not be less
than five (5) Business Days after the date the Issuer actually receives such
application, unless the Issuer shall have consented in writing to any earlier
date) unless prior to taking any such action (or the Closing Date in the case of
an omission), the Indenture Trustee shall have received written instructions in
response to such application specifying the action be taken or omitted.

 

115

--------------------------------------------------------------------------------

Article XII

Amendments and Indenture Supplements

 

Section 12.1. Supplemental Indentures and Amendments Without Consent of
Noteholders.

(a) Unless otherwise provided in the related Indenture Supplement with respect
to any amendment to this Base Indenture or such Indenture Supplement, without
the consent of the Noteholders of any Notes or any other Person but with the
consent of the Issuer (evidenced by its execution of such amendment), the
Indenture Trustee, the Administrator, the Servicer and the Administrative Agent,
and with prior notice to each Note Rating Agency that is then rating any
Outstanding Notes, at any time and from time to time, upon delivery of an Issuer
Tax Opinion, unless such Issuer Tax Opinion is waived by (i) in the case of an
amendment to such Indenture Supplement the Series Required Noteholders of such
Series or (ii) in the case of an amendment to this Base Indenture, the Series
Required Noteholders of each Outstanding Series and upon delivery by the Issuer
to the Indenture Trustee of an Officer’s Certificate to the effect that the
Issuer reasonably believes that such amendment could not have a material Adverse
Effect and is not reasonably expected to have a material Adverse Effect on the
Noteholders of the Notes at any time in the future, may amend this Base
Indenture or an Indenture Supplement for any of the following purposes:

(i) to evidence the succession of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes;

(ii) to add to the covenants of the Issuer, or to surrender any right or power
herein conferred upon the Issuer, for the benefit of the Noteholders of the
Notes of any or all Series or Classes (and if such covenants or the surrender of
such right or power are to be for the benefit of less than all Series or Classes
of Notes, stating that such covenants are expressly being included or such
surrenders are expressly being made solely for the benefit of one or more
specified Series or Classes);

(iii) to cure any ambiguity, to correct or supplement any provision herein which
may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Base
Indenture;

(iv) to establish any form of Note as provided in Article V, and to provide for
the issuance of any Series or Class of Notes as provided in Article VI and to
set forth the terms thereof, and/or to add to the rights of the Noteholders of
the Notes of any Series or Class;

(v) to evidence and provide for the acceptance of appointment by another
corporation as a successor Indenture Trustee hereunder;

(vi) to provide for additional or alternative forms of credit enhancement for
any Series or Class of Notes;

(vii) to comply with any regulatory, accounting or tax laws;

 

116

--------------------------------------------------------------------------------

(viii) to prevent the Issuer from being subject to tax on its net income as an
association (or publicly traded partnership) taxable as a corporation or a
taxable mortgage pool taxable as a corporation, each for United States federal
income tax purposes;

(ix) determined by the Administrator to be reasonably necessary to maintain the
rating currently assigned by the applicable Note Rating Agency and/or to avoid
such Class of Notes being placed on negative watch by such Note Rating Agency;
or

(x) as otherwise provided in the related Indenture Supplement.

(b) Additionally, subject to the terms and conditions of Section 12.2, unless
otherwise provided in the related Indenture Supplement with respect to any
amendment of this Base Indenture or an Indenture Supplement, and in addition to
clauses (i) through (x) above, this Base Indenture or an Indenture Supplement
may also be amended by the Issuer, the Indenture Trustee, the Administrator, the
Servicer and the Administrative Agent (in its sole and absolute discretion)
without the consent of any of the Noteholders or any other Person, upon delivery
of an Issuer Tax Opinion, unless such Issuer Tax Opinion is waived by (i) in the
case of an amendment to such Indenture Supplement the Series Required
Noteholders of such Series or (ii) in the case of an amendment to this Base
Indenture, the Series Required Noteholders of each Outstanding Series, for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Base Indenture or modifying in any manner the
rights of the Noteholders of the Notes under this Base Indenture or any other
Transaction Document; provided, however, that (i) the Issuer shall deliver to
the Indenture Trustee an Officer’s Certificate to the effect that the Issuer
reasonably believes that such amendment could not have a material Adverse Effect
on any Outstanding Notes and is not reasonably expected to have a material
Adverse Effect at any time in the future, and (ii) if any Outstanding Notes are
then rated by a Note Rating Agency, (1) each such Note Rating Agency confirms in
writing to the Indenture Trustee that such amendment will not cause a Ratings
Effect on any Outstanding Notes or (2) if the Administrator and the
Administrative Agents determine in their reasonable judgment that an applicable
Note Rating Agency no longer provides such written confirmation described in the
foregoing clause (1), (a) the Administrator shall provide notice of such
amendment to the related Note Rating Agency and (b) each Administrative Agent
shall have provided their prior written consent to such amendment.

(c) Any amendment of this Base Indenture which affects the rights, duties,
immunities, obligations or liabilities of the Owner Trustee in its capacity as
owner trustee under the Trust Agreement shall require the written consent of the
Owner Trustee.

 

Section 12.2. Supplemental Indentures and Amendments with Consent of
Noteholders.

In addition to any amendment permitted pursuant to Section 12.1, and subject to
the terms and provisions of each Indenture Supplement with respect to any
amendment to this Base Indenture or such Indenture Supplement, with prior notice
to each Note Rating Agency and the consent of the Majority Noteholders of each
Series materially and adversely affected by such amendment of this Base
Indenture, including any Indenture Supplement, by Act of said Noteholders
delivered to the Issuer and the Indenture Trustee, the Issuer, the
Administrator, the Servicer, the Administrative Agent and the Indenture Trustee
upon delivery of an Issuer Tax

 

117

--------------------------------------------------------------------------------

Opinion (unless the Noteholders unanimously consent to waive such opinion), may
enter into an amendment of this Base Indenture for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Base Indenture of modifying in any manner the rights of the Noteholders
of the Notes of each such Series or Class under this Base Indenture or any
Indenture Supplement; provided, however, that no such amendment will, without
the consent of the Noteholder of each Outstanding Note materially and adversely
affected thereby:

(a) change the scheduled payment date of any payment of interest on any Note
held by such Noteholder, or change a Payment Date or Stated Maturity Date (other
than the exercise of an optional extension as set forth in the related Indenture
Supplement) of any Note held by such Noteholder;

(b) reduce the Note Balance of, or the Note Interest Rate, the Step-Up Fee Rate
or the Default Supplemental Fee Rate on any Note held by such Noteholder, or
change the method of computing the Note Balance or Note Interest Rate in a
manner that is adverse to such Noteholder;

(c) impair the right to institute suit for the enforcement of any payment on any
Note held by such Noteholder;

(d) reduce the percentage of Noteholders of the Outstanding Notes (or of the
Outstanding Notes of any Series or Class), whose consent is required for any
such amendment, or whose consent is required for any waiver of compliance with
the provisions of this Base Indenture or any Indenture Supplement or of defaults
hereunder or thereunder and their consequences, provided for in this Base
Indenture or any Indenture Supplement;

(e) modify any of the provisions of this Section or Section 8.14, except to
increase any percentage of Noteholders required to consent to any such amendment
or to provide that other provisions of this Base Indenture or any Indenture
Supplement cannot be modified or waived without the consent of the Noteholder of
each Outstanding Note adversely affected thereby;

(f) permit the creation of any lien or other encumbrance on the Collateral that
is prior to the lien in favor of the Indenture Trustee for the benefit of the
Noteholders of the Notes;

(g) change the method of computing the amount of principal of, or interest on,
any Note held by such Noteholder on any date;

(h) increase any Advance Rates in respect of Notes held by such Noteholder in
respect of Notes held by such Noteholder; or

(i) change, modify or waive any Scheduled Principal Payment Amount.

In addition, any Indenture Supplement may be amended, supplemented or otherwise
modified with the consent of each of the Noteholders of the Notes of the related
Series upon delivery of all opinions and certificates and notice to each Note
Rating Agency required pursuant to the first paragraph of this Section 12.2 or
as otherwise specified in the applicable Indenture Supplement. The consent of a
Person that is an Administrative Agent for one or more Series but is not an
Administrative Agent for any other Series is not required for any amendment,
supplement or modification to any such other Series.

 

118

--------------------------------------------------------------------------------

An amendment of this Base Indenture which changes or eliminates any covenant or
other provision of this Base Indenture which has expressly been included solely
for the benefit of one or more particular Series or Class of Notes, or which
modifies the rights of the Noteholders of Notes of such Series or Class with
respect to such covenant or other provision, will be deemed not to affect the
rights under this Base Indenture of the Noteholders of Notes of any other Series
or Class.

It will not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed amendment, but it will be sufficient
if such Act will approve the substance thereof.

 

Section 12.3. Execution of Amendments.

In executing or accepting the additional trusts created by any amendment or
Indenture Supplement of this Base Indenture permitted by this Article XII or the
modifications thereby of the trusts created by this Base Indenture, the
Indenture Trustee will be entitled to receive, and (subject to Section 11.1)
will be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment or Indenture Supplement is authorized and permitted
by this Base Indenture and that all conditions precedent thereto have been
satisfied. No such Opinion of Counsel shall be required in connection with any
amendment or Indenture Supplement consented to by all Noteholders if all of the
Noteholders have directed the Indenture Trustee in writing to execute such
amendment or Indenture Supplement. The Indenture Trustee may, but will not be
obligated to, enter into any such amendment or Indenture Supplement which
affects the Indenture Trustee’s own rights, duties or immunities under this Base
Indenture or otherwise.

 

Section 12.4. Effect of Amendments.

Upon the execution of any amendment of this Base Indenture or any Indenture
Supplement, or any supplemental indentures under this Article XII, this Base
Indenture and the related Indenture Supplement will be modified in accordance
therewith with respect to each Series and Class of Notes affected thereby, or
all Notes, as the case may be, and such amendment will form a part of this Base
Indenture and the related Indenture Supplement for all purposes; and every
Noteholder of Notes theretofore or thereafter authenticated and delivered
hereunder will be bound thereby to the extent provided therein.

 

Section 12.5. Reference in Notes to Indenture Supplements.

Notes authenticated and delivered after the execution of any amendment of this
Base Indenture or any Indenture Supplement or any supplemental indenture
pursuant to this Article may, and will if required by the Indenture Trustee,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such amendment or supplemental indenture. If the Issuer so
determines, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such amendment or supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.

 

119

--------------------------------------------------------------------------------

Section 12.6. Amendments to Appendix A

Any amendment of Appendix A to this Base Indenture which affects the rights,
duties, immunities, obligations or liabilities of any party to this Base
Indenture or to any other Transaction Document shall require the written consent
of such party.

Article XIII

Early Redemption of Notes

 

Section 13.1. Optional Redemption.

(a) Unless otherwise provided in the applicable Indenture Supplement for a
Series or Class of Notes, the Issuer has the right, but not the obligation, to:
(i) redeem a Series or Class of Term Notes in whole or in part (so long as, in
the case of any partial redemption, such redemption is funded using the proceeds
of the issuance and sale of one or more new Classes of Notes as further
specified in the related Indenture Supplement or from any other amounts received
by the Issuer pursuant to the PC Repurchase Agreement (or otherwise) other than
Collections on MSRs) on a date specified in the applicable Indenture Supplement
or on any Payment Date (a “Redemption Payment Date”) on or after the Payment
Date on which the aggregate Note Balance (after giving effect to all payments,
if any, on that day) of such Series or Class is reduced to less than the
Redemption Percentage of the Initial Note Balance and (ii) redeem a Series or
Class of Variable Funding Notes in whole or in part on a date specified in the
applicable Indenture Supplement.

If the Issuer, at the direction of the Administrator, elects to redeem a Series
or Class of Notes pursuant to this Section 13.1, it will cause the Issuer to
notify the Indenture Trustee and the Noteholders of such redemption at least
five (5) days prior to the Redemption Payment Date. Unless otherwise specified
in the Indenture Supplement applicable to the Notes to be so redeemed, the
redemption price of a Series or Class so redeemed will equal the Redemption
Amount, the payment of which will be subject to the allocations, deposits and
payments sections of the related Indenture Supplement, if any.

If the Issuer is unable to pay the Redemption Amount in full on the Redemption
Payment Date, such redemption shall be cancelled, notice of such cancelled
redemption shall be sent to all Secured Parties and payments on such Series or
Class of Notes will thereafter continue to be made in accordance with this Base
Indenture and the related Indenture Supplement, and the Noteholders of such
Series or Class of Notes and the related Administrative Agent shall continue to
hold all rights, powers and options as set forth under this Base Indenture,
until the Outstanding Note Balance of such Series or Class, plus all accrued and
unpaid interest and other amounts due in respect of the Notes, is paid in full
or the Stated Maturity Date occurs, whichever is earlier, subject to
Article VII, Article VIII and the allocations, deposits and payments sections of
this Base Indenture and the related Indenture Supplement.

 

120

--------------------------------------------------------------------------------

(b) Unless otherwise specified in the related Indenture Supplement, if the VFN
Principal Balance of any Class of VFNs has been reduced to zero, then, upon five
(5) Business Days’ prior written notice to the Noteholder thereof, the Issuer
may declare such Class no longer Outstanding, in which case the Noteholder
thereof shall submit such Class of Notes to the Indenture Trustee for
cancellation.

(c) The Notes of any Series or Class of Notes shall be subject to optional
redemption under this Article XIII, in whole but not in part, by the Issuer,
through (i) the use of the proceeds of issuance and sale of a new Series of
Notes issued hereunder, or (ii) the use of the proceeds received of any amounts
funded under any Variable Funding Notes on any Business Day after the date on
which the related Revolving Period ends, and on any Business Day within ten
(10) days prior to the end of such Revolving Period or at other times specified
in the related Indenture Supplement upon ten (10) days’ prior notice to the
Indenture Trustee and the Noteholders. Following issuance of the Redemption
Notice by the Issuer pursuant to Section 13.2 below, the Issuer shall be
required to purchase the entire aggregate Note Balance of such Series or
Class of Term Notes for the applicable Redemption Amount on the date set for
such redemption (the “Redemption Date”).

(d) The Issuer may redeem any Series or Class of Notes through (i) the use of
proceeds from the issuance and sale of a new Series or Class of Notes issued
hereunder, or (ii) the use of proceeds received following a VFN Note Balance
Adjustment Request, on any other Business Day specified in the related Indenture
Supplement.

(e) If necessary to avoid a Borrowing Base Deficiency, the Notes of any Series
or Class of Variable Funding Notes shall be subject to repayment by the Issuer,
in whole or in part, up to the amount necessary to avoid a Borrowing Base
Deficiency, using any other cash or funds of the Issuer other than Collections
on the Participation Certificates (Collections for this purpose include payments
of the PMH Repurchase Price), upon one (1) Business Day’s prior notice from the
Issuer to the Indenture Trustee and the related VFN Noteholders. Any such
repayment pursuant to this Section 13.1(d) shall reduce the principal balance of
such Variable Funding Notes but shall not result in a reduction of any funding
commitments related thereto or the Maximum VFN Principal Balance thereof (unless
otherwise agreed between the Noteholders of such Variable Funding Notes and the
Issuer) and (ii) may be made on a non-pro rata basis with other Series of
Variable Funding Notes.

(f) Notwithstanding any other provision of this Base Indenture, the early
redemption rights of the Issuer set forth in this Section 13.1 are in addition
to, the Issuer’s rights set forth in Section 2.01(b)(ii) to remove as Collateral
the Participation Certificates and Mortgage Loans.

 

Section 13.2. Notice.

(a) Promptly after the election to exercise any optional redemption pursuant to
Section 13.1, the Issuer will notify the Indenture Trustee and each related Note
Rating Agency in writing of the identity and Note Balance of the affected Series
or Class of Notes to be redeemed.

 

121

--------------------------------------------------------------------------------

(b) Notice of redemption (each a “Redemption Notice”) will promptly be given as
provided in Section 1.7. All notices of redemption will state (i) the Series or
Class of Notes to be redeemed pursuant to this Article XIII, (ii) the date on
which the redemption of the Series or Class of Notes to be redeemed pursuant to
this Article will begin, which will be the Redemption Payment Date, and
(iii) the redemption price for such Series or Class of Notes.

Article XIV

Miscellaneous

 

Section 14.1. No Petition.

Each of the Indenture Trustee, the Administrative Agent, the Servicer and the
Administrator, by entering into this Base Indenture, each Noteholder, by
accepting a Note and each Note Owner by accepting a Note or a beneficial
interest in a Note agrees that it will not at any time prior to the date which
is one year and one day, or, if longer, the applicable preference period then in
effect, after the payment in full of all the Notes, institute against the
Issuer, or join in any institution against the Issuer of, any receivership,
insolvency, bankruptcy or other similar proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes and this Base Indenture; provided,
however, that nothing contained herein shall prohibit or otherwise prevent the
Indenture Trustee from filing proofs of claim in any such proceeding.

 

Section 14.2. No Recourse.

No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee or Owner Trustee in their individual
capacities, (ii) any owner of a beneficial ownership interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
“control person” within the meaning of the 1933 Act and the 1934 Act of the
Indenture Trustee or Owner Trustee in its individual capacity, any holder of a
beneficial ownership interest in the Issuer or the Indenture Trustee or Owner
Trustee or of any successor or assign of the Indenture Trustee or Owner Trustee
in its individual capacity, except as any such Person may have expressly agreed
and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.

 

Section 14.3. Tax Treatment.

Notwithstanding anything to the contrary set forth herein, the Issuer has
entered into this Base Indenture with the intention that for United States
federal, state and local income and franchise tax purposes the Notes will
qualify as indebtedness secured by the Participation Certificates and the MSRs,
unless retained by the Issuer or a single beneficial owner of the equity of the
Issuer for U.S. federal income tax purposes or a single affiliate of the Issuer
whose ownership would cause the Notes to be treated as equity under Treasury
Regulations promulgated under section 385 of the Code (each, a “Retained Note”).
The Issuer, by entering

 

122

--------------------------------------------------------------------------------

into this Base Indenture, each Noteholder, by its acceptance of a Note and each
purchaser of a beneficial interest therein, by accepting such beneficial
interest, agree to treat such Notes (other than any Retained Note) as debt for
United States federal, state and local income and franchise tax purposes, unless
otherwise required by applicable law in a proceeding of final determination. The
Indenture Trustee shall treat the Trust Estate as a security device only. The
provisions of this Base Indenture shall be construed in furtherance of the
foregoing intended tax treatment.

 

Section 14.4. Alternate Payment Provisions.

Notwithstanding any provision of this Base Indenture or any of the Notes to the
contrary, the Issuer, with the written consent of the Indenture Trustee and the
Paying Agent, may enter into any agreement with any Noteholder of a Note
providing for a method of payment or notice that is different from the methods
provided for in this Base Indenture for such payments or notices. The Issuer
will furnish to the Indenture Trustee and the Paying Agent a copy of each such
agreement and the Indenture Trustee and the Paying Agent will cause payments or
notices, as applicable, to be made in accordance with such agreements.

 

Section 14.5. Termination of Obligations.

The respective obligations and responsibilities of the Indenture Trustee created
hereby (other than the obligation of the Indenture Trustee to make payments to
Noteholders as hereinafter set forth) shall terminate upon satisfaction and
discharge of this Base Indenture as set forth in Article VII, except with
respect to the payment obligations described in Section 14.6(b). Upon this
event, the Indenture Trustee shall release, assign and convey to the Issuer or
any of its designees, without recourse, representation or warranty, all of its
right, title and interest in the Collateral, whether then existing or thereafter
created, all monies due or to become due and all amounts received or receivable
with respect thereto (including all monies then held in any Trust Account) and
all proceeds thereof, except for amounts held by the Indenture Trustee pursuant
to Section 14.6(b). The Indenture Trustee shall execute and deliver such
instruments of transfer and assignment as shall be provided to it, in each case
without recourse, as shall be reasonably requested by the Issuer to vest in the
Issuer or any of its designees all right, title and interest which the Indenture
Trustee had in the Collateral.

 

Section 14.6. Final Payment.

(a) The Issuer shall give the Indenture Trustee at least ten (10) days’ prior
written notice of the Payment Date on which the Noteholders of any Series or
Class may surrender their Notes for payment of the final payment on and
cancellation of such Notes. Not later than the fifth (5th) day prior to the
Payment Date on which the final payment in respect of such Series or Class is
payable to Noteholders, the Indenture Trustee or the Paying Agent shall provide
notice to Noteholders of such Series or Class specifying (i) the date upon which
final payment of such Series or Class will be made upon presentation and
surrender of Notes of such Series or Class at the office or offices therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such payment date is not applicable, payments being
made only upon presentation and surrender of such Notes at the office or offices
therein specified. The Indenture Trustee shall give such notice to the Note
Registrar and the Paying Agent at the time such notice is given to Noteholders.

 

123

--------------------------------------------------------------------------------

(b) Notwithstanding a final payment to the Noteholders of any Series or Class
(or the termination of the Issuer), except as otherwise provided in this
paragraph, all funds then on deposit in any Account allocated to such
Noteholders shall continue to be held in trust for the benefit of such
Noteholders, and the Paying Agent or the Indenture Trustee shall pay such funds
to such Noteholders upon surrender of their Notes, if such Notes are Definitive
Notes. In the event that all such Noteholders shall not surrender their Notes
for cancellation within six (6) months after the date specified in the notice
from the Indenture Trustee described in clause (a) above, the Indenture Trustee
shall give a second (2nd) notice to the remaining such Noteholders to surrender
their Notes for cancellation and receive the final payment with respect thereto.
If within one year after the second (2nd) notice all such Notes shall not have
been surrendered for cancellation, the Indenture Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining such Noteholders concerning surrender of their Notes, and the cost
thereof (including costs related to giving the second (2nd) notice) shall be
paid out of the funds in the Collection and Funding Account. The Indenture
Trustee and the Paying Agent shall pay to the Issuer any monies held by them for
the payment of principal or interest that remains unclaimed for two (2) years.
After payment to the Issuer, Noteholders entitled to the money must look to the
Issuer for payment as general creditors unless an applicable abandoned property
law designates another Person.

 

Section 14.7. Base Servicing Fee.

The parties hereto acknowledge that PMC has the right to withdraw the Base
Servicing Fee with respect to any Portfolio Mortgage Loan out of collections it
receives with respect to such Portfolio Mortgage Loan.

 

Section 14.8. Owner Trustee Limitation of Liability.

It is expressly understood and agreed by the parties hereto that (a) this Base
Indenture is executed and delivered by Wilmington Savings Fund Society, FSB
(“WSFS”), not individually or personally but solely as trustee of the Issuer, in
the exercise of the powers and authority conferred and vested in it, (b) each of
the representations, warranties, undertakings and agreements herein made on the
part of the Issuer is made and intended not as personal representations,
warranties, undertakings and agreements by WSFS but is made and intended for the
purpose of binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on WSFS, individually or personally, to
perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto, (d) WSFS has made no
investigation as to the accuracy or completeness of any representations or
warranties made by the Issuer in this Base Indenture and (e) under no
circumstances shall WSFS be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Base Indenture or any other related documents.

 

124

--------------------------------------------------------------------------------

Section 14.9. Communications with Rating Agencies.

If the Servicer, the Administrative Agent or the Indenture Trustee shall receive
any written or oral communication from any Note Rating Agency (or any of the
respective officers, directors or employees of any Note Rating Agency) with
respect to the transactions contemplated hereby or under the Transaction
Documents or in any way relating to the Notes, the Servicer, the Administrative
Agent and the Indenture Trustee agree to refrain from communicating with such
Note Rating Agency and to promptly notify the Administrator of such
communication; provided, however, that if the Servicer, the Administrative Agent
or the Indenture Trustee receives an oral communication from a Note Rating
Agency, the Servicer, the Administrative Agent or the Indenture Trustee, as the
case may be, is authorized to refer such Note Rating Agency to the
Administrator, who will respond to such oral communication. At the written
request of the Administrator, the Servicer, the Administrative Agent and the
Indenture Trustee agree to cooperate with the Administrator to provide certain
information to the Administrator that may be reasonably required by a Note
Rating Agency to rate or to perform ratings surveillance on the Notes, and
acknowledge and agree that the Administrator shall be permitted, in turn, to
provide such information to the Note Rating Agencies via the internet address
identified therefor by the Administrator; provided, that the Servicer, the
Administrative Agent and the Indenture Trustee shall only be required to provide
such information that is reasonably available to such party at the time of
request. Notwithstanding any other provision of this Base Indenture or the other
Transaction Documents, under no circumstances shall the Servicer, the
Administrative Agent or the Indenture Trustee be required to participate in
telephone conversations or other oral communications with a Note Rating Agency,
nor shall the Servicer, the Administrative Agent or the Indenture Trustee be
prohibited from communicating with any nationally recognized statistical rating
organization about matters other than the Notes or the transactions contemplated
hereby or by the Transaction Documents. Furthermore, the Indenture Trustee may
make statements to Noteholders available on its website (as contemplated by
Section 3.5(a) hereof), and such action is not prohibited by this Section 14.9.

 

Section 14.10. Authorized Representatives.

Each individual designated as an authorized representative of the Indenture
Trustee, Calculation Agent, Paying Agent and Securities Intermediary, PMC, the
Administrative Agents and the Issuer (each, an “Authorized Representative”), is
authorized to give and receive notices, requests and instructions and to deliver
certificates and documents in connection with this Base Indenture on behalf of
each of the Indenture Trustee, Calculation Agent, Paying Agent, Securities
Intermediary, PMC, PLS, the Administrative Agents and the Issuer, respectively,
and the specimen signature for each such Authorized Representative of the
Indenture Trustee, Calculation Agent, Paying Agent, Securities Intermediary,
PMC, the Administrative Agents and the Issuer initially authorized hereunder is
set forth on Exhibits C-1, C-2, C-3 and C-4, respectively. From time to time,
the Indenture Trustee, the Calculation Agent, the Paying Agent, the Securities
Intermediary, PMC, PLS, the Administrative Agents and the Issuer may, by
delivering to the others a revised exhibit, change the information previously
given pursuant to this Section 14.10, but each of the parties hereto shall be
entitled to rely conclusively on the then current exhibit until receipt of a
superseding exhibit.

 

125

--------------------------------------------------------------------------------

Section 14.11. Performance of the Issuer’s Duties by the Owner Trustee and the
Administrator.

(a) The parties hereto hereby acknowledge and agree (i) that certain duties of
the Issuer will be performed on behalf of the Issuer by the Administrator
pursuant to the Administration Agreement and hereby acknowledge and accept the
terms of such agreement as of the date hereof and (ii) except as expressly set
forth herein, the Owner Trustee shall have no duty or obligation to perform the
obligations of the Issuer hereunder or to monitor the compliance of the Issuer
with the terms hereof.

(b) Any successor to the Owner Trustee appointed pursuant to the terms of the
Trust Agreement (or any corporation into which the Owner Trustee may be merged
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Owner Trustee shall be a party) shall be
the successor Owner Trustee under the Trust Agreement for purposes of this Base
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.

 

Section 14.12. Noteholder or Note Owner Communications with the Indenture
Trustee.

A Noteholder (if the Notes are represented by Definitive Notes) or a Note Owner
(if the Notes are represented by Book-Entry Notes) may communicate with the
Indenture Trustee and give notices and make requests and demands and give
directions to the Indenture Trustee through the procedures of the Depository and
by notifying the Indenture Trustee and providing to the Indenture Trustee a copy
of the communication such Noteholder or Note Owner, as applicable, proposes to
send. Any Note Owner must provide written certification stating that the Note
Owner is a beneficial owner of a Note, together with supporting documentation
such as a trade confirmation, an account statement, a letter from a broker or
dealer verifying ownership or another similar document evidencing ownership of a
Note. The Indenture Trustee will not be required to take action in response to
requests, demands or directions of a Noteholder or a Note Owner, unless the
Noteholder or Note Owner has offered reasonable security or indemnity reasonably
satisfactory to the Indenture Trustee to protect it against the fees and
expenses that it may incur in complying with the request, demand or direction.

[Signature Pages Follow]

 

126

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Base Indenture to be
duly executed as of the day and year first above written.

 

PMT ISSUER TRUST– FMSR, as Issuer By: Wilmington Savings Fund Society FSB, not
in its individual capacity but solely as Owner Trustee By:  

/s/ Jeffrey R. Everhart

Name:   Jeffrey R. Everhart Title:   Vice President

 

[PMT ISSUER TRUST - FMSR – Signature Page to Base Indenture]

--------------------------------------------------------------------------------

CITIBANK, N.A., as Indenture Trustee, Calculation Agent, Paying Agent and
Securities Intermediary and not in its individual capacity By:  

/s/ Valerie Delgado

Name:   Valerie Delgado Title:   Senior Trust Officer

 

[PMT ISSUER TRUST - FMSR – Signature Page to Base Indenture]

--------------------------------------------------------------------------------

PENNYMAC CORP.,

as Servicer and as Administrator

By:  

/s/ Pamela Marsh

Name:   Pamela Marsh Title:   Managing Director, Treasurer

 

[PMT ISSUER TRUST - FMSR – Signature Page to Base Indenture]

--------------------------------------------------------------------------------

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent By:  

/s/ Dominic Obaditch

Name:   Dominic Obaditch Title:   Vice President

 

[PMT ISSUER TRUST - FMSR – Signature Page to Base Indenture]

--------------------------------------------------------------------------------

Schedule 1

Participation Certificates Schedule

Participation Certificate, dated as of December 20, 2017, evidencing a
participation interest granted to the Indenture Trustee in the Retained MSR
Excess Spread, as more particularly described in the Retained Excess Spread
Participation Agreement (the “Retained MSR Excess Spread PC”).

Participation Certificate, dated as of December 20, 2017, evidencing a
participation interest granted to the Indenture Trustee in the Sold MSR Excess
Spread, as more particularly described in the Excess Spread Participation
Agreement (the “Sold MSR Excess Spread PC”).

 

Schedule 1-1

--------------------------------------------------------------------------------

Schedule 2

Participation Agreements Schedule

Third Amended and Restated Master Spread Acquisition and MSR Servicing
Agreement, dated as of December 20, 2017 between PennyMac Corp., as seller, and
PennyMac Holdings, LLC, as purchaser (the “Excess Spread Participation
Agreement”).

Retained MSR Excess Spread Participation Agreement, dated as of December 20,
2017 between PennyMac Corp., as company, and PennyMac Corp., as the Initial
Participant (the “Retained MSR Excess Spread Participation Agreement”).

 

Schedule 2-1

--------------------------------------------------------------------------------

Schedule 3

Eligible Securities Schedule

[To be provided electronically, if any]

 

Schedule 3-1

--------------------------------------------------------------------------------

Schedule 4

Required Information Regarding Mortgage Loans

[On file with the Administrative Agent]

 

Schedule 4-1

--------------------------------------------------------------------------------

Schedule 5

Wire Instructions

TRANSACTION PARTIES:

 

If to PennyMac Corp.: Name of Bank:    City National Bank ABA Number of Bank:   
***** Name of Account:    PennyMac Corp. Operating Account Account Number at
Bank:    ***** If to the Credit Suisse First Boston Mortgage Capital LLC, as
Administrative Agent: Name of Bank:    BNY Mellon ABA Number of Bank:    *****
Name of Account:    CSFB Mortgage Capital Account Number:    ***** If to the
Owner Trustee:    Name of Bank:    Wells Fargo Bank, N.A. ABA Number of Bank:   
***** Account Number at Bank:    ***** FFC:    CH129352-0 PMT Issuer Trust TRUST
ACCOUNTS: If to the Collection and Funding Account: Name of Bank:    Citibank,
N.A. ABA Number of Bank:    ***** Account Number at Bank:    ***** Account Name:
   SF Incoming Wire Account Ref:    A/C 119463 PMAC17FMSR COLLECTION AND FUNDING
AC If to the Note Payment Account: Name of Bank:    Citibank, N.A. ABA Number of
Bank:    ***** Account Number at Bank:    ***** Account Name:    SF Incoming
Wire Account Ref:    A/C 119464 PMAC17FMSR NOTE PAYMENT AC If to the Expense
Reserve Account: Name of Bank:    Citibank, N.A. ABA Number of Bank:    *****
Account Number at Bank:    *****

 

Schedule 5-1

--------------------------------------------------------------------------------

Account Name:    SF Incoming Wire Account Ref:    A/C 119466 PMAC17FMSR EXPENSE
RESERVE AC If to the Eligible Securities Account: Name of Bank:    Citibank,
N.A. ABA Number of Bank:    ***** Account Number at Bank:    ***** Account Name:
   SF Incoming Wire Account Ref:    A/C 119471 PMAC17FMSR Eligible Securities
Account

 

Schedule 5-2

--------------------------------------------------------------------------------

Exhibit A-1

FORM OF GLOBAL RULE 144A NOTE

 

Class [        ] Note    Initial Note Balance: $[        ]
Note Number: [            ]                                         [Maximum VFN
Principal Balance: $[        ] ] [or such lesser amount as contemplated by the
definition of Maximum VFN Principal Balance as set forth in the[Insert Series
Name] Indenture Supplement] [CUSIP No.:]    [ISIN No.:]   

THE OUTSTANDING NOTE BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
[MAXIMUM VFN PRINCIPAL BALANCE] [INITIAL NOTE BALANCE] SHOWN ON THE FACE HEREOF.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. THE ISSUER HAS NOT AGREED TO
REGISTER THE NOTES UNDER THE 1933 ACT, TO QUALIFY THE NOTES UNDER THE SECURITIES
LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY NOTEHOLDER.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE
REQUIREMENTS OF THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.

EACH HOLDER OF THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE DEEMED TO
REPRESENT THAT EITHER (I) IT IS NOT AND IS NOT ACQUIRING, HOLDING OR
TRANSFERRING THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN ON BEHALF OF, OR USING
THE ASSETS OF, ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE

 

--------------------------------------------------------------------------------

RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR ANY PLAN AS
DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), AN ENTITY THAT IS DEEMED TO HOLD THE ASSETS OF ANY SUCH EMPLOYEE
BENEFIT PLAN OR PLAN PURSUANT TO 29 CFR SECTION 2510.3-101 AS MODIFIED BY
SECTION 3(42) OF ERISA (THE “PLAN ASSET REGULATIONS”), WHICH EMPLOYEE BENEFIT
PLAN, PLAN OR ENTITY IS SUBJECT TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE
(EACH, A “PLAN”), OR A GOVERNMENTAL, NON-U.S. OR CHURCH PLAN THAT IS SUBJECT TO
ANY U.S. FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS SUBSTANTIALLY SIMILAR TO
TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (II)(A) AS OF
THE DATE OF PURCHASE OR TRANSFER, IT BELIEVES THAT THIS NOTE IS PROPERLY TREATED
AS INDEBTEDNESS WITHOUT SUBSTANTIAL EQUITY FEATURES FOR PURPOSES OF THE PLAN
ASSET REGULATIONS AND AGREES TO SO TREAT THIS NOTE AND (B) THE TRANSFEREE’S
ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR ANY BENEFICIAL INTEREST
HEREIN WILL SATISFY THE REQUIREMENTS OF PROHIBITED TRANSACTION CLASS EXEMPTION
(“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 OR THE STATUTORY
PROHIBITED TRANSACTION EXEMPTION FOR SERVICE PROVIDERS SET FORTH IN SECTION
408(b)(17) OF ERISA AND SECTION 4975(d)(20) OF THE CODE OR ANY SIMILAR CLASS OR
STATUTORY EXEMPTION AND WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR, IN THE CASE OF A
GOVERNMENTAL, NON-U.S. OR CHURCH PLAN SUBJECT TO SIMILAR LAW, WILL NOT VIOLATE
ANY SIMILAR LAW.

THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET
FORTH IN SECTION 6.5 OF THE BASE INDENTURE AND SECTION [ ] OF THE RELATED
INDENTURE SUPPLEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE ISSUER UPON REQUEST). EACH TRANSFEREE OF THIS NOTE SHALL
PROVIDE THE NOTE REGISTRAR AND THE ISSUER THE CERTIFICATION REQUIRED BY SECTION
6.5(i) OF THE BASE INDENTURE AND THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN MAY
BE TRANSFERRED IN AN OFF-SHORE TRANSACTION AS DEFINED IN REGULATION S OF THE
1933 ACT TO A PERSON WHO IS NOT ANY TIME A U.S. PERSON AS DEFINED BY REGULATION
S OF THE 1933 ACT AND WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN A
REGULATION S NOTE OR (IN CERTAIN LIMITED CIRCUMSTANCES) A DEFINITIVE NOTE ONLY
(IN THE CASE OF AN INTEREST IN A REGULATION S GLOBAL NOTE) IN ACCORDANCE WITH
THE PROCEDURES SET FORTH IN SECTION 6.5 OF THE BASE INDENTURE AND (IN THE CASE
OF A DEFINITIVE NOTE) UPON RECEIPT BY THE NOTE REGISTRAR AND INDENTURE TRUSTEE
OF SUCH CERTIFICATION. PRIOR TO PURCHASING THIS NOTE, PROSPECTIVE PURCHASERS
SHOULD CONSULT WITH COUNSEL WITH RESPECT TO THE AVAILABILITY AND CONDITIONS OF
EXEMPTIONS FROM THE RESTRICTIONS ON RESALE OR TRANSFER.

 

Exhibit A-1-2

--------------------------------------------------------------------------------

THIS NOTE IS A LIMITED RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED TO
RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE. THE ISSUER IS NOT PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE. THIS
NOTE DOES NOT EVIDENCE AN OBLIGATION OF OR AN INTEREST IN, AND IS NOT GUARANTEED
BY, THE SERVICER, THE INDENTURE TRUSTEE (IN ALL ITS CAPACITIES), THE
ADMINISTRATOR OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”) TO THE NOTE REGISTRAR FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

Exhibit A-1-3

--------------------------------------------------------------------------------

PMT ISSUER TRUST—FMSR

MSR COLLATERALIZED NOTES, SERIES [     ]

CLASS [        ] NOTE

PMT ISSUER TRUST—FMSR, a Delaware statutory trust (the “Issuer”), for value
received, hereby promises to pay to [                        ], or registered
assigns (the “Noteholder”), [interest, fees and principal as provided in the
Indenture] [the principal sum of [                    ] $[                    ],
or such part thereof as may be advanced and outstanding hereunder and to pay
interest on such principal sum or such part thereof as shall remain unpaid from
time to time, at the rate and at the times provided in the Indenture].

Principal of this Note is payable on each applicable [Interim Payment Date and]
Payment Date as set forth in Section[s] [4.4] and 4.5 of the Base Indenture and
Section [ ] of the [Series Name] Indenture Supplement. The Outstanding Note
Balance of this Note bears interest at the applicable Note Interest Rate as set
forth in the Indenture. On each applicable [Interim Payment Date and] Payment
Date, in accordance with the terms and provisions of the Indenture, interest on
this Note will be paid as set forth in Section[s] [4.4] and 4.5 of the Base
Indenture and Section [ ] of the [Series Name] Indenture Supplement.

Capitalized terms used but not defined herein have the meanings set forth in the
Base Indenture (as may be amended, restated, supplemented or otherwise modified
from time to time, the “Base Indenture”), dated as of December [20], 2017, among
the Issuer, Citibank, N.A. (“Citibank”), as Indenture Trustee (the “Indenture
Trustee”), Calculation Agent (the “Calculation Agent”), Paying Agent (the
“Paying Agent”) and Securities Intermediary (the “Securities Intermediary”),
PennyMac Corp. (“PMC”), as Administrator (the “Administrator”) and as Servicer
(the “Servicer”) and Credit Suisse First Boston Mortgage Capital LLC (“CSFB”),
as Administrative Agent (the “Administrative Agent”), and an Indenture
Supplement (as may be amended, restated, supplemented or otherwise modified from
time to time, the “[Insert Series Name] Indenture Supplement” and together with
the Base Indenture, the “Indenture”), dated as of [            ], 20[    ], by
and among [insert parties to Indenture Supplement].

[In the event of a VFN Principal Balance increase funded by the Noteholders, the
Noteholder of this Note shall, and is hereby authorized to, record on the
schedule attached to this Note the date and amount of any VFN Principal Balance
increase funded by it, and each repayment thereof; provided, that failure to
make any such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to the VFN Principal
Balance and its right to receive interest payments in respect thereof.]

[By its acceptance of this Note, each Noteholder covenants and agrees, until the
termination of the Revolving Period, on each Funding Date or each Limited
Funding Date to advance amounts in respect of any VFN Principal Balance increase
hereunder to the Issuer, subject to and in accordance with the terms of the
Indenture.]

 

Exhibit A-1-4

--------------------------------------------------------------------------------

[In the event of a payment of all or a portion of the Note Balance of this Note,
in accordance with the terms and provisions of the Indenture, the Noteholder
thereof shall, and is hereby authorized to, record on the schedule attached to
this Note the date and amount of the Outstanding Note Balance of this Note
following such payment.]

Absent manifest error, the [Note] [VFN Principal] Balance of each Note as set
forth in the notations made by the related Noteholder on such Note shall be
binding upon the Indenture Trustee, the Note Registrar and the Issuer; provided,
that failure by a Noteholder to make such recordation on its Note or any error
in such notation shall not adversely affect any Noteholder’s rights with respect
to the [Note] [VFN Principal] Balance of its Note and such Noteholder’s right to
receive payments in respect of principal and interest in respect thereof.

Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

The statements in the legend set forth above are an integral part of the terms
of this Note and by acceptance hereof each Holder of this Note agrees to be
subject to and bound by the terms and provisions set forth in such legend.

This Note is a Rule 144A Global Note deposited with DTC acting as Depository,
and registered in the name of Cede & Co., a nominee of DTC, and Cede & Co., as
holder of record of this Note, shall be entitled to receive payments of
principal and interest, other than principal and interest due at the maturity
date, by wire transfer of immediately available funds.

The statements in the legend relating to DTC set forth above are an integral
part of the terms of this Note and by acceptance thereof each holder of this
Note agrees to be subject to and bound by the terms and provisions set forth in
such legend, if any.

Unless the certificate of authentication hereon shall have been executed by an
Authorized Signatory of the Indenture Trustee and, if an Authenticating Agent
has been appointed by the Indenture Trustee pursuant to Section 11.12 of the
Base Indenture, by manual signature of such Authenticating Agent, this Note
shall not entitle the Noteholder hereof to any benefit under the Indenture
and/or be valid for any purpose.

THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR
IN CONNECTION WITH THIS NOTE, THE RELATIONSHIP OF THE PARTIES HEREUNDER, AND/OR
THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES
HEREUNDER WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Exhibit A-1-5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
or in facsimile, by an Issuer Authorized Officer, as of the date set forth
below.

Date: [                ], 20[        ]

 

PMT ISSUER TRUST—FMSR, as Issuer By: Wilmington Savings Fund Society, FSB, not
in its individual capacity but solely as Owner Trustee By:  

 

  Issuer Authorized Officer

 

Exhibit A-1-6

--------------------------------------------------------------------------------

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Indenture Trustee     By:  

 

    Title:   Authorized Signatory of Indenture Trustee

AUTHENTICATING AGENT’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Authenticating Agent     By:  

 

    Title:   Authorized Signatory of Authenticating Agent

 

Exhibit A-1-7

--------------------------------------------------------------------------------

[REVERSE OF NOTE]

This Note is one of the duly authorized Class [    ] Notes of the Issuer,
designated as its PMT ISSUER TRUST—FMSR MSR Collateralized Notes, Series [    ],
Class [    ] (herein called the “Class [    ] Notes”), all issued under the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary
and the Holders of the Notes. To the extent that any provision of this Note
contradicts or is inconsistent with the provisions of the Indenture, the
provisions of the Indenture shall control and supersede such contradictory or
inconsistent provision herein. The Notes are subject to all terms of the
Indenture.

The payments on the Class [    ] Notes are [senior to the Class [    ] Notes,
the Class [    ] Notes and the Class [    ] Notes][, and subordinate to the
Class [    ] Notes, the Class [    ] Notes and the Class [    ] Notes], as and
to the extent provided in the Indenture.

The principal of and interest and fees on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied in accordance with the Indenture.

The entire unpaid principal amount and all accrued and unpaid interest and fees
of this Note shall be due and payable on the earlier of (i) any Redemption
Payment Date as set forth in Section 13.1 of the Base Indenture [or in Section [
] of the [Series Name] Indenture Supplement] and (ii) the Stated Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount and all
accrued and unpaid interest of the Notes shall be immediately due and payable on
the date on which an Event of Default of the kind specified in clauses (b), (c)
or (q) of Section 8.1 of the Base Indenture occurs, and, if any other Event of
Default occurs and is continuing, then and in each and every such case, either
the Indenture Trustee or the requisite percentage of Noteholders of each Series,
by notice in writing to the Issuer (and to the Indenture Trustee if given by the
Holders), may declare all Notes to be immediately due and payable in the manner
provided in the Indenture. All applicable principal payments on the Notes shall
be made to the Holders of the Notes entitled thereto in accordance with the
terms of the Indenture.

The Trust Estate secures this Class [    ] Note and all other Class [    ] Notes
equally and ratably without prejudice, priority or distinction between any Class
[    ] Note and any other Class [    ] Note. The Notes are limited recourse
obligations of the Issuer and are limited in right of payment to amounts
available from the Trust Estate, as provided in the Indenture. The Issuer shall
not otherwise be liable for payments on the Notes, and none of the owners,
agents, officers, directors, employees, or successors or assigns of the Issuer
shall be personally liable for any amounts payable, or performance due, under
the Notes or the Indenture.

Any payment of interest or principal on this Note shall be paid on the
applicable [Interim Payment Date and] Payment Date as set forth in the Indenture
to the Person in whose name this Note (or one or more predecessor Notes) is
registered in the Note Register as of the close of business on the related
Record Date by wire transfer in immediately available funds to the account
specified in writing by the related Noteholder to the extent provided by the
Indenture and otherwise by check mailed to the Noteholder.

 

Exhibit A-1-8

--------------------------------------------------------------------------------

[Any reduction in the Note Balance of this Note (or any one or more predecessor
Notes) effected by any payments made on any applicable [Interim Payment Date
and] Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon.]

[Any reduction in the Maximum VFN Principal Balance or the VFN Principal
Balance, as the case may be, of this Class [    ] Note (or any one or more
predecessor Notes) effected by any payments made with respect thereto or
otherwise pursuant to the terms of the Indenture shall be binding upon all
future Holders of this Class [    ] Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. Any VFN Principal Balance increase of this Class [    ]
Note (or any one or more predecessor Notes) effected by payments to the Issuer
shall be binding upon the Issuer and shall inure to the benefit of all future
Holders of this Class [    ] Note and of any Note issued upon the registration
of transfer hereof or exchange hereof or in lieu hereof, whether or not noted
hereon.]

As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in the form attached hereto duly
executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Securities Transfer Agent’s Medallion Program
(“STAMP”), and thereupon one or more new Notes of authorized denominations and
in the same [aggregate principal amount] [VFN Principal Balance] will be issued
to the designated transferee or transferees. No service charge will be charged
for any registration of transfer or exchange of this Note, but the Issuer may
require the Noteholder to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

Each Noteholder, by acceptance of a Note or a beneficial ownership interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or Owner
Trustee in their individual capacities, (ii) any owner of a beneficial ownership
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or “control person” within the meaning of the 1933 Act and
the Securities Exchange Act of 1934, as amended, of the Indenture Trustee or
Owner Trustee in its individual capacity, any holder of a beneficial ownership
interest in the Issuer or the Indenture Trustee or Owner Trustee or of any
successor or assign of the Indenture Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.

 

Exhibit A-1-9

--------------------------------------------------------------------------------

Each Noteholder, by accepting a Note and each Note Owner by accepting a Note or
a beneficial interest in a Note agrees that it will not at any time prior to the
date which is one year and one day, or, if longer, the applicable preference
period then in effect, after the payment in full of all the Notes, institute
against the Issuer, or join in any institution against the Issuer of, any
receivership, insolvency, bankruptcy or other similar proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes and this Indenture.

The Issuer has entered into the Indenture and this Note is issued with the
intention that, for United States federal, state and local income and franchise
tax purposes, the Notes will qualify as indebtedness secured by the Collateral.
Each Noteholder, by its acceptance of a Note, and each purchaser of a beneficial
interest therein, by accepting such beneficial interest, agrees to treat such
Notes as debt for United States federal, state and local income and franchise
tax purposes, unless otherwise required by Applicable Law in a proceeding of
final determination.

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer or other parties thereto and the rights of the Holders of the Notes under
the Indenture at any time pursuant to the terms and provisions of Article XII of
the Base Indenture and Section [ ] of the [Series Name] Indenture Supplement.
The Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Notes or a particular
Class of Notes, on behalf of all of the Noteholders, or the Administrative
Agent, as applicable, to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note (or any one
or more predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of any Noteholder.

The term “Issuer” as used in this Note includes any successor to the Issuer
under the Indenture.

Notwithstanding any other provisions herein or in the Indenture, a Holder of
this Note will have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on this Note on the Stated Maturity
Date and to institute suit for the enforcement of any such payment, and such
right will not be impaired without the consent of the Holder; provided, however,
that notwithstanding any other provision of the Indenture to the contrary, the
obligation to pay principal of or interest on this Note or any other amount
payable to the Holder

 

Exhibit A-1-10

--------------------------------------------------------------------------------

will be without recourse to the Administrator, the Servicer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary or
any Affiliate (other than the Issuer), officer, employee or director of any of
them, and the obligation of the Issuer to pay principal of or interest on this
Note or any other amount payable to the Holder will be limited to amounts
available from the Trust Estate and subject to the priority of payment set forth
in the Indenture.

Notwithstanding any other terms of the Indenture or this Note, the obligations
of the Issuer hereunder are limited recourse obligations of the Issuer, payable
solely from the Trust Estate, and following realization of the Trust Estate and
application of the proceeds thereof in accordance with the terms of the
Indenture, the Holder hereof shall not be entitled to take any further steps to
recover any sums due but still unpaid hereunder or thereunder, all claims in
respect of which shall be extinguished and shall not thereafter revive. No
Holder of this Note shall have recourse for the payment of any amount owing in
respect of this Note or the Indenture or for any action or inaction of the
Issuer against any officer, director, employee, shareholder, stockholder or
incorporator of the Issuer or any of their successors or assigns for any amounts
payable under this Note or the Indenture. The foregoing provisions of this Note
shall not (i) prevent recourse to the Trust Estate for the sums due or to become
due under any security, instrument or agreement which is part of the Trust
Estate, (ii) save as specifically provided therein, constitute a waiver, release
or discharge of any indebtedness or obligation evidenced by this Note or secured
by the Indenture, or (iii) limit the right of any Person, to name the Issuer as
a party defendant in any proceeding or in the exercise of any other remedy under
this Note or the Indenture, so long as no judgment in the nature of a deficiency
judgment or seeking personal liability shall be asked for or (if obtained)
enforced against any such Person or entity.

 

Exhibit A-1-11

--------------------------------------------------------------------------------

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:
___________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
                                         
                                         
                                         
                                                                      

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, ___________________ attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.

Dated: _________________     

Signature Guaranteed:

_________________*/

*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an “eligible guarantor institution” meeting the
requirements of STAMP.

 

Exhibit A-1-12

--------------------------------------------------------------------------------

Schedule to Series [     ], Class [    ] Note

dated as of [            ], 20[    ]

of PMT ISSUER TRUST—FMSR

 

[Interim Payment

Date]

[Payment Date]

[Payment Date of

Additional Note

Balance/Decrease

Note Balance

 

Aggregate

Amount of

[principal

payment]

[Funding of

VFN Principal

Balance

Increase] on

Class [    ] Notes

 

[Percentage

Interest in]

Aggregate Note

Balance of the

Class [    ] Notes

following

[advance/]

payment

 

[Percentage of
Interest in]

Aggregate Note

Balance of this

Class [    ] Note

following

[advance/]

payment

 

Note Balance of

Note following

[advance/]

payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-1-13

--------------------------------------------------------------------------------

Exhibit A-2

FORM OF DEFINITIVE NOTE RULE 144A

 

Class [        ] Note    Initial Note
Balance:                        $[        ]
Note Number: [            ]                                     [Maximum VFN
Principal Balance: $[            ] ] [or such lesser amount as contemplated by
the definition of Maximum VFN Principal Balance as set forth in the[Insert
Series Name] Indenture Supplement] [CUSIP No.:]    [ISIN No.:]   

THE OUTSTANDING NOTE BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
[MAXIMUM VFN PRINCIPAL BALANCE] [INITIAL NOTE BALANCE] SHOWN ON THE FACE HEREOF.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. THE ISSUER HAS NOT AGREED TO
REGISTER THE NOTES UNDER THE 1933 ACT, TO QUALIFY THE NOTES UNDER THE SECURITIES
LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY NOTEHOLDER.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON THAT
IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE 1933 ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, OR (C) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF THE
INDENTURE AND APPLICABLE STATE SECURITIES LAWS.

EACH HOLDER OF THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL DELIVER TO THE
INDENTURE TRUSTEE AND THE NOTE REGISTRAR A CERTIFICATION TO THE EFFECT THAT
EITHER (I) IT IS NOT AND IS NOT ACQUIRING, HOLDING OR TRANSFERRING THIS NOTE OR
ANY BENEFICIAL INTEREST HEREIN ON BEHALF OF, OR USING THE ASSETS OF, (I) ANY

 

Exhibit A-2-1

--------------------------------------------------------------------------------

“EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR ANY PLAN AS DEFINED IN
SECTION 4975(e)(1) OF THE CODE, AN ENTITY THAT IS DEEMED TO HOLD THE ASSETS OF
ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN PURSUANT TO 29 CFR SECTION 2510.3-101 AS
MODIFIED BY SECTION 3(42) OF ERISA (THE “PLAN ASSET REGULATIONS”), WHICH
EMPLOYEE BENEFIT PLAN, PLAN OR ENTITY IS SUBJECT TO TITLE I OF ERISA OR SECTION
4975 OF THE CODE (EACH, A “PLAN”), OR A GOVERNMENTAL, NON-U.S. OR CHURCH PLAN
THAT IS SUBJECT TO ANY U.S. FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS
SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR
LAW”) OR (II)(A) AS OF THE DATE OF PURCHASE OR TRANSFER, IT BELIEVES THAT THIS
NOTE IS PROPERLY TREATED AS INDEBTEDNESS WITHOUT SUBSTANTIAL EQUITY FEATURES FOR
PURPOSES OF THE PLAN ASSET REGULATIONS AND AGREES TO SO TREAT THIS NOTE AND
(B) THE TRANSFEREE’S ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR ANY
BENEFICIAL INTEREST HEREIN WILL SATISFY THE REQUIREMENTS OF PROHIBITED
TRANSACTION CLASS EXEMPTION (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60,
PTCE 96-23 OR THE STATUTORY PROHIBITED TRANSACTION EXEMPTION FOR SERVICE
PROVIDERS SET FORTH IN SECTION 408(b)(17) OF ERISA AND SECTION 4975(d)(20) OF
THE CODE OR ANY SIMILAR CLASS OR STATUTORY EXEMPTION AND WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S. OR CHURCH PLAN SUBJECT TO
SIMILAR LAW, WILL NOT VIOLATE ANY SIMILAR LAW.

THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET
FORTH IN SECTION 6.5 OF THE BASE INDENTURE AND SECTION [ ] OF THE RELATED
INDENTURE SUPPLEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE ISSUER UPON REQUEST). EACH TRANSFEREE OF THIS NOTE SHALL
PROVIDE THE NOTE REGISTRAR AND THE ISSUER THE CERTIFICATION[S] REQUIRED BY
SECTION 6.5(j) OF THE BASE INDENTURE AND THIS NOTE MAY BE TRANSFERRED ONLY UPON
RECEIPT BY THE NOTE REGISTRAR AND INDENTURE TRUSTEE OF SUCH CERTIFICATION. PRIOR
TO PURCHASING THIS NOTE, PROSPECTIVE PURCHASERS SHOULD CONSULT WITH COUNSEL WITH
RESPECT TO THE AVAILABILITY AND CONDITIONS OF EXEMPTIONS FROM THE RESTRICTIONS
ON RESALE OR TRANSFER.

THIS NOTE IS A LIMITED RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED TO
RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE. THE ISSUER IS NOT PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE. THIS
NOTE DOES NOT EVIDENCE AN OBLIGATION OF OR AN INTEREST IN, AND IS NOT GUARANTEED
BY, THE SERVICER, THE INDENTURE TRUSTEE (IN ALL ITS CAPACITIES), THE
ADMINISTRATOR OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.

 

Exhibit A-2-2

--------------------------------------------------------------------------------

PMT ISSUER TRUST—FMSR

MSR COLLATERALIZED NOTES, SERIES [     ]

CLASS [        ] NOTE

PMT ISSUER TRUST—FMSR, a Delaware statutory trust (the “Issuer”), for value
received, hereby promises to pay to [                        ], or registered
assigns (the “Noteholder”), [interest, fees and principal as provided in the
Indenture] [the principal sum of [                ] $[                ], or such
part thereof as may be advanced and outstanding hereunder and to pay interest on
such principal sum or such part thereof as shall remain unpaid from time to
time, at the rate and at the times provided in the Indenture].

Principal of this Note is payable on each applicable [Interim Payment Date and]
Payment Date as set forth in Section[s] [4.4] and 4.5 of the Base Indenture and
Section [ ] of the [Series Name] Indenture Supplement. The Outstanding Note
Balance of this Note bears interest at the applicable Note Interest Rate as set
forth in the Indenture. On each applicable [Interim Payment Date and] Payment
Date, in accordance with the terms and provisions of the Indenture, interest on
this Note will be paid as set forth in Section[s] [4.4] and 4.5 of the Base
Indenture and Section [ ] of the [Series Name] Indenture Supplement.

Capitalized terms used but not defined herein have the meanings set forth in the
Base Indenture (as may be amended, restated, supplemented or otherwise modified
from time to time, the “Base Indenture”), dated as of December [20], 2017, among
the Issuer, Citibank, N.A. (“Citibank”), as Indenture Trustee (the “Indenture
Trustee”), Calculation Agent (the “Calculation Agent”), Paying Agent (the
“Paying Agent”) and Securities Intermediary (the “Securities Intermediary”),
PennyMac Corp. (“PMC”), as Administrator (the “Administrator”) and as Servicer
(the “Servicer”) and Credit Suisse First Boston Mortgage Capital LLC (“CSFB”),
as Administrative Agent (the “Administrative Agent”), and an Indenture
Supplement (as may be amended, restated, supplemented or otherwise modified from
time to time, the “[Insert Series Name] Indenture Supplement” and together with
the Base Indenture, the “Indenture”), dated as of [            ], 20[        ],
by and among [insert parties to Indenture Supplement].

[In the event of a VFN Principal Balance increase funded by the Noteholders, the
Noteholder of this Note shall, and is hereby authorized to, record on the
schedule attached to this Note the date and amount of any VFN Principal Balance
increase funded by it, and each repayment thereof; provided, that failure to
make any such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to the VFN Principal
Balance and its right to receive interest payments in respect thereof.]

[By its acceptance of this Note, each Noteholder covenants and agrees, until the
termination of the Revolving Period, on each Funding Date or each Limited
Funding Date to advance amounts in respect of any VFN Principal Balance increase
hereunder to the Issuer, subject to and in accordance with the terms of the
Indenture.]

[In the event of a payment of all or a portion of the Note Balance of this Note,
in accordance with the terms and provisions of the Indenture, the Noteholder
thereof shall, and is hereby authorized to, record on the schedule attached to
this Note the date and amount of the Outstanding Note Balance of this Note
following such payment.]

 

Exhibit A-2-3

--------------------------------------------------------------------------------

Absent manifest error, the [Note] [VFN Principal] Balance of each Note as set
forth in the notations made by the related Noteholder on such Note shall be
binding upon the Indenture Trustee, the Note Registrar and the Issuer; provided,
that failure by a Noteholder to make such recordation on its Note or any error
in such notation shall not adversely affect any Noteholder’s rights with respect
to the [Note] [VFN Principal] Balance of its Note and such Noteholder’s right to
receive payments in respect of principal and interest in respect thereof.

Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

The statements in the legend set forth above are an integral part of the terms
of this Note and by acceptance hereof each Holder of this Note agrees to be
subject to and bound by the terms and provisions set forth in such legend.

Unless the certificate of authentication hereon shall have been executed by an
Authorized Signatory of the Indenture Trustee and, if an Authenticating Agent
has been appointed by the Indenture Trustee pursuant to Section 11.12 of the
Base Indenture, by manual signature of such Authenticating Agent, this Note
shall not entitle the Noteholder hereof to any benefit under the Indenture
and/or be valid for any purpose.

THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR
IN CONNECTION WITH THIS NOTE, THE RELATIONSHIP OF THE PARTIES HEREUNDER, AND/OR
THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES
HEREUNDER WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Exhibit A-2-4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
or in facsimile, by an Issuer Authorized Officer, as of the date set forth
below.

Date: [            ], 20[        ]

 

PMT ISSUER TRUST - FMSR, as Issuer By: Wilmington Savings Fund Society, FSB, not
in its individual capacity but solely as Owner Trustee By:  

 

  Issuer Authorized Officer

 

Exhibit A-2-5

--------------------------------------------------------------------------------

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Indenture Trustee     By:  

 

    Title:   Authorized Signatory of Indenture Trustee

AUTHENTICATING AGENT’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Authenticating Agent     By:  

 

    Title:   Authorized Signatory of Authenticating Agent

 

Exhibit A-2-6

--------------------------------------------------------------------------------

[REVERSE OF NOTE]

This Note is one of the duly authorized Class [    ] Notes of the Issuer,
designated as its PMT ISSUER TRUST—FMSR MSR Collateralized Notes, Series [    ],
Class [    ] (herein called the “Class [    ] Notes”), all issued under the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary
and the Holders of the Notes. To the extent that any provision of this Note
contradicts or is inconsistent with the provisions of the Indenture, the
provisions of the Indenture shall control and supersede such contradictory or
inconsistent provision herein. The Notes are subject to all terms of the
Indenture.

The payments on the Class [    ] Notes are [senior to the Class [    ] Notes,
the Class [    ] Notes and the Class [    ] Notes][, and subordinate to the
Class [    ] Notes, the Class [    ] Notes and the Class [    ] Notes], as and
to the extent provided in the Indenture.

The principal of and interest and fees on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied in accordance with the Indenture.

The entire unpaid principal amount and all accrued and unpaid interest and fees
of this Note shall be due and payable on the earlier of (i) any Redemption
Payment Date as set forth in Section 13.1 of the Base Indenture [or in Section [
] of the [Series Name] Indenture Supplement] and (ii) the Stated Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount and all
accrued and unpaid interest of the Notes shall be immediately due and payable on
the date on which an Event of Default of the kind specified in clauses (b), (c)
or (q) of Section 8.1 of the Base Indenture occurs, and, if any other Event of
Default occurs and is continuing, then and in each and every such case, either
the Indenture Trustee or the requisite percentage of Noteholders of each Series,
by notice in writing to the Issuer (and to the Indenture Trustee if given by the
Holders), may declare all Notes to be immediately due and payable in the manner
provided in the Indenture. All applicable principal payments on the Notes shall
be made to the Holders of the Notes entitled thereto in accordance with the
terms of the Indenture.

The Trust Estate secures this Class [    ] Note and all other Class [    ] Notes
equally and ratably without prejudice, priority or distinction between any Class
[    ] Note and any other Class [    ] Note. The Notes are limited recourse
obligations of the Issuer and are limited in right of payment to amounts
available from the Trust Estate, as provided in the Indenture. The Issuer shall
not otherwise be liable for payments on the Notes, and none of the owners,
agents, officers, directors, employees, or successors or assigns of the Issuer
shall be personally liable for any amounts payable, or performance due, under
the Notes or the Indenture.

Any payment of interest or principal on this Note shall be paid on the
applicable [Interim Payment Date and] Payment Date as set forth in the Indenture
to the Person in whose name this Note (or one or more predecessor Notes) is
registered in the Note Register as of the close of business on the related
Record Date by wire transfer in immediately available funds to the account
specified in writing by the related Noteholder to the extent provided by the
Indenture and otherwise by check mailed to the Noteholder.

 

Exhibit A-2-7

--------------------------------------------------------------------------------

[Any reduction in the Note Balance of this Note (or any one or more predecessor
Notes) effected by any payments made on any applicable [Interim Payment Date
and] Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon.]

[Any reduction in the Maximum VFN Principal Balance or the VFN Principal
Balance, as the case may be, of this Class [     ] Note (or any one or more
predecessor Notes) effected by any payments made with respect thereto or
otherwise pursuant to the terms of the Indenture shall be binding upon all
future Holders of this Class [     ] Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. Any VFN Principal Balance increase of this Class [     ]
Note (or any one or more predecessor Notes) effected by payments to the Issuer
shall be binding upon the Issuer and shall inure to the benefit of all future
Holders of this Class [     ] Note and of any Note issued upon the registration
of transfer hereof or exchange hereof or in lieu hereof, whether or not noted
hereon.]

As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in the form attached hereto duly
executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Securities Transfer Agent’s Medallion Program
(“STAMP”), and thereupon one or more new Notes of authorized denominations and
in the same [aggregate principal amount] [VFN Principal Balance] will be issued
to the designated transferee or transferees. No service charge will be charged
for any registration of transfer or exchange of this Note, but the Issuer may
require the Noteholder to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

Each Noteholder, by acceptance of a Note or a beneficial ownership interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or Owner
Trustee in their individual capacities, (ii) any owner of a beneficial ownership
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or “control person” within the meaning of the 1933 Act and
the Securities Exchange Act of 1934, as amended, of the Indenture Trustee or
Owner Trustee in its individual capacity, any holder of a beneficial ownership
interest in the Issuer or the Indenture Trustee or Owner Trustee or of any
successor or assign of the Indenture Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.

 

Exhibit A-2-8

--------------------------------------------------------------------------------

Each Noteholder, by accepting a Note and each Note Owner by accepting a Note or
a beneficial interest in a Note agrees that it will not at any time prior to the
date which is one year and one day, or, if longer, the applicable preference
period then in effect, after the payment in full of all the Notes, institute
against the Issuer, or join in any institution against the Issuer of, any
receivership, insolvency, bankruptcy or other similar proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes and this Indenture

The Issuer has entered into the Indenture and this Note is issued with the
intention that, for United States federal, state and local income and franchise
tax purposes, the Notes will qualify as indebtedness secured by the Collateral.
Each Noteholder, by its acceptance of a Note, and each purchaser of a beneficial
interest therein, by accepting such beneficial interest, agrees to treat such
Notes as debt for United States federal, state and local income and franchise
tax purposes, unless otherwise required by Applicable Law in a proceeding of
final determination.

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer or other parties thereto and the rights of the Holders of the Notes under
the Indenture at any time pursuant to the terms and provisions of Article XII of
the Base Indenture and Section [     ] of the [Series Name] Indenture
Supplement. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Notes or a
particular Class of Notes, on behalf of all of the Noteholders, or the
Administrative Agent, as applicable, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of any Noteholder.

The term “Issuer” as used in this Note includes any successor to the Issuer
under the Indenture.

This Note is issuable only in definitive form in denominations as provided in
the [Series Name] Indenture Supplement, subject to certain limitations therein
set forth.

 

Exhibit A-2-9

--------------------------------------------------------------------------------

Notwithstanding any other provisions herein or in the Indenture, a Holder of
this Note will have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on this Note on the Stated Maturity
Date and to institute suit for the enforcement of any such payment, and such
right will not be impaired without the consent of the Holder; provided, however,
that notwithstanding any other provision of the Indenture to the contrary, the
obligation to pay principal of or interest on this Note or any other amount
payable to the Holder will be without recourse to the Administrator, the
Servicer, the Indenture Trustee, the Calculation Agent, the Paying Agent, the
Securities Intermediary or any Affiliate (other than the Issuer), officer,
employee or director of any of them, and the obligation of the Issuer to pay
principal of or interest on this Note or any other amount payable to the Holder
will be limited to amounts available from the Trust Estate and subject to the
priority of payment set forth in the Indenture.

Notwithstanding any other terms of the Indenture or this Note, the obligations
of the Issuer hereunder are limited recourse obligations of the Issuer, payable
solely from the Trust Estate, and following realization of the Trust Estate and
application of the proceeds thereof in accordance with the terms of the
Indenture, the Holder hereof shall not be entitled to take any further steps to
recover any sums due but still unpaid hereunder or thereunder, all claims in
respect of which shall be extinguished and shall not thereafter revive. No
Holder of this Note shall have recourse for the payment of any amount owing in
respect of this Note or the Indenture or for any action or inaction of the
Issuer against any officer, director, employee, shareholder, stockholder or
incorporator of the Issuer or any of their successors or assigns for any amounts
payable under this Note or the Indenture. The foregoing provisions of this Note
shall not (i) prevent recourse to the Trust Estate for the sums due or to become
due under any security, instrument or agreement which is part of the Trust
Estate, (ii) save as specifically provided therein, constitute a waiver, release
or discharge of any indebtedness or obligation evidenced by this Note or secured
by the Indenture, or (iii) limit the right of any Person, to name the Issuer as
a party defendant in any proceeding or in the exercise of any other remedy under
this Note or the Indenture, so long as no judgment in the nature of a deficiency
judgment or seeking personal liability shall be asked for or (if obtained)
enforced against any such Person or entity.

 

Exhibit A-2-10

--------------------------------------------------------------------------------

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:
___________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
                                         
                                         
                                         
                                         
                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, ___________________ attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.

Dated: _________________     

Signature Guaranteed:

_________________*/

*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an “eligible guarantor institution” meeting the
requirements of STAMP.

