Exhibit 10.3

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”),
dated as of May 8, 2013, is hereby entered into by and among PennyMac Financial
Services, Inc., a Delaware corporation (the “Corporation”), Private National
Mortgage Acceptance Company, LLC, a Delaware limited liability company
(“PMLLC”), and each of the Members.

 

RECITALS

 

WHEREAS, the Members hold membership interests (“Units”) in PMLLC, which is
treated as a partnership for United States federal income tax purposes;

 

WHEREAS, the Corporation is the managing member of, and holds and will hold
Units in, PMLLC;

 

WHEREAS, as a result of the Members agreeing to retain Units rather than
transferring all of their Units to the Corporation in exchange for Class A
Shares in a transaction that would be subject to Section 351(a) of the United
States Internal Revenue Code of 1986, as amended (the “Code”), the Corporation
expects to incur significantly lower tax liabilities on an ongoing basis with
respect to the operations of PMLLC;

 

WHEREAS, the Units held by the Members are exchangeable for Class A Shares
pursuant to the Exchange Agreement;

 

WHEREAS, PMLLC and each of its direct and indirect subsidiaries treated as a
partnership for United States federal income tax purposes will have in effect an
election under Section 754 of the Code for each Taxable Year in which an
exchange of Units for Class A Shares occurs, which election is intended to
result in an adjustment to the tax basis of the assets owned by PMLLC and such
subsidiaries (solely with respect to the Corporation) at the time (such time,
the “Exchange Date”) of an exchange of Units for Class A Shares or any other
acquisition by the Corporation of Units for cash or otherwise in each case in a
transaction that is a taxable exchange by the exchanging Member for federal
income tax purposes, including such an exchange by a Member that is generally
exempt from federal income taxation (collectively, an “Exchange”), by reason of
such Exchange and the payments under this Agreement (such assets and any asset
whose tax basis is determined, in whole or in part, by reference to the adjusted
basis of any such asset, the “Adjusted Assets”);

 

WHEREAS, the income, gain, loss, expense and other Tax items of (i) the
Corporation, as a member of PMLLC, may be affected by the Basis Adjustment with
respect to the Adjusted Assets and (ii) the Corporation may be affected by the
Imputed Interest; and

 

WHEREAS, the parties to this Agreement desire to make certain arrangements with
respect to the effect of the Basis Adjustment and the Imputed Interest on the
liability for Taxes of the Corporation.

 

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NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I  DEFINITIONS

 

Definitions. As used in this Agreement, the terms set forth in this Article I
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined).

 

“Adjusted Asset” is defined in the Recitals of this Agreement.

 

“Advisory Firm” means any “big four” accounting firm or any other law or
accounting firm that is nationally recognized as being expert in Tax matters and
that is agreed to by the Board of Directors of the Corporation.

 

“Advisory Firm Letter” shall mean a letter from the Advisory Firm stating that
the relevant schedule, notice or other information to be provided by the
Corporation to the Applicable Member and all supporting schedules and work
papers were prepared in a manner consistent with the terms of this Agreement
and, to the extent not expressly provided in this Agreement, on a reasonable
basis in light of the facts and law in existence on the date such schedule,
notice or other information is delivered to the Applicable Member.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such first Person.

 

“Agreed Rate” means LIBOR plus 100 basis points.

 

“Agreement” is defined in the Preamble of this Agreement.

 

“Amended Schedule” is defined in Section 2.04(b).

 

“Amount Realized” means, in respect of an Exchange by an Exchanging Member, the
amount that is deemed for purposes of this Agreement to be the amount realized
by the Exchanging Member on the Exchange, which shall be the sum of (i) the
Market Value of the Class A Shares, the amount of cash and the amount or fair
market value of other consideration received by the Exchanging Member in the
Exchange other than under this Agreement and (ii) the Share of Liabilities
attributable to the Units Exchanged.

 

“Applicable Member” means any present or former Member to whom any portion of a
Realized Tax Benefit is attributable hereunder.

 

“Available Cash” means all cash and cash equivalents of the Corporation on hand,
less (i) amounts reserved for the payment of Taxes and corporate overhead
expenses, and (ii) the amount of cash reserves reasonably established in good
faith by the Corporation.

 

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“Basis Adjustment” means the adjustment to the Tax basis of an Adjusted Asset,
in each case, arising in respect of an Exchange, as calculated under
Section 2.01 of this Agreement, under the principles of Section 732 of the Code
(in a situation where, as a result of one or more Exchanges, PMLLC becomes an
entity that is disregarded as separate from its owner for tax purposes) or
Sections 743(b) and 754 of the Code (including in situations where, following an
Exchange, PMLLC remains in existence as an entity for tax purposes) and, in each
case, comparable sections of state, local and foreign Tax laws.  Notwithstanding
any other provision of this Agreement, the amount of any Basis Adjustment
resulting from an Exchange of one or more Units shall be determined without
regard to any Pre-Exchange Transfer of such Units and as if any such
Pre-Exchange Transfer had not occurred.

 

“Beneficial Owner” means, with respect to a security, a Person who directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares: (i) voting power, which includes the power to vote, or
to direct the voting of, such security and/or (ii) investment power, which
includes the power to dispose of, or to direct the disposition of, such
security.  The terms “Beneficially Own” and “Beneficial Ownership” shall have
correlative meanings.

 

“Board of Directors” or “Board” means the board of directors of the Corporation.

 

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of California shall not be regarded as a Business Day.

 

“Change of Control” is defined in the Exchange Agreement.

 

“Class A Shares” means shares of Class A common stock of the Corporation.

 

“Code” is defined in the Recitals of this Agreement.

 

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

 

“Corporation” is defined in the Preamble of this Agreement.

 

“Corporation Return” means the United States federal, state, local and/or
foreign Tax Return, as applicable, of the Corporation filed with respect to
Taxes of any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative
amount of Realized Tax Benefits for all Taxable Years of the Corporation, up to
and including such Taxable Year, net of the cumulative amount of Realized Tax
Detriments for the same period.  The Realized Tax Benefit and Realized Tax
Detriment for each Taxable Year shall be determined based on the most recent Tax
Benefit Schedule or Amended Schedule, if any, in existence at the time of such
determination.

 

“Default Rate” means LIBOR plus 500 basis points.

 

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“Deferral Rate” means LIBOR plus 350 basis points.

