Exhibit 10.7

EXECUTION COPY

 

 

 

MASTER REPURCHASE AGREEMENT

among

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent
(“Administrative Agent”)

and

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as buyer (“Buyer”)

and

PENNYMAC CORP., as seller (“Seller”)

Dated as of December 20, 2017

PMT ISSUER TRUST - FMSR

MSR COLLATERALIZED NOTES,

SERIES 2017-VF1

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

  DEFINITIONS      1  

Section 1.01

  Certain Defined Terms      1  

Section 1.02

  Other Defined Terms      7  

ARTICLE II

  GENERAL TERMS      8  

Section 2.01

  Transactions      8  

Section 2.02

  Procedure for Entering into Transactions      8  

Section 2.03

  Repurchase; Payment of Repurchase Price      9  

Section 2.04

  Price Differential      9  

Section 2.05

  Margin Maintenance      9  

Section 2.06

  Payment Procedure      10  

Section 2.07

  Application of Payments      10  

Section 2.08

  Use of Purchase Price and Transaction Requests      11  

Section 2.09

  Recourse      11  

Section 2.10

  Requirements of Law      11  

Section 2.11

  Taxes      12  

Section 2.12

  Indemnity      13  

Section 2.13

  Additional Balance and Additional Funding      14  

Section 2.14

  Commitment Fee      14  

Section 2.15

  Termination      14  

ARTICLE III

  REPRESENTATIONS AND WARRANTIES      14  

Section 3.01

  Seller Existence      14  

Section 3.02

  Licenses      15  

Section 3.03

  Power      15  

Section 3.04

  Due Authorization      15  

Section 3.05

  Financial Statements      15  

Section 3.06

  No Event of Default      16  

Section 3.07

  Solvency      16  

Section 3.08

  No Conflicts      16  

Section 3.09

  True and Complete Disclosure      16  

Section 3.10

  Approvals      17  

Section 3.11

  Litigation      17  

Section 3.12

  Material Adverse Change      17  

Section 3.13

  Ownership      17  

Section 3.14

  The Note      18  

Section 3.15

  Taxes      18  

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Section 3.16

  Investment Company      18  

Section 3.17

  Chief Executive Office; Jurisdiction of Organization      18  

Section 3.18

  Location of Books and Records      18  

Section 3.19

  ERISA      18  

Section 3.20

  Financing of Note and Additional Balances      19  

Section 3.21

  Agreements      19  

Section 3.22

  Other Indebtedness      19  

Section 3.23

  No Reliance      19  

Section 3.24

  Plan Assets      19  

Section 3.25

  No Prohibited Persons      19  

Section 3.26

  Compliance with 1933 Act      19  

ARTICLE IV

  CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST      20  

Section 4.01

  Ownership      20  

Section 4.02

  Security Interest      20  

Section 4.03

  Further Documentation      21  

Section 4.04

  Changes in Locations, Name, etc.      21  

Section 4.05

  Performance by Buyer of Seller’s Obligations      22  

Section 4.06

  Proceeds      22  

Section 4.07

  Remedies      22  

Section 4.08

  Limitation on Duties Regarding Preservation of Repurchase Assets      23  

Section 4.09

  Powers Coupled with an Interest      23  

Section 4.10

  Release of Security Interest      23  

Section 4.11

  Reinstatement      23  

Section 4.12

  Subordination      24  

ARTICLE V

  CONDITIONS PRECEDENT      24  

Section 5.01

  Initial Transaction      24  

Section 5.02

  All Transactions      25  

Section 5.03

  Closing Subject to Conditions Precedent      26  

ARTICLE VI

  COVENANTS      28  

Section 6.01

  Litigation      28  

Section 6.02

  Prohibition of Fundamental Changes      29  

Section 6.03

  Weekly Reporting      29  

Section 6.04

  No Adverse Claims      29  

Section 6.05

  Assignment      29  

Section 6.06

  Security Interest      29  

Section 6.07

  Records      29  

Section 6.08

  Books      30  

 