 

Exhibit A-2-11

--------------------------------------------------------------------------------

Schedule to Series [    ], Class [    ] Note

dated as of [            ], 20[    ]

of PMT ISSUER TRUST—FMSR

 

[Interim Payment

Date]

[Payment Date]

[Payment Date of

Additional Note

Balance/Decrease

Note Balance

 

Aggregate

Amount of

[principal

payment]

[Funding of

VFN Principal

Balance

Increase] on

Class [    ] Notes

 

[Percentage

Interest in]

Aggregate Note

Balance of the

Class [    ] Notes

following

[advance/]

payment

 

[Percentage of
Interest in]

Aggregate Note

Balance of this

Class [    ] Note

following

[advance/]

payment

 

Note Balance of

Note following

[advance/]

payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-2-12

--------------------------------------------------------------------------------

Exhibit A-3

FORM OF GLOBAL REGULATION S NOTE

 

Class [        ] Note    Initial Note Balance: $[            ]
Note Number: [            ]                             [Maximum VFN Principal
Balance: $[            ] ] [or such lesser amount as contemplated by the
definition of Maximum VFN Principal Balance as set forth in the[Insert Series
Name] Indenture Supplement] [CUSIP No.:]    [ISIN No.:]   

THE OUTSTANDING NOTE BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
INITIAL NOTE BALANCE SHOWN ON THE FACE HEREOF.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. THE ISSUER HAS NOT AGREED TO
REGISTER THE NOTES UNDER THE 1933 ACT, TO QUALIFY THE NOTES UNDER THE SECURITIES
LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY NOTEHOLDER.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) PURSUANT TO REGULATION S OF
THE 1933 ACT IN AN OFF-SHORE TRANSACTION AS DEFINED IN REGULATION S OF THE 1933
ACT TO A PERSON THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S OF THE 1933
ACT OR (C) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT,
IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF THE INDENTURE AND APPLICABLE
STATE SECURITIES LAWS.

EACH HOLDER OF THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE DEEMED TO
REPRESENT THAT EITHER (I) IT IS NOT AND IS NOT ACQUIRING, HOLDING OR
TRANSFERRING THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN ON BEHALF OF, OR USING
THE ASSETS OF, ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR ANY
PLAN AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE

 

Exhibit A-3-1

--------------------------------------------------------------------------------

CODE OF 1986, AS AMENDED (THE “CODE”), AN ENTITY THAT IS DEEMED TO HOLD THE
ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN PURSUANT TO 29 CFR SECTION
2510.3-101 AS MODIFIED BY SECTION 3(42) OF ERISA (THE “PLAN ASSET REGULATIONS”),
WHICH EMPLOYEE BENEFIT PLAN, PLAN OR ENTITY IS SUBJECT TO TITLE I OF ERISA OR
SECTION 4975 OF THE CODE (EACH, A “PLAN”), OR A GOVERNMENTAL, NON-U.S. OR CHURCH
PLAN THAT IS SUBJECT TO ANY U.S. FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS
SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR
LAW”) OR (II)(A) AS OF THE DATE OF PURCHASE OR TRANSFER, IT BELIEVES THAT THIS
NOTE IS PROPERLY TREATED AS INDEBTEDNESS WITHOUT SUBSTANTIAL EQUITY FEATURES FOR
PURPOSES OF THE PLAN ASSET REGULATIONS AND AGREES TO SO TREAT THIS NOTE AND
(B) THE TRANSFEREE’S ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR ANY
BENEFICIAL INTEREST HEREIN WILL SATISFY THE REQUIREMENTS OF PROHIBITED
TRANSACTION CLASS EXEMPTION (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60,
PTCE 96-23 OR THE STATUTORY PROHIBITED TRANSACTION EXEMPTION FOR SERVICE
PROVIDERS SET FORTH IN SECTION 408(b)(17) OF ERISA AND SECTION 4975(d)(20) OF
THE CODE OR ANY SIMILAR CLASS OR STATUTORY EXEMPTION AND WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S. OR CHURCH PLAN SUBJECT TO
SIMILAR LAW, WILL NOT VIOLATE ANY SIMILAR LAW.

THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET
FORTH IN SECTION 6.5 OF THE BASE INDENTURE AND SECTION [ ] OF THE RELATED
INDENTURE SUPPLEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE ISSUER UPON REQUEST). EACH TRANSFEREE OF THIS NOTE SHALL
PROVIDE THE NOTE REGISTRAR AND THE ISSUER THE CERTIFICATION REQUIRED BY SECTION
6.5(i) OF THE BASE INDENTURE AND THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN MAY
BE TRANSFERRED IN AN OFF-SHORE TRANSACTION AS DEFINED IN THE 1933 ACT TO A
PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN A RULE 144A NOTE OR (IN
CERTAIN LIMITED CIRCUMSTANCES) A DEFINITIVE NOTE ONLY (IN THE CASE OF AN
INTEREST IN A RULE 144A GLOBAL NOTE) IN ACCORDANCE WITH THE PROCEDURES SET FORTH
IN SECTION 6.5 OF THE BASE INDENTURE AND (IN THE CASE OF A DEFINITIVE NOTE) UPON
RECEIPT BY THE NOTE REGISTRAR AND INDENTURE TRUSTEE OF SUCH CERTIFICATION. PRIOR
TO PURCHASING THIS NOTE, PROSPECTIVE PURCHASERS SHOULD CONSULT WITH COUNSEL WITH
RESPECT TO THE AVAILABILITY AND CONDITIONS OF EXEMPTIONS FROM THE RESTRICTIONS
ON RESALE OR TRANSFER.

THIS NOTE IS A LIMITED RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED TO
RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE. THE ISSUER IS NOT PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE. THIS
NOTE DOES NOT

 

Exhibit A-3-2

--------------------------------------------------------------------------------

EVIDENCE AN OBLIGATION OF OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
SERVICER, THE INDENTURE TRUSTEE, THE CALCULATION AGENT, THE PAYING AGENT, THE
SECURITIES INTERMEDIARY, THE ADMINISTRATOR OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”) TO THE NOTE REGISTRAR FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

Exhibit A-3-3

--------------------------------------------------------------------------------

PMT ISSUER TRUST - FMSR

MSR COLLATERALIZED NOTES, SERIES [     ]

CLASS [        ] NOTE

PMT ISSUER TRUST—FMSR, a Delaware statutory trust (the “Issuer”), for value
received, hereby promises to pay to [                        ], or registered
assigns (the “Noteholder”), [interest, fees and principal as provided in the
Indenture] [the principal sum of [                    ] $[                ], or
such part thereof as may be advanced and outstanding hereunder and to pay
interest on such principal sum or such part thereof as shall remain unpaid from
time to time, at the rate and at the times provided in the Indenture].

Principal of this Note is payable on each applicable Payment Date as set forth
in Section[s] [4.4] and 4.5 of the Base Indenture and Section [ ] of the [Series
Name] Indenture Supplement. The Outstanding Note Balance of this Note bears
interest at the applicable Note Interest Rate as set forth in the Indenture. On
each applicable [Interim Payment Date and] Payment Date, in accordance with the
terms and provisions of the Indenture, interest on this Note will be paid as set
forth in Section[s] [4.4] and 4.5 of the Base Indenture and Section [ ] of the
[Series Name] Indenture Supplement.

Capitalized terms used but not defined herein have the meanings set forth in the
Base Indenture (as may be amended, restated, supplemented or otherwise modified
from time to time, the “Base Indenture”), dated as of December [20], 2017, among
the Issuer, Citibank, N.A. (“Citibank”), as Indenture Trustee (the “Indenture
Trustee”), Calculation Agent (the “Calculation Agent”), Paying Agent (the
“Paying Agent”) and Securities Intermediary (the “Securities Intermediary”),
PennyMac Corp. (“PMC”), as Administrator (the “Administrator”) and as Servicer
(the “Servicer”) Credit Suisse First Boston Mortgage Capital LLC (“CSFB”), as
Administrative Agent (the “Administrative Agent”), and an Indenture Supplement
(as may be amended, restated, supplemented or otherwise modified from time to
time, the “[Insert Series Name] Indenture Supplement” and together with the Base
Indenture, the “Indenture”), dated as of [            ], 20[        ], by and
among [insert parties to Indenture Supplement].

[In the event of a VFN Principal Balance increase funded by the Noteholders, the
Noteholder of this Note shall, and is hereby authorized to, record on the
schedule attached to this Note the date and amount of any VFN Principal Balance
increase funded by it, and each repayment thereof; provided, that failure to
make any such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to the VFN Principal
Balance and its right to receive interest payments in respect thereof.]

[By its acceptance of this Note, each Noteholder covenants and agrees, until the
termination of the Revolving Period, on each Funding Date or each Limited
Funding Date to advance amounts in respect of any VFN Principal Balance increase
hereunder to the Issuer, subject to and in accordance with the terms of the
Indenture.]

 

Exhibit A-3-4

--------------------------------------------------------------------------------

[In the event of a payment of all or a portion of the Note Balance of this Note,
in accordance with the terms and provisions of the Indenture, the Noteholder
thereof shall, and is hereby authorized to, record on the schedule attached to
this Note the date and amount of the Outstanding Note Balance of this Note
following such payment.]

Absent manifest error, the [Note] [VFN Principal] Balance of each Note as set
forth in the notations made by the related Noteholder on such Note shall be
binding upon the Indenture Trustee, the Note Registrar and the Issuer; provided,
that failure by a Noteholder to make such recordation on its Note or any error
in such notation shall not adversely affect any Noteholder’s rights with respect
to the [Note] [VFN Principal] Balance of its Note and such Noteholder’s right to
receive payments in respect of principal and interest in respect thereof.

Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

The statements in the legend set forth above are an integral part of the terms
of this Note and by acceptance hereof each Holder of this Note agrees to be
subject to and bound by the terms and provisions set forth in such legend.

This Note is a Regulation S Global Note deposited with DTC acting as Depository,
and registered in the name of Cede & Co., a nominee of DTC, and Cede & Co., as
holder of record of this Note, shall be entitled to receive payments of
principal and interest, other than principal and interest due at the maturity
date, by wire transfer of immediately available funds.

The statements in the legend relating to DTC set forth above are an integral
part of the terms of this Note and by acceptance thereof each holder of this
Note agrees to be subject to and bound by the terms and provisions set forth in
such legend, if any.

Unless the certificate of authentication hereon shall have been executed by an
Authorized Signatory of the Indenture Trustee and, if an Authenticating Agent
has been appointed by the Indenture Trustee pursuant to Section 11.12 of the
Base Indenture, by manual signature of such Authenticating Agent, this Note
shall not entitle the Noteholder hereof to any benefit under the Indenture
and/or be valid for any purpose.

THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR
IN CONNECTION WITH THIS NOTE, THE RELATIONSHIP OF THE PARTIES HEREUNDER, AND/OR
THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES
HEREUNDER WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Exhibit A-3-5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
or in facsimile, by an Issuer Authorized Officer, as of the date set forth
below.

Date: [                    ], 20[        ]

 

PMT ISSUER TRUST—FMSR, as Issuer By: Wilmington Savings Fund Society, FSB, not
in its individual capacity but solely as Owner Trustee By:  

 

  Issuer Authorized Officer

 

Exhibit A-3-6

--------------------------------------------------------------------------------

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Indenture Trustee     By:  

 

    Title:   Authorized Signatory of Indenture Trustee

AUTHENTICATING AGENT’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Authenticating Agent     By:  

 

    Title:   Authorized Signatory of Authenticating Agent

 

Exhibit A-3-7

--------------------------------------------------------------------------------

[REVERSE OF NOTE]

This Note is one of the duly authorized Class [    ] Notes of the Issuer,
designated as its PMT ISSUER TRUST - FMSR MSR Collateralized Notes, Series
[    ], Class [    ] (herein called the “Class [    ] Notes”), all issued under
the Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary
and the Holders of the Notes. To the extent that any provision of this Note
contradicts or is inconsistent with the provisions of the Indenture, the
provisions of the Indenture shall control and supersede such contradictory or
inconsistent provision herein. The Notes are subject to all terms of the
Indenture.

The payments on the Class [    ] Notes are [senior to the Class [    ] Notes,
the Class [    ] Notes and the Class [    ] Notes][, and subordinate to the
Class [    ] Notes, the Class [    ] Notes and the Class [    ] Notes], as and
to the extent provided in the Indenture.

The principal of and interest and fees on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied in accordance with the Indenture.

The entire unpaid principal amount and all accrued and unpaid interest and fees
of this Note shall be due and payable on the earlier of (i) any Redemption
Payment Date as set forth in Section 13.1 of the Base Indenture [or in Section [
] of the [Series Name] Indenture Supplement] and (ii) the Stated Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount and all
accrued and unpaid interest of the Notes shall be immediately due and payable on
the date on which an Event of Default of the kind specified in clauses (b), (c)
or (q) of Section 8.1 of the Base Indenture occurs, and, if any other Event of
Default occurs and is continuing, then and in each and every such case, either
the Indenture Trustee or the requisite percentage of Noteholders of each Series,
by notice in writing to the Issuer (and to the Indenture Trustee if given by the
Holders), may declare all Notes to be immediately due and payable in the manner
provided in the Indenture. All applicable principal payments on the Notes shall
be made to the Holders of the Notes entitled thereto in accordance with the
terms of the Indenture.

The Trust Estate secures this Class [    ] Note and all other Class [    ] Notes
equally and ratably without prejudice, priority or distinction between any Class
[    ] Note and any other Class [    ] Note. The Notes are limited recourse
obligations of the Issuer and are limited in right of payment to amounts
available from the Trust Estate, as provided in the Indenture. The Issuer shall
not otherwise be liable for payments on the Notes, and none of the owners,
agents, officers, directors, employees, or successors or assigns of the Issuer
shall be personally liable for any amounts payable, or performance due, under
the Notes or the Indenture.

Any payment of interest or principal on this Note shall be paid on the
applicable [Interim Payment Date and] Payment Date as set forth in the Indenture
to the Person in whose name this Note (or one or more predecessor Notes) is
registered in the Note Register as of the close of business on the related
Record Date by wire transfer in immediately available funds to the account
specified in writing by the related Noteholder to the extent provided by the
Indenture and otherwise by check mailed to the Noteholder.

 

Exhibit A-3-8

--------------------------------------------------------------------------------

[Any reduction in the Note Balance of this Note (or any one or more predecessor
Notes) effected by any payments made on any applicable [Interim Payment Date
and] Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon.]

[Any reduction in the Maximum VFN Principal Balance or the VFN Principal
Balance, as the case may be, of this Class [     ] Note (or any one or more
predecessor Notes) effected by any payments made with respect thereto or
otherwise pursuant to the terms of the Indenture shall be binding upon all
future Holders of this Class [     ] Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. Any VFN Principal Balance increase of this Class [     ]
Note (or any one or more predecessor Notes) effected by payments to the Issuer
shall be binding upon the Issuer and shall inure to the benefit of all future
Holders of this Class [     ] Note and of any Note issued upon the registration
of transfer hereof or exchange hereof or in lieu hereof, whether or not noted
hereon.]

As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in the form attached hereto duly
executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Securities Transfer Agent’s Medallion Program
(“STAMP”), and thereupon one or more new Notes of authorized denominations and
in the same [aggregate principal amount] [VFN Principal Balance] will be issued
to the designated transferee or transferees. No service charge will be charged
for any registration of transfer or exchange of this Note, but the Issuer may
require the Noteholder to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

Each Noteholder, by acceptance of a Note or a beneficial ownership interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or Owner
Trustee in their individual capacities, (ii) any owner of a beneficial ownership
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or “control person” within the meaning of the 1933 Act and
the Securities Exchange Act of 1934, as amended, of the Indenture Trustee or
Owner Trustee in its individual capacity, any holder of a beneficial ownership
interest in the Issuer or the Indenture Trustee or Owner Trustee or of any
successor or assign of the Indenture Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.

 

Exhibit A-3-9

--------------------------------------------------------------------------------

Each Noteholder, by accepting a Note and each Note Owner by accepting a Note or
a beneficial interest in a Note agrees that it will not at any time prior to the
date which is one year and one day, or, if longer, the applicable preference
period then in effect, after the payment in full of all the Notes, institute
against the Issuer, or join in any institution against the Issuer of, any
receivership, insolvency, bankruptcy or other similar proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes and this Indenture.

The Issuer has entered into the Indenture and this Note is issued with the
intention that, for United States federal, state and local income and franchise
tax purposes, the Notes will qualify as indebtedness secured by the Collateral.
Each Noteholder, by its acceptance of a Note, and each purchaser of a beneficial
interest therein, by accepting such beneficial interest, agrees to treat such
Notes as debt for United States federal, state and local income and franchise
tax purposes, unless otherwise required by Applicable Law in a proceeding of
final determination.

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer or other parties thereto and the rights of the Holders of the Notes under
the Indenture at any time pursuant to the terms and provisions of Article XII of
the Base Indenture and Section [ ] of the [Series Name] Indenture Supplement.
The Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Notes or a particular
Class of Notes, on behalf of all of the Noteholders, or the Administrative
Agent, as applicable, to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note (or any one
or more predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of any Noteholder.

The term “Issuer” as used in this Note includes any successor to the Issuer
under the Indenture.

Notwithstanding any other provisions herein or in the Indenture, a Holder of
this Note will have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on this Note on the Stated Maturity
Date and to institute suit for the enforcement of any such payment, and such
right will not be impaired without the consent of the Holder; provided, however,
that notwithstanding any other provision of the Indenture to the contrary, the
obligation to pay principal of or interest on this Note or any other amount
payable to the Holder

 

Exhibit A-3-10

--------------------------------------------------------------------------------

will be without recourse to the Administrator, the Servicer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary or
any Affiliate (other than the Issuer), officer, employee or director of any of
them, and the obligation of the Issuer to pay principal of or interest on this
Note or any other amount payable to the Holder will be limited to amounts
available from the Trust Estate and subject to the priority of payment set forth
in the Indenture.

Notwithstanding any other terms of the Indenture or this Note, the obligations
of the Issuer hereunder are limited recourse obligations of the Issuer, payable
solely from the Trust Estate, and following realization of the Trust Estate and
application of the proceeds thereof in accordance with the terms of the
Indenture, the Holder hereof shall not be entitled to take any further steps to
recover any sums due but still unpaid hereunder or thereunder, all claims in
respect of which shall be extinguished and shall not thereafter revive. No
Holder of this Note shall have recourse for the payment of any amount owing in
respect of this Note or the Indenture or for any action or inaction of the
Issuer against any officer, director, employee, shareholder, stockholder or
incorporator of the Issuer or any of their successors or assigns for any amounts
payable under this Note or the Indenture. The foregoing provisions of this Note
shall not (i) prevent recourse to the Trust Estate for the sums due or to become
due under any security, instrument or agreement which is part of the Trust
Estate, (ii) save as specifically provided therein, constitute a waiver, release
or discharge of any indebtedness or obligation evidenced by this Note or secured
by the Indenture, or (iii) limit the right of any Person, to name the Issuer as
a party defendant in any proceeding or in the exercise of any other remedy under
this Note or the Indenture, so long as no judgment in the nature of a deficiency
judgment or seeking personal liability shall be asked for or (if obtained)
enforced against any such Person or entity.

 

Exhibit A-3-11

--------------------------------------------------------------------------------

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:
___________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
                                         
                                         
                                         
                                         
                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, ___________________ attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.

Dated: _________________     

Signature Guaranteed:

_________________*/

*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an “eligible guarantor institution” meeting the
requirements of STAMP.

 

Exhibit A-3-12

--------------------------------------------------------------------------------

Schedule to Series [    ], Class [    ] Note

dated as of [    ], 20[    ]

of PMT ISSUER TRUST - FMSR

 

[Interim Payment

Date]

[Payment Date]

[Payment Date of

Additional Note

Balance/Decrease

Note Balance

 

Aggregate

Amount of

[principal

payment]

[Funding of

VFN Principal

Balance

Increase] on

Class [    ] Notes

 

[Percentage

Interest in]

Aggregate Note

Balance of the

Class [    ] Notes

following

[advance/]

payment

 

[Percentage of
Interest in]

Aggregate Note

Balance of this

Class [    ] Note

following

[advance/]

payment

 

Note Balance of

Note following

[advance/]

payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-3-13

--------------------------------------------------------------------------------

Exhibit A-4

FORM OF DEFINITIVE REGULATION S NOTE

 

Class [        ] Note    Initial Note Balance: $[        ]
Note Number: [            ]                                     [Maximum VFN
Principal Balance: $[                ] ] [or such lesser amount as contemplated
by the definition of Maximum VFN Principal Balance as set forth in the[Insert
Series Name] Indenture Supplement] [CUSIP No.:]    [ISIN No.:]   

THE OUTSTANDING NOTE BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
INITIAL NOTE BALANCE SHOWN ON THE FACE HEREOF.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. THE ISSUER HAS NOT AGREED TO
REGISTER THE NOTES UNDER THE 1933 ACT, TO QUALIFY THE NOTES UNDER THE SECURITIES
LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY NOTEHOLDER.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) PURSUANT TO REGULATION S OF
THE 1933 ACT IN AN OFF-SHORE TRANSACTION AS DEFINED IN THE 1933 ACT TO A PERSON
THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S OF THE 1933 ACT OR
(C) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, IN EACH
CASE IN COMPLIANCE WITH THE REQUIREMENTS OF THE INDENTURE AND APPLICABLE STATE
SECURITIES LAWS.

EACH HOLDER OF THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL DELIVER TO THE
INDENTURE TRUSTEE AND THE NOTE REGISTRAR A CERTIFICATION TO THE EFFECT THAT
EITHER (I) IT IS NOT AND IS NOT ACQUIRING, HOLDING OR TRANSFERRING THIS NOTE OR
ANY BENEFICIAL INTEREST HEREIN ON BEHALF OF, OR USING THE ASSETS OF, (I) ANY
EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR ANY PLAN AS DEFINED IN
SECTION 4975(e)(1) OF THE CODE, AN ENTITY THAT

 

Exhibit A-4-1

--------------------------------------------------------------------------------

IS DEEMED TO HOLD THE ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN PURSUANT
TO 29 CFR SECTION 2510.3-101 AS MODIFIED BY SECTION 3(42) OF ERISA (THE “PLAN
ASSET REGULATIONS”), WHICH EMPLOYEE BENEFIT PLAN, PLAN OR ENTITY IS SUBJECT TO
TITLE I OF ERISA OR SECTION 4975 OF THE CODE (EACH, A “PLAN”), OR A
GOVERNMENTAL, NON-U.S. OR CHURCH PLAN THAT IS SUBJECT TO ANY U.S. FEDERAL,
STATE, LOCAL OR OTHER LAW THAT IS SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF
THE CODE (“SIMILAR LAW”) OR (II)(A) AS OF THE DATE OF PURCHASE OR TRANSFER, IT
BELIEVES THAT THIS NOTE IS PROPERLY TREATED AS INDEBTEDNESS WITHOUT SUBSTANTIAL
EQUITY FEATURES FOR PURPOSES OF THE PLAN ASSET REGULATIONS AND AGREES TO SO
TREAT THIS NOTE AND (B) THE TRANSFEREE’S ACQUISITION, HOLDING AND DISPOSITION OF
THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN WILL SATISFY THE REQUIREMENTS OF
PROHIBITED TRANSACTION CLASS EXEMPTION (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38,
PTCE 95-60, PTCE 96-23 OR THE STATUTORY PROHIBITED TRANSACTION EXEMPTION FOR
SERVICE PROVIDERS SET FORTH IN SECTION 408(b)(17) OF ERISA AND SECTION
4975(d)(20) OF THE CODE OR ANY SIMILAR CLASS OR STATUTORY EXEMPTION AND WILL NOT
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S. OR CHURCH
PLAN SUBJECT TO SIMILAR LAW, WILL NOT VIOLATE ANY SIMILAR LAW.

THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET
FORTH IN SECTION 6.5 OF THE BASE INDENTURE AND SECTION [ ] OF THE RELATED
INDENTURE SUPPLEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE ISSUER UPON REQUEST). EACH TRANSFEREE OF THIS NOTE SHALL
PROVIDE THE NOTE REGISTRAR AND THE ISSUER THE CERTIFICATION[S] REQUIRED BY
SECTION 6.5(j) OF THE BASE INDENTURE AND THIS NOTE MAY BE TRANSFERRED ONLY UPON
RECEIPT BY THE NOTE REGISTRAR AND INDENTURE TRUSTEE OF SUCH CERTIFICATION. PRIOR
TO PURCHASING THIS NOTE, PROSPECTIVE PURCHASERS SHOULD CONSULT WITH COUNSEL WITH
RESPECT TO THE AVAILABILITY AND CONDITIONS OF EXEMPTIONS FROM THE RESTRICTIONS
ON RESALE OR TRANSFER.

THIS NOTE IS A LIMITED RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED TO
RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE. THE ISSUER IS NOT PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE. THIS
NOTE DOES NOT EVIDENCE AN OBLIGATION OF OR AN INTEREST IN, AND IS NOT GUARANTEED
BY, THE SERVICER, THE INDENTURE TRUSTEE, THE CALCULATION AGENT, THE PAYING
AGENT, THE SECURITIES INTERMEDIARY, THE ADMINISTRATOR OR ANY AFFILIATE OF ANY OF
THEM AND IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE
INSURER.

 

Exhibit A-4-2

--------------------------------------------------------------------------------

PMT ISSUER TRUST - FMSR

MSR COLLATERALIZED NOTES, SERIES[    ]

CLASS [        ] NOTE

PMT ISSUER TRUST—FMSR, a Delaware statutory trust (the “Issuer”), for value
received, hereby promises to pay to [                        ], or registered
assigns (the “Noteholder”), [interest, fees and principal as provided in the
Indenture] [the principal sum of [                        ]
$[                            ], or such part thereof as may be advanced and
outstanding hereunder and to pay interest on such principal sum or such part
thereof as shall remain unpaid from time to time, at the rate and at the times
provided in the Indenture].

Principal of this Note is payable on each applicable [Interim Payment Date and]
Payment Date as set forth in Section[s] [4.4] and 4.5 of the Base Indenture and
Section [ ] of the [Series Name] Indenture Supplement. The Outstanding Note
Balance of this Note bears interest at the applicable Note Interest Rate as set
forth in the Indenture. On each applicable [Interim Payment Date and] Payment
Date, in accordance with the terms and provisions of the Indenture, interest on
this Note will be paid as set forth in Section[s] [4.4] and 4.5 of the Base
Indenture and Section [ ] of the [Series Name] Indenture Supplement.

Capitalized terms used but not defined herein have the meanings set forth in the
Base Indenture (as may be amended, restated, supplemented or otherwise modified
from time to time, the “Base Indenture”), dated as of December [20], 2017, among
the Issuer, Citibank, N.A. (“Citibank”), as Indenture Trustee (the “Indenture
Trustee”), Calculation Agent (the “Calculation Agent”), Paying Agent (the
“Paying Agent”) and Securities Intermediary (the “Securities Intermediary”),
PennyMac Corp. (“PMC”), as Administrator (the “Administrator”) and as Servicer
(the “Servicer”) and Credit Suisse First Boston Mortgage Capital LLC (“CSFB”),
as Administrative Agent (the “Administrative Agent”), and an Indenture
Supplement (as may be amended, restated, supplemented or otherwise modified from
time to time, the “[Insert Series Name] Indenture Supplement” and together with
the Base Indenture, the “Indenture”), dated as of [            ], 20[        ],
by and among [insert parties to Indenture Supplement].

[In the event of a VFN Principal Balance increase funded by the Noteholders, the
Noteholder of this Note shall, and is hereby authorized to, record on the
schedule attached to this Note the date and amount of any VFN Principal Balance
increase funded by it, and each repayment thereof; provided, that failure to
make any such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to the VFN Principal
Balance and its right to receive interest payments in respect thereof.]

[By its acceptance of this Note, each Noteholder covenants and agrees, until the
termination of the Revolving Period, on each Funding Date or each Limited
Funding Date to advance amounts in respect of any VFN Principal Balance increase
hereunder to the Issuer, subject to and in accordance with the terms of the
Indenture.]

 

Exhibit A-4-3

--------------------------------------------------------------------------------

[In the event of a payment of all or a portion of the Note Balance of this Note,
in accordance with the terms and provisions of the Indenture, the Noteholder
thereof shall, and is hereby authorized to, record on the schedule attached to
this Note the date and amount of the Outstanding Note Balance of this Note
following such payment.]

Absent manifest error, the [Note] [VFN Principal] Balance of each Note as set
forth in the notations made by the related Noteholder on such Note shall be
binding upon the Indenture Trustee, the Note Registrar and the Issuer; provided,
that failure by a Noteholder to make such recordation on its Note or any error
in such notation shall not adversely affect any Noteholder’s rights with respect
to the [Note] [VFN Principal] Balance of its Note and such Noteholder’s right to
receive payments in respect of principal and interest in respect thereof.

Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

The statements in the legend set forth above are an integral part of the terms
of this Note and by acceptance hereof each Holder of this Note agrees to be
subject to and bound by the terms and provisions set forth in such legend.

Unless the certificate of authentication hereon shall have been executed by an
Authorized Signatory of the Indenture Trustee and, if an Authenticating Agent
has been appointed by the Indenture Trustee pursuant to Section 11.12 of the
Base Indenture, by manual signature of such Authenticating Agent, this Note
shall not entitle the Noteholder hereof to any benefit under the Indenture
and/or be valid for any purpose.

THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR
IN CONNECTION WITH THIS NOTE, THE RELATIONSHIP OF THE PARTIES HEREUNDER, AND/OR
THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES
HEREUNDER WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Exhibit A-4-4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
or in facsimile, by an Issuer Authorized Officer, as of the date set forth
below.

Date: [            ], 20[        ]

 

PMT ISSUER TRUST - FMSR, as Issuer By: Wilmington Savings Fund Society, FSB, not
in its individual capacity but solely as Owner Trustee By:  

 

  Issuer Authorized Officer

 

Exhibit A-4-5

--------------------------------------------------------------------------------

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Indenture Trustee     By:  

 

    Title:   Authorized Signatory of Indenture Trustee

AUTHENTICATING AGENT’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture.

 

Date: [                ], 20[        ]     CITIBANK, N.A., not in its individual
capacity but solely as Authenticating Agent     By:  

 

    Title:   Authorized Signatory of Authenticating Agent

 

Exhibit A-4-6

--------------------------------------------------------------------------------

[REVERSE OF NOTE]

This Note is one of the duly authorized Class [    ] Notes of the Issuer,
designated as its PMT ISSUER TRUST—FMSR MSR Collateralized Notes, Series [    ],
Class [    ] (herein called the “Class [    ] Notes”), all issued under the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary
and the Holders of the Notes. To the extent that any provision of this Note
contradicts or is inconsistent with the provisions of the Indenture, the
provisions of the Indenture shall control and supersede such contradictory or
inconsistent provision herein. The Notes are subject to all terms of the
Indenture.

The payments on the Class [    ] Notes are [senior to the Class [    ] Notes,
the Class [    ] Notes and the Class [    ] Notes][, and subordinate to the
Class [    ] Notes, the Class [    ] Notes and the Class [__] Notes], as and to
the extent provided in the Indenture.

The principal of and interest and fees on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied in accordance with the Indenture.

The entire unpaid principal amount and all accrued and unpaid interest and fees
of this Note shall be due and payable on the earlier of (i) any Redemption
Payment Date as set forth in Section 13.1 of the Base Indenture [or in Section [
] of the [Series Name] Indenture Supplement] and (ii) the Stated Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount and all
accrued and unpaid interest of the Notes shall be immediately due and payable on
the date on which an Event of Default of the kind specified in clauses (b), (c)
or (q) of Section 8.1 of the Base Indenture occurs, and, if any other Event of
Default occurs and is continuing, then and in each and every such case, either
the Indenture Trustee or the requisite percentage of Noteholders of each Series,
by notice in writing to the Issuer (and to the Indenture Trustee if given by the
Holders), may declare all Notes to be immediately due and payable in the manner
provided in the Indenture. All applicable principal payments on the Notes shall
be made to the Holders of the Notes entitled thereto in accordance with the
terms of the Indenture.

The Trust Estate secures this Class [    ] Note and all other Class [    ] Notes
equally and ratably without prejudice, priority or distinction between any Class
[    ] Note and any other Class [    ] Note. The Notes are limited recourse
obligations of the Issuer and are limited in right of payment to amounts
available from the Trust Estate, as provided in the Indenture. The Issuer shall
not otherwise be liable for payments on the Notes, and none of the owners,
agents, officers, directors, employees, or successors or assigns of the Issuer
shall be personally liable for any amounts payable, or performance due, under
the Notes or the Indenture.

Any payment of interest or principal on this Note shall be paid on the
applicable [Interim Payment Date and] Payment Date as set forth in the Indenture
to the Person in whose name this Note (or one or more predecessor Notes) is
registered in the Note Register as of the close of business on the related
Record Date by wire transfer in immediately available funds to the account
specified in writing by the related Noteholder to the extent provided by the
Indenture and otherwise by check mailed to the Noteholder.

 

Exhibit A-4-7

--------------------------------------------------------------------------------

[Any reduction in the Note Balance of this Note (or any one or more predecessor
Notes) effected by any payments made on any applicable [Interim Payment Date
and] Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon.]

[Any reduction in the Maximum VFN Principal Balance or the VFN Principal
Balance, as the case may be, of this Class [     ] Note (or any one or more
predecessor Notes) effected by any payments made with respect thereto or
otherwise pursuant to the terms of the Indenture shall be binding upon all
future Holders of this Class [     ] Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. Any VFN Principal Balance increase of this Class [     ]
Note (or any one or more predecessor Notes) effected by payments to the Issuer
shall be binding upon the Issuer and shall inure to the benefit of all future
Holders of this Class [     ] Note and of any Note issued upon the registration
of transfer hereof or exchange hereof or in lieu hereof, whether or not noted
hereon.]

As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in the form attached hereto duly
executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Securities Transfer Agent’s Medallion Program
(“STAMP”), and thereupon one or more new Notes of authorized denominations and
in the same [aggregate principal amount] [VFN Principal Balance] will be issued
to the designated transferee or transferees. No service charge will be charged
for any registration of transfer or exchange of this Note, but the Issuer may
require the Noteholder to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

Each Noteholder, by acceptance of a Note or a beneficial ownership interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or Owner
Trustee in their individual capacities, (ii) any owner of a beneficial ownership
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or “control person” within the meaning of the 1933 Act and
the Securities Exchange Act of 1934, as amended, of the Indenture Trustee or
Owner Trustee in its individual capacity, any holder of a beneficial ownership
interest in the Issuer or the Indenture Trustee or Owner Trustee or of any
successor or assign of the Indenture Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.

 

Exhibit A-4-8

--------------------------------------------------------------------------------

Each Noteholder, by accepting a Note and each Note Owner by accepting a Note or
a beneficial interest in a Note agrees that it will not at any time prior to the
date which is one year and one day, or, if longer, the applicable preference
period then in effect, after the payment in full of all the Notes, institute
against the Issuer, or join in any institution against the Issuer of, any
receivership, insolvency, bankruptcy or other similar proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes and this Indenture.

The Issuer has entered into the Indenture and this Note is issued with the
intention that, for United States federal, state and local income and franchise
tax purposes, the Notes will qualify as indebtedness secured by the Collateral.
Each Noteholder, by its acceptance of a Note, and each purchaser of a beneficial
interest therein, by accepting such beneficial interest, agrees to treat such
Notes as debt for United States federal, state and local income and franchise
tax purposes, unless otherwise required by Applicable Law in a proceeding of
final determination.

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer or other parties thereto and the rights of the Holders of the Notes under
the Indenture at any time pursuant to the terms and provisions of Article XII of
the Base Indenture and Section [ ] of the [Series Name] Indenture Supplement.
The Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Notes or a particular
Class of Notes, on behalf of all of the Noteholders, or the Administrative
Agent, as applicable, to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note (or any one
or more predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of any Noteholder.

The term “Issuer” as used in this Note includes any successor to the Issuer
under the Indenture.