 

“Determination” shall have the meaning ascribed to such term in
Section 1313(a) of the Code or similar provision of state, local and foreign Tax
law, as applicable, or any other event (including the execution of an IRS
Form 870-AD) that finally and conclusively establishes the amount of any
liability for Tax.

 

“Dispute” is defined in Section 7.08(a).

 

“Early Termination Date” means the date of an Early Termination Notice for
purposes of determining the Early Termination Payment.

 

“Early Termination Notice” is defined in Section 4.02.

 

“Early Termination Payment” is defined in Section 4.03(b).

 

“Early Termination Rate” means LIBOR plus 100 basis points.

 

“Early Termination Schedule” is defined in Section 4.02.

 

“Exchange” is defined in the Recitals of this Agreement, and “Exchanged” and
“Exchanging” shall have correlative meanings.

 

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

 

“Exchange Agreement” means the Exchange Agreement by and among the Corporation,
PMLLC, and the Members from time to time party hereto.

 

“Exchange Basis Schedule” is defined in Section 2.02.

 

“Exchange Date” is defined in the Recitals of this Agreement.

 

“Exchange Payment” is defined in Section 5.01.

 

“Exchanging Member” means a Member that Exchanges some or all of its Units.

 

“Expert” is defined in Section 7.09.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the
liability for Taxes of the Corporation (and PMLLC, but only with respect to
Taxes imposed on PMLLC and allocable to the Corporation) using the same methods,
elections, conventions and similar practices used on the relevant Corporation
Return, but using the Non-Stepped Up Tax Basis instead of the Tax basis
reflecting the Basis Adjustments of the Adjusted Assets and excluding any
deduction attributable to Imputed Interest.

 

“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or
483 or other provision of the Code and any similar provision of state, local and
foreign Tax law with respect to the Corporation’s payment obligations under this
Agreement.

 

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“Interest Amount” is defined in Section 3.01(b).

 

“IPO” means the initial public offering of Class A Shares by the Corporation.

 

“IPO Date” means the date on which the Corporation contributes to PMLLC the net
proceeds received by the Corporation in connection with the IPO.

 

“IRS” means the United States Internal Revenue Service.

 

“LIBOR” means for each month (or portion thereof) during any period, an interest
rate per annum equal to the rate per annum reported, on the date two days prior
to the first day of such month, on the Telerate Page 3750 (or if such screen
shall cease to be publicly available, as reported on Reuters Screen page “LIBO”
or by any other publicly available source of such market rate) for London
interbank offered rates for United States dollar deposits for such month (or
portion thereof).

 

“LLC Agreement” means, with respect to PMLLC, the Fourth Amended and Restated
Limited Liability Company Agreement of PMLLC, dated on or about the date hereof,
as such agreement may be amended from time to time

 

“Market Value” shall mean the closing price of the Class A Shares on the
applicable Exchange Date on the national securities exchange or interdealer
quotation system on which such Class A Shares are then traded or listed;
provided that if there is no such closing price of the Class A Shares for the
applicable Exchange Date, then the Market Value shall mean the closing price of
the Class A Shares on the most recent Business Day immediately preceding such
Exchange Date for which there is a closing price of the Class A Shares on the
national securities exchange or interdealer quotation system on which such
Class A Shares are then traded or listed; provided further, that if the Class A
Shares are not then listed on a national securities exchange or interdealer
quotation system, “Market Value” shall mean the cash consideration paid for
Class A Shares, or the fair market value of the other property delivered for
Class A Shares, as determined by the Board of Directors of the Corporation in
good faith.

 

“Material Objection Notice” is defined in Section 4.02.

 

“Members” means the parties hereto, other than the Corporation and PMLLC, and
each other Person who from time to time executes a Joinder Agreement in the form
attached hereto as Exhibit A.

 

“Net Tax Benefit” is defined in Section 3.01(b).

 

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax
basis that such asset would have had at such time if no Basis Adjustment had
been made.

 

“Objection Notice” is defined in Section 2.04(a).

 

“Original Members” means the members of PMLLC on the date of, but immediately
preceding, the IPO.

 

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“Payment Date” means any date on which a payment is required to be made pursuant
to this Agreement.

 

“Person” means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization,
governmental entity or other entity.

 

“PMLLC” is defined in the Preamble of this Agreement.

 

“Pre-Exchange Transfer” means any transfer (including upon the death of a
Member) of one or more Units (i) that occurs prior to an Exchange of such Units,
and (ii) to which Section 743(b) of the Code applies.

 

“Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively,
the net excess, if any, of the Hypothetical Tax Liability over the liability for
Taxes of the Corporation (and PMLLC, but only with respect to Taxes imposed on
PMLLC and allocable to the Corporation for such Taxable Year), such liability to
be computed taking into account the Basis Adjustments and, to the extent
applicable under this Agreement, the Valuation Assumptions.  If all or a portion
of the actual liability for Taxes of the Corporation (and PMLLC, but only with
respect to Taxes imposed on PMLLC and allocable to the Corporation for such
Taxable Year) for the Taxable Year arises or is proposed to be reduced as a
result of an audit by a Taxing Authority of any Taxable Year, such liability
shall not be included or eliminated, respectively, in determining the Realized
Tax Benefit unless and until there has been a Determination.

 

“Realized Tax Detriment” means, for a Taxable Year and for all Taxes
collectively, the net excess, if any, of the liability for Taxes of the
Corporation (and PMLLC, but only with respect to Taxes imposed on PMLLC and
allocable to the Corporation for such Taxable Year), such liability to be
computed taking into account the Basis Adjustments and, to the extent applicable
under this Agreement, the Valuation Assumptions, over the Hypothetical Tax
Liability for such Taxable Year.  If all or a portion of the actual liability
for Taxes of the Corporation (and PMLLC, but only with respect to Taxes imposed
on PMLLC and allocable to the Corporation for such Taxable Year) for the Taxable
Year arises or is proposed to be reduced as a result of an audit by a Taxing
Authority of any Taxable Year, such liability shall not be included or
eliminated, respectively, in determining the Realized Tax Detriment unless and
until there has been a Determination.

 

“Reconciliation Dispute” is defined in Section 7.09.

 

“Reconciliation Procedures” shall mean those procedures set forth in
Section 7.09.

 

“Schedule” means any Exchange Basis Schedule or Tax Benefit Schedule and the
Early Termination Schedule.

 

“Senior Obligations” is defined in Section 5.01.

 

“Share of Liabilities”, means, as to any Unit at the time of an Exchange, the
portion of PMLLC’s aggregate liabilities, as determined for purposes of
Section 752 and Section 1001 of the Code, allocated to that Unit pursuant to
Section 752 of the Code and the applicable Treasury Regulations.

