Exhibit 10.6

 

EXECUTION

 

AMENDMENT NO. 4
TO MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT

 

Amendment No. 4 to Mortgage Loan Participation Purchase And Sale Agreement,
dated as of January 3, 2013 (this “Amendment”), by and among Bank of America,
N.A. (“Purchaser”), PennyMac Corp. (“Seller”), PennyMac Mortgage Investment
Trust and PennyMac Operating Partnership, L.P. (individually and collectively,
the “Guarantor”).

 

RECITALS

 

Purchaser, Guarantor and Seller are parties to that certain Mortgage Loan
Participation Purchase And Sale Agreement, dated as of December 23, 2011, (as
amended by Amendment No. 1, dated as of August 17, 2012, Amendment No. 2, dated
as of October 29, 2012, and Amendment No. 3, dated as of December 5, 2012, the
“Existing MLPSA”; and as further amended by this Amendment, the “MLPSA”).  The
Guarantor is a party to that certain Guaranty (as amended from time to time, the
“Guaranty”), dated as of December 23, 2011, made by Guarantor in favor of
Purchaser.

 

Purchaser, Seller and Guarantor have agreed, subject to the terms and conditions
of this Amendment, that the Existing MLPSA be amended to reflect certain agreed
upon revisions to the terms of the Existing MLPSA.  As a condition precedent to
amending the Existing MLPSA, Purchaser has required Guarantor to ratify and
affirm the Guaranty on the date hereof.

 

Accordingly, Purchaser, Seller and Guarantor hereby agree, in consideration of
the mutual premises and mutual obligations set forth herein, that the Existing
MLPSA is hereby amended as follows:

 

SECTION 1.         Definitions.

 

1.1          Section 1 of the Existing MLPSA is hereby amended by deleting the
definitions of “Expiration Date” and “Liquidity”, each in its entirety and
replacing each respectively with the following:

 

“Expiration Date”: The earlier of (i) January 2, 2014, (ii) at Purchaser’s
option, upon the occurrence of an Event of Default, and (iii) the date on which
this Agreement shall terminate in accordance with the provisions hereof or by
operation of law.

 

“Liquidity”: With respect to such Person, the sum of (i) its cash and Cash
Equivalents (including amounts maintained in the Over/Under Account), plus
(ii) the aggregate amount of unused capacity available to such Person under
committed repurchase agreements for whole loans for which such Person has
unencumbered eligible collateral to pledge thereunder.

 

1.2          Section 1 of the Existing MLPSA is hereby amended by adding the
following definitions in the appropriate alphabetical order:

 

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“Default Rate”: As of any date of determination, the Post Default Rate specified
in the Repurchase Agreement; provided that if the Repurchase Agreement is no
longer in effect as of such date, the lesser of (i) the Discount Rate plus five
percent (5.00%), or (ii) the maximum nonusurious interest rate, if any, that at
any time, or from time to time, may be contracted for, taken, reserved, charged
or received under the laws of the United States and the State of New York, per
annum.

 

“Minimum Over/Under Account Balance”:  As of any date of determination, the
balance required to be maintained by Seller in the Over/Under Account under the
Repurchase Agreement; provided, that if the Repurchase Agreement is no longer in
effect as of such date, the Minimum Over/Under Account Balance shall be zero or
as otherwise agreed among the parties.

 

“Over/Under Account”:  That account maintained by Purchaser, as described in
Section 30 and in the Repurchase Agreement, if any.

 

SECTION 2.         Security Interest.  Section 8(c) of the Existing MLPSA is
hereby amended by inserting the phrase “, any funds of the Seller at any time
deposited or held in the Over/Under Account” immediately following the phrase
“the Takeout Commitments” in the second sentence thereof.

 

SECTION 3.         Adjusted Tangible Net Worth.  Section 11(a)(i) of the
Existing MLPSA is hereby amended by deleting such section in its entirety and
replacing it with the following:

 

(A) Seller shall maintain an Adjusted Tangible Net Worth of not less than
$150,000,000; and (B) PMIT shall maintain an Adjusted Tangible Net Worth of not
less than $860,000,000.