This Note is issuable only in definitive form in denominations as provided in
the [Series Name] Indenture Supplement, subject to certain limitations therein
set forth.

Notwithstanding any other provisions herein or in the Indenture, a Holder of
this Note will have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on this Note on the Stated Maturity
Date and to institute suit for the enforcement

 

Exhibit A-4-9

--------------------------------------------------------------------------------

of any such payment, and such right will not be impaired without the consent of
the Holder; provided, however, that notwithstanding any other provision of the
Indenture to the contrary, the obligation to pay principal of or interest on
this Note or any other amount payable to the Holder will be without recourse to
the Administrator, the Servicer, the Indenture Trustee, the Calculation Agent,
the Paying Agent, the Securities Intermediary or any Affiliate (other than the
Issuer), officer, employee or director of any of them, and the obligation of the
Issuer to pay principal of or interest on this Note or any other amount payable
to the Holder will be limited to amounts available from the Trust Estate and
subject to the priority of payment set forth in the Indenture.

Notwithstanding any other terms of the Indenture or this Note, the obligations
of the Issuer hereunder are limited recourse obligations of the Issuer, payable
solely from the Trust Estate, and following realization of the Trust Estate and
application of the proceeds thereof in accordance with the terms of the
Indenture, the Holder hereof shall not be entitled to take any further steps to
recover any sums due but still unpaid hereunder or thereunder, all claims in
respect of which shall be extinguished and shall not thereafter revive. No
Holder of this Note shall have recourse for the payment of any amount owing in
respect of this Note or the Indenture or for any action or inaction of the
Issuer against any officer, director, employee, shareholder, stockholder or
incorporator of the Issuer or any of their successors or assigns for any amounts
payable under this Note or the Indenture. The foregoing provisions of this Note
shall not (i) prevent recourse to the Trust Estate for the sums due or to become
due under any security, instrument or agreement which is part of the Trust
Estate, (ii) save as specifically provided therein, constitute a waiver, release
or discharge of any indebtedness or obligation evidenced by this Note or secured
by the Indenture, or (iii) limit the right of any Person, to name the Issuer as
a party defendant in any proceeding or in the exercise of any other remedy under
this Note or the Indenture, so long as no judgment in the nature of a deficiency
judgment or seeking personal liability shall be asked for or (if obtained)
enforced against any such Person or entity.

 

Exhibit A-4-10

--------------------------------------------------------------------------------

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:
___________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
                                         
                                         
                                         
                                         
                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, ___________________ attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.

Dated: _________________     

Signature Guaranteed:

_________________*/

*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an “eligible guarantor institution” meeting the
requirements of STAMP.

 

Exhibit A-4-11

--------------------------------------------------------------------------------

Schedule to Series [    ], Class [    ] Note

dated as of [            ], 20[    ]

of PMT ISSUER TRUST—FMSR

 

[Interim Payment

Date]

[Payment Date]

[Payment Date of

Additional Note

Balance/Decrease

Note Balance

 

Aggregate

Amount of

[principal

payment]

[Funding of

VFN Principal

Balance

Increase] on

Class [    ] Notes

 

[Percentage

Interest in]

Aggregate Note

Balance of the

Class [    ] Notes

following

[advance/]

payment

 

[Percentage of
Interest in]

Aggregate Note

Balance of this

Class [    ] Note

following

[advance/]

payment

 

Note Balance of

Note following

[advance/]

payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-4-12

--------------------------------------------------------------------------------

Exhibit B-1

FORM OF TRANSFEREE CERTIFICATE FOR TRANSFERS OF NOTES PURSUANT TO RULE 144A

 

Issuer   PMT ISSUER TRUST – FMSR   3043 Townsgate Road, Suite 300   Westlake
Village, CA 91361   Attention: PMT ISSUER TRUST – FMSR Collateralized Notes  
with a copy to:  

Wilmington Savings Fund Society, FSB, as Owner Trustee

500 Delaware Avenue, 11th Floor

  Wilmington   DE 19801   Attention: Corporate Trust Administration
Administrator   PennyMac Corp.   3043 Townsgate Road   Westlake Village   CA
91361   Attention: Treasurer Indenture Trustee                   Citibank, N.A.
 

Corporate and Investment Banking 388

Greenwich Street, 14th Floor

  New York,   NY 10013   Ref.: PMT ISSUER TRUST - FMSR, Series
20[        ]-[        ]   Attention: PMT ISSUER TRUST – FMSR Collateralized
Notes

Re: $[                ] PMT ISSUER TRUST - FMSR, MSR Collateralized Notes,
Series 20        -        , Class             

Reference is hereby made to the Base Indenture, dated as of December [20], 2017
(as may be amended, restated, supplemented or otherwise modified from time to
time, the “Indenture”), among PMT ISSUER TRUST—FMSR, as Issuer, PennyMac Corp.,
as Administrator and as Servicer, and Citibank, N.A., as Indenture Trustee,
Calculation Agent, Paying Agent and Securities Intermediary, Credit Suisse First
Boston Mortgage Capital LLC, as Administrative Agent, and the “Administrative
Agents” from time to time party thereto. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

 

Exhibit B-1-1

--------------------------------------------------------------------------------

[NOTE: COMPLETE [A] FOR A TRANSFER OF AN INTEREST IN A REGULATION S GLOBAL NOTE
TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A RULE 144A
GLOBAL NOTE DURING THE DISTRIBUTION COMPLIANCE PERIOD. COMPLETE [B] FOR A
TRANSFER OF AN INTEREST IN A REGULATION S GLOBAL NOTE TO A TRANSFEREE THAT TAKES
DELIVERY IN THE FORM OF AN INTEREST IN A RULE 144A DEFINITIVE NOTE. COMPLETE [C]
FOR A TRANSFER OF AN INTEREST IN A REGULATION S DEFINITIVE NOTE TO A TRANSFEREE
THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A RULE 144A GLOBAL NOTE.
COMPLETE [D] FOR A TRANSFER OF AN INTEREST IN A REGULATION S DEFINITIVE NOTE TO
A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF A RULE 144A DEFINITIVE NOTE.
COMPLETE [E] FOR A TRANSFER OF AN INTEREST IN A RULE 144A GLOBAL NOTE TO A
TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A RULE 144A
DEFINITIVE NOTE. COMPLETE [F] FOR A TRANSFER OF AN INTEREST IN RULE 144A
DEFINITIVE NOTE TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST
IN A RULE 144A GLOBAL NOTE. COMPLETE [G] FOR A TRANSFER OF AN INTEREST IN A RULE
144A DEFINITIVE NOTE TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF A RULE
144A DEFINITIVE NOTE.]

[A] This letter relates to                      principal amount of Notes that
are held in the form of a beneficial interest in a Regulation S Global Note
(ISIN No.             ) (CUSIP No.                     ) in the name of
                     (the “Transferor”) through [Euroclear] [Clearstream], which
in turn holds through the Depository. The Transferor has requested a transfer of
such beneficial interest in the Notes for a beneficial interest in a Rule 144A
Global Note (CUSIP No.                 ) in the name of                  (the
“Transferee”), to be held through the Depository. Delivered herewith is a
Transferee Certification completed by the Transferee.

[B] This letter relates to              principal amount of Notes that are held
in the form of a beneficial interest in a Regulation S Global Note (ISIN No.
                ) (CUSIP No.                     ) in the name of
                 (the “Transferor”) through [Euroclear] [Clearstream], which in
turn holds through the Depository. The Transferor has requested a transfer of
such beneficial interest in the Notes for a Rule 144A Definitive Note (CUSIP No.
                    ) in the name of                      (the “Transferee”),
pursuant to Section 6.5 of the Indenture. Delivered herewith is a Transferee
Certification completed by the Transferee.

[C] This letter relates to a Regulation S Definitive Note (ISIN No.
                    ) (CUSIP No.                 ) in the principal amount of
                in the name of                  (the “Transferor”). The
Transferor has requested a transfer of such Note for a beneficial interest in a
Rule 144A Global Note (CUSIP No.                     ) in the name of
                         (the “Transferee”), to be held through the Depository.
Delivered herewith is a Transferee Certification completed by the Transferee.

 

Exhibit B-1-2

--------------------------------------------------------------------------------

[D] This letter relates to a Regulation S Definitive Note (ISIN No.
                ) (CUSIP No.                 ) in the principal amount of
                     in the name of                  (the “Transferor”). The
Transferor has requested a transfer of such Note for a Rule 144A Definitive Note
(CUSIP No.                             ) in the name of                     
(the “Transferee”) pursuant to Section 6.5 of the Indenture. Delivered herewith
is a Transferee Certification completed by the Transferee.

[E] This letter relates to                          principal amount of Notes
that are held in the form of a beneficial interest in a Rule 144A Global Note
(CUSIP No.                     ) in the name of                     (the
“Transferor”) through the Depository. The Transferor has requested a transfer of
such beneficial interest in the Notes for a Rule 144A Definitive Note (CUSIP No.
                    ) in the name of                                (the
“Transferee”) pursuant to Section 6.5 of the Indenture. Delivered herewith in a
Transferee Certification completed by the Transferee.

[F] This letter relates to a Rule 144A Definitive Note (CUSIP No.
                    ) in the principal amount of                      in the
name of                      (the “Transferor”). The Transferor has requested a
transfer of such Note for a beneficial interest in a Rule 144A Global Note
(CUSIP No.                     ) in the name of                          (the
“Transferee”), to be held through the Depository. Delivered herewith is a
Transferee Certification completed by the Transferee.

[G] This letter relates to a Rule 144A Definitive Note (CUSIP
No.                    ) in the principal amount of                      in the
name of                     _ (the “Transferor”). The Transferor has requested a
transfer of such Notes for another Rule 144A Definitive Note (CUSIP No.
                    ) in the name of                  (the “Transferee”)
pursuant to Section 6.5 of the Indenture. Delivered herewith is a Transferee
Certification completed by the Transferee.

In connection with such request, and in respect of such Notes, the Transferor
does hereby certify that such Notes are being transferred in accordance with
(i) the transfer restrictions set forth in the Indenture and the Notes and
(ii) Rule 144A under the Securities Act to a Transferee that the Transferor
reasonably believes is purchasing the Notes for its own account and the
Transferor reasonably believes that the Transferee is a “qualified institutional
buyer” within the meaning of Rule 144A, and such Transferee is aware that the
sale to it is being made in reliance upon Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
jurisdiction.

If the Transferor is the Noteholder of a Regulation S Note (or an interest
therein) and intends to transfer such Note (or such interest) to the Transferee
taking delivery of such Note (or such interest) in the form of a Restricted Note
(or interest therein), the Transferor hereby certifies that the transfer is
being made after the end of the Distribution Compliance Period.

 

Exhibit B-1-3

--------------------------------------------------------------------------------

The certificate and the statements contained herein are made for your benefit.

 

[INSERT NAME OF TRANSFEROR] By:  

 

  Name:   Title:   Dated:

 

 

Exhibit B-1-4

--------------------------------------------------------------------------------

TRANSFEREE CERTIFICATION

 

Issuer   PMT ISSUER TRUST – FMSR   3043 Townsgate Road, Suite 300   Westlake
Village, CA 91361   Attention: PMT ISSUER TRUST – FMSR Collateralized Notes  
with a copy to:  

Wilmington Savings Fund Society, FSB, as Owner Trustee

500 Delaware Avenue, 11th Floor

  Wilmington   DE 19801   Attention: Corporate Trust Administration
Administrator   PennyMac Corp.   3043 Townsgate Road   Westlake Village   CA
91361   Attention: Treasurer Indenture Trustee                   Citibank, N.A.
 

Corporate and Investment Banking

388 Greenwich Street, 14th Floor

  New York,   NY 10013   Ref.: PMT ISSUER TRUST—FMSR, Series
20[            ]-[        ]   Attention: PMT ISSUER TRUST – FMSR Collateralized
Notes

Re: $[                ] PMT ISSUER TRUST—FMSR, MSR Collateralized Notes, Series
20        -        , Class             

Reference is hereby made to the Base Indenture, dated as of December [20], 2017
(as may be amended, restated, supplemented or otherwise modified from time to
time, the “Indenture”), among PMT ISSUER TRUST—FMSR, as Issuer, PennyMac Corp.,
as Administrator and as Servicer, and Citibank, N.A., as Indenture Trustee,
Calculation Agent, Paying Agent and Securities Intermediary, Credit Suisse First
Boston Mortgage Capital LLC, as Administrative Agent, and the “Administrative
Agents” from time to time party thereto. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

The undersigned (the “Transferee”) intends to purchase $             Note
Balance of Class Notes (the “Notes”) from the Transferor named in the Transfer
Certificate to which this Transferee Certification is attached. In connection
with the registration of the transfer of such Notes, the Transferee hereby
executes and delivers to each of you this “Transferee Certification” in which
the Transferee certifies to each of you the information set forth herein.

 

Exhibit B-1-5

--------------------------------------------------------------------------------

1. The Transferee is a “qualified institutional buyer” as that term is defined
in Rule 144A (“Rule 144A”) promulgated under the Securities Act of 1933, as
amended (the “1933 Act”) and has completed the form of certification to that
effect attached hereto as Annex A1 (if the Transferee is not a registered
investment company) or Annex A2 (if the Transferee is a registered investment
company). The Transferee is aware that the sale to it is being made in reliance
on Rule 144A.

2. The Transferee understands that the Notes have not been registered under the
1933 Act or registered or qualified under any state securities laws and that no
transfer may be made unless the Notes are registered under the 1933 Act and
under applicable state law or unless the transfer complies with Section 6.5 of
the Indenture and any provision in any applicable Indenture Supplement. The
Transferee further understands that neither the Transferor, the Administrator,
the Servicer, the Indenture Trustee nor the Note Registrar is under any
obligation to register the Notes or make an exemption from such registration
available.

3. The Transferee is acquiring the Notes for its own account or for the account
of a “qualified institutional buyer” (as defined in Rule 144A, a “QIB”), and
understands that such Notes may be resold, pledged or transferred only (a) to a
person reasonably believed to be such a QIB that purchases for its own account
or for the account of a QIB to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A or (b) to a transferee that is a
person that is not a U.S. person acquiring such interest in an “offshore
transaction” (as defined in Regulation S) in compliance with the provisions of
Regulation S, if the transfer is otherwise made in accordance with any
applicable securities laws of any state of the United States or any other
relevant jurisdiction. In addition, such transfer may be subject to additional
restrictions and is subject to compliance with certain procedures, as set forth
in Section 6.5 of the Indenture referred to below and any provision in any
applicable Indenture Supplement. By its execution of this agreement, the
Transferee agrees that it will not resell, pledge or transfer any of the Notes
to anyone otherwise than in strict compliance with Rule 144A, or pursuant to
another exemption from registration under the 1933 Act and all applicable state
securities laws, and in strict compliance with the transfer restrictions set
forth in Section 6.5 of the Indenture. The Transferee will not attempt to
transfer any or all of the Notes pursuant to Rule 144A unless the Transferee
offers and sells such Certificates only to QIBs or to offerees or purchasers
that the Transferee and any person acting on behalf of the Transferee reasonably
believe (as described in paragraph (d)(l) of Rule 144A) is a QIB.

4. The Transferee has been furnished with all information that it requested
regarding (a) the Notes and distributions thereon and (b) the Indenture.

5. The Transferee has knowledge in financial and business matters and is capable
of evaluating the merits and risks of an investment in the Notes; the Transferee
has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision; and the Transferee (or any account or
which it is pursuing) is able to bear the economic risk of an investment in the
Notes and can afford a complete loss of such investment.

 

Exhibit B-1-6

--------------------------------------------------------------------------------

6. The Transferee is an “accredited investor” as defined in paragraph (1), (2),
(3) or (7) of Rule 501(a) under the 1933 Act.

7. Either (i) the Transferee is not, and is not acquiring, holding or
transferring the Notes on behalf of or using assets of, an “employee benefit
plan” as defined in section 3(3) of ERISA, a plan described in
section 4975(e)(1) of the Code, an entity which is deemed to hold the assets of
any such employee benefit plan or plan pursuant to 29 C.F.R. section 2510.3-101
as modified by section 3(42) of ERISA (the “Plan Asset Regulations”), which
employee benefit plan, plan or entity is subject to Title I of ERISA or
section 4975 of the Code, or a governmental, non-U.S. or church plan which is
subject to any U.S. federal, state, local or other law that is substantially
similar to Title I of ERISA or section 4975 of the Code (“Similar Law”), or
(ii) (A) the Transferee is acquiring a Note, (B) as of the date of the transfer
or purchase, it believes that such Note is properly treated as indebtedness
without substantial equity features for purposes of the Plan Asset Regulations
and agrees to so treat such Note and (C) the Transferee’s acquisition, holding
and disposition of the Notes will satisfy the requirements of Prohibited
Transaction Class Exemption (“PTCE”) 84-14 (relating to transactions affected by
a qualified professional asset manager), PTCE 90-1 (relating to investments by
insurance company pooled separate accounts), PTCE 91-38 (relating to investments
in bank collective investment funds), PTCE 95-60 (relating to transactions
involving insurance company general accounts), PTCE 96-23 (relating to
transactions directed by an in-house professional asset manager) or the
statutory prohibited transaction exemption for service providers set forth in
section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code or a similar
class or statutory exemption and will not result in a non-exempt prohibited
transaction under section 406 of ERISA or section 4975 of the Code (or, in the
case of a governmental, non-U.S. or church plan subject to Similar Law, will not
violate any such substantially Similar Law).

8. If the Transferee is acquiring the Notes as a fiduciary or agent for one or
more investor accounts, it represents that it has sole investment discretion
with respect to each such account and it has full power to make the foregoing
acknowledgments, representations, warranties and agreements on behalf of each
such account.

All capitalized terms used but not otherwise defined herein have the respective
meanings assigned thereto in the Indenture, pursuant to which the Notes were
issued.

IN WITNESS WHEREOF, the undersigned has caused this Transferee Certification to
be executed by its duly authorized representative as of the day and year first
above written.

 

[TRANSFEREE] By:  

 

  Name:                                     
                                                
Title:                                     
                                                

 

Exhibit B-1-7

--------------------------------------------------------------------------------

Annex A1 to Exhibit B-1

TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES

1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Transferee.

2. The Transferee is a “qualified institutional buyer” as that term is defined
in Rule 144A (“Rule 144A”) promulgated under the Securities Act of 1933, as
amended (the “1933 Act”), because (a) the Transferee owned and/or invested on a
discretionary basis at least $             in securities [Note to reviewer—the
amount in the previous blank must be at least $100,000,000 unless the Transferee
is a dealer, in which case the amount filled in the previous blank must be at
least $10,000,000.] (except for the excluded securities referred to in paragraph
3 below) as of                  [specify a date on or since the end of the
Transferee’s most recently ended fiscal year] (such amount being calculated in
accordance with Rule 144A) and (b) the Transferee meets the criteria listed in
the category marked below.

 

  _____ Corporation, etc. The Transferee is an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a
corporation (other than a bank as defined in Section 3(a)(2) of the 1933 Act or
a savings and loan association or other similar institution referenced in
Section 3(a)(5)(A) of the Act), a partnership, or a Massachusetts or similar
business trust.

 

  _____ Bank. The Transferee (a) is a national bank or banking institution as
defined in Section 3(a)(2) of the 1933 Act and is organized under the laws of a
state, territory or the District of Columbia; the business of the Transferee is
substantially confined to banking and is supervised by the appropriate state or
territorial banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statements as of a date not more
than 16 months preceding the date of this certification in the case of a U.S.
bank, and not more than 18 months preceding the date of this certification in
the case of a foreign bank or equivalent institution, a copy of which financial
statements is attached hereto.

 

  _____ Savings and Loan. The Transferee is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution referenced in Section 3(a)(5)(A) of the 1933 Act. The
Transferee is supervised and examined by a state or federal authority having
supervisory authority over any such institutions or is a foreign savings and
loan association or equivalent institution and has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial statements as
of a date not more than 16 months preceding the date of this certification in
the case of a U.S. savings and loan association or similar institution, and not
more than 18 months preceding the date of this certification in the case of a
foreign savings and loan association or equivalent institution, a copy of which
financial statements is attached hereto.

 

Exhibit B-1-8

--------------------------------------------------------------------------------

  _____ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended (the “1934 Act”).

 

  _____ Insurance Company. The Transferee is an insurance company as defined in
Section 2(13) of the 1933 Act, whose primary and predominant business activity
is the writing of insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance commissioner or a
similar official or agency of a state, territory or the District of Columbia.

 

  _____ State or Local Plan. The Transferee is a plan established and maintained
by a state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its employees.

 

  _____ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended.

 

  _____ Investment Adviser. The Transferee is an investment adviser registered
under the Investment Advisers Act of 1940, as amended.

 

  _____ Other. The Transferee qualifies as a “qualified institutional buyer” as
defined in Rule 144A on the basis of facts other than those listed in any of the
entries above. If this response is marked, the Transferee must certify on
additional pages, to be attached to this certification, to facts that satisfy
the Servicer that the Transferee is a “qualified institutional buyer” as defined
in Rule 144A.

3. The term “securities” as used herein does not include (a) securities of
issuers that are affiliated with the Transferee, (b) securities constituting the
whole or part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (c) bank deposit notes and certificates of deposit,
(d) loan participations, (e) repurchase agreements, (f) securities owned but
subject to a repurchase agreement and (g) currency, interest rate and commodity
swaps.

4. For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Transferee, the Transferee used the
cost of such securities to the Transferee and did not include any of the
securities referred to in the preceding paragraph. Further, in determining such
aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee’s direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the 1934 Act.

5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Notes are
relying and will continue to rely on the statements made herein because one or
more sales to the Transferee may be made in reliance on Rule 144A.

 

Exhibit B-1-9

--------------------------------------------------------------------------------

  6. Will the Transferee be purchasing                      ____        _____

the Notes only for the Transferee’s                     YES         NO

own account?

If the answer to the foregoing question is “NO”, the Transferee agrees that, in
connection with any purchase of securities sold to the Transferee for the
account of a third party (including any separate account) in reliance on Rule
144A, the Transferee will only purchase for the account of a third party that at
the time is a “qualified institutional buyer” within the meaning of Rule 144A.
In addition, the Transferee agrees that the Transferee will not purchase
securities for a third party unless the Transferee has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of “qualified institutional buyer” set forth in Rule 144A.

The Transferee will notify each of the parties to which this certification is
made of any changes in the information and conclusions herein. Until such notice
is given, the Transferee’s purchase of the Notes will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the
Transferee is a bank or savings and loan as provided above, the Transferee
agrees that it will furnish to such parties updated annual financial statements
promptly after they become available.

IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed
by its duly authorized representative this          day of                 ,
                .

 

 

Print Name of Transferee

By:                                     
                                                            
Name:                                     
                                                      
Title:                                     
                                                        
Date:                                     
                                                        

 

Exhibit B-1-10

--------------------------------------------------------------------------------

Annex A2 to Exhibit B-1

REGISTERED INVESTMENT COMPANIES

1. As indicated below, the undersigned is the President, Chief Financial Officer
or Senior Vice President of the entity purchasing the Notes (the “Transferee”)
or, if the Transferee is part of a Family of Investment Companies (as defined in
paragraph 3 below), is an officer of the related investment adviser (the
“Adviser”).

2. The Transferee is a “qualified institutional buyer” as that term is defined
in Rule 144A (“Rule 144A”) promulgated under the Securities Act of 1933, as
amended (the “1933 Act”), because (a) the Transferee is an investment company (a
“Registered Investment Company”) registered under the Investment Company Act of
1940, as amended (the “1940 Act”) and (b) as marked below, the Transferee alone,
or the Transferee’s Family of Investment Companies, owned at least $            
[Note to reviewer—the amount in the previous blank must be at least
$100,000,000] in securities (other than the excluded securities referred to in
paragraph 4 below) as of                      [specify a date on or since the
end of the Transferee’s most recently ended fiscal year]. For purposes of
determining the amount of securities owned by the Transferee or the Transferee’s
Family of Investment Companies, the cost of such securities to the Transferee or
the Transferee’s Family of Investment Companies was used.

 

  _____ The Transferee owned $             in securities (other than the
excluded securities referred to in paragraph 4 below) as of the end of the
Transferee’s most recent fiscal year (such amount being calculated in accordance
with Rule 144A).

 

  _____ The Transferee is part of a Family of Investment Companies which owned
in the aggregate $             in securities (other than the excluded securities
referred to in paragraph 4 below) as of the end of the Transferee’s most recent
fiscal year (such amount being calculated in accordance with Rule 144A).

3. The term “Family of Investment Companies” as used herein means two or more
Registered Investment Companies except for a unit investment trust whose assets
consist solely of shares of one or more Registered Investment Companies
(provided that each series of a “series company,” as defined in Rule 18f-2 under
the 1940 Act, shall be deemed to be a separate investment company) that have the
same investment adviser (or, in the case of a unit investment trust, the same
depositor) or investment advisers (or depositors) that are affiliated (by virtue
of being majority-owned subsidiaries of the same parent or because one
investment adviser is a majority-owned subsidiary of the other).

4. The term “securities” as used herein does not include (a) securities of
issuers that are affiliated with the Transferee or are part of the Transferee’s
Family of Investment Companies, (b) bank deposit notes and certificates of
deposit, (c) loan participations, (d) repurchase agreements, (e) securities
owned but subject to a repurchase agreement and (f) currency, interest rate and
commodity swaps.

5. The Transferee is familiar with Rule 144A and understands that the parties to
which this certification is being made are relying and will continue to rely on
the statements made herein because one or more sales to the Transferee will be
in reliance on Rule 144A. In addition, the Transferee will only purchase for the
Transferee’s own account.

 

Exhibit B-1-11

--------------------------------------------------------------------------------

6. The undersigned will notify the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice, the
Transferee’s purchase of the Purchased Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.

IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed
by its duly authorized representative this         of                    ,
        .

 

 

[Print Name of Transferee or Adviser]

By:                                     
                                                            
Name:                                     
                                                      
Title:                                     
                                                        

 

IF AN ADVISER: [Print Name of Transferee]

Date:                                 

 

Exhibit B-1-12

--------------------------------------------------------------------------------

Exhibit B-2

FORM OF TRANSFEREE CERTIFICATE FOR TRANSFER OF NOTES PURSUANT TO REGULATION S

[Transferee to Receive Regulation S Note]

 

Issuer    PMT ISSUER TRUST – FMSR    3043 Townsgate Road, Suite 300    Westlake
Village, CA 91361   

Attention: PMT ISSUER TRUST – FMSR Collateralized Notes

 

with a copy to:

  

 

Wilmington Savings Fund Society, FSB, as Owner Trustee

500 Delaware Avenue, 11th Floor

   Wilmington    DE 19801    Attention: Corporate Trust Administration
Administrator    PennyMac Corp.    3043 Townsgate Road    Westlake Village    CA
91361    Attention: Treasurer Indenture Trustee        Citibank, N.A.   

Corporate and Investment Banking

388 Greenwich Street, 14th Floor

   New York,    NY 10013    Ref.: PMT ISSUER TRUST—FMSR, Series 20[    ]-[    ]
   Attention: PMT ISSUER TRUST – FMSR Collateralized Notes

 

  Re: $[                ] PMT ISSUER TRUST—FMSR, MSR Collateralized Notes,
Series 20    -    , Class             

Reference is hereby made to the Base Indenture, dated as of December [20], 2017
(as may be amended, restated, supplemented or otherwise modified from time to
time, the “Indenture”), among PMT ISSUER TRUST—FMSR, as Issuer, PennyMac Corp.,
as Administrator and as Servicer, and Citibank, N.A., as Indenture Trustee,
Calculation Agent, Paying Agent and Securities Intermediary, Credit Suisse First
Boston Mortgage Capital LLC, as Administrative Agent, and the “Administrative
Agents” from time to time party thereto. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

 

Exhibit B-2-1

--------------------------------------------------------------------------------

[NOTE: COMPLETE [A] FOR A TRANSFER OF AN INTEREST IN A RULE 144A GLOBAL NOTE TO
A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A REGULATION S
GLOBAL NOTE DURING THE DISTRIBUTION COMPLIANCE PERIOD. COMPLETE [B] FOR A
TRANSFER OF AN INTEREST IN A RULE 144A GLOBAL NOTE TO A TRANSFEREE THAT TAKES
DELIVERY IN THE FORM OF AN INTEREST IN A REGULATION S DEFINITIVE NOTE. COMPLETE
[C] FOR A TRANSFER OF AN INTEREST IN A RULE 144A DEFINITIVE NOTE TO A TRANSFEREE
THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A REGULATION S GLOBAL NOTE.
COMPLETE [D] FOR A TRANSFER OF AN INTEREST IN A RULE 144A DEFINITIVE NOTE TO A
TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF A REGULATION S DEFINITIVE NOTE.
COMPLETE [E] FOR A TRANSFER OF AN INTEREST IN A REGULATION S GLOBAL NOTE TO A
TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A REGULATION S
DEFINITIVE NOTE. COMPLETE [F] FOR A TRANSFER OF AN INTEREST IN REGULATION S
DEFINITIVE NOTE TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST
IN A REGULATION S GLOBAL NOTE. COMPLETE [G] FOR A TRANSFER OF AN INTEREST IN A
REGULATION S DEFINITIVE NOTE TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF
A REGULATION S DEFINITIVE NOTE.]

[A] This letter relates to                      principal amount of Notes that
are held in the form of a beneficial interest in a Rule 144A Global Note (CUSIP
No.                     ) in the name of                      (the “Transferor”)
through the Depository. The Transferor has requested a transfer of such
beneficial interest in the Notes for a beneficial interest in a Regulation S
Global Note (ISIN No.                     ) (CUSIP No.                      ) in
the name of                      (the “Transferee”) through [Euroclear]
[Clearstream], which in turn holds through the Depository. Delivered herewith is
a Transferee Certification completed by the Transferee.

[B] This letter relates to                      principal amount of Notes that
are held in the form of a beneficial interest in a Rule 144A Global Note (CUSIP
No.                      ) in the name of                      (the
“Transferor”) through the Depository. The Transferor has requested a transfer of
such beneficial interest in the Notes for a Regulation S Definitive Note (ISIN
No.                     ) (CUSIP No.                     ) in the name of
                     (the “Transferee”) pursuant to Section 6.5 of the
Indenture. Delivered herewith is a Transferee Certification completed by the
Transferee.

[C] This letter relates to a Rule 144A Definitive Note (CUSIP No.
                    ) in the principal amount of                      in the
name of                     (the “Transferor”). The Transferor has requested a
transfer of such beneficial interest in the Notes for a beneficial interest in a
Regulation S Global Note (ISIN No.                     ) (CUSIP No.
                    ) in the name of                      (the “Transferee”)
through [Euroclear] [Clearstream], which in turn holds through the Depository.
Delivered herewith is a Transferee Certification completed by the Transferee.

[D] This letter relates to a Rule 144A Definitive Note (CUSIP
No.                    ) in the principal amount of                      in the
name of                      (the “Transferor”). The Transferor has requested a
transfer of such Note for a Regulation S Definitive Note (ISIN No.
                    ) (CUSIP No.                    ) in the name of
                     (the “Transferee”) pursuant to Section 6.5 of the
Indenture. Delivered herewith is a Transferee Certification completed by the
Transferee.

 

Exhibit B-2-2

--------------------------------------------------------------------------------

[E] This letter relates to                      principal amount of Notes that
are held in the form of a beneficial interest in a Regulation S Global Note
(ISIN No.                     ) (CUSIP No.                    ) in the name of
                     (the “Transferor”) through the Depository. The Transferor
has requested a transfer of such beneficial interest in the Notes for a
Regulation S Definitive Note (ISIN No.                     ) (CUSIP No.
                    ) in the name of                     _______ (the
“Transferee”) pursuant to Section 6.5 of the Indenture. Delivered herewith is a
Transferee Certification completed by the Transferee.

[F] This letter relates to a Regulation S Definitive Note (ISIN No.
                    ) (CUSIP No.                     ) in the principal amount
of                      in the name of                      (the “Transferor”).
The Transferor has requested a transfer of such Note for a beneficial interest
in a Regulation S Global Note (ISIN No.                     ) (CUSIP No.
                    ) in the name of                      (the “Transferee”)
through [Euroclear] [Clearstream], which in turn holds through the Depository.
Delivered herewith is a Transferee Certification completed by the Transferee.

[G] This letter relates to a Regulation S Definitive Note (ISIN No.
                    ) (CUSIP No.                     ) in the principal amount
of                      in the name of                      (the “Transferor”).
The Transferor has requested of such beneficial interest in the Notes for
Regulation S Definitive Note (ISIN No.                     ) (CUSIP No.
                    ) in the name of                      (the “Transferee”)
pursuant to Section 6.5 of the Indenture. Delivered herewith is a Transferee
Certification completed by the Transferee.

In connection with such request, and in respect of such Notes, the Transferor
does hereby certify that such Notes are being transferred in accordance with
(i) the transfer restrictions set forth in the Indenture and the Notes, and
that:

(i) the offer of the Notes was not made to a person in the United States;

(ii) at the time the buy order was originated, the Transferee was outside the
United States or the Transfer and any person acting on its behalf reasonably
believed that the Transferee was outside the United States

(iii) no directed selling efforts have been made in contravention of the
requirements of Rule 903 or 904 of Regulation S, as applicable;

(iv) the transaction is not part of a plan or scheme to evade the registration
requirements of the United States Securities Act of 1933, as amended (the
“Securities Act”); and

(v) the Transferee is not a U.S. person.

If the Transferor is the Noteholder of a Regulation S Note (or an interest
therein) and intends to transfer such Note (or such interest) to the Transferee
taking delivery of such Note (or such interest) in the form of a Restricted Note
(or interest therein), the Transferor hereby certifies that the transfer is
being made after the end of the Distribution Compliance Period.

 

Exhibit B-2-3

--------------------------------------------------------------------------------

The certificate and the statements contained herein are made for your benefit.

 

[INSERT NAME OF TRANSFEROR] By:  

 

  Name:   Title:

Dated:

 

Exhibit B-2-4

--------------------------------------------------------------------------------

TRANSFEREE CERTIFICATION

 

Issuer    PMT ISSUER TRUST – FMSR    3043 Townsgate Road, Suite 300    Westlake
Village, CA 91361   

Attention: PMT ISSUER TRUST – FMSR Collateralized Notes

 

with a copy to:

  

 

Wilmington Savings Fund Society, FSB, as Owner Trustee

500 Delaware Avenue, 11th Floor

   Wilmington    DE 19801    Attention: Corporate Trust Administration
Administrator    PennyMac Corp.    3043 Townsgate Road    Westlake Village    CA
91361    Attention: Treasurer Indenture Trustee        Citibank, N.A.   

Corporate and Investment Banking

388 Greenwich Street, 14th Floor

   New York,    NY 10013    Ref.: PMT ISSUER TRUST—FMSR, Series
20[        ]-[        ]    Attention: PMT ISSUER TRUST – FMSR Collateralized
Notes

 

  Re: $[                ] PMT ISSUER TRUST—FMSR, MSR Collateralized Notes,
Series 20    -    , Class             

Reference is hereby made to the Base Indenture, dated as of December [20], 2017
(as may be amended, restated, supplemented or otherwise modified from time to
time, the “Indenture”), among PMT ISSUER TRUST—FMSR, as Issuer, PennyMac Corp.,
as Administrator and as Servicer, and Citibank, N.A., as Indenture Trustee,
Calculation Agent, Paying Agent and Securities Intermediary, Credit Suisse First
Boston Mortgage Capital LLC, as Administrative Agent, and the “Administrative
Agents” from time to time party thereto. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

The undersigned (the “Transferee”) intends to purchase $                 Note
Balance of Class __Notes (the “Notes”) from the Transferor named in the Transfer
Certificate to which this Transferee Certification is attached. In connection
with the registration of the transfer of such Notes, the Transferee hereby
executes and delivers to each of you this “Transferee Certification” in which
the Transferee certifies to each of you the information set forth herein.