 

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“Subsidiaries” means, with respect to any Person, as of any date of
determination, any other Person as to which the first Person owns, directly or
indirectly, or otherwise controls more than 50% of the voting shares or other
similar interests or the sole general partner interest or managing member or
similar interest of such Person.

 

“Tax Benefit Payment” is defined in Section 3.01(b).

 

“Tax Benefit Schedule” is defined in Section 2.03.

 

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.

 

“Taxable Year” means a taxable year of the Corporation as defined in
Section 441(b) of the Code or comparable section of state, local or foreign Tax
law, as applicable (and, therefore, for the avoidance of doubt, may include a
period of less than twelve (12) months for which a Tax Return is prepared),
ending on or after the IPO Date.

 

“Taxes” means any and all United States federal, state, local and foreign taxes,
assessments or similar charges that are based on or measured with respect to net
income or profits, whether as an exclusive or on an alternative basis, and any
interest related to such Tax.

 

“Taxing Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory authority.

 

“Treasury Regulations” means the final, temporary and proposed regulations under
the Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.

 

“Units” is defined in the Recitals of this Agreement.

 

“Valuation Assumptions” shall mean, as of an Early Termination Date, the
assumptions that (1) in each Taxable Year ending on or after such Early
Termination Date, the Corporation will be a regular “C corporation” for federal
income tax purposes and will have taxable income sufficient to fully use the
deductions arising during such Taxable Year from any Basis Adjustment and
Imputed Interest, (2) the federal income tax rates and state, local and foreign
income tax rates that will be in effect for each such Taxable Year will be those
specified for each such Taxable Year by the Code and other law as in effect on
the Early Termination Date, (3) any loss carryovers generated by any Basis
Adjustment or Imputed Interest and available as of the date of the Early
Termination Schedule will be used by the Corporation on a pro rata basis from
the date of the Early Termination Schedule through the scheduled expiration date
of such loss carryovers, (4) any non-amortizable assets will be disposed of on
the fifteenth (15th) anniversary of the earlier of the Basis Adjustment and the
Early Termination Date, provided, that in the event

 

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of a Change of Control prior to the Early Termination Date, non-amortizable
assets shall be deemed disposed of at the earlier of (i) the time of sale of the
relevant asset or (ii) as generally provided in this Valuation Assumption
(4) and (5) if, at the Early Termination Date, there are Units that have not
been Exchanged, then each such Unit shall be deemed to be Exchanged for the
Market Value of the Class A Shares and the amount of cash that would be
transferred if the Exchange occurred on the Early Termination Date.

 

ARTICLE II  DETERMINATION OF CUMULATIVE REALIZED NET TAX BENEFIT

 

Section 2.01                             Basis Adjustment.

 

(a)                                 Adjusted Assets. For purposes of this
Agreement, as a result of an Exchange, PMLLC shall be deemed to be entitled to a
Basis Adjustment for each Adjusted Asset with respect to the Corporation, the
amount of which Basis Adjustment shall be the excess, if any, of (i) the sum of
(x) the Amount Realized by the Exchanging Member in the Exchange, to the extent
attributable to such Adjusted Asset, plus (y) the amount of payments made
pursuant to this Agreement with respect to such Exchange, to the extent
attributable to such Adjusted Asset, over (ii) the Corporation’s share of
PMLLC’s Tax basis for such Adjusted Asset immediately after the Exchange,
attributable to the Units Exchanged, determined as if (x) PMLLC remains in
existence as an entity for tax purposes, and (y) PMLLC had not made the election
provided by Section 754 of the Code.

 

(b)                                 Imputed Interest.  For the avoidance of
doubt, payments made under this Agreement shall not be treated as resulting in a
Basis Adjustment to the extent such payments are treated as Imputed Interest.

 

Section 2.02                             Exchange Basis Schedule.  Within
forty-five (45) calendar days after the filing of the United States federal
income tax return of the Corporation for each Taxable Year, the Corporation
shall deliver to each Exchanging Member a schedule (an “Exchange Basis
Schedule”) that shows, in reasonable detail, for purposes of Taxes, (i) the
actual unadjusted Tax basis of the Adjusted Assets as of each applicable
Exchange Date, (ii) the Basis Adjustment with respect to the Adjusted Assets as
a result of the Exchanges effected in such Taxable Year, calculated in the
aggregate, (iii)  the period or periods, if any, over which the Adjusted Assets
are amortizable and/or depreciable and (iv) the period or periods, if any, over
which each Basis Adjustment is amortizable and/or depreciable (which, for
non-amortizable assets shall be based on clause (4) of the Valuation
Assumptions).

 

Section 2.03                             Tax Benefit Schedule.  Within
forty-five (45) calendar days after the filing of the United States federal
income tax return of the Corporation for any Taxable Year in which there is a
Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to
each Applicable Member a schedule showing, in reasonable detail, the calculation
of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a
“Tax Benefit Schedule”). The Schedule will become final as provided in
Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject to
the procedures set forth in Section 2.04(b)).

 

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Section 2.04                             Procedures, Amended Schedule.

 

(a)                                 Procedure. Every time the Corporation
delivers to an Applicable Member an applicable Schedule under this Agreement,
including any Amended Schedule delivered pursuant to Section 2.04(b), but
excluding any Early Termination Schedule or amended Early Termination Schedule,
the Corporation shall also (x) deliver to the Applicable Member schedules and
work papers providing reasonable detail regarding the preparation of the
Schedule and an Advisory Firm Letter supporting such Schedule and (y) allow the
Applicable Member reasonable access at no cost to the appropriate
representatives at the Corporation and the Advisory Firm in connection with a
review of such Schedule. The applicable Schedule shall become final and binding
on all parties unless the Applicable Member, within thirty (30) calendar days
after receiving an Exchange Basis Schedule or amendment thereto or a Tax Benefit
Schedule or amendment thereto, provides the Corporation with notice of a
material objection to such Schedule (“Objection Notice”) made in good faith.  If
the parties, for any reason, are unable to successfully resolve the issues
raised in such notice within thirty (30) calendar days of receipt by the
Corporation of an Objection Notice with respect to an Exchange Basis Schedule or
a Tax Benefit Schedule, the Corporation and the Applicable Member shall employ
the Reconciliation Procedures as described in Section 7.09 of this Agreement.