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Section 6.09

  Approvals      30  

Section 6.10

  Material Change in Business      30  

Section 6.11

  Distributions      30  

Section 6.12

  Applicable Law      30  

Section 6.13

  Existence      30  

Section 6.14

  Chief Executive Office; Jurisdiction of Organization      30  

Section 6.15

  Taxes      30  

Section 6.16

  Transactions with Affiliates      31  

Section 6.17

  Guarantees      31  

Section 6.18

  Indebtedness      31  

Section 6.19

  True and Correct Information      31  

Section 6.20

  No Pledge      31  

Section 6.21

  Plan Assets      31  

Section 6.22

  Sharing of Information      31  

Section 6.23

  Modification of the Base Indenture and Series 2017-VF1 Indenture Supplement   
  31  

Section 6.24

  Reporting Requirements      32  

Section 6.25

  Liens on Substantially All Assets      34  

Section 6.26

  Litigation Summary      34  

Section 6.27

  Hedging      34  

Section 6.28

  MSR Valuation      34  

Section 6.29

  Most Favored Status      34  

Section 6.30

  Servicer Administration      35  

ARTICLE VII

  DEFAULTS/RIGHTS AND REMEDIES OF BUYER UPON DEFAULT      35  

Section 7.01

  Events of Default      35  

Section 7.02

  No Waiver      38  

Section 7.03

  Due and Payable      38  

Section 7.04

  Fees      38  

Section 7.05

  Default Rate      38  

ARTICLE VIII

  ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER      38  

Section 8.01

  Entire Agreement      38  

Section 8.02

  Waivers, Separate Actions by Buyer      39  

ARTICLE IX

  SUCCESSORS AND ASSIGNS      39  

Section 9.01

  Successors and Assigns      39  

Section 9.02

  Participations and Transfers      39  

 

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Section 9.03

  Buyer and Participant Register      40  

ARTICLE X

  MISCELLANEOUS      41  

Section 10.01

  Survival      41  

Section 10.02

  Indemnification      41  

Section 10.03

  Nonliability of Buyer      41  

Section 10.04

  Governing Law; Submission to Jurisdiction; Waivers      42  

Section 10.05

  Notices      43  

Section 10.06

  Severability      44  

Section 10.07

  Section Headings      45  

Section 10.08

  Counterparts      45  

Section 10.09

  Periodic Due Diligence Review      45  

Section 10.10

  Hypothecation or Pledge of Repurchase Assets      45  

Section 10.11

  Non-Confidentiality of Tax Treatment      46  

Section 10.12

  Set-off      47  

Section 10.13

  Intent      47  

 

Schedule 1    –      Responsible Officers of Seller Schedule 2    –      Asset
Schedule Schedule 3    –      Buyer Account Exhibit A    –      Form of
Transaction Notice Exhibit B    –      Existing Indebtedness

 

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MASTER REPURCHASE AGREEMENT

This Master Repurchase Agreement (this “Agreement”) is made as of December 20,
2017, among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (“CSFB”), as
administrative agent (the “Administrative Agent”), CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH (“CSCIB”), as buyer (“Buyer”), and PENNYMAC CORP., as seller
(“Seller” or “PMC”). Capitalized terms have the meanings specified in Sections
1.01 and 1.02.

W I T N E S S E T H :

WHEREAS, pursuant to the Base Indenture and the Series 2017-VF1 Indenture
Supplement, PMT ISSUER TRUST—FMSR (the “Issuer”) has duly authorized the
issuance of a Series of Notes, as a single Class of Variable Funding Note, known
as the “PMT ISSUER TRUST—FMSR MSR Collateralized Notes, SERIES 2017-VF1” (the
“Note”);

WHEREAS, from time to time the parties hereto may enter into Transactions;

WHEREAS, Seller is the owner of the Note; and

WHEREAS, Seller wishes to sell the Note to Buyer pursuant to the terms of this
Agreement;

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, Buyer and Seller hereby agree as follows.

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms. Capitalized terms used herein shall have the
indicated meanings:

“Additional Balance” has the meaning set forth in Section 2.13.

“Additional Funding” has the meaning set forth in Section 2.13.

“Additional Repurchase Assets” has the meaning set forth in Section 4.02(c).

“Administrative Agent” has the meaning given to such term in the preamble to
this Agreement.

“Agreement” has the meaning given to such term in the preamble to this
Agreement.

“Amortization Date” has the meaning assigned to the term in the Pricing Side
Letter.