 

SECTION 4.         Liquidity.  Section 11(a)(ii) of the Existing MLPSA is hereby
amended by deleting such section in its entirety and replacing it with the
following:

 

(ii) As of the end of each calendar month, (A) Seller has maintained Liquidity
in an amount not less than $7,500,000 and (B) PMIT and its Subsidiaries have
maintained in the aggregate Liquidity in an amount not less than $30,000,000, of
which at least $20,000,000 shall be in the form of cash and Cash Equivalents.

 

SECTION 5.         Indemnification.  Section 15(b) of the Existing MLPSA is
hereby amended by deleting such section in its entirety and replacing it with
the following:

 

(b) If Seller fails to pay when due any such costs, expenses or other amounts
payable by it under this Agreement (including, without limitation, reasonable
fees and expenses of counsel and indemnities), such amount may be paid on behalf
of Seller by Purchaser, in its sole discretion and/or Purchaser shall be
entitled to withdraw from the Over/Under Account or retain from payments made by
Seller or an Approved Investor, or set off against any amounts to be paid to
Purchaser.  Seller shall remain liable for any such payments made by Purchaser
on behalf of

 

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Seller and any deficiency remaining after any such withdrawal, retention or
set-off.  No such payment by Purchaser shall be deemed a waiver of any of
Purchaser’s rights under this Agreement.

 

SECTION 6.         Over/Under Account.  The Existing MLPSA is hereby amended by
inserting the following Section 30 at the end thereof:

 

Section 30.  Over/Under Account.

 

(a)           Seller shall at all times maintain a balance in the Over/Under
Account of not less than the Minimum Over/Under Account Balance.  The Over/Under
Account shall be used to assist in settling Seller’s payment obligations to
Purchaser under this Agreement.  Purchaser shall not be required to segregate
and hold funds deposited by or on behalf of Seller in the Over/Under Account
separate and apart from Purchaser’s own funds or funds deposited by or held for
others.  Upon the occurrence of a Potential Default or an Event of Default,
Purchaser shall have the right to increase the Minimum Over/Under Account
Balance Seller is required to maintain in the Over/Under Account by giving
notice to Seller thereof.  If Seller fails to deposit funds in the Over/Under
Account to comply with any such required increase within the time frame required
by Purchaser, Purchaser shall have the right to retain in the Over/Under Account
any amounts received by Purchaser on behalf of Seller or otherwise credited to
the Over/Under Account to comply with any such required increase, including,
without limitation, any purchase proceeds received by Purchaser from any
Approved Investor pursuant to Section 3.  Purchaser shall not be liable to
Seller for any costs, losses or damages arising from or relating to the increase
of the Minimum Over/Under Account Balance that Seller is required to maintain in
the Over/Under Account or retention of excess funds by Purchaser to comply with
any such increase.  For the sake of clarity, only one Over/Under Account shall
be maintained by Purchaser for Seller in connection with this Agreement and the
Repurchase Agreement, if any, and such Over/Under Account shall be subject to
the terms of this Agreement as well as the Repurchase Agreement, if any.

 

(b)           Within one (1) Business Day of Purchaser’s receipt of a payment
from Seller or an Approved Investor, Purchaser shall credit to the Over/Under
Account all amounts received by it that exceed those amounts then due to
Purchaser in accordance with this Agreement.  Purchaser shall make available to
Seller by posting on its warehouse lending website within one (1) Business Day
following any such credit to the Over/Under Account, or as soon thereafter as is
reasonably possible, a statement that details the amounts so credited by
Purchaser to the Over/Under Account.

 

(c)           If any amount credited to the Over/Under Account creates a balance
in excess of the Minimum Over/Under Account Balance required pursuant to
Section 30(a) above, provided that no Potential Default or Event of Default has
occurred and is continuing, Seller may submit a written request to Purchaser for
return or payment of such excess funds.  If any such request is

 

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received by Purchaser prior to 1:00 p.m. (New York City time) on a Business Day,
Purchaser shall use commercially reasonable efforts to wire such requested
excess funds to Seller by the end of such Business Day and in no event no later
than two (2) Business Days after Purchaser’s receipt of such request. 
Notwithstanding anything contained in this Section 30 to the contrary, Purchaser
reserves the right to reject any request for excess funds from the Over/Under
Account if Purchaser determines that such excess funds shall be used to satisfy
Seller’s outstanding obligations under this Agreement or are subject to other
rights as provided in this Agreement.