 

Exhibit B-2-5

--------------------------------------------------------------------------------

1. The Transferee (i) is acquiring such Notes in an offshore transaction in
accordance with Rule 904 of Regulation S, (ii) is acquiring such Notes for its
own account, (iii) is not acquiring, and has not entered into any discussions
regarding its acquisition of, such Notes while it is in the United States of
America or any of its territories or possessions, (iv) understands that such
Notes are being sold without registration under the Securities Act by reason of
an exemption that depends, in part, on the accuracy of these representations,
(v) understands that such Notes may not, absent an applicable exemption, be
transferred without registration and/or qualification under the Securities Act
and applicable state securities laws and the laws of any other applicable
jurisdiction and (vi) understands that prior to the end of the Distribution
Compliance Period, interests in a Regulation S Note may only be held through
Euroclear or Clearstream.

2. The Transferee understands that the Notes have not been registered under the
Securities Act and, therefore, cannot be offered or sold in the United States or
to U.S. persons (as defined in Rule 902(k) promulgated under the Securities Act)
unless they are registered under the Securities Act or unless an exemption from
registration is available. Accordingly, the certificates representing the Notes
will bear a legend stating that the Notes have not been registered under the
Securities Act and setting forth certain of the restrictions on transfer of the
Notes. The Transferee understands that the Issuer has no obligation to register
the Notes under the Securities Act or to comply with the requirements for any
exemption from the registration requirements of the Securities Act.

3. The Transferee understands that the Notes (or any interest therein) may be
resold, pledged or transferred only (a) to a person whom the Transferee
reasonably believes after due inquiry is, and who has certified that it is, a
“qualified institutional buyer” (a “QIB”) that purchases for its own account or
for the account of a QIB to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A or (b) to a transferee that is a
non-U.S. person acquiring such interest in an “offshore transaction” (as defined
in Regulation S) in compliance with the provisions of Regulation S, if the
transfer is otherwise made in accordance with any applicable securities laws of
any state of the United States or any other relevant jurisdiction. In addition,
such transfer may be subject to additional restrictions and is subject to
compliance with certain procedures, as set forth in Section 6.5 of the Indenture
referred to above.

4. The Transferee has been furnished with all information that it requested
regarding (a) the Notes and distributions thereon and (b) the Indenture.

5. The Transferee has knowledge in financial and business matters and is capable
of evaluating the merits and risks of an investment in the Notes; the Transferee
has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision; and the Transferee (or any account or
which it is pursuing) is able to bear the economic risk of an investment in the
Notes and can afford a complete loss of such investment.

 

Exhibit B-2-6

--------------------------------------------------------------------------------

6. Either (i) the Transferee is not, and is not acquiring, holding or
transferring the Notes on behalf of or with assets of, an “employee benefit
plan” as defined in section 3(3) of ERISA, a plan described in
section 4975(e)(1) of the Code, an entity which is deemed to hold the assets of
any such employee benefit plan or plan pursuant to 29 C.F.R. Section 2510.3-101
as modified by section 3(42) of ERISA (the “Plan Asset Regulations”), which
employee benefit plan, plan or entity is subject to Title I of ERISA or
section 4975 of the Code, or a governmental, non-U.S. or church plan which is
subject to any U.S. federal, state, local or other law that is substantially
similar to Title I of ERISA or section 4975 of the Code (“Similar Law”), or
(ii) (A) as of the date of the transfer or purchase, it believes that such Note
is properly treated as indebtedness without substantial equity features for
purposes of the Plan Asset Regulations and agrees to so treat such Note and
(B) the Transferee’s acquisition, holding and disposition of the Notes will
satisfy the requirements of Prohibited Transaction Class Exemption (“PTCE”)
84-14 (relating to transactions affected by a qualified professional asset
manager), PTCE 90-1 (relating to investments by insurance company pooled
separate accounts), PTCE 91-38 (relating to investments in bank collective
investment funds), PTCE 95-60 (relating to transactions involving insurance
company general accounts), PTCE 96-23 (relating to transactions directed by an
in-house professional asset manager) or the statutory prohibited transaction
exemption for service providers set forth in Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code or a similar class or statutory exemption and
will not result in a non-exempt prohibited transaction under section 406 of
ERISA or section 4975 of the Code (or, in the case of a governmental, non-U.S.
or church plan subject to Similar Law, will not violate any such substantially
Similar Law).

All capitalized terms used but not otherwise defined herein have the respective
meanings assigned thereto in the Indenture, pursuant to which the Notes were
issued.

 

Exhibit B-2-7

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has caused this Transferee Certification to
be executed by its duly authorized representative as of the day and year first
above written.

 

[TRANSFEREE] By:  

 

  Name:  

 

  Title:  

 

 

Exhibit B-2-8

--------------------------------------------------------------------------------

Exhibit C-1

AUTHORIZED REPRESENTATIVES OF THE INDENTURE TRUSTEE,

CALCULATION AGENT, PAYING AGENT AND

SECURITIES INTERMEDIARY

[See Attached]

 

Exhibit C-1-1

--------------------------------------------------------------------------------

Exhibit C-2

AUTHORIZED REPRESENTATIVES OF PENNYMAC CORP., AS SERVICER AND AS ADMINISTRATOR

 

Name:

  

Title:

  

Signature

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

Exhibit C-2-1

--------------------------------------------------------------------------------

Exhibit C-3

AUTHORIZED REPRESENTATIVES OF THE ADMINISTRATIVE AGENT

 

Name:

  

Title:

  

Signature

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

Exhibit C-3-1

--------------------------------------------------------------------------------

Exhibit C-4

AUTHORIZED REPRESENTATIVES OF THE ISSUER

[See attached]

 

Exhibit C-4-1

--------------------------------------------------------------------------------

Exhibit D

FORM OF CERTIFICATE OF AUTHENTICATION OF INDENTURE TRUSTEE AND

AUTHENTICATING AGENT

[See attached]

 

Exhibit D-1

--------------------------------------------------------------------------------

INDENTURE TRUSTEE’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Series or Class designated herein and referred
to in the within-mentioned Indenture and Indenture Supplement.

 

Date: [            ], 20[    ]     CITIBANK, N.A., not in its individual
capacity but solely as Indenture Trustee     By:  

 

    Title:   Authorized Signatory of Indenture Trustee

AUTHENTICATING AGENT’S

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Class designated herein and referred to in the
within-mentioned Indenture and Indenture Supplement.

 

Date: [            ], 20[    ]    

CITIBANK, N.A., not in its individual capacity but solely as Authenticating
Agent

    By:  

 

    Title:   Authorized Signatory of Authenticating Agent

 

Exhibit D-1-2

--------------------------------------------------------------------------------

Exhibit E

FORM OF INDENTURE SUPPLEMENT

[To be provided]

 

Exhibit E-1

--------------------------------------------------------------------------------

Exhibit F

FORM OF RISK RETENTION CERTIFICATION

[                    ], 20[    ]

Citibank, N.A.

Corporate and Investment Banking

388 Greenwich Street, 14th Floor

New York, NY 10013

Attention: PMT ISSUER TRUST—FMSR MSR Collateralized Notes

RE:    Risk Retention Certification

Ladies and Gentlemen:

Reference is made to (i) the Base Indenture, dated as of December [20], 2017 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Base Indenture”), among PMT ISSUER TRUST—FMSR (the “Issuer”), Citibank, N.A.,
as Indenture Trustee, Calculation Agent, Paying Agent and Securities
Intermediary (the “Indenture Trustee”), PennyMac Corp. (“PMC”) and Credit Suisse
First Boston Mortgage Capital LLC (the “Administrative Agent”), (ii) the Series
[            ] Indenture Supplement, dated as of [            ], 20[    ] (the
“Series [        ] Indenture Supplement,” and together with the Base Indenture,
the “Indenture”), among the Issuer, the Indenture Trustee, PMC, as Servicer and
as Administrator, and the Administrative Agent and (iii) the Risk Retention Side
Letter, dated as of [            ], 20[    ] (the “Risk Retention Side Letter”),
between PMC and the Issuer. Capitalized terms not otherwise defined in this
letter agreement shall have the same meanings as specified therefor in the
Indenture or the Risk Retention Side Letter, as applicable.

In connection with, and in consideration of the agreements contained in the
Indenture, as of the date first above written:

 

  (a)

PMC certifies to the Issuer on behalf of each holder of a Series [            ]
Note that: (i) as an originator for the purposes of the Retention Requirements,
it has held on an on-going basis, a material net economic interest in the
securitization transaction contemplated by the Note Purchase Agreement, which is
not less than 5% of the aggregate nominal value of the Participation
Certificates (the “Retained Economic Interest”) measured at the time of each
acquisition of a Participation Certificate by the Issuer; (ii) the Retained
Economic Interest takes the form of a first loss tranche in accordance with
paragraph 1(d) of Article 405 of the Capital Requirements Regulation, as
represented by, initially, PMC’ direct ownership of the Owner Trust Certificate
and the Issuer’s associated rights to residual cash flow under the Base
Indenture; (iii) it has held up to 100% of the membership interest in the Owner
Trust Certificate; (iv) the aggregate capital contributions made by PMC with
respect to the ownership interests in the Issuer have represented at least 5.0%
of the aggregate nominal value of the Participation Certificates measured at the
time of origination as described in (i) above; and (v) PMC has not sold or

 

Exhibit F-1

--------------------------------------------------------------------------------

  entered into any credit risk mitigation, short positions or any other hedges
or otherwise sought to mitigate its credit risk with respect to its ownership
interests in the Issuer or the Participation Certificates (except as permitted
by the Capital Requirements Regulation); and

 

  (b) the Issuer certifies to each holder of a Series [            ] Note for
purposes of the Retention Requirements that it has not sold or entered into any
credit risk mitigation, short positions or any other hedges or otherwise sought
to mitigate its credit risk with respect to Retained Economic Interest or the
Participation Certificates (except as permitted by the Capital Requirements
Regulation).

IN WITNESS WHEREOF, the undersigned have caused this certification to be
executed by its duly authorized representative as of the date first above
written.

 

PENNYMAC CORP. By:  

 

Name:   Title:   PMT ISSUER TRUST—FMSR By: PENNYMAC CORP., as Administrator By:
 

 

Name:   Title:  

 

Exhibit F-2

--------------------------------------------------------------------------------

APPENDIX A

DEFINED TERMS

“1933 Act” means the Securities Act of 1933.

“1934 Act” means the Securities Exchange Act of 1934.

“Accepted Servicing Practices” means, with respect to any Mortgage Loan,
(i) those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, and (ii) those
practices required from time to time by Fannie Mae.

“Account Bank” means Bank of America, N.A., and any successor thereto in such
capacity.

“Acknowledgment Agreement” means collectively, (i) the Acknowledgment Agreement,
dated as of December 20, 2017, by and among Fannie Mae, PMC, PMH, PMT and the
Indenture Trustee, and (ii) the Subordination of Interest Agreement.

“Act” when used with respect to any Noteholder, has the meaning set forth in
Section 1.5 of the Base Indenture.

“Act of Insolvency” means, with respect to any Person or its Affiliates, (i) the
filing of a petition, commencing, or authorizing the commencement of any case or
proceeding, or the voluntary joining of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law
relating to the protection of creditors, or suffering any such petition or
proceeding to be commenced by another which is consented to, not timely
contested or results in entry of an order for relief; (ii) the seeking of the
appointment of a receiver, trustee, custodian or similar official for such party
or an Affiliate or any substantial part of the property of either; (iii) the
appointment of a receiver, conservator, or manager for such party or an
Affiliate by any governmental agency or authority having the jurisdiction to do
so; (iv) the making or offering by such party or an Affiliate of a composition
with its creditors or a general assignment for the benefit of creditors; (v) the
admission by such party or an Affiliate of such party of its inability to pay
its debts or discharge its obligations as they become due or mature; or
(vi) that any governmental authority or agency or any person, agency or entity
acting or purporting to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume custody or control of, all
or any substantial part of the property of such party or of any of its
Affiliates, or shall have taken any action to displace the management of such
party or of any of its Affiliates or to curtail its authority in the conduct of
the business of such party or of any of its Affiliates.

“Action” when used with respect to any Noteholder, has the meaning set forth in
Section 1.5 of the Base Indenture.

“Activation Notice” has the meaning set forth in the Dedicated Account Control
Agreement.

 

1

--------------------------------------------------------------------------------

“Additional Note Payment” means, for each Series of Notes, the meaning as
specified in the related Indenture Supplement, if specified therein.

“Administration Agreement” means the Administration Agreement, dated as of the
Closing Date, by and between the Issuer and the Administrator.

“Administrative Agent” means (a) initially, CSFB or any Affiliate of the
foregoing or any successor thereto in respect of the Series of Notes for which
it is designated as an Administrative Agent therefor in the related Indenture
Supplement, and (b) in respect of any Series, the Person(s) specified in the
related Indenture Supplement. Unless the context indicates otherwise in any
Indenture Supplement for such Indenture Supplement, each reference to the
“Administrative Agent” herein or in any other Transaction Document shall be
deemed to constitute a collective reference to each Person that is an
Administrative Agent. If (x) any Person that is an Administrative Agent resigns
as an Administrative Agent in respect of all Series for which it was designated
as the Administrative Agent or (y) all of the Notes in respect of each Series
for which any Person was designated as the Administrative Agent are repaid or
redeemed in full, such Person shall cease to be an “Administrative Agent” for
purposes hereof and each other Transaction Document.

“Administrative Expenses” means any amounts due from or accrued for the account
of the Issuer with respect to any period for any administrative expenses
incurred by the Issuer, including (i) to any accountants, agents, counsel and
other advisors of the Issuer (other than the Owner Trustee) for reasonable and
customary fees and expenses; (ii) to any other person in respect of any
governmental fee, charge or tax; (iii) to any other Person (other than the Owner
Trustee) in respect of any other fees or expenses permitted under this Base
Indenture (including indemnities) and the documents delivered pursuant to or in
connection with this Base Indenture and the Notes; (iv) any and all fees and
expenses of the Issuer incurred in connection with its entry into and the
performance of its obligations under any of the agreements contemplated by this
Base Indenture; (v) the orderly winding up of the Issuer following the cessation
of the transactions contemplated by this Base Indenture; and (vi) any and all
other reasonable and customary fees and expenses incurred by the Issuer in
connection with the transactions contemplated by this Base Indenture, but not in
duplication of any amounts specifically provided for in respect of the Indenture
Trustee, the Owner Trustee, the Administrator or any VFN Noteholder.

“Administrator” means PMC, in its capacity as the Administrator on behalf of the
Issuer, and any successor to PMC in such capacity.

“Advance Reimbursement Amount” means any amount which the Servicer collects on a
Mortgage Loan, withdraws from a custodial account or receives from any successor
servicer or Fannie Mae pursuant to the Agency Guide, as reimbursement for
advances in its capacity as Servicer with respect to Fannie Mae MBS.

“Advance Rate” means, with respect to any Series of Notes, and for any
Class within such Series, if applicable, the percentage specified as its
“Advance Rate” in the Indenture Supplement for such Series.

 

2

--------------------------------------------------------------------------------

“Advance Rate Trigger Event” means the occurrence of an Advance Rate Trigger 1
Event or an Advance Trigger 2 Event.

“Advance Rate Trigger 1 Event” means the occurrence of any of the following:

(a) the Servicer SDQ Rate exceeds 2.00% over three (3) consecutive months in a
quarter;

(b) Net Earnings are negative for two (2) consecutive calendar quarters; or

(c) a decline in the Lender Adjusted Net Worth of 25% over a single quarter.

“Advance Rate Trigger 2 Event” means the occurrence of any of the following:

(a) the Servicer SDQ Rate exceeds 4.00% over three (3) consecutive months in a
quarter;

(b) Net Earnings are negative for four (4) consecutive quarters and there is a
decline in the Lender Adjusted Net Worth of 30% or more during the same period;

(c) Fannie Mae issues a PIP and the PIP is not remedied within six (6) months;
or

(d) a decline in the Lender Adjusted Net Worth of 40% over two (2) consecutive
quarters.

“Adverse Claim” means a lien, security interest, charge, encumbrance or other
right or claim of any Person (other than (A) the liens created in favor of the
Secured Parties or assigned to the Secured Parties by (i) this Base Indenture,
(ii) the PC Repurchase Agreement or (iii) any other Transaction Document,
(B) the rights of Fannie Mae under the Fannie Mae Lender Contract) or (C) the
Owner Trustee Lien.

“Adverse Effect” when used in this Base Indenture with respect to any Series or
Class of Notes and any event, means that such event is reasonably likely, at the
time of its occurrence, to (i) result in the occurrence of an Event of Default
relating to such Series or Class of Notes, (ii) materially adversely affect
(A) the amount of funds available to be paid to the Noteholders of such Series
or Class of Notes pursuant to this Base Indenture, (B) the timing of such
payments or (C) the rights or interests of the Noteholders of such Series or
Class, (iii) materially adversely affect the Security Interest of the Indenture
Trustee for the benefit of the Secured Parties in the Collateral unless
otherwise permitted by this Base Indenture, or (iv) materially adversely affect
the collectability of the Collateral.

“Affiliate” means, with respect to any specified Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person; provided, however, that in respect of
PMC, PMH or Guarantor, the term “Affiliate” shall include only Guarantor and its
wholly owned subsidiaries, and in respect of PLS, the term “Affiliate” shall
include only Private National Mortgage Acceptance Company, LLC and its wholly
owned subsidiaries.

 

3

--------------------------------------------------------------------------------

“Ancillary Income” means all income derived from a Mortgage Loan (other than
payments or other collections in respect of principal, interest, escrow payments
and prepayment penalties attributable to such Mortgage Loan) and to which the
Servicer or any Subservicer, as the servicer or subservicer of the Mortgage
Loan, is entitled in accordance with the Lender Contract, including, (i) all
late charges, fees received with respect to checks or bank drafts returned by
the related bank for insufficient funds, assumption fees, optional insurance
administrative fees, all interest, income, or credit on funds deposited in the
escrow accounts and custodial accounts or other receipts on or with respect to
such Mortgage Loan (subject to Applicable Law and the Lender Contract), (ii)
reconveyance fees, subordination fees, speedpay fees, mortgage pay on the web
fees, automatic clearing house fees, demand statement fees, modification fees,
if any, and other similar types of fees arising from or in connection with any
Mortgage Loan to the extent not otherwise payable by the mortgagor under
Applicable Law or pursuant to the terms of the related Mortgage Note, and
(iii) if and to the extent that any FHA Loans, USDA Loans or VA Loans are
Subject Mortgages, any incentive fees payable by FHA under the applicable FHA
Mortgage Insurance Contract, by USDA under the USDA Loan Guarantee Document, or
by VA under the applicable VA Loan Guaranty Agreement, as applicable, to the
Servicer or any Subservicer, as servicer or subservicer of the Mortgage Loans,
including incentive amounts payable in connection with Mortgage Loan
modifications and other loss mitigation activities.

“Applicable Law” has the meaning set forth in Section 4.1 of the Base Indenture.

“Applicable Rating” means, for each Class of Notes, the rating(s) specified as
such for such Class in the related Indenture Supplement, if applicable. Only
those rating(s) specified for any Class of Notes that are made at the request of
Issuer shall be applicable for purposes of this Base Indenture.

“Appraised Market Value” means, for any MSR, the appraised market value
established in accordance with the Fannie Mae Servicing Guide.

“Asset” means (a) the Participation Certificates and (b) the related MSRs, in
each case, sold or pledged to secure the Obligations under the PC Repurchase
Agreement.

“Asset Base” means for any date of determination, the product of (1) the
Purchase Price Percentage and (2) the then-current Market Value.

“Asset File” means the documents described in Section 2.2 of the Base Indenture
pertaining to a particular Participation Certificate.

“Asset Schedule” means a schedule, in the form attached to the PC Repurchase
Agreement, listing as of the date of such schedule the applicable Participation
Certificate and the applicable Participation Agreement, as such schedule shall
be updated from time to time in accordance with Section 2.02 of the PC
Repurchase Agreement.

“Authenticating Agent” means any Person authorized by the Indenture Trustee to
authenticate Notes under Section 11.12 of the Base Indenture.

 

4

--------------------------------------------------------------------------------

“Authorized Signatory” means, with respect to any entity, each Person duly
authorized to act as a signatory of such entity at the time such Person signs on
behalf of such entity.

“Available Funds” means, with respect to:

(i) any Interim Payment Date, (A) all Collections on the Participation
Certificates or the Eligible Securities received during the related Collection
Period and on deposit in the Collection and Funding Account, plus (B) any other
funds of the Issuer that the Issuer (or the Administrator on behalf of the
Issuer) identifies to the Indenture Trustee to be treated as “Available Funds”
for such Interim Payment Date (including any cash amounts that are on deposit in
the Collection and Funding Account which the Administrator has instructed the
Indenture Trustee to apply in accordance with Section 4.4.(a)(iii) of the Base
Indenture); and

(ii) any Payment Date, (A) all Collections on the Participation Certificates or
the Eligible Securities received during the related Collection Period and on
deposit in the Collection and Funding Account, plus (B) any income from
Permitted Investments in Trust Accounts that have been established for the
benefit of all Series of Notes, plus (C) any other funds of the Issuer that the
Issuer (or the Administrator on behalf of the Issuer) identifies to the
Indenture Trustee to be treated as “Available Funds” for such Payment Date
(including any cash amounts that are on deposit in the Collection and Funding
Account which the Administrator has instructed the Indenture Trustee to apply in
accordance with Section 4.5(a)(1)(ix) of the Base Indenture) plus (D) any
amounts released from the Series Reserve Account under the Series 2017-VF1
Indenture Supplement.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101
et seq.

“Base Indenture” means the Base Indenture, dated December 20, 2017, among the
Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying
agent and as securities intermediary, PMC, as Administrator and as Servicer and
the Administrative Agent, including the schedules and exhibits thereto.

“Base Servicing Fee” means, for any Mortgage Loan, a monthly fee not greater
than 12.5 basis points of the unpaid principal balance of the Mortgage Loans.

“Base Servicing Fee Rate” means, for the Sold MSR Excess Spread PC, the “Base
Servicing Fee Rate” set forth as such in the Excess Spread Participation
Agreement. For the Retained MSR Excess Spread PC, the “Base Servicing Fee Rate”
set forth as such in the Retained Excess Spread Participation Agreement. For any
other Participation Certificate, as set forth in the related Participation
Agreement.

“Benefit Plan Investor” has the meaning set forth in Section 3.9(b) of the Trust
Agreement.

 

5

--------------------------------------------------------------------------------

“Book-Entry Notes” means a note registered in the name of the Depository or its
nominee, ownership of which is reflected on the books of the Depository or on
the books of a Person maintaining an account with such Depository (directly or
as an indirect participant in accordance with the rules of such Depository);
provided, that after the occurrence of a condition whereupon Definitive Notes
are to be issued to Note Owners, such Book-Entry Notes shall no longer be
“Book-Entry Notes”.

“Borrowing Base” means, as of any date of determination, an amount equal to the
aggregate Collateral Value (as calculated using clause (b) of the definition of
Market Value Percentage) of the Portfolio.

“Borrowing Base Deficiency” means the positive difference, if any, of:

 

  (i) the aggregate VFN Principal Balances of all Outstanding Series of VFNs;
and

 

  (ii) the sum of:

(a) the product of: (1) (A) the more recent of the Borrowing Base on the
Borrowing Base Determination Date preceding such date of determination, or the
Interim Borrowing Base on the Interim Borrowing Base Determination Date
preceding such date of determination minus (B) the aggregate of the Term Note
Series Invested Amounts, and (2) the Weighted Average Advance Rate in respect of
all Outstanding Series of VFNs; and

(b) the Market Value of any Eligible Securities that have been transferred and
delivered to the Issuer pursuant to the PC Repurchase Agreement prior to the
Payment Date or Interim Borrowing Base Payment Date, as applicable; provided,
however, that aggregate Market Value of all Eligible Securities and all Pledged
Margin Securities, together, cannot exceed an amount equal to 15% of the
Borrowing Base as of such date of determination; provided, further, that any
Eligible Security shall only be included for purposes of determining the
Borrowing Base Deficiency for a maximum of three (3) consecutive months;

(c) any cash amounts that are on deposit in the Collection and Funding Account
that were deposited by the Administrator prior to the Payment Date or Interim
Borrowing Base Payment Date, as applicable, which the Administrator has
instructed the Indenture Trustee to reserve in the Collection and Funding
Account pursuant to Sections 4.4(a)(iii) and Section 4.5(a)(1)(vii) of the Base
Indenture; and

(d) the Market Value of any Pledged Margin Securities that have been pledged to
the Issuer pursuant to the PC Repurchase Agreement prior to the Payment Date or
Interim Borrowing Base Payment Date, as applicable; provided, however, that
aggregate Market Value of all Pledged Margin Securities and all Eligible
Securities, together, cannot exceed an amount equal to 15% of the Borrowing Base
as of such date of determination; provided, further, that any Pledged Margin
Securities shall only be included for purposes of determining the Borrowing Base
Deficiency for a maximum of three (3) consecutive months.

 

6

--------------------------------------------------------------------------------

“Borrowing Base Determination Date” means, with respect to any Payment Date, the
Business Day of the month of such Payment Date on which the MSR Valuation Agent
performs its Market Value Report based on the information contained in the MSR
Monthly Report.

“Borrowing Capacities” means, for any Outstanding Series of VFNs on any date,
the difference between (i) the related Maximum VFN Principal Balance on such
date and (ii) the related VFN Principal Balance on such date.

“Business Day” means, for any Class of Notes, any day other than (i) a Saturday
or Sunday or (ii) any other day on which (x) national banking associations or
state banking institutions in New York, New York, the State of California, the
State of Texas or the city and state where the Corporate Trust Office is located
or (y) the Federal Reserve Bank of New York are authorized or obligated by law,
executive order or governmental decree to be closed.

“Buyer Parties” means any or all of the VFN Repo Buyer, the Administrative
Agent, the Indenture Trustee, the Owner Trustee and any other parties acting on
behalf of the Issuer.

“Calculation Agent” means the same Person who serves at any time as the
Indenture Trustee, or an Affiliate of such Person, as calculation agent pursuant
to the terms of this Base Indenture.

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of the PC Repurchase Agreement, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.

“Cash Equivalents” has the meaning set forth in Section 1 of the PC Repo Pricing
Side Letter.

“Certificate of Authentication” means the certificate of the Indenture Trustee
or the alternative certificate of the Authenticating Agent, substantially in the
form attached to the Base Indenture in Exhibit D.

“Certificate of Trust” means the Certificate of Trust filed for the Trust on
November 22, 2017, pursuant to the Original Trust Agreement and Section 3810(a)
of the Statutory Trust Statute.

“Certificate Register” and “Certificate Registrar” means the register mentioned
and the registrar appointed pursuant to Section 3.3 of the Trust Agreement.

“Certificateholder” has the meaning set forth in the Trust Agreement.

“Change in Control” means:

 

7

--------------------------------------------------------------------------------

(A) any transaction or event as a result of which Guarantor ceases to own,
beneficially or of record, through one of its wholly-owned Subsidiaries, more
than 50% of the stock of PMC, except with respect to an initial public offering
of PMC’s common stock on a U.S. national securities exchange;

(B) the sale, transfer, or other disposition of all or substantially all of
PMC’s assets (excluding any such action taken in connection with any
securitization transaction); or

(C) the consummation of a merger or consolidation of PMC with or into another
entity or any other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by Persons who were not stockholders of PMC immediately prior to such
merger, consolidation or other reorganization.

“Citibank” means Citibank, N.A. and any successor or assign thereto.

“Class” means, with respect to any Notes, the class designation assigned to such
Note in the related Indenture Supplement. A Series issued in one class, with no
class designation in the related Indenture Supplement, may be referred to herein
as a “Class”.

“Class Invested Amount” means, as of any date of determination:

(i) for any Class of a Series of Variable Funding Notes, an amount equal to:
(i) the sum of (A) the outstanding Note Balance of such Class (as reduced by
(1) the Scheduled Principal Payment Amount actually paid on such Class on such
Payment Date, if applicable, and (2) the Early Amortization Event Payment Amount
actually paid on such Class on such Payment Date, if applicable), plus (B) the
aggregate outstanding Note Balances of all Classes of Variable Funding Notes
within the same Series of Variable Funding Notes that are senior to or pari
passu with such Class on such date and not otherwise captured in clause (A),
divided by (ii) the highest Advance Rate in respect of such Class of Variable
Funding Notes; and

(ii) for any Class of a Series of Term Notes, an amount equal to: (i) the sum of
(A) the outstanding the Note Balance of such Class (as reduced by (1) the
Scheduled Principal Payment Amount actually paid on such Class on such Payment
Date, if applicable, and (2) the Early Amortization Event Payment Amount
actually paid on such Class on such Payment Date, if applicable), plus (B) the
aggregate outstanding Note Balances of all Classes of Term Notes within the same
Series of Term Notes that are senior to or pari passu with such Class on such
date and not otherwise captured in clause (A), divided by (ii) the highest
Advance Rate in respect of such Class of Term Notes.

“Clearing Corporation” has the meaning set forth in Section 8-102(a)(5) of the
UCC.

“Clearstream” means Clearstream Banking, S.A., and any successor thereto.

 

8

--------------------------------------------------------------------------------

“Closing Date” means December 20, 2017.

“Code” means the Internal Revenue Code of 1986.

“Collateral” has the meaning set forth in the Granting Clause of the Base
Indenture.

“Collateral Value” means, as of the applicable Determination Date, the
difference between (i) the product of (A) the related Market Value Percentage
and (B) the aggregate unpaid principal balance of the Mortgage Loans and
(ii) the Stop-Loss Cap.

“Collection and Funding Account” means the non-interest bearing trust account or
accounts, each of which shall be an Eligible Account, established and maintained
pursuant to Sections 4.1 and 4.7 of the Base Indenture and entitled “Citibank,
N.A., as Indenture Trustee for the PMT ISSUER TRUST—FMSR Collateralized Notes,
Collection and Funding Account” or such of the foregoing that can be reflected
on the account systems of the institution maintaining such account.

“Collection Period” means, (i) for the first Interim Payment Date or Payment
Date, the period beginning on the Cut-off Date and ending at the end of the day
before the Determination Date for such Interim Payment Date or Payment Date, and
(ii) for each subsequent Interim Payment Date or Payment Date, the period
beginning at the opening of business on the most recent preceding Determination
Date and ending as of the close of business on the day before the Determination
Date for such Interim Payment Date or Payment Date.

“Collection Policy” means PMC’s policies regarding Collections and remittance in
accordance with the provisions of the PC Repurchase Agreement and the Servicing
Contracts and shall include the charging and collection of fees for servicing
functions, including, without limitation, the charging of late fees, assumption
fees, modification fees and other clerical or administrative fees in the
ordinary course of servicing.

“Collections” means (i) any amounts received by PMC relating to the
Participation Certificates, including, any amounts received by PMC and payable
to the Issuer under the PC Repurchase Agreement, the PC Repo Guaranty, the PMH
Repurchase Agreement or the PMH Repo Guaranty and (ii) any amounts received by
the Indenture Trustee relating to the Eligible Securities; provided, however,
that Collections shall not include amounts related to the Base Servicing Fee,
Ancillary Income or the Advance Reimbursement Amounts.

“Commitment Period” means the period from and including the Closing Date to but
not including the Termination Date or such earlier date on which the obligations
of the Issuer, as Repo Buyer, under the PC Repurchase Agreement shall have
terminated pursuant to the terms thereof.

“Confidential Information” has the meaning set forth in Section 10.10(b) of the
PC Repurchase Agreement.

 

9

--------------------------------------------------------------------------------

“Consideration” means, (a) in the context of delivery thereof by the Issuer, as
Repo Buyer, any or all of (i) the Owner Trust Certificate, including increases
in the value thereof pursuant to Sections 4.4(b) or 4.5(e) of the Base
Indenture, (ii) one or more Variable Funding Notes and (iii) cash, and (b) in
the context of delivery thereof by PMC, as Repo Seller, in satisfaction of a
Margin Deficit, any or all of (i) a reduction in the value of the Owner Trust
Certificate pursuant to the terms of the PC Repurchase Agreement and (ii) any
Margin Call Payment.

“Control,” “Controlling” or “Controlled” means possession of the power to direct
or cause the direction of the management or policies of a Person through the
right to exercise voting power or by contract, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.

“Corporate Trust Office” means, for each Series of Notes, as specified in the
related Indenture Supplement.

“CSFB” has the meaning set forth in the Preamble of the Base Indenture.

“Cumulative Default Supplemental Fee Shortfall Amount” means, for each Payment
Date and each Class of Notes, any portion of the Default Supplemental Fee or
Cumulative Default Supplemental Fee Shortfall Amount for that Class for a
previous Payment Date that has not been paid, plus accrued and unpaid interest
at the applicable Note Interest Rate, plus the Default Supplemental Fee Rate on
such shortfall from the Payment Date on which the shortfall first occurred
through the current Payment Date.

“Cumulative Interest Shortfall Amount” means, for each Payment Date and each
Class of Notes, any portion of the Interest Payment Amount (calculated under
clause (i) or clause (ii)(1), as applicable, of the definition thereof, if
applicable) for that Class for all previous Payment Dates that has not been paid
if any, plus accrued and unpaid interest at the applicable Note Interest Rate
plus the Cumulative Interest Shortfall Amount Rate on each such shortfall from
the Payment Date on which such shortfall first occurred to but excluding the
current Payment Date.

“Cumulative Interest Shortfall Amount Rate” has the meaning set forth in the
related Indenture Supplement.

“Cumulative Step-Up Fee Shortfall Amount” means, for each Payment Date and each
Class of Notes, any portion of the Step-Up Fee or Cumulative Step-Up Fee
Shortfall Amount for that Class for a previous Payment Date that has not been
paid, plus accrued and unpaid interest at the applicable Note Interest Rate and
plus the Step-Up Fee Rate on such shortfall from the Payment Date on which the
shortfall first occurred through the current Payment Date.

“Current Amounts Due” means the sum of: (A) all reasonable internal costs and
actual expenses related to the following actions (if taken): (1) the
determination of the Appraised Market Value; (2) stabilizing the servicing of
the Subject Mortgages; (3) the sale and transfer of the Servicing Rights; and
(4) any action brought by Fannie Mae before a court of its choice for leave to
interplead any Distributable Funds; and (B) all actual amounts due under the
Fannie Mae Lender Contract to Fannie Mae on the Servicer’s Fannie Mae Portfolio
because of any of the following up to and including the date Fannie Mae
terminates the Servicing Rights: (1) any

 

10

--------------------------------------------------------------------------------

breach of selling representations, warranties or covenants made or assumed by
the Servicer; (2) any breach of any servicing obligations by the Servicer;
(3) any actual unperformed obligations under the regular servicing option or
other recourse agreements; and (4) any other obligations the Servicer currently
owes to Fannie Mae. If the Subject Mortgages make up less than the Servicer’s
Fannie Mae Portfolio, the costs and expenses referred to in clause (A) above
include all sums related to the Servicer’s Fannie Mae Portfolio through the end
of the 24-month period following the date, if any, Fannie Mae terminates the
Servicing Rights.