 

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“Amortization Payment Amount” has the meaning assigned to the term in the
Pricing Side Letter.

“Applicable Lending Office” means the “lending office” of Buyer (or of an
Affiliate of Buyer) designated on the signature page hereof or such other office
of Buyer (or of an Affiliate of Buyer) as Buyer may from time to time specify to
Seller in writing as the office by which the Transactions are to be made and/or
maintained.

“Asset Schedule” means Schedule 2 attached hereto, which lists the Note and the
terms thereof, as such schedule shall be updated from time to time in accordance
with Section 2.02 hereof, including without limitation, in connection with
Buyer’s approval of any Additional Balances pursuant to Section 2.13.

“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.

“Base Rate” means the LIBOR Rate.

“Buyer” means CSCIB, together with its successors, and any assignee of and
Participant or Transferee in the Transaction.

“Buyer Account” means the account identified on Schedule 3 hereto.

“Commitment Fee” has the meaning assigned to the term in the Pricing Side
Letter.

“Committed Amount” has the meaning assigned to the term in the Pricing Side
Letter.

“Confidential Information” has the meaning set forth in Section 10.11(b).

“CSCIB” has the meaning given to such term in the preamble to this Agreement.

“CSFB” has the meaning given to such term in the preamble to this Agreement.

“ERISA Event of Termination” means with respect to Seller or the Guarantor
(i) with respect to any Plan, a reportable event, as defined in Section 4043 of
ERISA, as to which the PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified with thirty (30) days of the
occurrence of such event, or (ii) the withdrawal of Seller, the Guarantor or any
ERISA Affiliate thereof from a Plan during a plan year in which it is a
substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the
failure by Seller, the Guarantor or any ERISA Affiliate thereof to meet the
minimum funding standard of Section 412 of the Code or Section 302 of ERISA with
respect to any Plan, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code (or
Section 430(j) of the Code as amended by the Pension Protection Act) or
Section 302(e) of ERISA (or Section 303(j) of ERISA, as amended by the Pension
Protection Act), or (iv) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by Seller, the
Guarantor or any ERISA Affiliate thereof to terminate any plan, or (v) the
failure to meet requirements of Section 436 of the Code resulting in the loss of
qualified

 

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status under Section 401(a)(29) of the Code, or (vi) the institution by the PBGC
of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by
Seller, the Guarantor or any ERISA Affiliate thereof of a notice from a
Multiemployer Plan that action of the type described in the previous clause (vi)
has been taken by the PBGC with respect to such Multiemployer Plan, or
(viii) any event or circumstance exists which may reasonably be expected to
constitute grounds for Seller, the Guarantor or any ERISA Affiliate thereof to
incur liability under Title IV of ERISA or under Sections 412(b) or 430(k) of
the Code with respect to any Plan.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Existing Indebtedness” has the meaning specified in Section 3.22.

“Expenses” means all present and future expenses reasonably incurred by or on
behalf of Buyer in connection with the negotiation, execution or enforcement of
this Agreement or any of the other Program Agreements and any amendment,
supplement or other modification or waiver related hereto or thereto, whether
incurred heretofore or hereafter, which expenses shall include the reasonable
and documented cost of title, lien, judgment and other record searches;
reasonable and documented 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 hereby.

“Governmental Actions” means any and all consents, approvals, permits, orders,
authorizations, waivers, exceptions, variances, exemptions or licenses of, or
registrations, declarations or filings with, any Governmental Authority required
under any Governmental Rules.

“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 Seller or Buyer, as
applicable.

“Governmental Rules” means any and all laws, statutes, codes, rules,
regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and all legally binding conditions, standards,
prohibitions, requirements and judgments of any Governmental Authority.

“Indenture” means the Base Indenture, together with the Series 2017-VF1
Indenture Supplement thereto.

“Indenture Trustee” means Citibank, N.A., its permitted successors and assigns.

“Issuer” has the meaning given to such term in the recitals to this Agreement.

“Margin” has the meaning assigned to the term in the Pricing Side Letter.

“Margin Call” has the meaning set forth in Section 2.05(a).

 

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“Margin Deadlines” has the meaning set forth in Section 2.05(b).

“Margin Deficit” has the meaning set forth in Section 2.05(a).