 

(b)                                 Amended Schedule. The applicable Schedule
for any Taxable Year may be amended from time to time by the Corporation (i) in
connection with a Determination affecting such Schedule, (ii) to correct
material inaccuracies in the Schedule identified as a result of the receipt of
additional factual information relating to a Taxable Year after the date the
Schedule was provided to the Applicable Member, (iii) to comply with the
Expert’s determination under the Reconciliation Procedures, (iv) to reflect a
material change in the Realized Tax Benefit or Realized Tax Detriment for such
Taxable Year attributable to a carryback or carryforward of a loss or other tax
item to such Taxable Year, (v) to reflect a material change in the Realized Tax
Benefit or Realized Tax Detriment for such Taxable Year attributable to an
amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange
Basis Schedule to take into account payments made pursuant to this Agreement
(such Schedule, an “Amended Schedule”). The Corporation shall provide any
Amended Schedule to the Applicable Member within thirty (30) calendar days of
the occurrence of an event referred to in clauses (i) through (vi) of the
preceding sentence, and any such Amended Schedule shall be subject to approval
procedures similar to those described in Section 2.04(a).

 

ARTICLE III  TAX BENEFIT PAYMENTS

 

Section 3.01                             Payments.

 

(a)                                 Payments. Within five (5) Business Days of a
Tax Benefit Schedule that was delivered to an Applicable Member becoming final
in accordance with Section 2.04(a), the Corporation shall pay to such Applicable
Member for such Taxable Year the Tax Benefit Payment determined pursuant to
Section 3.01(b).  Each such Tax Benefit Payment shall be made by wire transfer
of immediately available funds to a bank account of the Applicable Member
previously designated by such Member to the Corporation.  For the avoidance of
doubt, no Tax Benefit Payment shall be made in respect of estimated tax
payments, including, without limitation, federal income tax payments.

 

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(b)                                 A “Tax Benefit Payment” means an amount, not
less than zero, equal to the sum of the Net Tax Benefit and the Interest Amount
resulting from each Exchange by the Applicable Member.  The “Net Tax Benefit”
for each Taxable Year shall be an amount equal to the excess, if any, of 85% of
the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over
the total amount of payments previously made under this Section 3.01 with
respect to that Exchange, excluding payments attributable to Interest Amount;
provided, however, that for the avoidance of doubt, no Member shall be required
to return any portion of any previously made Tax Benefit Payment.  The “Interest
Amount” for a given Taxable Year with respect to an Exchange shall equal the
interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed
Rate from the due date (without extensions) for filing the Corporation Return
with respect to Taxes for the most recently ended Taxable Year until the Payment
Date.  Notwithstanding the foregoing, for each Taxable Year ending on or after
the date of a Change of Control, all Tax Benefit Payments, whether paid with
respect to Units that were Exchanged (i) prior to the date of such Change of
Control or (ii) on or after the date of such Change of Control, shall be
calculated by using Valuation Assumptions (1), (3), and (4), substituting in
each case the terms “the date on which a Change of Control becomes effective”
for an “Early Termination Date.”  The Net Tax Benefit and the Interest Amount
shall be determined separately with respect to each separate Exchange, on a
Unit-by-Unit basis by reference to the Amount Realized by the Exchanging Member
on the Exchange of a Unit and the resulting Basis Adjustment to the Corporation.

 

(c)                                  If on any Payment Date the Corporation does
not have sufficient Available Cash to pay the Tax Benefit Payment that is due on
such Payment Date as specified in Section 3.01(a), the Corporation may elect by
written notice to the affected Members to defer payment of such Tax Benefit
Payment that is in excess of the Available Cash for a period of time not to
exceed two (2) years.  If the Corporation elects to defer payment of any amount
pursuant to this Section 3.01(c), interest shall accrue on such amount at the
Deferral Rate from the Payment Date specified in Section 3.01(a) until such
amount is paid.  While any amounts are deferred pursuant to this
Section 3.01(c), the Corporation shall be required, within ninety (90) calendar
days of obtaining Available Cash, to make payments to Applicable Members with
respect to such deferred amounts to the extent of such Available Cash.  Upon a
Change in Control, any amounts then deferred pursuant to this
Section 3.01(c) (and all accrued and unpaid interest thereon) shall become due,
and no further amounts may be deferred pursuant to this Section 3.01(c).

 

(d)                                 The Corporation shall use good faith efforts
to ensure that it has sufficient Available Cash to make all payments due under
this Agreement without regard to Section 3.01(c), which good faith efforts shall
include considering opportunities to obtain financing on commercially reasonable
terms in order to obtain sufficient Available Cash for such purpose.

 

Section 3.02                             No Duplicative Payments. 
Notwithstanding anything in this Agreement to the contrary, it is intended that
the provisions of this Agreement will not result in duplicative payment of any
amount (including interest) required under this Agreement. It is also intended
that the provisions of this Agreement will result in 85% of the Corporation’s
Cumulative Net Realized Tax Benefit for each Exchange, and the Interest Amount
thereon, being paid to the Applicable Members pursuant to this Agreement.  The
provisions of this Agreement shall be construed in the appropriate manner so
that these fundamental results are achieved.

 

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Section 3.03                             Pro Rata Limitation on Deductions; Pro
Rata Payments.  For the avoidance of doubt, to the extent that (i) the
Corporation’s deductions with respect to any Basis Adjustment are limited in a
particular Taxable Year or (ii) the Corporation lacks sufficient funds to
satisfy its obligations to make all Tax Benefit Payments due in a particular
Taxable Year, the limitation on the deductions, or the Tax Benefit Payments that
may be made, as the case may be, shall be taken into account or made for the
Applicable Member in the same proportion as Tax Benefit Payments would have been
made absent the limitations in clauses (i) and (ii) of this paragraph, as
applicable.

 

ARTICLE IV  TERMINATION

 

Section 4.01                             Early Termination and Breach of
Agreement.

 

(a)                                 The Corporation may terminate this Agreement
with respect to all of the Units held (or previously held and Exchanged) by all
Members at any time by paying to the Members the Early Termination Payment;
provided, however, that this Agreement shall only terminate upon the receipt of
the Early Termination Payment by all Members, and provided, further, that the
Corporation may withdraw any notice to execute its termination rights under this
Section 4.01(a) prior to the time at which any Early Termination Payment has
been paid.  Upon payment of the Early Termination Payments by the Corporation,
neither the Members nor the Corporation shall have any further payment
obligations under this Agreement, other than for any (a) Tax Benefit Payment
agreed to by the Corporation and the Member as due and payable but unpaid as of
the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable
Year ending with or including the date of the Early Termination Notice (except
to the extent that the amount described in clause (b) is included in the Early
Termination Payment).  For the avoidance of doubt, if an Exchange occurs after
the Corporation makes the Early Termination Payments with respect to all
Members, the Corporation shall have no obligations under this Agreement with
respect to such Exchange, and its only obligations under this Agreement in such
case shall be its obligations to all Members under Section 4.03(a).