“Custodian” has the meaning set forth in Section 2.3 of the Base Indenture.

“Cut-off Date” means the Closing Date.

“Dedicated Account” means the demand deposit account PennyMac Loan Services, LLC
on behalf of PennyMac Corp., in trust for PMT ISSUER TRUST—FMSR –Dedicated
Account, which account has been established by PLS, PMC, the Indenture Trustee,
as secured party, the Issuer, the Guarantor and the Account Bank for the benefit
of the Indenture Trustee at the Account Bank.

“Dedicated Account Control Agreement” means, the Deposit Account Control
Agreement, dated as of December 20, 2017, among PMC, the Issuer, the Indenture
Trustee, PLS, the Guarantor and the Account Bank, pursuant to which to the
Dedicated Account is established.

“Dedicated Account Pledge Agreement” means, the Dedicated Account Pledge
Agreement, dated as of December 20, 2017, by PLS in favor of Issuer.

“Default” means an event, condition or default that, with the giving of notice,
the passage of time, or both, would constitute an Event of Default.

“Default Period” means the period of time that begins upon the occurrence of an
Event of Default and ends on the earlier to occur of (i) the date on which the
Event of Default has been waived or cured pursuant to the terms of the Base
Indenture or (ii) the date on which all Classes or Series of Notes not waiving
such Event of Default are paid or redeemed in full in accordance with the terms
of the Base Indenture.

“Default Supplemental Fee” has the meaning set forth in the related Indenture
Supplement, if applicable.

“Default Supplemental Fee Rate” has the meaning set forth in the related
Indenture Supplement, if applicable.

“Definitive Note” means a Note issued in definitive, fully registered form
evidenced by a physical Note, substantially in the form of one or more of the
Definitive Notes attached as Exhibit A-2 and Exhibit A-4 to the Base Indenture.

“Depository” means initially, The Depository Trust Company, the nominee of which
is Cede & Co., and any permitted successor depository. The Depository shall at
all times be a Clearing Corporation.

 

11

--------------------------------------------------------------------------------

“Depository Agreement” means, for any Series or Class of Book-Entry Notes, the
agreement among the Issuer, the Indenture Trustee and the Depository, dated as
of the related Issuance Date, relating to such Notes.

“Depository Participant” means a broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.

“Determination Date” means, in respect of any Payment Date or Interim Payment
Date, three (3) Business Days before such Payment Date or Interim Payment Date.

“Determination Date Report” means a report delivered by the Administrator as
described in Section 3.2(a) of the Base Indenture, which shall be delivered in
the form of one or more electronic files.

“Disposition Management Agreement” means the Disposition Management Agreement,
to be entered into among PMC, the Administrative Agent and the Indenture Trustee
and a successor disposition manager to CSFB.

“Disposition Manager” means, initially, CSFB, and prior to the first issuance of
Term Notes, a successor disposition manager mutually agreed upon by the
Administrative Agent and the Administrator.

“Disposition Manager Fee” shall have the meaning set forth in the Disposition
Management Agreement.

“Distributable Funds” means any Net Proceeds available for distribution.

“Distribution Compliance Period” means, in respect of any Regulation S Global
Note or Regulation S Definitive Note, the forty (40) consecutive days beginning
on and including the later of (a) the day on which any Notes represented thereby
are offered to persons other than distributors (as defined in Regulation S under
the 1933 Act) pursuant to Regulation S and (b) the Issuance Date for such Notes.

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“DTC” has the meaning set forth in Section 5.4(a) of the Base Indenture.

“Early Amortization Event” means the occurrence of any of the following events:

(i) the unpaid principal balance of the Portfolio is less than $20,000,000,000;

(ii) the Servicer SDQ Rate exceeds 6.00%;

(iii) the Market Value of a base fee equal to 12.5 basis points, inclusive of
Ancillary Income and servicing costs, is less than $45,000,000;

 

12

--------------------------------------------------------------------------------

(iv) claims by Fannie Mae relating to breaches of representations and warranties
for the underlying Mortgage Loans that remain unresolved following sixty
(60) days from the date the related cure and rebuttal periods permitted under
the Fannie Mae Guide have been exhausted, and the related compensatory fees and
principal balance of mortgage loans for such unresolved claims exceed 0.025% of
the unpaid principal balance of the underlying Mortgage Loans as of the end of
any calendar month; provided, however that once PMC and Fannie Mae have agreed
to an indemnification such indemnification shall be deemed to be a resolved
claim and therefore not part of the foregoing calculation; or

(v) notice by Fannie Mae of a material breach by the Servicer of the Fannie Mae
Lender Contract which remains uncured for ninety (90) days.

“Early Amortization Event Payment Amount” has the meaning set forth in the
related Indenture Supplement.

“Early Amortization Period” means, for all Series of Notes, the period that
begins upon the occurrence of an Early Amortization Event and ends on the date
when the Early Amortization Event is no longer in effect, pursuant to the
requirements set forth in Section 4.12 of the Base Indenture.

“Eligible Account” means an account or accounts maintained with an insured
depository institution that meets the rating requirements adopted by Fannie Mae
and set forth in the Fannie Mae Lender Contract.

“Eligible Asset” means any Asset:

(a) which relates to a Servicing Contract for Mortgage Loans in an Eligible
Securitization Transaction in which the PMC is acting in the capacity of
servicer;

(b) which complies with all Applicable Laws and other legal requirements,
whether federal, state or local;

(c) which provides for payment in Dollars;

(d) which was not originated in or subject to the Laws of a jurisdiction whose
Laws would make such Asset, or the financing thereof contemplated by the PC
Repurchase Agreement unlawful, invalid or unenforceable and is not subject to
any legal limitation on transfer;

(e) which is owned solely by PMC (or with respect to the Sold MSR Excess Spread,
PMH) subject to the relevant Servicing Contract free and clear of all Liens
other than Liens in favor of the Issuer, as Repo Buyer (and in the case of Sold
MSR Excess Spread, Liens in favor of PMC) and has not been sold, conveyed,
pledged or assigned to any other lender, purchaser or Person;

(f) in respect of which Asset Seller has complied in all material respects with
the Collection Policy and the related Servicing Contract or Participation
Agreement, as applicable;

 

13

--------------------------------------------------------------------------------

(g) which is not an obligation of the United States of America, any State or any
agency or instrumentality or political subdivision thereof (other than Fannie
Mae);

(h) in respect of which the information set forth in the Asset Schedule and the
related Servicing Contract and, with respect to the Participation Certificates,
the Participation Agreement, is true and correct in all material respects;

(i) in respect of which PMC has obtained from each Person that may have an
interest in such Asset all acknowledgments or approvals, if any, that are
necessary to pledge such Asset as contemplated by the PC Repurchase Agreement;

(j) (i) which complies with the representations and warranties set forth on
Schedules 1-A and 1-B of the PC Repurchase Agreement, (ii) with respect to
Eligible Securities complies with the representations and warranties to be
agreed upon by the Repo Buyer, the Administrative Agent and the Repo Seller and
to be set forth on Schedule 1-C to the PC Repurchase Agreement and (iii) with
respect to Pledged Margin Securities, complies with the representations and
warranties to be agreed upon by the Repo Buyer, the Administrative Agent and the
Repo Seller and to be set forth on Schedule 1-D to the PC Repurchase Agreement;

(k) which with respect to any Asset that constitutes MSRs:

(i) constitutes an “account” or a “general intangible” as defined in the Uniform
Commercial Code and is not evidenced by an “instrument,” as defined in the
Uniform Commercial Code as so in effect;

(ii) relates to an Eligible Securitization Transaction, where the related
Participation Certificate is sold to the Issuer, as Repo Buyer, under the PC
Repurchase Agreement;

(iii) arose pursuant to a Servicing Contract that is in full force and effect
and under which the Servicer has not been terminated; and

(iv) the related Participation Certificate is an Eligible Asset the PC
Repurchase Agreement; and

(l) which with respect to any Asset that constitutes a Participation
Certificate:

(i) is intended to constitute a “security” as defined in the Uniform Commercial
Code and is evidenced by a certificate;

(ii) for which the related MSRs relate to an Eligible Securitization Transaction
and have been pledged to the Issuer, as Repo Buyer, under the PC Repurchase
Agreement;

(iii) for which the Participation Certificate arose pursuant to a Participation
Agreement that is in full force and effect; and

 

14

--------------------------------------------------------------------------------

(iv) for which the related MSRs are an Eligible Asset under the PC Repurchase
Agreement;

in each case as of the related Purchase Date and as of each day that such Asset
shall be subject to a Transaction under the PC Repurchase Agreement.

“Eligible Securities Account” means the non-interest bearing trust account or
accounts, each of which shall be an Eligible Account, established and maintained
pursuant to Sections 4.1 and 4.7 of the Base Indenture and entitled “Citibank,
N.A., as Indenture Trustee for the PMT ISSUER TRUST—FMSR Collateralized Notes,
Eligible Securities Account” or such of the foregoing that can be reflected on
the account systems of the institution maintaining such account.

“Eligible Security” means any of the following obligations and securities:
(i) (a) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or (b) direct
obligations of, or obligations fully guaranteed as to timely payment of
principal and interest by, any agency or instrumentality of the United States,
provided that such obligations are backed by the full faith and credit of the
United States; or (ii) mortgage backed securities issued or guaranteed by Fannie
Mae, Freddie Mac or Ginnie Mae, each of which shall be listed on Schedule 3 of
the Base Indenture, which schedule may be maintained in electronic form.

“Eligible Securitization Transaction” means any Fannie Mae MBS which, as of the
date of the related Transaction and as of each day that any Asset shall be
subject to a Transaction under the PC Repurchase Agreement (unless expressly
agreed upon in writing by the Issuer, as Repo Buyer, to the contrary) with
respect to which the related Servicing Contract and is in full force and effect,
at any time any Asset related to such Servicing Contract is subject to a
Transaction, and under which the servicer has not been terminated, resigned or
become subject to a right of termination or other “trigger event.”

“Eligible Servicer” means an approved Fannie Mae servicer that Fannie Mae
determines in Fannie Mae’s reasonable discretion, (a) is able to service the
Subject Mortgages in light of the needs and characteristics of the Subject
Mortgages, (b) is able to perform all of its existing servicing obligations, and
(c) is in compliance with the Fannie Mae Lender Contract.

“Eligible Subservicer” means an established mortgage servicer that (A)(i) has
been a Fannie Mae approved issuer for at least two (2) years, (ii) services
mortgage loans with an aggregate unpaid principal balance greater than or equal
to $30,000,000,000 and (iii) has a servicer rating of at least “Average” by S&P,
“SQ3” by Moody’s or “RPS3” by Fitch, and (B) is party to an Eligible Servicing
Agreement. PLS is initially approved by the Issuer, as Repo Buyer, as an
Eligible Subservicer, assuming continuing compliance with the requirements of
clause (A) above.

“Eligible Subservicing Agreement” means a subservicing agreement (i) that has
been approved in writing by Repo Buyer under the PC Repurchase Agreement,
(ii) the subservicer of which is an Eligible Subservicer, and (iii) that has not
been assigned or amended in any respect that is materially adverse to
Noteholders with respect to the remittance of

 

15

--------------------------------------------------------------------------------

servicing fees or advance reimbursements without the prior written consent of
Repo Buyer under the PC Repurchase Agreement. The PLS Subservicing Agreement and
the Subservicer Side Letter Agreement, together, are initially approved by the
Repo Buyer under the PC Repurchase Agreement as an Eligible Subservicing
Agreement, assuming continuing compliance with the requirements of clauses
(ii) and (iii) above.

“EO13224” has the meaning set forth in Section 3.18 of the PC Repurchase
Agreement.

“Entitlement Order” has the meaning set forth in Section 8-102(a)(8) of the UCC.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any corporation or trade or business that, together with
PMC or the Guarantor is treated as a single employer under section 414(b) or
(c) of the Code or solely for purposes of section 302 of ERISA and section 412
of the Code is treated as single employer described in section 414 of the Code.

“Euroclear” means Euroclear Bank S.A./N.V. as operator of the Euroclear System,
and any successor thereto.

“Event of Default” means (i) with respect to the Base Indenture, the meaning set
forth in Section 8.1 of the Base Indenture and (ii) with respect to the PC
Repurchase Agreement, the meaning set forth in Section 7.01 of the PC Repurchase
Agreement.

“Excess Spread” means, for the Sold MSR Excess Spread PC, “Sold MSR Excess
Spread” as defined in the Excess Spread Participation Agreement. For the
Retained MSR Excess Spread PC, “Retained MSR Excess Spread” as set forth in the
Retained Excess Spread Participation Agreement. For any other Participation
Certificate, as set forth in the related Participation Agreement.

“Excess Spread Participation Agreement” means the Third Amended and Restated
Master Spread Acquisition and MSR Servicing Agreement, dated as of December 20,
2017, between PMC, as seller, and PMH, as purchaser.

“Excess Spread Rate” means, for the Sold MSR Excess Spread PC, the rate per
annum set forth as such in Section 1.01 of the Excess Spread Participation
Agreement. For the Retained MSR Excess Spread PC, the rate per annum set forth
as such in Section 1 of the Retained Excess Spread Participation Agreement. For
any other Participation Certificate, as set forth in the related Participation
Agreement.

“Expense Limit” means, with respect to: (i) expenses and indemnification amounts
(A) in any year, for the Owner Trustee, the Indenture Trustee (in all its
capacities) and the MSR Valuation Agent, $200,000 (with $150,000 being reserved
for the Indenture Trustee), and (B) for any single Payment Date, for the
Indenture Trustee only (in all its capacities) $50,000; and (ii) Administrative
Expenses, in any year, $50,000; provided, that the Expense Limit shall only
apply to payments made pursuant to Sections 4.5(a)(1)(i) and (ii) of the Base
Indenture; and provided, further, that any amounts in excess of the Expense
Limit that have not been paid pursuant to Section 4.5 of the Base Indenture may
be applied toward and subject to the Expense Limit for the subsequent year and
may be paid in a subsequent year.

 

16

--------------------------------------------------------------------------------

“Expense Reserve Account” means the segregated non-interest bearing trust
account or accounts, each of which shall be an Eligible Account, established and
maintained pursuant to Sections 4.1 and 4.6 of the Base Indenture, and entitled
“Citibank, N.A., as Indenture Trustee for the PMT ISSUER TRUST—FMSR
Collateralized Notes, Expense Reserve Account”.

“Expense Reserve Required Amount” means, with respect to any date of
determination, $200,000 (with $150,000 being reserved for the Indenture
Trustee).

“Expenses” means all present and future expenses reasonably incurred by or on
behalf of the Issuer, as Repo Buyer, in connection with the negotiation,
execution or enforcement or the ongoing operations relating to the PC Repurchase
Agreement, the Indenture or any of the other Program Agreements and PMH
Documents, and Participation Agreements, and any amendment, supplement or other
modification or waiver related thereto, whether incurred prior to or after the
Closing Date, which expenses shall include any trustee or other service provider
fees, indemnification payments, MSR transfer costs, the cost of title, lien,
judgment and other record searches, reasonable attorneys’ fees, any ongoing
audits or due diligence costs in connection with valuation, entering into
Transactions or determining whether a Margin Deficit may exist, and costs of
preparing and recording any UCC financing statements or other filings necessary
to perfect the security interest created by the PC Repurchase Agreement.

“Facility Entity” has the meaning set forth in Section 9.5(i) of the Base
Indenture.

“Fannie Mae” means the Federal National Mortgage Association and any successor
thereto.

“Fannie Mae Approvals” shall have the meaning set forth in Section 6.10 of the
PC Repurchase Agreement.

“Fannie Mae Eligibility Requirements” has the meaning set forth in
Section 3.1(a)(xiv) of the Base Indenture.

“Fannie Mae Guide” means the Fannie Mae Selling Guide and the Fannie Mae
Servicing Guide.

“Fannie Mae Lender Contract” means collectively, the Mortgage Selling and
Servicing Contract and all applicable Pool Purchase Contracts between Fannie Mae
and the Servicer, the Fannie Mae Selling Guide, the Fannie Mae Servicing Guide
and all supplemental servicing instructions or directives provided by Fannie
Mae, all applicable master agreements, recourse agreements, repurchase
agreements, indemnification agreements, loss-sharing agreements, and any other
agreements between Fannie Mae and the Servicer.

“Fannie Mae MBS” means an MBS issued by Fannie Mae, the issuance of which, and
the servicing of such Fannie Mae eligible mortgage loans by PMC, being governed
in all respects by the Fannie Mae Lender Contract, including such Fannie Mae
eligible mortgage loans for which (i) PMC has submitted a fully completed
Request for Approval for Transfer and

 

17

--------------------------------------------------------------------------------

consummated a purchase and sale transaction with an eligible Fannie Mae approved
issuer to acquire MSRs, (ii) Fannie Mae has approved and consented to such
acquisition of MSRs by PMC by delivering a consent notice to PMC in accordance
with Chapter A2-7-3 of the Fannie Mae Servicing Guide, and (iii) PMC has started
servicing the related MSRs and collecting payments from the borrowers.

“Fannie Mae Requirements” includes the Fannie Mae Lender Contract (whether
specific to PMC or of general application), in addition to the contracts
(including any related guaranty agreement, master servicing agreement, master
agreement for servicer’s principal and interest custodial account, master
agreement for servicer’s escrow custodial account, master custodial agreement,
schedule of subscribers and any other agreement or arrangement), and all
applicable rules, regulations, communications, memoranda and other written
directives, procedures, manuals, guidelines, including the Fannie Mae
Eligibility Requirements, and any other information or material incorporated
therein, defining the rights and obligations of Fannie Mae and Servicer, with
respect to the Mortgage Loans.

“Fannie Mae Selling Guide” means the Fannie Mae Single Family Selling Guide.

“Fannie Mae Servicing Guide” means, the Fannie Mae Single Family Servicing
Guide.

“FATCA” means sections 1471 through 1474 of the Code, any current or future
regulations or official interpretations thereof, any agreement entered into
pursuant to section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or
regulatory legislation, guidance notes, rules or practices adopted pursuant to
any intergovernmental agreement entered into in connection with the
implementation of such sections of the Code.

“FCPA” has the meaning set forth in Section 10.1(h) of the Base Indenture.

“FCPA Entity” or “FCPA Entities” has the meaning set forth in Section 10.1(h) of
the Base Indenture.

“FDIA” has the meaning set forth in Section 10.12(c) of the PC Repurchase
Agreement.

“FDICIA” has the meaning set forth in Section 10.12(d) of the PC Repurchase
Agreement.

“Fee Letter” means, for any Series, as defined in the related Indenture
Supplement, if applicable.

“Fees” means, collectively, with respect to any Interest Accrual Period, the
Indenture Trustee Fee, the Owner Trustee Fee, the Disposition Manager Fee and
the MSR Valuation Agent Fee.

“FHA” means the Federal Housing Administration, an agency within HUD, or any
successor thereto, and including the Federal Housing Commissioner and the
Secretary of HUD where appropriate under the FHA Regulations.

 

18

--------------------------------------------------------------------------------

“FHA Loan” means a Mortgage Loan which is the subject of an FHA Mortgage
Insurance Contract.

“FHA Mortgage Insurance Contract” means the contractual obligation of the FHA
respecting the insurance of a Mortgage Loan.

“FHA Regulations” means the regulations promulgated by the Department of HUD
under the National Housing Act, as amended from time to time and codified in 24
Code of Federal Regulations, and other HUD issuances relating to FHA Loans,
including the related handbooks, circulars, notices and mortgagee letters.

“Fidelity Insurance” means insurance coverage with respect to employee errors,
omissions, dishonesty, forgery, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and computer fraud
in an aggregate amount acceptable to PMC’s regulators.

“Final Payment Date” means, for any Class of Notes, the earliest of (i) the
Stated Maturity Date for such Class, (ii) after the end of the related Revolving
Period, the Payment Date on which the Note Balance of the Notes of such
Class has been reduced to zero, and (iii) the Payment Date which follows the
Payment Date on which all proceeds of the sale of the Trust Estate are
distributed pursuant to Section 8.6 of the Base Indenture.

“Financial Asset” has the meaning set forth in Section 8-102(a)(9) of the UCC.

“Financial Statements” means the consolidated financial statements of the
Guarantor and PMC prepared in accordance with GAAP for the year or other period
then ended.

“Fitch” means Fitch Ratings, Inc., or any successor thereto.

“Full Amortization Period” means, for all Series of Notes, the period that
begins upon the commencement of the Full Amortization Period pursuant to
Section 4.12 of the Base Indenture and ends on the date on which the Notes of
all Series are paid or redeemed in full.

“Funding Amount” means the amount of a funding proposed to be released or drawn
on a VFN on any Funding Date, that does not cause a Borrowing Base Deficiency.

“Funding Certification” means a report delivered by the Administrator in respect
of each Funding Date pursuant to Section 4.3(a) of the Base Indenture.

“Funding Conditions” means, with respect to any proposed Funding Date, the
following conditions:

(i) no Borrowing Base Deficiency shall exist following the proposed funding
(without giving effect to the Market Value of any Eligible Securities or cash
amounts on deposit in the Collection and Funding Account), and the
Administrative Agent shall be satisfied in its sole discretion that it has a
current accurate valuation of the Portfolio to support such determination;

 

19

--------------------------------------------------------------------------------

(ii) no breach of representation, warranty or covenant of the Servicer, the
Administrator or the Issuer, or with respect to the Participation Certificates,
under the Base Indenture or under any Transaction Document, which could
reasonably be expected to have a material Adverse Effect, shall exist;

(iii) solely with respect to any Funding Date which will be a VFN Draw Date, (A)
(unless (and to the extent) each related VFN Noteholder and VFN Funding Source
has agreed to waive this condition for purposes of fundings under its related
Variable Funding Note), no Funding Interruption Event shall be continuing and
(B) (unless (and to the extent) each related VFN Noteholder and VFN Funding
Source have agreed to waive this condition for purposes of fundings under its
related Variable Funding Note), no Event of Default shall have occurred and be
continuing;

(iv) the Administrator shall have provided the Indenture Trustee, no later than
10:00 a.m. New York City time on the Business Day preceding such Funding Date
(or such other time as may be agreed to from time to time by the Administrator,
the Indenture Trustee and the Administrative Agent), a Determination Date Report
reporting information with respect to the Participation Certificates in the
Trust Estate and demonstrating the satisfaction of the Borrowing Base, and no
later than 10:00 a.m. New York City time on such Funding Date, a Funding
Certification certifying that all Funding Conditions have been satisfied;
provided, however, that no Variable Funding Note Noteholder shall have any
liability for failing to fund a requested draw of a Variable Funding Note unless
it has received a Funding Certification by 1:00 p.m. New York City time on the
Business Day preceding such Funding Date;

(v) the full amount of the Required Available Funds shall be on deposit in the
Collection and Funding Account, before and after the release of cash from such
account to fund the purchase price of Participation Certificates (if any
Participation Certificate is being purchased on such Funding Date);

(vi) the payment of the Funding Amount or the drawing on any VFNs shall not
result in a material adverse United States federal income tax consequence to the
Trust Estate or any Noteholders; and

(vii) the Full Amortization Period shall not be in effect.

“Funding Date” means any Payment Date or any Interim Payment Date with respect
to which the Administrator shall have delivered (i) a Funding Certification in
accordance with Section 4.3(a) of the Base Indenture or (ii) a VFN Note Balance
Adjustment Request in accordance with Section 4.3(b) of the Base Indenture;
provided, no Full Amortization Period shall have occurred and shall be
continuing on such Payment Date or Interim Payment Date.

“Funding Interruption Event” means the occurrence of an event which with the
giving of notice or the passage of time, or both, would constitute an Event of
Default, whether or not the Indenture Trustee, the Administrative Agent and/or
any Noteholders have provided notice sufficient to cause the Full Amortization
Period to commence as a result of such event.

 

20

--------------------------------------------------------------------------------

“GAAP” means U.S. generally accepted accounting principles that are
(i) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its successors, as in effect from time to time,
and (ii) applied consistently with principles applied to past financial
statements of PMC and its subsidiaries; provided, that a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) that such
principles have been properly applied in preparing such financial statements.

“Ginnie Mae” means the Government National Mortgage Association and any
successor thereto.

“GLB Act” shall have the meaning set forth in Section 10.10(b) of the PC
Repurchase Agreement.

“Global Note” means a Note issued in global form and deposited with or on behalf
of the Depository, substantially in the form of one or more of the Global Notes
attached as Exhibit A-1 and Exhibit A-3 to the Base Indenture.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions over PMC, PMH, the Guarantor or
the Issuer, as Repo Buyer, as applicable.

“Grant,” “Granting” or “Granted” means pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Base Indenture. A Grant of collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of such collateral or other agreement or
instrument and all other moneys payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.

“Gross Proceeds” means the amount accepted by Fannie Mae for the New Servicing
Rights plus any termination fees due to the Servicer under the Fannie Mae Lender
Contract.

“Guarantee” means, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances for
delinquent

 

21

--------------------------------------------------------------------------------

taxes and insurance or other obligations in respect of a mortgaged property. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have
correlative meanings.

“Guarantor” means PennyMac Mortgage Investment Trust, in its capacity as
guarantor under the PC Repo Guaranty and the PMH Repo Guaranty.

“Hedging Instrument” means, for each Series of Notes, as specified in the
related Indenture Supplement.

“HUD” means the United States Department of Housing and Urban Development or any
successor thereto.

“Indemnified Party” means, for purposes of the Base Indenture, as set forth in
Section 10.4 thereof, and for purposes of the Trust Agreement, as set forth in
Section 8.2 thereof.

“Indebtedness” means, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business, so long as such trade accounts payable are payable
within ninety (90) days of the date the respective goods are delivered or the
respective services are rendered; (c) Indebtedness (as defined in clauses (a) or
(b)) of others secured by a Lien on the Property of such Person, whether or not
the respective Indebtedness so secured has been assumed by such Person;
(d) obligations (contingent or otherwise) of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capital Lease Obligations of
such Person; (f) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements, including, without limitation,
any Indebtedness arising under the PC Repurchase Agreement; (g) Indebtedness (as
defined in clauses (a) or (b)) of others Guaranteed by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; (i) Indebtedness (as defined in clauses
(a) or (b)) of general partnerships of which such Person is a general partner
and (j) with respect to clauses (a)-(i) above both on and off balance sheet.

“Indenture” has the meaning set forth in the preamble of the Base Indenture.

“Indenture Supplement” means each supplement to the Base Indenture, executed and
delivered in conjunction with the issuance of the related Series of Notes,
including the schedules and exhibits thereto.

“Indenture Trustee” means the Person named as the Indenture Trustee in the
Preamble to the Base Indenture until a successor Indenture Trustee shall have
become such pursuant to the applicable provisions of this Base Indenture, and
thereafter “Indenture Trustee” means and includes each Person who is then an
Indenture Trustee thereunder.

 

22

--------------------------------------------------------------------------------

“Indenture Trustee Authorized Officer” means, with respect to the Indenture
Trustee, Calculation Agent, Paying Agent, Note Registrar or Securities
Intermediary, any officer of the Indenture Trustee, Calculation Agent, Paying
Agent, Note Registrar or Securities Intermediary assigned to its corporate trust
services, including any vice president, assistant vice president, assistant
treasurer or trust officer, who is customarily performing functions with respect
to corporate trust matters and, with respect to a particular corporate trust
matter under this Base Indenture, any other officer to whom such matter is
referred because of such officer’s knowledge of and familiarity with the
particular subject, in each case, having direct responsibility for the
administration of this Base Indenture.

“Indenture Trustee Fee” means the fee payable to the Indenture Trustee pursuant
to the terms of the Base Indenture on each Payment Date in a monthly amount as
agreed in the Indenture Trustee Fee Letter, which includes the fees to Citibank,
and its successors and assigns in its capacities as Calculation Agent, Paying
Agent, Securities Intermediary and Note Registrar; provided, that the Indenture
Trustee shall also be entitled to receive payment of (i) separate fees and
expenses pursuant to Section 11.7 of the Base Indenture in connection with tax
filings made by the Indenture Trustee and (ii) any additional expenses permitted
pursuant to the terms of the Indenture Trustee Fee Letter.

“Indenture Trustee Fee Letter” means the fee letter agreement between Citibank
and PMC, dated October 10, 2017, setting forth the fees to be paid to Citibank
for the performance of its duties as Indenture Trustee and in all other
capacities under the Indenture.

“Initial Note Balance” means, for any Note or for any Class of Notes, the Note
Balance of such Note upon the related Issuance Date as specified in the related
Indenture Supplement.

“Insolvency Event” means, with respect to a specified Person, (i) an involuntary
case or other proceeding under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced against any Person or
any substantial part of its property, or a petition shall be filed against such
Person in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
winding-up or liquidation of such Person’s business and (A) such case or
proceeding shall continue undismissed and unstayed and in effect for a period of
sixty (60) days or (B) an order for relief in respect of such Person shall be
entered in such case or proceeding under such laws or a decree or order granting
such other requested relief shall be granted; or (ii) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person of its inability to pay its debts generally as they become due.

 

23

--------------------------------------------------------------------------------

“Insolvency Proceeding” means any proceeding of the sort described in the
definition of Insolvency Event.

“Interest Accrual Period” means, for any Class of Notes and any Payment Date,
the period specified in the related Indenture Supplement.

“Interest Amount” means, for each Interest Accrual Period and each Class of
Notes, interest accrued on such Class during such period, in an amount equal to
interest on such Class’s Note Balance at the applicable Note Interest Rate.

“Interest Day Count Convention” means, for any Series or Class of Notes, the
fraction specified in the related Indenture Supplement to indicate the number of
days counted in an Interest Accrual Period divided by the number of days assumed
in a year, for purposes of calculating the Interest Payment Amount for each
Interest Accrual Period in respect of such Series or Class.

“Interest Payment Amount” means, for any Series or Class of Notes, as applicable
and with respect to any Payment Date:

(i) for any Series or Class of Term Notes, the related Cumulative Interest
Shortfall Amount plus the product of:

(A) the Note Balance as of the close of business on the preceding Payment Date;

(B) the related Note Interest Rate for such Series or Class and for the related
Interest Accrual Period; and

(C) the Interest Day Count Convention specified in the related Indenture
Supplement; and

(ii) for any Series or Class of Variable Funding Notes, the lesser of:

(1) the related Cumulative Interest Shortfall Amount plus the product of:

(A) the average daily aggregate VFN Principal Balance during the related
Interest Accrual Period (calculated based on the average of the aggregate VFN
Principal Balances on each day during the related Interest Accrual Period);

(B) the related Note Interest Rate for such Class during the related Interest
Accrual Period; and

 

24

--------------------------------------------------------------------------------

(C) the Interest Day Count Convention specified in the related Indenture
Supplement; or

(2) such other amount as determined by the Administrative Agent and reported to
the Indenture Trustee at least one (1) Business Day prior to such Payment Date.

“Interested Noteholders” means, for any Class, any Noteholder or group of
Noteholders holding Notes evidencing not less than 25% of the aggregate Voting
Interests of such Class.

“Interim Borrowing Base” means, as of any Interim Borrowing Base Determination
Date, an amount equal to the aggregate Collateral Value (as calculated using
clause (c) of the definition of Market Value Percentage) of the Portfolio.

“Interim Borrowing Base Determination Date” means the Business Day following the
day in which a Modified Valuation Trigger has occurred and is at least five
(5) Business Days prior to or after the next succeeding Borrowing Base
Determination Date or (ii) any other Business Day agreed to among the Issuer,
the Administrator, the Indenture Trustee and the Administrative Agent, following
one (1) Business Day’s written notice to the Indenture Trustee.

“Interim Borrowing Base Payment Date” means the fifth (5th) Business Day
following an Interim Borrowing Base Determination Date.

“Interim Payment Date” means, with respect to any Series of Notes, (i) each
Interim Borrowing Base Payment Date or (ii) for each calendar week, the second
(2nd) Business Day of such week following one (1) Business Day’s written notice
from the Issuer to the related VFN Noteholders, the Administrative Agent and the
Indenture Trustee, or (iii) for any other Business Day, such date agreed to
among the Issuer, the Administrator, the Indenture Trustee and the
Administrative Agent, following one (1) Business Day’s written notice to the
Indenture Trustee. If an Interim Payment Date falls on the same date as a
Payment Date, the Interim Payment Date shall be disregarded. No Interim Payment
Dates shall occur during the Full Amortization Period.

“Interim Payment Date Report” has the meaning set forth in Section 3.2(c) of the
Base Indenture.

“Investment Company Act” means the Investment Company Act of 1940.

“IRS” means the United States Internal Revenue Service.

“Issuance Date” means, for any Series of Notes, the date of issuance of such
Series, as set forth in the related Indenture Supplement.

“Issuer” has the meaning set forth in the Preamble to the Base Indenture.

 

25

--------------------------------------------------------------------------------

“Issuer Affiliate” means any person involved in the organization or operation of
the Issuer or an Affiliate of such a person which is also an affiliate within
the meaning of Rule 3a-7 promulgated under the Investment Company Act.

“Issuer Authorized Officer” means any director or any authorized officer of the
Owner Trustee or the Administrator who may also be an officer or employee of
PMC, its managing member or an Affiliate of PMC or its managing member.

“Issuer Certificate” means a certificate (including an Officer’s Certificate)
signed in the name of an Issuer Authorized Officer, or signed in the name of the
Issuer by an Issuer Authorized Officer. Wherever this Base Indenture requires
that an Issuer Certificate be signed also by an accountant or other expert, such
accountant or other expert (except as otherwise expressly provided in this Base
Indenture) may be an employee of PMC or an Affiliate.

“Issuer Indemnified Party” has the meaning set forth in Section 9.2(a) of the
Base Indenture.

“Issuer Tax Opinion” means, with respect to any undertaking, an Opinion of
Counsel to the effect that, for United States federal income tax purposes,
(i) such undertaking will not result in the Issuer being subject to tax on its
net income as an association (or publicly traded partnership) taxable as a
corporation or a taxable mortgage pool taxable as a corporation, (ii) if any
Notes are issued or deemed issued as a result of such undertaking, any Notes
issued or deemed issued on such date that are not Retained Notes will be debt,
and (iii) if requested by the Administrative Agent, such undertaking will not
cause the Noteholders or beneficial owners of Notes that are not Retained Notes
to have been sold or exchanged under section 1001 of the Code (excluding, for
this purpose, sales or exchanges of the Notes that result in gain or loss of
zero for federal income tax purposes). For any Series of VFNs that is a Retained
Note, clause (ii) shall apply to the repurchase agreement financing of such
Series of VFNs, if any (rather than to the VFNs subject to such financing).

“Laws” means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Governmental Authority.

“Lender Adjusted Net Worth” has the meaning set forth in the Fannie Mae
Contract.

“Level” means any of the six (6) tiers of Servicer SDQ Rate set forth in the
definition of Stop-Loss Cap.

“License” means any license, permit, approval, right, privilege, quota,
concession, or franchise issued, granted, conferred or otherwise created by a
Governmental Authority.