“Market Value” means, with respect to the Note as of any date of determination,
and without duplication, the fair market value of the Note on such date as
reasonably determined by Buyer (or an Affiliate thereof).

“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 Seller or any Affiliate that is a party to any
Program Agreement taken as a whole; (b) a material impairment of the ability of
Seller or any Affiliate that is a party to any Program Agreement to perform
under any Program Agreement and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability of
any Program Agreement against Seller or any Affiliate that is a party to any
Program Agreement.

“Maximum Purchase Price” has the meaning assigned to the term in the Pricing
Side Letter.

“Non-Excluded Taxes” has the meaning set forth in Section 2.11(a).

“Note” has the meaning given to such term in the recitals to this Agreement.

“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 10.05 or, as to any party, at such other address as shall be designated
by such party in a written notice to the other party.

“Obligations” means (a) all of Seller’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 Price
Differential Payment Date, and other obligations and liabilities, to Buyer or
its Affiliates arising under, or in connection with, the Program Agreements,
whether now existing or hereafter arising; (b) any and all sums reasonably
incurred and paid by Buyer or on behalf of 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 Seller’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 Buyer of its rights
under the Program Agreements, including reasonable attorneys’ fees and
disbursements and court costs; (d) all of Seller’s indemnity obligations to
Buyer pursuant to the Program Agreements; and (e) all of Seller’s and
Guarantor’s obligations under the Roll-Up Agreement and other Repurchase
Documents.

“Officer’s Compliance Certificate” has the meaning assigned to such term in the
Pricing Side Letter.

“Other Taxes” has the meaning set forth in Section 2.11(b).

 

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“Participant” has the meaning set forth in Section 9.02(a).

“PMC” has the meaning given to such term in the preamble to this Agreement.

“PMH” means PennyMac Holdings, LLC, a limited liability company organized under
the laws of the State of Delaware.

“POP” means PennyMac Operating Partnership, L.P., a limited partnership
organized under the laws of the State of Delaware.

“Price Differential” means with respect to any Transaction as of any date of
determination, an amount equal to the product of (A) the Pricing Rate for such
Transaction and (B) the Purchase Price for such Transaction, calculated daily on
the basis of a 360 day year for the actual number of days during the Price
Differential Period.

“Price Differential Payment Date” means, for as long as any Obligations shall
remain owing by Seller to Buyer, each Payment Date.

“Price Differential Period” means, the period from and including a Price
Differential Payment Date (or the Purchase Date for any date of determination
before the first Price Differential Payment Date), up to but excluding the next
Price Differential Payment Date.

“Price Differential Statement Date” has the meaning set forth in Section 2.04.

“Pricing Rate” means Base Rate plus the applicable Margin.

“Pricing Side Letter” means the letter agreement dated as of the Closing Date,
between Buyer and Seller as amended, restated, supplemented or otherwise
modified from time to time.

“Primary Repurchase Assets” has the meaning set forth in Section 4.02(a).

“Program Agreements” means this Agreement, the Pricing Side Letter, the VFN Repo
Guaranty, the Subservicer Side Letter Agreement, the PC Repurchase Agreement,
the PC Repo Guaranty, the Excess Spread Participation Agreement, the Retained
Excess Spread Participation Agreement, the Base Indenture and the Series
2017-VF1 Indenture Supplement, as each of the same may hereafter be amended,
restated, supplemented or otherwise modified from time to time.

“Prohibited Person” has the meaning set forth in Section 3.25.

“Purchase Date” means, subject to the satisfaction of the conditions precedent
set forth in Article V hereof, each Funding Date on which a Transaction is
entered into by Buyer pursuant to Section 2.02 or such other mutually agreed
upon date as more particularly set forth on Exhibit A hereto.

 

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“Purchase Price” means the price at which each Purchased Asset (or portion
thereof) is transferred by Seller to Buyer, which shall equal on any date of
determination, the difference between (i) the sum of (a) the Asset Value of such
Purchased Asset on the related Purchase Date, plus (b) the product of the
Purchase Price Percentage and the principal amount of any Additional Balances
related to such Purchased Asset, minus (ii) the sum of (a) any Repurchase Price
paid with respect to such Purchased Asset pursuant to Section 2.03, plus (b) any
Additional Note Payment made with respect to such Purchased Asset pursuant to
Section 4.4(b) or Section 4.5(e) of the Indenture, plus (c) any Redemption
Amount paid pursuant to Section 13.1 of the Indenture, plus (d) any funds
applied by Buyer against the Purchase Price pursuant to Section 2.05(c).