 

(b)                                 In the event that the Corporation breaches
any of its material obligations under this Agreement, whether as a result of
failure to make any payment when due, failure to honor any other material
obligation required hereunder or by operation of law as a result of the
rejection of this Agreement in a case commenced under the Bankruptcy Code or
otherwise, then all obligations hereunder shall be accelerated and such
obligations shall be calculated as if an Early Termination Notice had been
delivered on the date of such breach and shall include, but shall not be limited
to, (1) the Early Termination Payment calculated as if an Early Termination
Notice had been delivered on the date of a breach, (2) any Tax Benefit Payment
agreed to by the Corporation and any Members as due and payable but unpaid as of
the date of a breach, and (3) any Tax Benefit Payment due for the Taxable Year
ending with or including the date of a breach.  Notwithstanding the foregoing,
in the event that the Corporation breaches this Agreement, the Members shall be
entitled to elect to receive the amounts set forth in clauses (1), (2) and
(3) above or to seek specific performance of the terms hereof.  The parties
agree that the failure to make any payment due pursuant to this Agreement within
ninety (90) calendar days of the date such payment is due (subject to the
Corporation’s rights under Section 3.01(c)) shall be deemed to be a breach of a
material obligation under this Agreement for all purposes of this Agreement, and
that it will not be considered to be a breach of a material obligation under
this Agreement to make a payment due pursuant to this Agreement within ninety
(90) calendar days of the date such payment is due.

 

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(c)                                  The Corporation, PMLLC and each of the
Members hereby acknowledge that, as of the date of this Agreement, the aggregate
value of the Tax Benefit Payments cannot reasonably be ascertained for United
States federal income tax or other applicable Tax purposes.

 

Section 4.02                             Early Termination Notice.  If the
Corporation chooses to exercise its right of early termination under
Section 4.01 above, the Corporation shall deliver to each present or former
Member notice of such intention to exercise such right (“Early Termination
Notice”) and a schedule (the “Early Termination Schedule”) specifying the
Corporation’s intention to exercise such right and showing in reasonable detail
the calculation of the Early Termination Payment for that Member.  The Early
Termination Schedule shall become final and binding on all parties unless the
Member, within thirty (30) calendar days after receiving the Early Termination
Schedule, provides the Corporation with notice of a material objection to such
Schedule made in good faith (“Material Objection Notice”).  If the parties, for
any reason, are unable to successfully resolve the issues raised in such notice
within thirty (30) calendar days after receipt by the Corporation of the
Material Objection Notice, the Corporation and the Member shall employ the
Reconciliation Procedures as described in Section 7.09 of this Agreement.

 

Section 4.03                             Payment upon Early Termination.

 

(a)                                 Within five (5) Business Days after
agreement between the Member and the Corporation of the Early Termination
Schedule, the Corporation shall pay to the Member an amount equal to the Early
Termination Payment.  Such payment shall be made by wire transfer of immediately
available funds to a bank account designated by the Member.

 

(b)                                 The “Early Termination Payment” as of the
date of the delivery of an Early Termination Schedule shall equal with respect
to any Member the present value, discounted at the Early Termination Rate as of
such date, of all Tax Benefit Payments that would be required to be paid by the
Corporation to the Member beginning from the Early Termination Date and assuming
that the Valuation Assumptions are applied.

 

ARTICLE V  SUBORDINATION AND LATE PAYMENTS

 

Section 5.01                             Subordination.  Notwithstanding any
other provision of this Agreement to the contrary, any Tax Benefit Payment or
Early Termination Payment required to be made by the Corporation to the Members
under this Agreement (an “Exchange Payment”) shall rank subordinate and junior
in right of payment to any principal, interest or other amounts due and payable
in respect of any obligations in respect of indebtedness for borrowed money of
the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari
passu with all current or future unsecured obligations of the Corporation that
are not Senior Obligations.

 

Section 5.02                             Late Payments by the Corporation.  The
amount of all or any portion of any Exchange Payment not made to any Member when
due (subject to the Corporation’s rights under Section 3.01(c)) under the terms
of this Agreement shall be payable together with any interest thereon, computed
at the Default Rate and commencing from the date on which such Exchange Payment
was due and payable.

 

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ARTICLE VI  NO DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.01                             Original Member Participation in the
Corporation’s and PMLLC’s Tax Matters. Except as otherwise provided herein, the
Corporation shall have full responsibility for, and sole discretion over, all
Tax matters concerning the Corporation and PMLLC, including without limitation
the preparation, filing or amending of any Tax Return and defending, contesting
or settling any issue pertaining to Taxes.  Notwithstanding the foregoing, the
Corporation shall notify the applicable Original Member of, and keep the
applicable Original Member reasonably informed with respect to, the portion of
any audit of the Corporation and PMLLC by a Taxing Authority the outcome of
which is reasonably expected to affect the applicable Original Member’s rights
and obligations under this Agreement, and shall provide to the applicable
Original Member reasonable opportunity to provide information and other input to
the Corporation, PMLLC and their respective advisors concerning the conduct of
any such portion of such audit; provided, however, that the Corporation and
PMLLC shall not be required to take any action that is inconsistent with any
provision of the LLC Agreement or applicable law; and, provided, further, that
any BlackRock Member or Highfields Member (as those terms are defined in the LLC
Agreement) that, in each case, is an Original Member shall be entitled to
participate, at such Original Member’s own expense, in the conduct of the
portion of any audit of the Corporation and PMLLC by a Taxing Authority the
outcome of which is reasonably expected to affect the applicable Original
Member’s rights and obligations under this Agreement.