 

(d)           Purchaser may, from time to time and without separate
authorization by Seller or notice to Seller, withdraw funds from the Over/Under
Account to settle amounts owed in accordance with the terms of this Agreement or
to otherwise satisfy Seller’s obligations under this Agreement, including,
without limitation (i) to reimburse itself for any reasonable costs and expenses
incurred by Purchaser in connection with this Agreement, as permitted herein,
and (ii) in the exercise of Purchaser’s or its Affiliates’ rights under
Section 14.

 

(e)           If, at any time, Seller fails to maintain in the Over/Under
Account the Minimum Over/Under Account Balance as required hereunder, in
addition to any other rights and remedies that Purchaser may have against
Seller, Purchaser shall have the right to immediately stop purchasing
Participation Certificates from Seller and/or to charge Seller accrued interest
on that portion of the Minimum Over/Under Account Balance that Seller has failed
to maintain, at the Default Rate, from the time that such balance failed to be
maintained until the time that funds are deposited into or held in the
Over/Under Account to comply with such Minimum Over/Under Account Balance
requirements hereunder. Without limiting the generality of the foregoing, it is
understood and agreed that should the balance in the Over/Under Account become
negative, Seller will continue to owe Purchaser accrued interest as provided
herein.

 

(f)            Any funds of Seller at any time deposited or held in the
Over/Under Account, whether such funds are required to be deposited and held in
the Over/Under Account pursuant to this Section 30 or otherwise, are hereby
pledged by Seller as security for its obligations under this Agreement, and
Seller hereby grants a security interest in such funds to Purchaser, and such
pledge and security interest shall be considered “a security agreement or other
arrangement or other credit enhancement” that is “related to” the Agreement and
transactions hereunder within the meaning of Bankruptcy Code Sections
101(38A)(A) and 741(7)(A)(xi).

 

SECTION 7.         Fees and Expenses.  Seller hereby agrees to pay to Purchaser,
on demand, any and all reasonable fees, costs and expenses (including reasonable
fees and expenses of counsel) incurred by Purchaser in connection with the
development, preparation and execution of this Amendment, irrespective of
whether any transactions hereunder are executed.

 

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SECTION 8.         Conditions Precedent.  This Amendment shall become effective
as of the date hereof upon Purchaser’s receipt of this Amendment, executed and
delivered by a duly authorized officer of Purchaser, Seller and Guarantor.

 

SECTION 9.         Limited Effect.  Except as expressly amended and modified by
this Amendment, the Existing MLPSA shall continue to be, and shall remain, in
full force and effect in accordance with its terms.

 

SECTION 10.       Counterparts.  This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.

 

SECTION 11.       Severability.  Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement.

 

SECTION 12.        GOVERNING LAW.  THE AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

SECTION 13.       Reaffirmation of Guaranty. The Guarantor hereby (i) agrees
that the liability of Guarantor or rights of Purchaser under the Guaranty shall
not be affected as a result of this Amendment, (ii) ratifies and affirms all of
the terms, covenants, conditions and obligations of the Guaranty and
(iii) acknowledges and agrees that such Guaranty is and shall continue to be in
full force and effect.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first
above written.

 

 

 

BANK OF AMERICA, N.A., as Purchaser

 

 

 

 

 

 

 

By:

/s/ Rayanthi De Mel

 

 

Name: Rayanthi De Mel

 

 

Title: Assistant Vice President

 

 

Bank of America, N.A.

 

 

 

 

 

 

 

PENNYMAC CORP., as Seller

 

 

 

 

 

 

 

By:

/s/ Pamela Marsh

 

 

Name: Pamela Marsh

 

 

Title: Managing Director, Treasurer

 

 

 

 

 

 

 

PENNYMAC MORTGAGE INVESTMENT TRUST, as Guarantor

 

 

 

 

 

 

 

By:

/s/ Pamela Marsh

 

 

Name: Pamela Marsh

 

 

Title: Managing Director, Treasurer

 

 

 

 

 

 

 

PENNYMAC OPERATING PARTNERSHIP, L.P., as Guarantor

 

 

 

 

 

 

 

By:

PennyMac GP OP, Inc., its General Partner

 

 

 

 

 

 

 

 

By:

/s/ Pamela Marsh

 

 

 

Name: Pamela Marsh

 

 

 

Title: Managing Director, Treasurer

 

Signature Page to Amendment No. 4 to MLPSA

 

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