“Purchase Price Percentage” has the meaning assigned to the term in the Pricing
Side Letter.

“Purchased Assets” means, collectively, the Note (including all outstanding
Additional Balances thereunder) together with the Repurchase Assets related to
such Note, until such Note has been repurchased by Seller in accordance with the
terms of this Agreement.

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller, or any other person or entity with respect to the
Purchased Assets.

“Register” has the meaning set forth in Section 9.02(b).

“Repurchase Assets” has the meaning set forth in Section 4.02(c).

“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date
requested by Seller on which the Repurchase Price is paid pursuant to
Section 2.03.

“Repurchase Documents” means “Program Agreements” as defined in the Roll-Up
Agreement.

“Repurchase Price” means the price at which Purchased Assets are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the accrued but unpaid Price Differential as
of the date of such determination.

“Repurchase Rights” has the meaning set forth in Section 4.02(c).

“Responsible Officer” means as to any Person, the chief executive officer or,
with respect to financial matters, the chief financial officer or treasurer of
such Person. The Responsible Officers of Seller as of the Closing Date are
listed on Schedule 1 hereto.

“Roll-Up Agreement” has the meaning set forth in the Pricing Side Letter.

“Seller” has the meaning assigned to such term in the preamble to this Agreement
and includes PMC’s permitted successors and assigns.

“Seller Termination Option” means (a) (i) Buyer has or shall incur costs in
connection with those matters provided for in Section 2.10 or 2.11 and
(ii) Buyer requests that Seller pay to Buyer those costs in connection therewith
or (b) Buyer has declared in writing that an event described in
Section 5.02(g)(A) has occurred.

 

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“Series 2017-VF1 Indenture Supplement” means the Series 2017-VF1 Indenture
Supplement, dated as of 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 CSFB, as administrative
agent, as amended, restated, supplemented or otherwise modified from time to
time.

“Taxes” has the meaning assigned to such term in Section 2.11(a).

“Termination Date” has the meaning assigned to such term in the Pricing Side
Letter.

“Transaction” means a transaction pursuant to which Seller transfers a Note or
Additional Balances, as applicable, to Buyer against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer such Note or
Additional Balances, as applicable, back to Seller at a date certain or on
demand, against the transfer of funds by Seller.

“Transaction Notice” has the meaning assigned to such term in Section 2.02(a).

“Transaction Register” has the meaning assigned to such term in Section 9.03(b).

“Transferee” has the meaning set forth in Section 9.02(b).

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect on the Closing Date in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.

“VFN Guarantor” means PennyMac Mortgage Investment Trust, in its capacity as
guarantor under the VFN Repo Guaranty.

“VFN Repo Guaranty” means the Guaranty, dated as of the Closing Date, pursuant
to which VFN Guarantor fully and unconditionally guarantees the obligations of
Seller hereunder.

“Weekly Report Date” has the meaning set forth in Section 6.03.

Section 1.02 Other Defined Terms.

(a) Any capitalized terms used and not defined herein shall have the meaning set
forth in the Base Indenture or the Series 2017-VF1 Indenture Supplement, as
applicable.

(b) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specified herein,
the term “or” has the inclusive meaning represented by the term “and/or” and the
term “including” is not limiting. All references to Sections, subsections,
Articles and Exhibits shall be to Sections, subsections, and Articles of, and
Exhibits to, this Agreement unless otherwise specifically provided.

 

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

(d) 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.”