 

Section 6.02                             Consistency.  Except upon the written
advice of an Advisory Firm, and except for items that are explicitly described
as “deemed” or in similar manner by the terms of this Agreement, the Corporation
and the Exchanging Member agree to report and cause to be reported for all
purposes, including federal, state, local and foreign Tax purposes and financial
reporting purposes, all Tax-related items (including without limitation the
Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that
specified by the Corporation in any Schedule required to be provided by or on
behalf of the Corporation under this Agreement.  Any dispute concerning such
advice shall be subject to the Reconciliation Procedures of Section 7.09;
provided, however, that only an Original Member shall have the right to object
to such advice pursuant to this Section 6.02.  In the event that an Advisory
Firm is replaced with another firm acceptable to the Corporation and the
Exchanging Member, such replacement Advisory Firm shall be required to perform
its services under this Agreement using procedures and methodologies consistent
with the previous Advisory Firm, unless otherwise required by law or the
Corporation and the Exchanging Member agree to the use of other procedures and
methodologies.

 

Section 6.03                             Cooperation. The Members shall each
(a) furnish to the Corporation in a timely manner such information, documents
and other materials as the Corporation may reasonably request for purposes of
making any determination or computation necessary or appropriate under this
Agreement,  preparing any Tax Return or contesting or defending any audit,
examination or controversy with any Taxing Authority, (b) make itself available
to the Corporation and its representatives to provide explanations of documents
and materials and such other information as the Corporation or its
representatives may reasonably request in connection with any of the matters
described in clause (a) above, and (c) reasonably cooperate in connection with
any such matter, and the Corporation shall reimburse each Member for any
reasonable third-party costs and expenses incurred pursuant to this Section.

 

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ARTICLE VII  MISCELLANEOUS

 

Section 7.01                             Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
deemed duly given and received (a) on the date of delivery if delivered
personally, or by facsimile upon confirmation of transmission by the sender’s
fax machine if sent on a Business Day (or otherwise on the next Business Day) or
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service.  All notices hereunder shall be delivered
as set forth below, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice:

 

if to the Corporation, to:

 

PennyMac Financial Services, Inc.

6101 Condor Drive Moorpark, CA 93021

Attention: Chief Financial Officer
Fax: (818) 337-7182

 

with a copy (which shall not constitute notice to the Corporation) to:

 

Bingham McCutchen LLP

One Federal Street

Boston, Massachusetts  02110

Attention:  Daniel A. Nelson, Esq.

Fax: (617) 951-8736

 

if to PMLLC, to:

 

Private National Mortgage Acceptance Company, LLC

6101 Condor Drive Moorpark, CA 93021

Attention: Chief Financial Officer

Fax:  (818) 337-7182

 

with a copy (which shall not constitute notice to PMLLC) to:

 

Bingham McCutchen LLP

One Federal Street

Boston, Massachusetts  02110

Attention:  Daniel A. Nelson, Esq.

Fax:  (617) 951-8736

 

If to any Member, to:

 

The address and facsimile number set forth for such Member in the records of
PMLLC.

 

Any party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.

 

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Section 7.02                             Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.  Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

 

Section 7.03                             Entire Agreement; No Third Party
Beneficiaries. This Agreement, together with the LLC Agreement and the Exchange
Agreement, and the exhibits and schedules referenced herein and therein,
constitute  the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.  This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

Section 7.04                             Governing Law. This Agreement shall be
governed by, and construed in accordance with, the law of the State of Delaware,
without regard to the conflicts of laws principles thereof that would mandate
the application of the laws of another jurisdiction.

 

Section 7.05                             Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any law or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.  Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

Section 7.06                             Successors; Assignment; Amendments;
Waivers. No Member may assign this Agreement to any person without the prior
written consent of the Corporation; provided, however, that (i) to the extent
Units are effectively transferred in accordance with the terms of the LLC
Agreement, the transferring Member shall have the option to assign to the
transferee of such Units the transferring Member’s rights under this Agreement
with respect to such transferred Units, as long as such transferee has executed
and delivered, or, in connection with such transfer, executes and delivers, a
joinder to this Agreement, substantially in the form attached hereto as
Exhibit A, and (ii) once an Exchange has occurred, any and all payments that may
become payable to a Member pursuant to this Agreement with respect to the
Exchanged Units may be assigned to any Person or Persons, including a
liquidating trust, as long as any such Person has executed and delivered, or, in
connection with such assignment, executes and delivers, a joinder to this
Agreement, substantially in the form attached hereto as Exhibit A; provided,
further, however, that no such assignment or transfer shall relieve any party
hereto of any of its obligations hereunder.  For the avoidance of doubt, if a
Person transfers Units but does not assign to the transferee of such Units such
Person’s rights, if any, under this Agreement with respect to such transferred
Units, such Person shall be entitled to receive the Tax Benefit Payments, if
any, due hereunder with respect to such Units, including any Tax Benefit
Payments

 

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arising in respect of a subsequent Exchange of such Units, and shall be deemed
to be the “Applicable Member” to the extent necessary to effectuate that result,
including with respect to the right to receive Tax Benefit Payments, Schedules,
and Amended Schedules, and to dispute the same.

 

Notwithstanding the foregoing provisions of this Section 7.06, no transferee
described in clause (i) of the immediately preceding paragraph shall have the
right to enforce the provisions of Section 2.04, 4.02, 6.01 or 6.02 of this
Agreement, and no assignee described in clause (ii) of the immediately preceding
paragraph shall have any rights under this Agreement except for the right to
enforce its right to receive payments under this Agreement.

 

No provision of this Agreement may be amended unless such amendment is approved
in writing by each of the Corporation and PMLLC and by Original Members who
would be entitled to receive at least two-thirds of the Early Termination
Payments payable to all Original Members hereunder if the Corporation had
exercised its right of early termination on the date of the most recent Exchange
prior to such amendment (excluding, for purposes of this sentence, all payments
made to any Original Member pursuant to this Agreement since the date of such
most recent Exchange); provided, that no such amendment shall be effective if
such amendment will have a disproportionate effect on the payments certain
Members will or may receive under this Agreement unless all such Members
disproportionately affected consent in writing to such amendment.  No provision
of this Agreement may be waived unless such waiver is in writing and signed by
the party against whom the waiver is to be effective.

 

All of the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the parties hereto and their
respective successors, assigns, heirs, executors, administrators and legal
representatives.  The Corporation shall require and cause any direct or indirect
successor (whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, by written
agreement, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if no such succession had taken place.  Notwithstanding anything to the contrary
herein, in the event an Original Member transfers his Units to a Person referred
to clause (x)(ii), (x)(iii), or (x)(iv) of Section 9.1 of the LLC Agreement,
excluding any other Original Member, such Original Member shall have the right,
on behalf of such transferee, to enforce the provisions of Sections 2.04, 4.02,
6.01, or 6.02 with respect to such transferred Units.