“Lien” means, with respect to any property or asset of any Person (a) any
mortgage, lien, pledge, charge or other security interest or encumbrance of any
kind in respect of such property or asset or (b) the interest of a vendor or
lessor arising out of the acquisition of or agreement to acquire such property
or asset under any conditional sale agreement, lease purchase agreement or other
title retention agreement.

 

26

--------------------------------------------------------------------------------

“Liquidity” has the meaning set forth in the Fannie Mae Lender Contract.

“Majority Certificateholders” means the holders of Trust Certificates
representing a Percentage Interest of more than 50% in the aggregate.

“Majority Noteholders” means, with respect to any Series or Class of Notes or
all Outstanding Notes, the Noteholders of greater than 50% of the Note Balance
of the Outstanding Notes of such Series or Class or of Outstanding Notes, as the
case may be, measured by Voting Interests in any case.

“Margin Call” has the meaning set forth in Section 2.05(a) of the PC Repurchase
Agreement.

“Margin Call Payment” means (i) the sale and delivery of Eligible Securities, or
(ii) the transfer of cash to the Issuer, as Repo Buyer, under the PC Repurchase
Agreement.

“Margin Deadlines” has the meaning set forth in Section 2.05(b) of the PC
Repurchase Agreement.

“Margin Deficit” has the meaning set forth in Section 2.05(a) of the PC
Repurchase Agreement.

“Margin Excess” has the meaning set forth in Section 2.05(d) of the PC
Repurchase Agreement.

“Margin Excess Notice” means, in connection with a funding of Margin Excess
pursuant to Section 2.05(d) of the PC Repurchase Agreement, an irrevocable
notice delivered by PMC, as Repo Seller, to the Issuer, as Repo Buyer, with a
copy to the Administrative Agent and the Indenture Trustee, which notice
(i) shall be substantially in the form of Exhibit C to the PC Repurchase
Agreement, (ii) shall be signed by a Responsible Officer of PMC and be received
by the Issuer, as Repo Buyer, prior to 1:00 p.m. (New York time) one
(1) Business Day prior to the related Interim Payment Date, (iii) shall specify
(A) the Dollar amount of the requested Margin Excess, (B) the requested Interim
Payment Date, and (C) shall include a copy of the related “Funding
Certification” being delivered pursuant to the Indenture in connection with such
funding of Margin Excess, if applicable, and (iv) shall have attached to it a
revised Asset Schedule dated the date of such notice.

“Market Value” means, as of any date of determination, (a) with respect to the
Participation Certificate, as of any date of determination, the product of
(1) the Market Value Percentage as of the most recent Market Value Report and
(2) the aggregate unpaid principal balance of the Mortgage Loans related to the
MSRs evidenced by the Participation Certificate as of the last day for which
such information is available; (b) with respect to any Eligible Security, the
fair market value thereof, as determined by the Indenture Trustee as of the
close of business on the immediately preceding Business Day; and (c) with
respect to any Pledged Margin Security, the positive mark to market gain, if
any, as determined by using the bid side pricing of either Tradeweb Markets,
LLC, Thomson Reuters or such other pricing service mutually agreeable to the
Administrator and the Administrative Agent or the exchange upon which such
contract is traded, as applicable.

 

27

--------------------------------------------------------------------------------

“Market Value Information” has the meaning set forth in Section 3.1(a) of the
Base Indenture.

“Market Value Percentage” means:

(a) for Funding purposes (and for the purpose of calculating the Collateral
Value used in connection with such determination of a Funding) from time to
time, as of any date of determination, the lesser of (i) the fair value
percentage of the MSR determined by the Servicer as of the most recent date of
determination or (ii) the middle of the range of the fair value percentage,
including any Modified Valuation as applicable, of the MSR from the most
recently delivered Market Value Report;

(b) for purposes of determining the Borrowing Base (and for the purpose of
calculating the Collateral Value used in connection with such determination of
the Borrowing Base) from time to time, as of any date of determination, the
greater of (i) the Market Value Percentage calculated for Funding purposes
pursuant to clause (a) above, and (ii) the lower of (x) the product of (1) the
middle of the range of the fair value percentage of the MSR from the most
recently delivered Market Value Report and (2) 105.5% or (y) the product of
(1) the average of the middle of the range of the fair value percentage of the
MSR from the three (3) most recently delivered Market Value Reports and (2)
104%; or

(c) for purposes of determining the Interim Borrowing Base (and for the purpose
of calculating the Collateral Value used in connection with such determination
of the Interim Borrowing Base) from time to time, as of any date of
determination, the greater of (i) the Market Value Percentage calculated for
Funding purposes pursuant to clause (a) above which shall represent the Modified
Valuation applicable to the Interim Borrowing Base Determination Date, and
(ii) the lower of (x) the product of (1) the middle of the range of the fair
value percentage, which shall represent the applicable Modified Valuation, of
the MSR from the most recently delivered Market Value Report and (2) 105.5% or
(y) the product of (1) the average of the middle of the range of the fair value
percentage, based on the applicable Modified Valuation, of the MSR from the
three (3) most recently delivered Market Value Reports and (2) 104%.

“Market Value Report” has the meaning set forth in Section 3.3(g) of the Base
Indenture.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of PMC, the Guarantor or any Affiliate thereof that
is a party to any Program Agreement taken as a whole; (b) a material impairment
of the ability of PMC, the Guarantor or any Affiliate thereof that is a party to
any Program Agreement to perform under any Program Agreement and to avoid any
Event of Default; (c) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Program Agreement against PMC, the
Guarantor or any Affiliate thereof that is a party to any Program Agreement; or
(d) a material adverse effect on the rights and remedies of PMC under any of the
PMH Documents.

 

28

--------------------------------------------------------------------------------

“Maximum VFN Principal Balance” means, for any VFN Class, the amount specified
in the related Indenture Supplement.

“MBS” means a mortgage backed security guaranteed by Fannie Mae pursuant to the
Fannie Mae Lender Contract.

“Minimum Reserve Amount” means the lesser of: (i) the Stop-Loss Cap and (ii) the
sum of: (A) the Current Amounts Due, plus (B) all projected amounts (calculated
using Fannie Mae’s proprietary modeling system and Fannie Mae’s historical data)
that may be due to Fannie Mae related to the items described in clauses
B(1)-B(3) of the definition of Current Amounts Due. If the amounts determined in
clauses (i) and (ii) above are equal, then the “Minimum Reserve Amount” is the
amount determined in clause (ii) above.

“Modified Valuation” means the fair market values and the valuation percentages
of the Portfolio provided by the MSR Valuation Agent in the Market Value Report
assuming that the 10-year U.S. Treasury rate (mid-mark) as compared to the
10-year U.S. Treasury rate (mid-mark) used by the MSR Valuation Agent as of the
Borrowing Base Determination Date (i) declines by more than 0.375% or
(ii) increases by more than 0.375%.

“Modified Valuation Trigger” occurs when the 10-year U.S. Treasury rate
(mid-mark) as compared to the 10-year U.S. Treasury rate (mid-mark) used by the
MSR Valuation Agent as of the most recent Borrowing Base Determination Date
(i) declines by more than 0.375% or (ii) increases by more than 0.375%.

“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.

“Mortgage” means, with respect to a Mortgage Loan, a mortgage, deed of trust or
other instrument encumbering a fee simple interest in real property securing a
Mortgage Note.

“Mortgage Loan” means all loans serviced or to be serviced on an ongoing basis
by the Servicer for Fannie Mae.

“Mortgage Note” means the note or other evidence of the indebtedness of a
mortgagor secured by a Mortgage under a Mortgage Loan and all amendments,
modifications and attachments thereto.

“Mortgage Selling and Servicing Contract” means the Mortgage Selling and
Servicing Contract, dated as of October 15, 2010, as amended by the Addendum to
Mortgage Selling and Servicing Contract, dated as of January 14, 2013, between
the Servicer and Fannie Mae, pursuant to which the Servicer is selling mortgage
loans to Fannie Mae or servicing Mortgage Loans on Fannie Mae’s behalf, and any
related addenda.

“Mortgaged Property” means the real property (including all improvements,
buildings, fixtures and building equipment thereon and all additions,
alterations and replacements made at any time with respect to the foregoing) and
all other collateral securing repayment of the related Mortgage Loan.

 

29

--------------------------------------------------------------------------------

“MRA Payment Date” means the Business Day immediately preceding a “Payment Date”
as defined in the Base Indenture.

“MSR Monthly Report” has the meaning set forth in Section 3.3(f) of the Base
Indenture.

“MSR Portfolio” means the Mortgage Loans underlying the Participation
Certificates.

“MSR Valuation Agent” means Incenter Mortgage Advisors, LLC, or any successor
third party mortgage servicing rights valuation agent appointed by PMC in
accordance with the terms of this Base Indenture.

“MSR Valuation Agent Agreement” means the MSR Valuation Agent Agreement, dated
as of December 20, 2017, among the MSR Valuation Agent, PMC and the Issuer.

“MSR Valuation Agent Fee” means the fees and expenses payable to the MSR
Valuation Agent pursuant to the terms of the MSR Valuation Agent Agreement.

“MSRs” means, with respect to the Mortgage Loans, the mortgage servicing rights,
including any and all of the following: (a) any and all rights to service the
Mortgage Loans; (b) any payments to or monies received by the Servicer for
servicing the Mortgage Loans; (c) any late fees, penalties or similar payments
with respect to the Mortgage Loans; (d) all agreements or documents creating,
defining or evidencing any such servicing rights to the extent they relate to
such servicing rights and all rights of the Servicer thereunder; (e) escrow or
other similar payments with respect to the Mortgage Loans and any amounts
actually collected by the Servicer with respect thereto; (f) all accounts and
other rights to payment related to any of the property described in this
definition; and (g) any and all documents, files, records, servicing files,
servicing documents, servicing records, data tapes, computer records, or other
information pertaining to the Mortgage Loans or pertaining to the past, present
or prospective servicing of the Mortgage Loans; provided, however, MSRs shall
not include any Advance Reimbursement Amounts.

“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been or are required to be made by PMC or
any ERISA Affiliate and that is covered by Title IV of ERISA.

“Net Earnings” means reported Total Gross Income (Loss)(as calculated based on
the values assigned to such terms and reported in the Mortgage Bankers’
Financial Reporting Form) from servicing, less: (x) changes in MSR value;
(y) gains (losses) on derivatives used to hedge Servicing Rights; and (z) gains
(losses) on other derivatives or other financial instruments, calculated based
on data reported in the servicing column of Schedule C (Income) of its Mortgage
Bankers’ Financial Reporting Form.

“Net Excess Cash Amount” means, on any Payment Date or Interim Payment Date, the
amount of funds available to be distributed to PMC pursuant to
Sections 4.4(a)(iv), 4.5(a)(1)(x) or 4.5(a)(2)(vi) of the Base Indenture, as
applicable.

 

30

--------------------------------------------------------------------------------

“Net Payment Amount” means with respect to any MRA Payment Date or Interim
Payment Date, an amount equal to the sum of (i) the amounts payable by PMC
pursuant to Sections 2.03, 2.04 or 2.05 of the PC Repurchase Agreement, as
applicable, minus (ii) the amounts, if any, that will be distributable under
Sections 4.4(a)(iv) or 4.5(a)(1)(x) of the Base Indenture to PMC, as the holder
of the Owner Trust Certificate.

“Net Proceeds” means either (A) the Gross Proceeds minus the Minimum Reserve
Amount, if Fannie Mae chooses to market the New Servicing Rights, or (B) the
Appraised Market Value (plus any termination fee due to the Servicer under the
Fannie Mae Lender Contract) minus the Minimum Reserve Amount, if Fannie Mae
chooses to keep the Servicing Rights.

“New Servicing Rights” means the new servicing rights created when Fannie Mae
engages a new interim servicer or subservicer to service the Subject Mortgages
after Fannie Mae terminates the Servicing Rights.

“Non-Excluded Taxes” has the meaning set forth in Section 2.09(a) of the PC
Repurchase Agreement.

“Non-SDQ Factor” means, for a Level, the number of basis points set out in the
definition of Stop-Loss Cap as the Non-SDQ Factor for such Level.

“Non-SDQ Loans” means Mortgage Loans which are not SDQ Loans.

“Nonpublic Personal Information” means any consumer’s nonpublic personal
information as defined in the Gramm-Leach-Bliley Act.

“Note” or “Notes” means any note or notes of any Class authenticated and
delivered from time to time under this Base Indenture and the related Indenture
Supplement including any Variable Funding Note.

“Note Balance” means, on any date (i) for any Term Note, or for any Series or
Class of Term Notes, as the context requires, the Initial Note Balance of such
Term Note or the aggregate of the Initial Note Balances of the Term Notes of
such Series or Class, as applicable, less all amounts paid to the Noteholder of
such Term Note or Noteholders of such Term Notes with respect to principal, and
(ii) for any Variable Funding Note, its VFN Principal Balance on such date.

“Note Interest Rate” means, for any Note, or for any Series or Class of Notes as
the context requires, the interest rate specified, or calculated as provided in,
the related Indenture Supplement.

“Note Owner” means, with respect to a Book Entry Note, the Person who is the
owner of such Book Entry Note, as reflected on the books of the Depository, or
on the books of a Person maintaining an account with such Depository (directly
as a Depository Participant or as an indirect participant, in each case in
accordance with the rules of such Depository) and with respect to any Definitive
Notes, the Noteholder of such Note.

 

31

--------------------------------------------------------------------------------

“Note Payment Account” means the segregated non-interest bearing trust account
or accounts, each of which shall be an Eligible Account, established and
maintained pursuant to Sections 4.1 and 4.8 of the Base Indenture and entitled
“Citibank, N.A., as Indenture Trustee in trust for the Noteholders of the PMT
ISSUER TRUST—FMSR Collateralized Notes, Note Payment Account”.

“Note Purchase Agreement” means an agreement with one or more initial purchasers
or placement agents under which the Issuer will sell the Notes to such initial
purchaser(s), or contract with such placement agent(s) for the initial private
placement of the Notes, in each case as further defined in the related Indenture
Supplement.

“Note Rating Agency” means any nationally recognized rating agency, and, with
respect to any Outstanding Class of Notes, each rating agency, if any, specified
in the related Indenture Supplement. References to Note Rating Agencies or
“each” or “any” Note Rating Agency in this Base Indenture refer to Note Rating
Agencies that were engaged to rate any Notes issued under this Base Indenture,
which Notes are still Outstanding.

“Note Register” has the meaning set forth in Section 6.5 of the Base Indenture.

“Note Registrar” means the Person who keeps the Note Register specified in
Section 6.5 of the Base Indenture.

“Noteholder” means the Person in whose name a Note is registered in the Note
Register, except that, solely for the purposes of giving certain consents,
waivers, requests or demands as may be specified in this Base Indenture, the
interests evidenced by any Note registered in the name of, or in the name of a
Person or entity holding for the benefit of, the Issuer, PMC or any Person that
is an Affiliate of either or both of the Issuer and PMC, shall not be taken into
account in determining whether the requisite percentage necessary to effect any
such consent, waiver, request or demand shall have been obtained (unless such
Person is the sole holder of the Notes). The Indenture Trustee shall have no
responsibility to count any Person as a Noteholder who is not permitted to be so
counted under the Base Indenture pursuant to the definition of “Outstanding”
unless a Responsible Officer of the Indenture Trustee has actual knowledge that
such Person is an Affiliate of either or both of the Issuer and PMC.

“Notice” or “Notices” means all requests, demands and other communications, in
writing (including facsimile transmissions and e-mails), sent by overnight
delivery service, facsimile transmission, electronic transmission or
hand-delivery to the intended recipient at the address specified in
Section 10.04 of the PC Repurchase Agreement or, as to any party, at such other
address as shall be designated by such party in a written notice to the other
party.

“NRSRO” means a nationally recognized statistical rating organization that is a
credit rating agency that issues credit ratings that the U.S. Securities and
Exchange Commission permits other financial firms to use for certain regulatory
purposes.

“Obligations” means (a) all of PMC’s indebtedness, obligations to pay the
outstanding principal balance of the Purchase Price, together with interest
thereon on the Termination Date, outstanding interest due on each MRA Payment
Date, and other obligations and liabilities, to the Issuer, as Repo Buyer,
arising under, or in connection with, the Program

 

32

--------------------------------------------------------------------------------

Agreements, whether now existing or hereafter arising; (b) any and all sums
reasonably incurred and paid by the Issuer, as Repo Buyer, or on behalf of the
Issuer, as Repo Buyer, in order to preserve any Repurchase Asset or its interest
therein; (c) in the event of any proceeding for the collection or enforcement of
any of PMC’s indebtedness, obligations or liabilities referred to in this
definition, the reasonable expenses of retaking, holding, collecting, preparing
for sale, selling or otherwise disposing of or realizing on any Repurchase
Asset, or of any exercise by the Issuer, as Repo Buyer, of its rights under the
Program Agreements, including, without limitation, reasonable attorneys’ fees
and disbursements and court costs; and (d) all of PMC’s indemnity obligations to
the Issuer, as Repo Buyer, pursuant to the Program Agreements.

“Obligor” means any Person who owes or may be liable for payments under a
Mortgage Loan.

“OFAC” has the meaning set forth in Section 10.1(j) of the Base Indenture.

“Officer’s Certificate” means a certificate signed by an Issuer Authorized
Officer and delivered to the Indenture Trustee. Wherever this Base Indenture
requires that an Officer’s Certificate be signed also by an accountant or other
expert, such accountant or other expert (except as otherwise expressly provided
in this Base Indenture) may be an employee of the Servicer.

“Opinion of Counsel” means a written opinion of counsel reasonably acceptable to
the Indenture Trustee, which counsel may, without limitation, and except as
otherwise expressly provided in this Base Indenture and except for any opinions
related to tax matters or material adverse effects on Noteholders, be an
employee of the Issuer, PMC or any of their Affiliates.

“Optional Payment” has the meaning set forth in Section 2.03(c) of the PC
Repurchase Agreement.

“Organizational Documents” means the Issuer’s Trust Agreement (including the
related Owner Trust Certificate).

“Other Taxes” has the meaning set forth in in Section 2.09(b) of the PC
Repurchase Agreement.

“Outstanding” means, with respect to all Notes and, with respect to a Note or
with respect to Notes of any Series or Class means, as of the date of
determination, all such Notes theretofore authenticated and delivered under this
Base Indenture, except:

(i) any Notes theretofore canceled by the Indenture Trustee or delivered to the
Indenture Trustee for cancellation, or canceled by the Issuer and delivered to
the Indenture Trustee pursuant to Section 6.9 of the Base Indenture;

(ii) any Notes to be redeemed for whose full payment (including principal and
interest) redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee or any Paying Agent in trust for the
Noteholders of such Notes; provided that, if such Notes are to be redeemed,
notice of such redemption has been duly given if required pursuant to this Base
Indenture, or provision therefore satisfactory to the Indenture Trustee has been
made;

 

33

--------------------------------------------------------------------------------

(iii) any Notes which are canceled pursuant to Section7.3 of the Base Indenture;
and

(iv) any Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Base Indenture (except with respect
to any such Note as to which proof satisfactory to the Indenture Trustee is
presented that such Note is held by a person in whose hands such Note is a
legal, valid and binding obligation of the Issuer).

For purposes of determining the amounts of deposits, allocations, reallocations
or payments to be made, unless the context clearly requires otherwise,
references to “Notes” will be deemed to be references to “Outstanding Notes”. In
determining whether the Noteholders of the requisite principal amount of such
Outstanding Notes have taken any Action under the Base Indenture, Notes owned by
the Issuer, PMC, or any Affiliate of the Issuer or PMC (except with respect to
the Series 2017-VF1 Notes which have been sold by PMC to the VFN Repo Buyer
under the Series 2017-VF1 Repurchase Agreement and any Action to be given or
taken by a Noteholder under the Base Indenture shall be taken by the Repo Buyer
under the Series 2017-VF1 Repurchase Agreement) shall be disregarded. In
determining whether the Indenture Trustee will be protected in relying upon any
such Action, only Notes which an Indenture Trustee Authorized Officer has actual
knowledge are owned by the Issuer or PMC, or any Affiliate of the Issuer or PMC,
will be so disregarded. Notes so owned which have been sold pursuant to a
repurchase transaction or pledged in good faith may be regarded as Outstanding
if the pledgee proves to the satisfaction of the Indenture Trustee the pledgee’s
right to act as owner with respect to such Notes and that the Repo Buyer or
pledgee is not the Issuer or PMC or any Affiliate of the Issuer or PMC. Retained
Notes shall not constitute Notes “Outstanding” to the extent contemplated by the
applicable Indenture Supplement.

“Owner” means, when used with respect to a Note, any related Note Owner.

“Owner Trust Certificate” means a certificate evidencing a 100% undivided
beneficial interest in the Issuer.

“Owner Trust Estate” means the estate of the Trust.

“Owner Trustee” means WSFS, not in its individual capacity but solely as owner
trustee under the Trust Agreement, and any successor Owner Trustee thereunder.

“Owner Trustee Fee” means the annual fee of $7,000, to be paid annually on the
Payment Date occurring in December of each year.

“Owner Trustee Lien” means the lien in favor of the Owner Trustee granted
pursuant to Section 8.3 of the Trust Agreement, which lien is subordinated to
the lien of the Indenture Trustee as provided in such Section 8.3 and is subject
and subordinate to any and all rights of Fannie Mae under the Fannie Mae Lender
Contract or the Acknowledgment Agreement.

 

34

--------------------------------------------------------------------------------

“Participation Agreement” means, (i) with respect to the Sold MSR Excess Spread
PC, the Excess Spread Participation Agreement, (ii) with respect to the Retained
MSR Excess Spread PC, the Retained Excess Spread Participation Agreement, and
(iii) with respect to any other Participation Certificate, as set forth in the
related Participation Agreement.

“Participation Certificate” has the meaning, (i) with respect to the Excess
Spread Participation Agreement, the Sold MSR Excess Spread PC, (ii) with respect
to the Retained Excess Spread Participation Agreement, the Retained MSR Excess
Spread PC, and with respect to any other Participation Agreement, as set forth
therein.

“Participation Certificate Schedule” means, as of any date, the list attached as
Schedule 1 to the Base Indenture, as it may be amended from time to time in
accordance with Section 2.1(b) of the Base Indenture.

“Participation Interest” has the meaning set forth in the Excess Spread
Participation Agreement or the Retained Excess Spread Participation Agreement,
as applicable.

“Paying Agent” means the same Person who serves at any time as the Indenture
Trustee, or an Affiliate of such Person, as paying agent pursuant to the terms
of this Base Indenture.

“Payment Date” means, in any month beginning in January 2018, the 25th day of
such month or, if such 25th day is not a Business Day, the next Business Day
following such 25th day.

“Payment Date Report” has the meaning set forth in Section 3.2(b) of the Base
Indenture.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

“PC Documents” means, collectively, the Participation Certificates and the PC
Repurchase Agreement.

“PC Repo Guaranty” means that certain guaranty, made by the Guarantor in favor
of the Issuer, guaranteeing payment to the Issuer of all amounts owing to the
Issuer from PMC pursuant to the PC Repurchase Agreement.

“PC Repo Pricing Side Letter” means the pricing side letter agreement to the PC
Repurchase Agreement, dated as of the Closing Date, among the Issuer, as Repo
Buyer, PMC, as Repo Seller, and the Guarantor.

“PC Repurchase Agreement” means the Master Repurchase Agreement, dated as of
December 20, 2017, among PMC, as Repo Seller, the Issuer, as Repo Buyer and the
Guarantor, pursuant to which PMC has sold to the Issuer, all of its right, title
and interest in, to and under (i) the Retained MSR Excess Spread PC (including
all rights to the Retained MSR Excess Spread related thereto), and (ii) subject
to PMH’s rights under the PMH Repurchase Agreement, the Sold MSR Excess Spread
PC (including all rights to the Sold MSR Excess Spread related thereto).

 

35

--------------------------------------------------------------------------------

“Percentage Interest” means, with respect to each Trust Certificate, the
percentage indicated on the face thereof.

“Permitted Investments” means, at any time, any one or more of the following
obligations and securities:

(i) (a) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or (b) direct
obligations of, or obligations fully guaranteed as to timely payment of
principal and interest by, any agency or instrumentality of the United States,
provided that such obligations are backed by the full faith and credit of the
United States; and provided further that the short-term debt obligations of such
agency or instrumentality at the date of acquisition thereof have been rated (x)
“A-1” or the equivalent by any NRSRO if such obligations have a maturity of less
than sixty (60) days after the date of acquisition or (y) “A-1+” or the
equivalent by any NRSRO if such obligations have a maturity greater than sixty
(60) days after the date of acquisition;

(ii) repurchase agreements on obligations specified in clause (a) maturing not
more than three months from the date of acquisition thereof; provided that the
short-term unsecured debt obligations of the party agreeing to repurchase such
obligations are at the time rated “A-1+” or the equivalent by any NRSRO;

(iii) certificates of deposit, time deposits and bankers’ acceptances of any
U.S. depository institution or trust company incorporated under the laws of the
United States or any state thereof and subject to supervision and examination by
a federal and/or state banking authority of the United States; provided that the
unsecured short-term debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated “A-1+” or the
equivalent by any NRSRO;

(iv) commercial paper of any entity organized under the laws of the United
States or any state thereof which on the date of acquisition has been rated
“A-1+” or the equivalent by any NRSRO;

(v) interests in any U.S. money market fund which, at the date of acquisition of
the interests in such fund (including any such fund that is managed by the
Indenture Trustee or an Affiliate of the Indenture Trustee or for which the
Indenture Trustee or an Affiliate acts as advisor) and throughout the time as
the interest is held in such fund, has a rating of “AAAm” or the equivalent by
any NRSRO; or

(vi) other obligations or securities that are acceptable to the NRSRO as
Permitted Investments under the Base Indenture and if the investment of account
funds therein will not result in a reduction in the then current rating of the
Notes, as evidenced by a letter to such effect from the NRSRO;

 

36

--------------------------------------------------------------------------------

provided, that each of the foregoing investments shall mature no later than the
Business Day prior to the Payment Date immediately following the date of
purchase thereof (other than in the case of the investment of monies in
instruments of which the Indenture Trustee is the obligor, which may mature on
the related Payment Date), and shall be required to be held to such maturity;
and provided further, that each of the Permitted Investments may be purchased by
the Indenture Trustee through an Affiliate of the Indenture Trustee.

“Permitted Lien” means any liens for taxes, assessments, or similar charges
incurred in the ordinary course of business and which are not yet due or as to
which the period of grace, if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP.

“Person” means any individual, corporation, estate, partnership, limited
liability company, limited liability partnership, joint venture, association,
joint-stock company, business trust, trust, unincorporated organization,
government or any agency or political subdivision thereof, or other entity of a
similar nature.

“PIP” means any performance improvement plan entered into between the Servicer
and Fannie Mae from time to time.

“Place of Payment” means, with respect to any Class of Notes issued under the
Indenture, the city or political subdivision so designated with respect to such
Class of Notes by the Indenture Trustee.

“Plan” means an employee benefit or other plan established or maintained by PMC
or any ERISA Affiliate and covered by Title IV of ERISA, other than a
Multiemployer Plan.

“Plan Asset Regulations” has the meaning set forth in Section 6.5(k) of the Base
Indenture.

“Plan Assets” has the meaning set forth in United States Department of Labor
regulations at 29 C. F. R, section 2510.3-101 as modified by Section 3(42) of
ERISA.

“Pledged Margin Securities Account” means a securities account which shall be
established for the benefit of the Indenture Trustee.

“Pledged Margin Securities Account Control Agreement” means, a securities
account control agreement which shall be entered into by and among PMC, the
Issuer, the Indenture Trustee, PLS and the Guarantor for the purpose of holding
the Pledged Margin Securities.

“Pledged Margin Security” means any exchange traded futures and options or any
“to be announced” long forward contract on a mortgage-backed security. For the
avoidance of doubt, put contracts, short forward contracts and shorting will not
be permitted with respect to Pledged Margin Securities.

 

37

--------------------------------------------------------------------------------

“PLS” means PennyMac Loan Services, LLC, a limited liability company organized
under the laws of the State of Delaware, or its permitted successors and
assigns.

“PLS Subservicing Agreement” means the Third Amended and Restated Flow Servicing
Agreement, dated as of September 12, 2016, between PennyMac Operating
Partnership, L.P., as owner, and PLS, as servicer.

“PMC” means PennyMac Corp., a corporation organized under the laws of the State
of Delaware, or its permitted successors and assigns.

“PMC Repurchase Price” means the price for which PMC is entitled to repurchase a
Participation Certificate from the Issuer, under the PC Repurchase Agreement.

“PMH” means PennyMac Holdings, LLC, a limited liability company organized under
the laws of the State of Delaware, or its permitted successors and assigns.

“PMH Documents” means the PMH Repurchase Agreement, PMH Repo Guaranty, PMH
Subordination Agreement, pricing letter, side letter, confirmations and all
documents ancillary thereto that evidence a PMH Transaction in the form approved
by the Issuer, in writing in its sole discretion with any material modifications
approved by the Issuer in writing in its sole discretion (excluding provisions
related to the advance rate or interest rate of such PMH Transactions, which
shall not be subject to the Issuer review or approval).

“PMH Guaranteed Amount” has the meaning set forth in the PMH Repo Guaranty.

“PMH Repo Guaranty” means that certain guaranty, made by Guarantor in favor of
PMC, guaranteeing payment to PMC of all amounts owing to PMC from PMH pursuant
to the PMH Repurchase Agreement.

“PMH Repurchase Agreement” means the Master Repurchase Agreement, dated as of
December 20, 2017, between PMH, as Repo Seller, and PMC, as Repo Buyer, related
to the Sold MSR Excess Spread PC.

“PMH Repurchase Price” means the price for which PMH is entitled to repurchase
the Sold MSR Excess Spread PC from PMC, under the PMH Repurchase Agreement.

“PMH Subordination Agreement” means the Subordination, Acknowledgment and Pledge
Agreement, dated as of December 20, 2017, between the Issuer, as buyer, and PMH.

“PMH Transaction” means a transaction between PMH, as Repo Seller, and PMC
whereby PMH pledges the Sold MSR Excess Spread to PMC against the transfer of
funds by the PMC, which Sold MSR Excess Spread is concurrently or consecutively
pledged to the Issuer, as Repo Buyer, under the PC Repurchase Agreement.

“PMT” means PennyMac Mortgage Investment Trust, a real estate investment trust
organized under the laws of the State of Maryland, or its permitted successors
and assigns.

 

38

--------------------------------------------------------------------------------

“Pool Purchase Contract” means an agreement between Fannie Mae and the Servicer
to buy and sell mortgage loans or Participation Interests for inclusion in an
MBS pool.

“Portfolio” means each of (i) The Retained MSR Portfolio, and (ii) the Sold MSR
Portfolio, as applicable.

“Portfolio Collections” shall have the meaning set forth in the Excess Spread
Participation Agreement.

“Portfolio Excess Spread” means, collectively, the Retained MSR Excess Spread
and the Sold MSR Excess Spread and with respect to any other Participation
Certificate, the Excess Spread related thereto.

“Portfolio Mortgage Loan” means a Retained MSR Portfolio Mortgage Loan or a Sold
MSR Portfolio Mortgage Loan, as applicable.

“Portfolio Total Spread” shall have the meaning set forth in the Excess Spread
Participation Agreement.

“Predecessor Notes” of any particular Note means every previous Note evidencing
all or a portion of the same debt as that evidenced by such particular Note;
and, for the purposes of this definition, any Note authenticated and delivered
under Section 6.6 of the Base Indenture in lieu of a mutilated, lost, destroyed
or stolen Note will be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.

“Price Differential” means with respect to any Transaction as of any date of
determination, an amount equal to the sum of (i) the product of (A) the Pricing
Rate for such Transaction, (B) the Purchase Price for such Transaction and (C) a
fraction, the numerator of which is the number of days elapsed from and
including the preceding MRA Payment Date to and excluding such date of
determination and the denominator of which equals 360, and (ii) the aggregate
expected related fees (including Default Supplemental Fees, and Step-Up Fees),
costs and expenses (including any Fees, Expenses, reasonable out-of-pocket
expenses and indemnification amounts owed for Administrative Expenses of the
Issuer described in Section 4.5(a)(1)(ii) of the Base Indenture, and Specified
Call Premium Amounts) as of such date of determination (as determined by the
Administrative Agent).

“Price Differential Statement Date” has the meaning set forth in Section 2.04(a)
of the PC Repurchase Agreement.

“Pricing Rate” ” has the meaning set forth in Section 1 of the PC Repo Pricing
Side Letter.

“Proceeds” means “proceeds” as defined in Section 9-102(a)(64) of the UCC.

“Program Agreements” means the PC Repurchase Agreement, the PC Repo Pricing Side
Letter, the Dedicated Account Control Agreement, the Pledged Margin Securities
Account Control Agreement, if any, the Dedicated Account Pledge Agreement, the
Indenture, the Participation Agreements, and the PMH Documents.

 

39

--------------------------------------------------------------------------------

“Prohibited Person” has the meaning set forth in Section 3.18 of the PC
Repurchase Agreement.

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

“Prospective Owner” shall have the meaning set forth in Section 3.9(a) of the
Trust Agreement.

“PTCE” has the meaning set forth in Section 6.5(k) of the Base Indenture.

“Purchase Date” means, subject to the satisfaction of the conditions precedent
set forth in Article IV of the PC Repurchase Agreement, (i) the 25th day of such
month (or, if such 25th day is not a Business Day, the next Business Day
following such 25th day) or (ii) each calendar week, the second (2nd) Business
Day of each such week (or if any such date is not a Business Day, the next
succeeding Business Day) following one (1) Business Day’s written notice from
PMC, as Repo Seller, to the Issuer, as Repo Buyer, and the Administrative Agent,
in each case on which a Transaction is entered into by the Issuer, as Repo
Buyer, pursuant to the PC Repurchase Agreement or such other mutually agreed
upon date as more particularly set forth in the PC Repurchase Agreement.

“Purchase Price” means the price at which each Purchased Asset (or portion
thereof) is transferred by PMC, as Repo Seller, to the Issuer, as Repo Buyer,
which shall equal:

(a) on the Purchase Date, the product of (1) the Purchase Price Percentage and
(2) the applicable Market Value; and

(b) on any day after the Purchase Date, the amount determined under the
immediately preceding clause (a) increased by the amount of any Margin Excess
pursuant to Section 2.05(d) of the PC Repurchase Agreement and decreased by the
sum of (i) any Repurchase Price or Required Payments paid pursuant to
Section 2.03 of the PC Repurchase Agreement, and (ii) the amount of
Consideration transferred by PMC, as Repo Seller, to the Issuer, as Repo Buyer,
pursuant to Section 2.05(a) of the PC Repurchase Agreement equal to the sum of
(x) any cash, (y) the principal amount of any Additional Note Payment with
respect to the Variable Funding Note and (z) the amount of any reduction in the
Owner Trust Certificate, to the extent provided in Section 2.05 the PC
Repurchase Agreement.

“Purchase Price Percentage” has the meaning set forth in Section 1 of the PC
Repo Pricing Side Letter.

“Purchased Assets” means the collective reference to Participation Certificates
together with the Repurchase Assets related to such Participation Certificates.
For the sake of clarity, notwithstanding that related MSRs are pledged, and not
sold, to the Issuer, as Repo Buyer, under the PC Repurchase Agreement, such MSRs
will nevertheless be included herein as Purchased Assets.