ARTICLE II

GENERAL TERMS

Section 2.01 Transactions. Subject to the terms and conditions hereof, Buyer
agrees to enter into Transactions with Seller for a Purchase Price outstanding
at any one time not to exceed the Committed Amount, and may agree from time to
time to enter into Transactions with Seller for a Purchase Price outstanding in
excess of the Committed Amount but not to exceed the Maximum Purchase Price.
Buyer shall have no commitment or obligation to enter into Transactions in
connection with the Note to the extent (i) the Purchase Price of such
Transaction exceeds the Committed Amount or (ii) if the Transaction is requested
on or after the Amortization Date. During the term of this Agreement, Seller may
request Transactions, Seller may pay the Repurchase Price in whole or in part at
any time during such period without penalty, and additional Transactions may be
entered into in accordance with the terms and conditions hereof. Buyer’s
obligation to enter into Transactions pursuant to the terms of this Agreement
shall terminate on the Termination Date.

Section 2.02 Procedure for Entering into Transactions.

(a) Seller may enter into Transactions with Buyer under this Agreement on any
Purchase Date; provided, that Seller shall have given Buyer irrevocable notice
(each, a “Transaction Notice”), which notice (i) shall be substantially in the
form of Exhibit A, (ii) shall be signed by a Responsible Officer of Seller and
be received by Buyer prior to 1:00 p.m. (New York time) one (1) Business Day
prior to the related Purchase Date, and (iii) shall specify: (A) the Maximum VFN
Principal Balance of the Note; (B) the Initial Note Balance of the Note; (C) the
Dollar amount of the requested Purchase Price; (D) the requested Purchase Date;
(E) the Repurchase Date; (F) the Pricing Rate or Repurchase Price applicable to
the Transaction; and (G) any additional terms or conditions of the Transaction
not inconsistent with this Agreement. Each Transaction Notice on any Purchase
Date shall be in an amount equal to at least $500,000.

(b) If Seller shall deliver to Buyer a Transaction Notice that satisfies the
requirements of Section 2.02(a), Buyer will notify Seller of its intent to remit
the requested Purchase Price one (1) Business Day prior to the requested
Purchase Date. If all applicable conditions precedent set forth in Article V
have been satisfied on or prior to the Purchase Date, then subject to the
foregoing, on the Purchase Date, Buyer shall remit the amount of the requested
Purchase Price in U.S. Dollars and in immediately available funds to the account
of Seller specified in Schedule 5 to the Base Indenture.

 

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(c) Upon entering into each Transaction hereunder, the Asset Schedule shall be
automatically updated and replaced with the Asset Schedule attached to the
related Transaction Notice.

Section 2.03 Repurchase; Payment of Repurchase Price.

(a) Seller hereby promises to repurchase the Purchased Assets and pay all
outstanding Obligations on the Termination Date.

(b) On each Price Differential Payment Date following the Amortization Date,
Seller shall pay to Buyer in immediately available funds the Amortization
Payment Amount.

(c) By notifying Buyer in writing at least one (1) Business Day in advance,
Seller shall be permitted, at its option, to prepay, subject to Section 2.12,
the Purchase Price in whole or in part at any time, together with accrued and
unpaid interest on the amount so prepaid.

Section 2.04 Price Differential. On each Price Differential Payment Date, Seller
hereby promises to pay to Buyer all accrued and unpaid Price Differential on the
Transactions, as invoiced by Buyer to Seller three (3) Business Days prior to
the related Price Differential Payment Date (the “Price Differential Statement
Date”); provided, that on each Price Differential Payment Date prior to the
occurrence and continuation of an Event of Default, the estimated Price
Differential owed hereunder shall be subject to a true-up of the amount
determined by Buyer and agreed by the Seller one (1) Business Day prior to the
related Price Differential Payment Date. If Buyer fails to deliver such
statement on the Price Differential Statement Date, on such Price Differential
Payment Date Seller shall pay the amount which Seller calculates as the Price
Differential due and upon delivery of the statement, Seller shall remit to Buyer
any shortfall, or Buyer shall refund to Seller any excess, in the Price
Differential paid. The Price Differential shall be computed on the basis of the
actual number of days in each Price Differential Period and a 360-day year.

Section 2.05 Margin Maintenance.

(a) If at any time the aggregate outstanding amount of the Purchase Price of the
Note is greater than the Asset Value for the related Transaction (such excess, a
“Margin Deficit”), then Buyer may by notice to Seller require Seller to transfer
to Buyer cash in an amount at least equal to the Margin Deficit (such
requirement, a “Margin Call”).