 

Section 7.07                             Titles and Subtitles.  The titles of
the sections and subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.

 

Section 7.08                             Resolution of Disputes.

 

(a)                                 Any and all disputes which are not governed
by Section 7.09, including but not limited to any ancillary claims of any party,
arising out of, relating to or in connection with the validity, negotiation,
execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision)
(each a “Dispute”) shall be finally settled by arbitration conducted by a single
arbitrator in Los Angeles

 

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in accordance with the then-existing Rules of Arbitration of the International
Chamber of Commerce.  If the parties to the Dispute fail to agree on the
selection of an arbitrator within ten (10) calendar days of the receipt of the
request for arbitration, the International Chamber of Commerce shall make the
appointment.  The arbitrator shall be a lawyer admitted to the practice of law
in the State of California and shall conduct the proceedings in the English
language. Performance under this Agreement shall continue if reasonably possible
during any arbitration proceedings.  In addition to monetary damages, the
arbitrator shall be empowered to award equitable relief, including, but not
limited to an injunction and specific performance of any obligation under this
Agreement.  The arbitrator is not empowered to award damages in excess of
compensatory damages, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any Dispute.  The
award shall be final and binding upon the parties as from the date rendered, and
shall be the sole and exclusive remedy between the parties regarding any claims,
counterclaims, issues, or accounting presented to the arbitral tribunal. 
Judgment upon any award may be entered and enforced in any court having
jurisdiction over a party or any of its assets.

 

(b)                                 Notwithstanding the provisions of paragraph
(a), the Corporation may bring an action or special proceeding in any court of
competent jurisdiction for the purpose of compelling a party to arbitrate,
seeking temporary or preliminary relief in aid of an arbitration hereunder,
and/or enforcing an arbitration award and, for the purposes of this paragraph
(b), each Member (i) expressly consents to the application of paragraph (c) of
this Section 7.08 to any such action or proceeding, (ii) agrees that proof shall
not be required that monetary damages for breach of the provisions of this
Agreement would be difficult to calculate and that remedies at law would be
inadequate, and (iii) irrevocably appoints the Corporation as such Member’s
agent for service of process in connection with any such action or proceeding
and agrees that service of process upon such agent, who shall promptly advise
such Member of any such service of process, shall be deemed in every respect
effective service of process upon the Member in any such action or proceeding.

 

(c)

 

(i)                                     EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF COURTS LOCATED IN LOS ANGELES, CALIFORNIA FOR THE PURPOSE OF
ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH
(B) OF THIS SECTION 7.08, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION
OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS
AGREEMENT.  Such ancillary judicial proceedings include any suit, action or
proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award.  The parties
acknowledge that the fora designated by this paragraph (c) have a reasonable
relation to this Agreement, and to the parties’ relationship with one another;
and

 

(ii)                                  The parties hereby waive, to the fullest
extent permitted by applicable law, any objection which they now or hereafter
may have to personal jurisdiction or to the laying of venue of any such
ancillary suit, action or proceeding brought in any court referred to in
paragraph (c)(i) of this Section 7.08 and such parties agree not to plead or
claim the same.

 

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Section 7.09                             Reconciliation. In the event that the
Corporation and an Applicable Member are unable to resolve a disagreement with
respect to the matters governed by Sections 2.04, 4.02 and 6.02 within the
relevant period designated in this Agreement (“Reconciliation Dispute”), the
Reconciliation Dispute shall be submitted for determination to a nationally
recognized expert (the “Expert”) in the particular area of disagreement mutually
acceptable to both parties.  The Expert shall be an individual that is a partner
in a nationally recognized accounting firm or a law firm (other than the
Advisory Firm), and the Expert shall not be involved in any ongoing engagement
between the firm in which the Expert is a partner, on the one hand, and either
the Corporation or the Applicable Member, on the other hand, or have any other
actual or potential conflict of interest.  If the parties are unable to agree on
an Expert within fifteen (15) calendar days of receipt by the respondent(s) of
written notice of a Reconciliation Dispute, the Expert shall be appointed by the
International Chamber of Commerce Centre for Expertise.  The Expert shall
resolve any matter relating to the Exchange Basis Schedule or an amendment
thereto or the Early Termination Schedule or an amendment thereto within thirty
(30) calendar days and shall resolve any matter relating to a Tax Benefit
Schedule or an amendment thereto within fifteen (15) calendar days or as soon
thereafter as is reasonably practicable, in each case after the matter has been
submitted to the Expert for resolution.  Notwithstanding the preceding sentence,
if the matter is not resolved before any payment that is the subject of a
disagreement would be due (in the absence of such disagreement) or any Tax
Return reflecting the subject of a disagreement is due, the undisputed amount
shall be paid on such date and such Tax Return may be filed as prepared by the
Corporation, subject to adjustment or amendment upon resolution.  The costs and
expenses relating to the engagement of such Expert or amending any Tax Return
shall be borne by the Corporation except as provided in the next sentence.  The
Corporation and each Applicable Member shall bear their own costs and expenses
of such proceeding, unless the Applicable Member has a prevailing position that
is more than 10% of the payment at issue, in which case the Corporation shall
reimburse such Applicable Member for any reasonable out-of-pocket costs and
expenses in such proceeding.  Any dispute as to whether a dispute is a
Reconciliation Dispute within the meaning of this Section 7.09 shall be decided
by the Expert.  The Expert shall finally determine any Reconciliation Dispute
and the determinations of the Expert pursuant to this Section 7.09 shall be
binding on the Corporation and the Applicable Member and may be entered and
enforced in any court having jurisdiction.

 

Section 7.10                             Withholding. The Corporation shall be
entitled to deduct and withhold from any payment payable to an Applicable Member
pursuant to this Agreement such amounts as the Corporation is required to deduct
and withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law.  To the extent that amounts are so
withheld and paid over to the appropriate Taxing Authority by the Corporation,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Applicable Member.  The parties anticipate that, on the
basis of current law, no federal income tax withholding would be required with
respect to any holder of Units who is a “United States person” within the
meaning of Section 7701(a)(30) of the Code and who has properly certified that
such holder is not subject to federal backup withholding.

 

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Section 7.11                             Admission of the Corporation into a
Consolidated Group; Transfers of Corporate Assets.