 

40

--------------------------------------------------------------------------------

“Ratings Effect” means a reduction, qualification with negative implications or
withdrawal of any then current rating of any Outstanding Notes by an applicable
Note Rating Agency (other than as a result of the termination of such Note
Rating Agency).

“Record Date” means, for the interest or principal payable on any Note on any
applicable Payment Date or Interim Payment Date, (i) for a Book Entry Note, the
last Business Day before such Payment Date or Interim Payment Date, as
applicable, and (ii) for a Definitive Note, the last day of the month preceding
such Payment Date or Interim Payment Date, as applicable, unless otherwise
specified in the related Indenture Supplement.

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by PMC, or any other person or entity with respect to the Purchased
Assets or any other Repurchase Assets.

“Redemption Amount” means, with respect to a redemption of any Series or
Class of Notes by the Issuer pursuant to Section 13.1 of the Base Indenture or
pursuant to the related Indenture Supplement, an amount, which when applied
together with other Available Funds pursuant to Section 4.5 of the Base
Indenture, shall be sufficient to pay an amount equal to the sum of (i) the Note
Balance of all Outstanding Notes of such Series or Class as of the applicable
Redemption Payment Date or Redemption Date, (ii) all accrued and unpaid interest
on the Notes of such Series or Class through the day prior to such Redemption
Payment Date or Redemption Date, (iii) any and all amounts allocable to such
Series or Class and then owing or owing in connection with such redemption to
the Indenture Trustee or the Securities Intermediary, from the Issuer pursuant
to the terms hereof, and (iv) any and all other amounts allocable to such Series
or Class then due and payable under the Indenture (including all accrued and
unpaid Default Supplemental Fees or Step-Up Fees on the Notes of such Series or
Class through the day prior to such Redemption Payment Date or Redemption Date
and any Specified Call Premium Amount, if any) and, in the case of redemption of
all Outstanding Notes, sufficient to authorize the satisfaction and discharge of
this Base Indenture pursuant to Section 7.1 of the Base Indenture.

“Redemption Date” has the meaning set forth in Section 13.1 of the Base
Indenture.

“Redemption Notice” has the meaning set forth in Section 13.2 of the Base
Indenture.

“Redemption Payment Date” has the meaning set forth in Section 13.1 of the Base
Indenture.

“Redemption Percentage” means, for any Class, 10% or such other percentage set
forth in the related Indenture Supplement.

“Register” has the meaning set forth in Section 9.02(a) of the PC Repurchase
Agreement.

 

41

--------------------------------------------------------------------------------

“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation
AB), 17 C.F.R. §§ 229.1100 229.1125, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the U.S. Securities and Exchange Commission or by the staff of the U.S.
Securities and Exchange Commission, or as may be provided by the U.S. Securities
and Exchange Commission or its staff from time to time.

“Regulation RR” means regulations required under Section 15G of the 1934 Act,
added pursuant to Section 941(b) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.

“Regulation S” means Regulation S promulgated under the 1933 Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
contained in, Regulation S means such rule, section, subsection, definition or
term, as the case may be, or any successor thereto.

“Regulation S Definitive Note” has the meaning set forth in in
Section 5.2(c)(ii) of the Base Indenture.

“Regulation S Global Note” has the meaning set forth in Section 5.2(c)(ii) of
the Base Indenture.

“Regulation S Note” has the meaning set forth in Section 5.2(c)(ii) of the Base
Indenture.

“Regulation S Note Transfer Certificate” has the meaning set forth in
Section 6.5(i)(ii) of the Base Indenture.

“Related Security” means with respect to any Asset, (a) all security interests
or Liens and property subject thereto from time to time, if any, purporting to
secure payment of such Asset, whether pursuant to the related Servicing Contract
related to such Asset or otherwise, together with all financing statements
covering any collateral securing such Asset; (b) all guarantees, indemnities,
letters of credit, insurance or other agreements or arrangements of any kind
from time to time supporting or securing payment of such Asset whether pursuant
to the related Servicing Contract related to such Asset or otherwise; and
(c) any and all Proceeds of the foregoing.

“REO Property” means a Mortgaged Property in which an owner of the related
Mortgage Loan has acquired title to such Mortgaged Property through foreclosure
or by deed in lieu of foreclosure.

“Repo Buyer” means the purchaser under a repurchase agreement. With respect to
the PMH Repurchase Agreement, PMC is the Repo Buyer. With respect to the PC
Repurchase Agreement, the Issuer is the Repo Buyer. With respect to the Series
2017-VF1 Repurchase Agreement, the VFN Repo Buyer is the Repo Buyer.

“Repo Seller” means the seller under a repurchase agreement. With respect to the
PMH Repurchase Agreement, PMH is the Repo Seller. With respect to the PC
Repurchase Agreement, PMC is the Repo Seller. With respect to the Series
2017-VF1 Repurchase Agreement, PMC is the Repo Seller.

 

42

--------------------------------------------------------------------------------

“Repurchase Assets” has the meaning set forth in Section 4.02(a) of the PC
Repurchase Agreement.

“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date
requested by PMC, as Repo Seller, on which the Repurchase Price is paid pursuant
to Section 2.03 of the PC Repurchase Agreement.

“Repurchase Price” means the price at which Purchased Assets are to be
transferred from the Issuer, as Repo Buyer, to PMC, as Repo Seller (other than
the MSRs, which are pledged, and not sold, to the Issuer, as Repo Buyer), upon
termination of a Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase Price for such
Purchased Assets and the accrued but unpaid Price Differential as of the date of
such determination.

“Request for Approval for Transfer” means Form 629 to the Fannie Mae Guide
(Request for Approval for Servicing or Subservicing Transfer) as required by
Chapter A2-7-3 of the Fannie Mae Guide for one Fannie Mae approved servicer to
transfer its responsibility for servicing or subservicing any mortgage loans
and/or acquired properties to another servicer.

“Required Available Funds” means an amount that, in connection with each Funding
Date, shall remain on deposit in the Collection and Funding Account, which
amount shall equal (i) the amounts payable in respect of Fees and invoiced or
regularly occurring expenses payable from Available Funds on the next Payment
Date, plus (ii) all accrued and unpaid interest due on the Notes on the next
Payment Date following such Funding Date, plus (iii) all amounts required to be
deposited into each Series Reserve Account on the next Payment Date, plus
(iv) all amounts required to be deposited into the Expense Reserve Account on
the next Payment Date, plus (v) all accrued and unpaid Default Supplemental
Fees, if any, due on the Notes on the next Payment Date following such Funding
Date, plus (vi) all accrued and unpaid Step-Up Fees, if any, due on the Notes on
the next Payment Date following such Funding Date.

“Required Payment” means, with respect to any Purchased Asset, the amounts
required to be paid by PMC, as Repo Seller, to the Issuer, as Repo Buyer, on an
MRA Payment Date, equal to any “Scheduled Principal Payment Amounts” due on such
MRA Payment Date under the Indenture.

“Required Reserve Amount” means, with respect to any MRA Payment Date, the
amounts estimated to be due and owing by PMC, as Repo Seller, pursuant Sections
2.03, 2.04 or 2.05 of the PC Repurchase Agreement.

“Requirement of Law” means, with respect to any Person, any law, treaty, rule or
regulation or determination of an arbitrator, a court or other Governmental
Authority, applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

 

43

--------------------------------------------------------------------------------

“Responsible Officer” means,

(i) When used with respect to the Indenture Trustee, the Calculation Agent, the
Note Registrar, the Securities Intermediary or the Paying Agent, an Indenture
Trustee Authorized Officer;

(ii) when used with respect to the Issuer, any Issuer Authorized Officer who is
an officer of the Issuer or is an officer of the Administrator of the type
referred to in clause (iii) below; and

(iii) when used with respect to the Servicer or the Administrator, the chief
executive officer, the chief financial officer, any vice president or any
managing director of the Servicer or the Administrator, as the case may be.

“Restricted Cash” has the meaning set forth in Section 1 of the PC Repo Pricing
Side Letter.

“Restricted Payment” means, with respect to any Person, collectively, all
dividends or other distributions of any nature (cash, securities, assets or
otherwise), and all payments, by virtue of redemption or otherwise, on any class
of equity securities (including, warrants, options or rights therefor) issued by
such Person, which may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.

“Retained Excess Spread Participation Agreement” means the Retained Spread
Participation Agreement, dated as of December 20, 2017, between PMC, as company,
and PMC, as initial participant.

“Retained MSR Excess Spread” has the meaning set forth in the Retained Excess
Spread Participation Agreement.

“Retained MSR Excess Spread Collections” shall have the meaning set forth in the
Retained Excess Spread Participation Agreement.

“Retained MSR Excess Spread PC” means the Participation Certificate issued
pursuant to the Retained Excess Spread Participation Agreement which evidences
the Participation Interest in the Retained MSR Excess Spread.

“Retained MSR Portfolio” has the meaning set forth in the Retained Excess Spread
Participation Agreement.

“Retained MSR Portfolio Mortgage Loan” means a Mortgage Loan that is included in
the Retained MSR Portfolio.

“Retained Note” has the meaning set forth in Section 14.3 of the Base Indenture.

“Revolving Period” means, for any Series or Class of Notes, the period of time
beginning on, and including, the related Issuance Date and ending on, but
excluding, commencement of the Early Amortization Period or the Full
Amortization Period. For the avoidance of doubt, the occurrence of an Advance
Rate Trigger Event shall not cause the termination of the Revolving Period.

 

44

--------------------------------------------------------------------------------

“Right of Assumption” means the Indenture Trustee’s right to request that the
Indenture Trustee, if it is an Eligible Servicer, or a proposed new servicer, if
it is an Eligible Servicer, be retained to service the Subject Mortgages, all on
the terms and conditions set forth in the Acknowledgment Agreement.

“Rule 144A” means Rule 144A promulgated under the 1933 Act.

“Rule 144A Definitive Note” has the meaning set forth in Section 5.2(c)(i) of
the Base Indenture.

“Rule 144A Global Note” has the meaning set forth in Section 5.2(c)(i) of the
Base Indenture.

“Rule 144A Note” has the meaning set forth in Section 5.2(c)(i) of the Base
Indenture.

“Rule 144A Note Transfer Certificate” has the meaning set forth in
Section 6.5(i)(iii) of the Base Indenture.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business, or any successor thereto.

“Sale” means any sale of any portion of the Trust Estate pursuant to
Section 8.15 of the Base Indenture.

“Sanctions” has the meaning set forth in Section 10.1(j) of the Base Indenture.

“Schedules of Mortgages” means each Form 2005 (Guaranteed Mortgage-Backed
Securities Program Schedule of Mortgages) for PMC delivered to Fannie Mae or its
designee from time to time as provided in the Fannie Mae Guide.

“Scheduled Principal Payment Amount” means, for each Series of Notes and each
Payment Date, as and to the extent specified in the related Indenture
Supplement.

“SDQ Event” means the Servicer SDQ Rate for two (2) consecutive months is
greater than 90% of the upper threshold of the related Level.

“SDQ Factor” means, for a Level, the number of basis points set out in the
definition of Stop-Loss Cap as the SDQ Factor for such Level.

“SDQ Loans” means loans for which Servicer owns the Fannie Mae servicing rights
that are 90 days or more delinquent or in foreclosure.

“SEC” means the United States Securities and Exchange Commission, or any
successor thereto.

 

45

--------------------------------------------------------------------------------

“Secretary of State” means the Secretary of State of the State of Delaware.

“Secured Party” has the meaning set forth in the Granting Clause of the Base
Indenture.

“Securities Account” has the meaning set forth in Section 8-501(a) of the UCC.

“Securities Intermediary” has the meaning set forth in Section 8-102(a)(14) of
the UCC, and where appropriate, shall mean Citibank or its successor, in its
capacity as securities intermediary pursuant to Section 4.9 of the Base
Indenture.

“Security Entitlement or Securities Entitlements” has the meaning set forth in
Section 8-102(a)(17) of the UCC.

“Security Interest” means the security interest in the Collateral Granted to the
Indenture Trustee pursuant to the Granting Clause.

“Seller Termination Option” means (a) (i) the Issuer, as Repo Buyer, has or
shall incur costs in connection with those matters provided for in Section 2.09
or 2.10 of the PC Repurchase Agreement and (ii) the Issuer, as Repo Buyer,
requests that PMC, as Repo Seller, pay to the Issuer, as Repo Buyer, those costs
in connection therewith or (b) the Issuer, as Repo Buyer, has declared in
writing that an event described in Section 5.02(h)(A) of the PC Repurchase
Agreement has occurred.

“Series” means one or more Class or Classes of Notes assigned a series
designation, as specified in the related Indenture Supplement.

“Series 2017-VF1 Notes” means the Notes issued pursuant to the Series 2017-VF1
Indenture Supplement.

“Series 2017-VF1 Indenture Supplement” means the Indenture Supplement, dated as
of December 20, 2017, by and among the Issuer, the Indenture Trustee, the
Calculation Agent, the Paying Agent, the Securities Intermediary, PMC, as
Administrator and as Servicer, and CSFB, as Administrative Agent.

“Series 2017-VF1 Repurchase Agreement” means the Master Repurchase Agreement,
dated as of December 20, 2017, among PMC, as Repo Seller, the VFN Repo Buyer, as
Repo Buyer, and CSFB, as Administrative Agent, related to the Series 2017-VF1
Notes.

“Series Allocation Percentage” means, for any Series as of any date of
determination:

(i) as of any date prior to the Full Amortization Period, the percentage
obtained by dividing (a) the Series Invested Amount for such Series by (b) the
aggregate of the Series Invested Amounts for all Outstanding Series; and

(ii) as of any date during the Full Amortization Period, the percentage obtained
by dividing (a) the Series Invested Amount for such Series as of the first day
of the Full Amortization Period by (b) the aggregate of the Series Invested
Amounts as of the first day of the Full Amortization Period for all Outstanding
Series.

 

46

--------------------------------------------------------------------------------

“Series Available Funds” means, for any Series as of any Payment Date occurring
during the Full Amortization Period, after paying any amounts owed under
Sections 4.5(a)(2)(i), (ii) and (iii) of the Base Indenture, the sum of the
following:

(i) such Series’ Series Allocation Percentage of any income from Permitted
Investments in the Collection and Funding Account;

(ii) such Series’ Series Allocation Percentage of all Collections on deposit in
the Trust Accounts that are not Series Reserve Accounts (prior to giving effect
to any payments on such Payment Date);

(iii) such Series’ Series Allocation Percentage of any other funds of the Issuer
that the Issuer (or the Administrator on behalf of the Issuer) identifies to the
Indenture Trustee in writing to be treated as “Available Funds” as of such
Payment Date; and

(iv) such other amounts designated as Series Available Funds for the benefit of
such Series of Notes in the related Indenture Supplement.

“Series Invested Amount” means, the VFN Series Invested Amount or the Term Note
Series Invested Amount, as applicable.

“Series Required Noteholders” means, for any Series (a) if not specified in the
related Indenture Supplement, Noteholders of any Series constituting the
Majority Noteholders of such Series and (b) if specified in the related
Indenture Supplement, as set forth in the related Indenture Supplement.

“Series Reserve Account” means an account established for each Series which
shall be a non-interest bearing trust account which is an Eligible Account,
established and maintained pursuant to Sections 4.1 and 4.6 of the Base
Indenture, and in the name of the Indenture Trustee and identified by each
relevant Series.

“Series Reserve Required Amount” means with respect to any Series of Notes, if
applicable, the “Series Reserve Required Amount” set forth in the Indenture
Supplement for such Series.

“Servicer” means PMC in all its capacities as a Fannie Mae approved
seller/servicer under the Fannie Mae Lender Contract and as servicer under the
Fannie Mae Lender Contract of the related Mortgage Loans, and any successor
servicer approved by Fannie Mae under the Fannie Mae Lender Contract.

“Servicer SDQ Rate” means (i) the result of (x) the unpaid principal balance of
SDQ Loans, divided by (y) the total unpaid principal balance of Mortgage Loans,
in each case, determined as of the end of the most recently ended calendar
month, multiplied by (ii) 100, expressed as a percentage.

 

47

--------------------------------------------------------------------------------

“Servicer Termination Event” means, with respect to the Fannie Mae Lender
Contract, the occurrence of any events or conditions, and the passage of any
cure periods and giving to and receipt by the Servicer of any required notices,
as a result of which any Person has the current right to terminate the Servicer
as servicer or issuer, as applicable, under the Fannie Mae Lender Contract.

“Servicer’s Fannie Mae Portfolio” means all mortgage loans delivered, and all
mortgage loans and properties serviced, by the Servicer for Fannie Mae through
the date, if any, Fannie Mae terminates the Servicing Rights.

“Servicing Contract” means, the Mortgage Selling and Servicing Contract, the
applicable Master Agreements between Purchaser and Fannie Mae, and the
applicable Schedules of Mortgages (Form 2005), and any and all instruments,
agreements, invoices or other writings, which give rise to or otherwise evidence
any of the MSRs. Without limiting the generality of the foregoing, any reference
herein to a “Servicing Contract” shall be deemed to include the Acknowledgment
Agreement.

“Servicing Fee” means, with respect to any Mortgage Loan, the aggregate monthly
fee payable to the Servicer in servicing such Mortgage Loan pursuant to the
Fannie Mae Lender Contract, not including any Ancillary Income or Advance
Reimbursement Amounts.

“Servicing Rights” means the Servicer’s rights under the Fannie Mae Lender
Contract.

“Servicing Standards” has the meaning set forth in Section 10.2(i) of the Base
Indenture.

“Servicing Transfer Consent Notice” means Fannie Mae’s consent to the
post-delivery transfer of servicing to PMC from a transferor servicer under the
terms set forth in the Fannie Mae Guide, including any additional terms,
conditions and provisions set forth in such consent.

“Shortfall Amount” has the meaning set forth in Section 4.5 of the Base
Indenture.

“Similar Law” has the meaning set forth in Section 6.5(k) of the Base Indenture.

“Sold MSR Excess Spread” has the meaning set forth in the Excess Spread
Participation Agreement.

“Sold MSR Excess Spread PC” has the meaning set forth in the Excess Spread
Participation Agreement.

“Sold MSR Portfolio” has the meaning set forth in the Excess Spread
Participation Agreement.

“Sold MSR Portfolio Mortgage Loan” means a Mortgage Loan that is included in the
Sold MSR Portfolio.

 

48

--------------------------------------------------------------------------------

“Specified Call Premium Amount” has the meaning set forth in the related
Indenture Supplement, if applicable.

“STAMP” has the meaning set forth in Section 6.5(d) of the Base Indenture.

“Stated Maturity Date” means, for each Class of Notes, the date specified in the
Indenture Supplement for such Note as the fixed date on which the outstanding
principal and all accrued interest for such Series or Class of Notes is due and
payable.

“Statutory Trust Statute” means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. § 3801 et seq.

“Step-Up Fee” has the meaning set forth in the related Indenture Supplement, if
applicable.

“Step-Up Fee Rate” has the meaning set forth in the related Indenture
Supplement, if applicable.

“Stop-Loss Cap” means, as of any date of determination during the Stop-Loss Cap
Period, and subject to the provisions below, the greater of: (i) $250,000, and
(ii) the sum of (a) the result of (x) the unpaid principal balance of Non-SDQ
Loans as of such date multiplied by (y) the applicable Non-SDQ Factor shown in
the chart below (as adjusted from time to time), plus (b) the result of (x) the
unpaid principal balance of SDQ Loans as of such date multiplied by (y) the
applicable SDQ Factor shown in the chart below (as adjusted from time to time):

 

“Level”

  

If the Servicer

SDQ Rate is:

  

Then, the “Non-

SDQ Factor” is:

  

And the “SDQ

Factor” is:

1    0% - 2.0%    10 bps    50 bps 2    2.01% - 4.0%    12 bps    75 bps 3   
4.01% - 6.0%    14 bps    100 bps 4    6.01% - 10.0%    17 bps    150 bps 5   
10.01% - 15.0%    20 bps    200 bps 6    15.01% and over    25 bps    300 bps

“Stop-Loss Cap Period” means the period beginning on the effective date of the
Acknowledgment Agreement and terminating on the fifth (5th) anniversary of the
effective date of the Acknowledgment Agreement.

 

49

--------------------------------------------------------------------------------

“Stop-Loss Cap Required Amount” means with respect to any Series of Notes, if
applicable, the “Stop-Loss Cap Required Amount” set forth in the Indenture
Supplement for such Series.

“Subject Mortgages” means all loans which are now being serviced or which may
later be serviced by the Servicer pursuant to the Fannie Mae Lender Contract.

“Subservicer” means, with respect to any MSR, any subservicer engaged by the
Servicer to subservice the Mortgage Loans related to such MSR so long as such
subservicing arrangement with respect to such MSR is subject to an Eligible
Subservicing Agreement.

“Subservicer Side Letter Agreement” the Subservicer Acknowledgment Agreement,
dated as of December 20, 2017, among PMC, PLS, the Administrative Agent and the
Indenture Trustee.

“Subservicer Termination Event” occurs when:

(i) the Servicer has terminated the Person acting as Subservicer and has not
either (a) taken over the servicing of such Mortgage Loans itself in conformity
with Section 10.2(y) of the Base Indenture or (b) (i) identified a replacement
within thirty (30) days that meets the criteria of an Eligible Subservicer and
(ii) replaced the Subservicer with such Eligible Subservicer within sixty
(60) days under an Eligible Subservicing Agreement and an agreement in form and
substance similar to the Subservicer Side Letter Agreement; or

(ii) in the case of PLS, if (a) PLS ceases to be a seller/servicer approved by
Fannie Mae or a lender approved by HUD, (b) PLS has been suspended as a
seller/servicer by Fannie Mae or HUD on and after the date on which PLS first
obtained such approval from Fannie Mae or HUD, as applicable or (c) PLS is under
review or investigation outside of due course and has knowledge of imminent or
future investigation outside of due course, by Fannie Mae or HUD on and after
the date on which PLS became a Fannie Mae or HUD approved seller/servicer or
lender, as the context may require, and the Servicer has not either (x) taken
over the servicing of such Mortgage Loans itself in conformity with
Section 10.2(y) of the Base Indenture or (y) (i) identified a replacement within
thirty (30) days that meets the criteria of an Eligible Subservicer and
(ii) replaced PLS with such Eligible Subservicer within sixty (60) days under an
Eligible Subservicing Agreement and an agreement in form and substance similar
to the Subservicer Side Letter Agreement.

“Subordination of Interest Agreement” means the Third Amended and Restated
Subordination of Interest Agreement, dated as of December 20, 2017, among Fannie
Mae, the Guarantor, PMC, PMH and the Indenture Trustee.

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

 

50

--------------------------------------------------------------------------------

“Taxes” has the meaning assigned to such term in Section 2.09(a) of the PC
Repurchase Agreement.

“Term Note” means notes of any Series or Class designated as “Term Notes” in the
related Indenture Supplement.

“Term Note Series Available Funds” means, for each Series of Term Notes as of
any Payment Date occurring during the Full Amortization Period, after paying any
amounts owed under the priority of payments under the Base Indenture, the sum of
the following:

(i) such Series’ Series Allocation Percentage of any income from Permitted
Investments in the Collection and Funding Account;

(ii) such Series’ Series Allocation Percentage of all Collections on deposit in
the Trust Accounts that are not Series Reserve Accounts (prior to giving effect
to any payments on such Payment Date);

(iii) such Series’ Series Allocation Percentage of any other funds of the Issuer
that the Issuer (or the Administrator on behalf of the Issuer) identifies to the
Indenture Trustee in writing to be treated as “Available Funds” as of such
Payment Date; and

(iv) such other amounts designated as Term Note Series Available Funds for the
benefit of such Series of Term Notes in the related Indenture Supplement.

“Term Note Series Invested Amount” means, as of any date of determination, for
any Series of Term Notes, the highest Class Invested Amount for any Class of
Term Notes included in such Series of Term Notes.

“Termination Date” has the meaning set forth in Section 1 of the PC Repo Pricing
Side Letter.

“Total Assets” means PMC’s “Total Assets” as reported in field A240 of the
Mortgage Banker’s Financial Reporting Form in accordance with the requirements
set forth in the Fannie Mae Lender Contract.

“Total Collections” means,

(i) With respect to any Interim Payment Date, all Collections on the
Participation Certificates or Eligible Securities received during the related
Collection Period and any other funds of the Issuer that the Issuer (or the
Administrator on behalf of the Issuer) identifies to the Indenture Trustee to be
treated as “Total Collections” for such Interim Payment Date; and

 

51

--------------------------------------------------------------------------------

(ii) with respect to any Payment Date, (A) all Collections on the Participation
Certificates or Eligible Securities received during the related Collection
Period, plus (B) any income from Permitted Investments in Trust Accounts that
have been established for the benefit of all Series of Notes, plus (C) any other
funds of the Issuer that the Issuer (or the Administrator on behalf of the
Issuer) identifies to the Indenture Trustee to be treated as “Total Collections”
for such Payment Date.

“Total Excess Spread Schedule” means Schedule 4 to the PC Repurchase Agreement,
as updated from time to time by PMC, as Repo Seller.

“Transaction” has the meaning assigned to such term in the recitals to the PC
Repurchase Agreement.

“Transaction Documents” means, collectively, the Indenture, each Note Purchase
Agreement, the PC Repurchase Agreement, the Series 2017-VF1 Repurchase
Agreement, the Participation Agreements, the PC Repo Guaranty, the PMH Repo
Guaranty, the VFN Repo Guaranty, the Acknowledgment Agreement, the PMH
Subordination Agreement, the Fee Letter, the Participation Certificate Schedule,
all Notes, the Trust Agreement, the Administration Agreement, each Indenture
Supplement, the MSR Valuation Agent Agreement, the Disposition Management
Agreement, if any, the Dedicated Account Control Agreement and each of the other
documents, instruments and agreements entered into on the date hereof and
thereafter in connection with any of the foregoing or the transactions
contemplated thereby.

“Transaction Notice” has the meaning assigned to such term in Section 2.02 of
the PC Repurchase Agreement.

“Transaction Register” has the meaning assigned to such term in Section 9.03(b)
of the PC Repurchase Agreement.

“Transfer” has the meaning set forth in Section 6.5(h) of the Base Indenture. It
is expressly provided that the term “Transfer” in the context of the Notes
includes, without limitation, any distribution of the Notes by (i) a corporation
to its shareholders, (ii) a partnership to its partners, (iii) a limited
liability company to its members, (iv) a trust to its beneficiaries or (v) any
other business entity to the owners of the beneficial interests in such entity.

“Transfer/Engagement Request” means a request that Fannie Mae transfer the
Servicing Rights or New Servicing Rights, as applicable, to the Indenture
Trustee or a proposed new servicer.

“Transferee” has the meaning set forth in Section 9.02(a) of the PC Repurchase
Agreement.

“Treasury Regulations” means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

 

52

--------------------------------------------------------------------------------

“Trust” shall mean PMT ISSUER TRUST—FMSR, the Delaware statutory trust
established pursuant to the Original Trust Agreement and the Certificate of
Trust and continued hereby which shall carry on its business operations under
the name of “PMT ISSUER TRUST—FMSR”.

“Trust Account or Trust Accounts” means, individually, any of the Collection and
Funding Account, the Note Payment Account, the Expense Reserve Account or the
Series Reserve Account and any other account required under any Indenture
Supplement, if any, and collectively, all of the foregoing.

“Trust Agreement” means the trust agreement dated as of November 22, 2017 (the
“Original Trust Agreement”), as amended and restated by the Amended and Restated
Trust Agreement, dated the Closing Date, by and between PMC and the Owner
Trustee.

“Trust Certificate” means a certificate substantially in the form set forth in
Exhibit A of the Trust Agreement.

“Trust Estate” means the trust estate established under this Base Indenture for
the benefit of the Noteholders, which consists of the property described in the
Granting Clause, to the extent not released pursuant to Section 7.1 of the Base
Indenture.

“Trust Officer” means any officer of the Owner Trustee who is authorized to act
for the Owner Trustee and whose name appears on a list of such officers
furnished by the Owner Trustee to the Administrator and Indenture Trustee, as
such list may be amended and supplemented from time to time.

“Trust Property” means the property, or interests in property, constituting the
Trust Estate from time to time.

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code, as in
effect in the relevant jurisdiction.

“United States and U.S.” means the United States of America.

“United States Person” means (i) A citizen or resident of the United States,
(ii) a corporation or partnership (or entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in or under the laws of the United States, any one of the states thereof or the
District of Columbia, (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source or (iv) a trust if a
court within the United States is able to exercise primary supervision over the
administration of such trust, and one or more such United States Persons have
the authority to control all substantial decisions of such trust (or, to the
extent provided in applicable Treasury regulations, certain trusts in existence
on August 20, 1996 which are eligible to elect to be treated as United States
Persons).

“U.S. Anti-Money Laundering Laws” has the meaning set forth in Section 10.1(i)
of the Base Indenture.

“USDA” means the Rural Housing Service of the Rural Development Agency of the
United States Department of Agriculture, or any successor.

 

53

--------------------------------------------------------------------------------

“USDA Loan” means a Mortgage Loan which is guaranteed by USDA, as evidenced by a
USDA Loan Guarantee Document.

“USDA Loan Guarantee Document” means a loan guarantee document issued by USDA in
accordance with 7 CFR § 3555.107.

“VA” means the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

“VA Loan” means a Mortgage Loan which is subject of a VA Loan Guaranty Agreement
as evidenced by a loan guaranty certificate, or a Mortgage Loan which is a
vendor loan sold by the VA.

“VA Loan Guaranty Agreement” means the obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the mortgagor pursuant to the Servicemen’s Readjustment Act.

“Variable Funding Note or VFN” means any Note of a Series or Class designated as
“Variable Funding Notes” in the related Indenture Supplement.

“VFN Draw” means, for any Funding Date, the amount to be borrowed on such date
in relation to any VFNs pursuant to Section 4.3(b) of the Base Indenture.

“VFN Draw Date” means any Funding Date on which a VFN Draw is to be made
pursuant to Section 4.3(b) of the Base Indenture.

“VFN Funding Source” means, with respect to a VFN that is not subject to a
repurchase agreement, the VFN Noteholder; with respect to a VFN that is subject
to a repurchase agreement, the party that is the Repo Seller under such
repurchase agreement.

“VFN Noteholder” means the Noteholder of a VFN.

“VFN Note Balance Adjustment Request” has the meaning set forth in
Section 4.3(b)(i) of the Base Indenture.

“VFN Principal Balance” means, any date, for any VFN or for any Series or
Class of VFNs, as the context requires, the Note Balance thereof as of the
opening of business on the first day of the then-current Interest Accrual Period
for such Series or Class minus all amounts previously paid during such Interest
Accrual Period on such Note with respect to principal (including any Additional
Note Payments paid (or deemed paid) by the owner of the Owner Trust Certificate
pursuant to Sections 4.4(b) or 4.5(e) of the Base Indenture plus the amount of
any increase in the Note Balance of such Note during such Interest Accrual
Period prior to such date, which amount shall not exceed the Maximum VFN
Principal Balance.

“VFN Repo Buyer” has the meaning set forth in Section 2 of the Series 2017-VF1
Indenture Supplement.

 

54

--------------------------------------------------------------------------------

“VFN Repo Guaranty” means that certain guaranty, made by the Guarantor in favor
of the Repo Buyer, guaranteeing payment to the Repo Buyer of all amounts owing
to the Repo Buyer from the Repo Seller pursuant to the Series 2017-VF1
Repurchase Agreement.

“VFN Series Available Funds” means, for each Series of VFNs as of any Payment
Date occurring during the Full Amortization Period, after paying any amounts
owed under the priority of payments under the Base Indenture, the sum of the
following:

(i) such Series’ Series Allocation Percentage of any income from Permitted
Investments in the Collection and Funding Account;

(ii) such Series’ Series Allocation Percentage of all Collections on deposit in
the Trust Accounts that are not Series Reserve Accounts (prior to giving effect
to any payments on such Payment Date);

(iii) such Series’ Series Allocation Percentage of any other funds of the Issuer
that the Issuer (or the Administrator on behalf of the Issuer) identifies to the
Indenture Trustee in writing to be treated as “Available Funds” as of such
Payment Date; and

(iv) such other amounts designated as VFN Series Available Funds for the benefit
of such Series of VFNs in the related Indenture Supplement.

“VFN Series Invested Amount” means, as of any date of determination, for any
Series of VFNs, the highest Class Invested Amount for any Class of VFNs included
in such Series of VFNs.

“Voting Interests” means the aggregate voting power evidenced by the Notes, and
each Outstanding Note’s Voting Interest within its Series equals the percentage
equivalent of the fraction obtained by dividing that Note’s Note Balance by the
aggregate Note Balance of all Outstanding Notes within such Series; provided,
however, that where the Voting Interests are relevant in determining whether the
vote of the requisite percentage of Noteholders necessary to effect any consent,
waiver, request or demand shall have been obtained, the Voting Interests shall
be deemed to be reduced by the amount equal to the Voting Interests (without
giving effect to this provision) represented by the interests evidenced by any
Note registered in the name of, or in the name of a Person or entity holding for
the benefit of, the Issuer, PMC or any Person that is an Affiliate of any of the
Issuer or PMC (except with respect to the Series 2017-VF1 Notes which have been
sold by PMC to the VFN Repo Buyer under the Series 2017-VF1 Repurchase
Agreement). The Indenture Trustee shall have no liability for counting a Voting
Interest of any Person that is not permitted to be so counted under the
Indenture pursuant to the definition of “Outstanding” unless a Responsible
Officer of the Indenture Trustee has actual knowledge that such Person is the
Issuer or PMC or an Affiliate of either or both of the Issuer and PMC (except
with respect to the Series 2017-VF1 Notes which have been sold by PMC to the VFN
Repo Buyer under the Series 2017-VF1 Repurchase Agreement).

All actions, consents and votes under the terms and provisions of the Indenture
(other than under any Indenture Supplement related to a specific Series) that
require a certain percentage of Voting Interests of all Series or any specified
Series of Notes, such as the Series Required Noteholders of Series of Notes that
are Variable Funding Notes or the Series Required Noteholders of each

 

55

--------------------------------------------------------------------------------

Series, as opposed to the Majority Noteholders of all Outstanding Notes shall be
deemed by each of the Issuer, the Indenture Trustee, the Administrator, the
Servicer, the Administrative Agent and the Noteholders to require such
designated percentage of Voting Interests of each Outstanding Series and, in the
event any one specified Series fails to provide the required percentage of
Voting Interests with respect to any such action, consent or vote, then such
action, consent or vote shall be deemed by the Issuer, the Indenture Trustee,
the Administrator, the Servicer, the Administrative Agent and the Noteholders to
be not approved.

“Weighted Average Advance Rate” means, on any date of determination, with
respect to all Outstanding Series of Variable Funding Notes, a percentage equal
to the weighted average of the Advance Rates for each Series of Variable Funding
Notes then Outstanding (weighted based on the VFN Series Invested Amount of each
Series of Variable Funding Notes on such date). With respect to a specific
Series of Variable Funding Notes, the “Weighted Average Advance Rate” shall
equal the Advance Rate with respect to the Class within such Series of Variable
Funding Notes with the highest Advance Rates.

“WSFS” means Wilmington Savings Fund Society, FSB.

 

56