(b) Notice delivered pursuant to Section 2.05(a) may be given by any written or
electronic means. With respect to a Margin Call, any notice given before 5:00
p.m. (New York City time) on a Business Day shall be met, and the related Margin
Call satisfied, no later than 5:00 p.m. (New York City time) on the following
Business Day. With respect to a Margin Call, any notice given after 5:00 p.m.
(New York City time) on a Business Day shall be met, and the related Margin Call
satisfied, no later than 5:00 p.m. (New York City time) on the second (2nd)
Business Day following the date of such notice. The foregoing time requirements
for satisfaction of a Margin Call are referred to as the “Margin Deadlines”. The
failure of Buyer, on

 

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any one or more occasions, to exercise its rights hereunder, shall not change or
alter the terms and conditions to which this Agreement is subject or limit the
right of Buyer to do so at a later date. Seller and Buyer each agree that a
failure or delay by Buyer to exercise its rights hereunder shall not limit or
waive Buyer’s rights under this Agreement or otherwise existing by law or in any
way create additional rights for Seller.

(c) In the event that a Margin Deficit exists, Buyer may retain any funds
received by it to which Seller would otherwise be entitled hereunder, which
funds (i) may be held by Buyer against the related Margin Deficit or (ii) may be
applied by Buyer against the Purchase Price. Notwithstanding the foregoing,
Buyer retains the right, in its sole discretion, to make a Margin Call in
accordance with the provisions of this Section 2.05.

Section 2.06 Payment Procedure. Seller absolutely, unconditionally, and
irrevocably, shall make, or cause to be made, all payments required to be made
by Seller hereunder. Seller shall deposit or cause to be deposited all amounts
constituting collection, payments and proceeds of the Note (including all fees
and proceeds of sale to a third party) to the Buyer Account.

Section 2.07 Application of Payments.

(a) On each Price Differential Payment Date prior to the occurrence of an Event
of Default, all amounts deposited into the Buyer Account from and after the
immediately preceding Price Differential Payment Date (or the Closing Date in
connection with the initial Price Differential Payment Date), or received by
Buyer from the Issuer in the Buyer’s capacity as VFN Noteholder, shall be
applied as follows:

(i) first, to the payment of any accrued and unpaid Price Differential owing;

(ii) second, to the payment of Purchase Price outstanding to satisfy any Margin
Deficit owing;

(iii) third, to the payment of any unpaid Amortization Payment Amount.

(iv) fourth, to payment of all other costs and fees payable to Buyer pursuant to
this Agreement;

(v) fifth, to the payment of Purchase Price outstanding as a result of any
Additional Note Payment made pursuant to Section 4.4(b) or Section 4.5(e) of the
Indenture; and

(vi) sixth, any remainder to Seller.

(b) Notwithstanding the preceding provisions, if an Event of Default shall have
occurred hereunder, all funds related to the Note shall be applied as follows:

 

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(i) first, to the payment of any accrued and unpaid Price Differential owing;

(ii) second, to the payment of Purchase Price until reduced to zero;

(iii) third, to payment of all other costs and fees payable to Buyer pursuant to
this Agreement;

(iv) fourth, to the payment of any other Obligations; and

(v) fifth, any remainder to Seller.

Section 2.08 Use of Purchase Price and Transaction Requests. The Purchase Price
shall be used by Seller to satisfy its obligations under the Indenture and for
general corporate purposes.

Section 2.09 Recourse. Notwithstanding anything else to the contrary contained
or implied herein or in any other Program Agreement, Buyer shall have full,
unlimited recourse against Seller and its assets in order to satisfy the
Obligations.

Section 2.10 Requirements of Law.

(a) If any Requirement of Law (other than with respect to any amendment made to
Buyer’s certificate of trust and trust agreement or other organizational or
governing documents) or any change in the interpretation or application thereof
or compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the Closing Date:

(i) shall subject Buyer to any tax of any kind whatsoever with respect to this
Agreement or the Transactions (excluding income taxes, branch profits taxes,
franchise taxes or similar taxes imposed on Buyer as a result of any present or
former connection between Buyer and the United States, other than any such
connection arising solely from Buyer having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement) or change
the basis of taxation of payments to Buyer in respect thereof;

(ii) shall impose, modify or hold any reserve, special deposit, compulsory loan
or similar requirement against assets held by, deposits or other liabilities in
or for the account of, advances, or other extensions of credit by, or any other
acquisition of funds by, any office of Buyer which is not otherwise included in
the determination of the Price Differential hereunder; or

(iii) shall impose on Buyer any other condition;

and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering, continuing or maintaining
this Agreement or any other Program Agreement, the Transactions or to reduce any
amount due or owing hereunder in respect thereof, then, in any such case, Seller
shall promptly pay Buyer such additional amount or amounts as calculated by
Buyer in good faith as will compensate Buyer for such increased cost or reduced
amount receivable.