 

(a)                                 If the Corporation becomes a member of an
affiliated or consolidated group of corporations that files a consolidated
income tax return pursuant to Sections 1501 et seq. of the Code or any
corresponding provisions of state, local or foreign Tax law, then, while the
Corporation is such a member: (i) the provisions of this Agreement shall be
applied with respect to the group as a whole; and (ii) Tax Benefit Payments,
Early Termination Payments and other applicable items hereunder shall be
computed with reference to the consolidated taxable income of the group as a
whole.

 

(b)                                 If any entity that is obligated to make an
Exchange Payment hereunder transfers one or more assets to a corporation with
which such entity does not file a consolidated tax return pursuant to
Section 1501 of the Code, such entity, for purposes of calculating the amount of
any Exchange Payment (e.g., calculating the gross income of the entity and
determining the Realized Tax Benefit of such entity) due hereunder, shall be
treated as having disposed of such asset in a fully taxable transaction on the
date of such transfer.  The consideration deemed to be received by such entity
shall be equal to the fair market value of the transferred asset, plus (i) the
amount of debt to which such asset is subject, in the case of a contribution of
an encumbered asset or (ii) the amount of debt allocated to such asset, in the
case of a transfer of a partnership interest.

 

Section 7.12                             Confidentiality.  Each Member and
assignee acknowledges and agrees that the information of the Corporation is
confidential and, except in the course of performing any duties as necessary for
the Corporation and its Affiliates, as required by law or legal process or to
enforce the terms of this Agreement, such Person shall keep and retain in the
strictest confidence and not disclose to any Person any confidential matters,
acquired pursuant to this Agreement, of the Corporation and its Affiliates and
successors, concerning PMLLC and its Affiliates and successors or the other
Members, learned by the Member heretofore or hereafter.  This Section 7.12 shall
not apply to (i) any information that has been made publicly available by the
Corporation or any of its Affiliates, becomes public knowledge (except as a
result of an act of such Member in violation of this Agreement) or is generally
known to the business community and (ii) the disclosure of information to the
extent necessary for a Member to prepare and file his or her Tax Returns, to
respond to any inquiries regarding the same from any Taxing Authority or to
prosecute or defend any action, proceeding or audit by any Taxing Authority with
respect to such Tax Returns.  Notwithstanding anything to the contrary herein,
each Member and assignee (and each employee, representative or other agent of
such Member or assignee, as applicable) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the
Corporation, PMLLC, the Members and their Affiliates, and any of their
transactions, and all materials of any kind (including opinions or other tax
analyses) that are provided to the Members relating to such tax treatment and
tax structure.

 

If a Member or assignee commits a breach, or threatens to commit a breach, of
any of the provisions of this Section 7.12, the Corporation shall have the right
and remedy to have the provisions of this Section 7.12 specifically enforced by
injunctive relief or otherwise by any court of competent jurisdiction without
the need to post any bond or other security, it being acknowledged and agreed
that any such breach or threatened breach shall cause irreparable injury to the
Corporation or any of its Subsidiaries or the other Members and that money
damages alone shall not provide an adequate remedy to such Persons.  Such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available at law or in equity.

 

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Section 7.13                             Independent Nature of Members’ Rights
and Obligations.  The obligations of each Member hereunder are several and not
joint with the obligations of any other Member, and no Member shall be
responsible in any way for the performance of the obligations of any other
Member under hereunder.  The decision of each Member to enter into to this
Agreement has been made by such Member independently of any other Member. 
Nothing contained herein, and no action taken by any Member pursuant hereto,
shall be deemed to constitute the Members as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Members are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated hereby and the Corporation
acknowledges that the Members are not acting in concert or as a group, and the
Corporation will not assert any such claim, with respect to such obligations or
the transactions contemplated hereby.

 

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IN WITNESS WHEREOF, the Corporation, PMLLC and each Member have duly executed
this Agreement as of the date first written above.

 

 

PENNYMAC FINANCIAL SERVICES, INC.

 

 

 

 

 

 

 

By:

/s/ Jeffrey Grogin

 

 

Name: Jeffrey Grogin

 

 

Title:   Chief Administrative and Legal Officer and Secretary

 

 

 

 

 

 

 

PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC

 

By its Managing Member, PennyMac Financial Services, Inc.

 

 

 

 

 

 

 

By:

/s/ Jeffrey Grogin

 

 

Name: Jeffrey Grogin

 

 

Title:   Chief Administrative and Legal Officer and Secretary

 

 

 

 

 

 

 

MEMBERS

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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EXHIBIT A

 

JOINDER

 

This JOINDER (this “Joinder”) to the Tax Receivable Agreement, dated as of
[        ], 2013, by and among PennyMac Financial Services, Inc., a Delaware
corporation (the “Corporation”), Private National Mortgage Acceptance Company,
LLC, a Delaware limited liability company (“PMLLC”) and
[                                  ] (“Permitted Transferee”).

 

WHEREAS, on [                  ], 20[    ], Permitted Transferee acquired (the
“Acquisition”) [      ] Units in PMLLC (collectively, “Interests” and, together
with all other Interests hereinafter acquired by Permitted Transferee from
Transferor, the “Acquired Interests”) from [                  ] (“Transferor”);
and

 

WHEREAS, Transferor, in connection with the Acquisition, has required Permitted
Transferee to execute and deliver this Joinder pursuant to Section 7.06 of the
Tax Receivable Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements contained
herein, Permitted Transferee hereby agrees as follows:

 

Section 1.1.                                 Definitions.  To the extent
capitalized words used in this Joinder are not defined in this Joinder, such
words shall have the meaning set forth in the Tax Receivable Agreement.

 

Section 1.2.                                 Joinder.  Permitted Transferee
hereby acknowledges and agrees to become a “Member” (as defined in the Tax
Receivable Agreement) for all purposes of the Tax Receivable Agreement,
including but not limited to, being bound by Sections 7.12, 2.04, 4.02, 6.01 and
6.02 of the Tax Receivable Agreement, with respect to the Acquired Interests,
and any other Interests Permitted Transferee acquires hereafter.

 

Section 1.3.                                 Notice.  All notices, requests,
consents and other communications hereunder to Permitted Transferee shall be
deemed to be sufficient if contained in a written instrument delivered in person
or sent by facsimile (provided a copy is thereafter promptly delivered as
provided in this Section 1.3) or nationally recognized overnight courier,
addressed to Permitted Transferee at the address or facsimile number set forth
below or such other address or facsimile number as may hereafter be designated
in writing by Permitted Transferee:

 

[add notice address]

 

Section 1.4.                                 Governing Law.  THIS JOINDER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

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IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by
Permitted Transferee as of the date first above written.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

2

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