 

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(b) If Buyer shall have determined that the adoption of or any change in any
Requirement of Law (other than with respect to any amendment made to Buyer’s
certificate of incorporation and by-laws or other organizational or governing
documents) regarding capital adequacy or in the interpretation or application
thereof or compliance by Buyer or any corporation Controlling Buyer with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the Closing Date
shall have the effect of reducing the rate of return on Buyer’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which Buyer or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration Buyer’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
Buyer to be material, then from time to time, Seller shall promptly pay to Buyer
such additional amount or amounts as will compensate Buyer for such reduction.

(c) If Buyer becomes entitled to claim any additional amounts pursuant to this
Section 2.10, it shall promptly notify Seller of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this Section 2.10 submitted by Buyer to Seller shall be conclusive
in the absence of manifest error.

Section 2.11 Taxes.

(a) Any and all payments by or on behalf of Seller under or in respect of this
Agreement or any other Program Agreements to which Seller is a party shall be
made free and clear of, and without deduction or withholding for or on account
of, any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto, whether now or hereafter imposed, levied,
collected, withheld or assessed by any taxation authority or other Governmental
Authority (collectively, “Taxes”), unless required by law. If Seller shall be
required under any applicable Requirement of Law to deduct or withhold any Taxes
from or in respect of any sum payable under or in respect of this Agreement or
any of the other Program Agreements to Buyer (including for purposes of
Section 2.10 and this Section 2.11, any assignee, successor or participant),
(i) Seller shall make all such deductions and withholdings in respect of Taxes,
(ii) Seller shall pay the full amount deducted or withheld in respect of Taxes
to the relevant taxation authority or other Governmental Authority in accordance
with any applicable Requirement of Law, and (iii) the sum payable by Seller
shall be increased as may be necessary so that after Seller has made all
required deductions and withholdings (including deductions and withholdings
applicable to additional amounts payable under this Section 2.11) such Buyer
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made in respect of Non-Excluded Taxes. For
purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than,
in the case of Buyer, Taxes that are (i) imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of
which such Buyer is organized or of its Applicable Lending Office, or any
political subdivision thereof, unless such Taxes are imposed as a result of
Buyer having executed, delivered or performed its obligations or received
payments under, or enforced, this Agreement or any of the other Program
Agreements (in which case such Taxes will be treated as Non-Excluded Taxes) and
(ii) imposed pursuant to FATCA.

 

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(b) In addition, Seller hereby agrees to pay any present or future stamp,
recording, documentary, excise, property or value-added taxes, or similar taxes,
charges or levies that arise from any payment made under or in respect of this
Agreement or any other Program Agreement or from the execution, delivery or
registration of, any performance under, or otherwise with respect to, this
Agreement or any other Program Agreement (collectively, “Other Taxes”).

(c) Seller hereby agrees to indemnify Buyer for, and to hold it harmless
against, the full amount of Non-Excluded Taxes and Other Taxes, and the full
amount of Taxes of any kind imposed by any jurisdiction on amounts payable by
Seller under this Section 2.11 imposed on or paid by such Buyer and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. The indemnity by Seller provided for in this
Section 2.11 shall apply and be made whether or not the Non-Excluded Taxes or
Other Taxes for which indemnification hereunder is sought have been correctly or
legally asserted. Amounts payable by Seller under the indemnity set forth in
this Section 2.11(c) shall be paid within ten (10) days from the date on which
Buyer makes written demand therefor.

(d) Without prejudice to the survival of any other agreement of the Seller
hereunder, the agreements and obligations of the Seller contained in this
Section 2.11 shall survive the termination of this Agreement and the other
Program Agreements. Nothing contained in Section 2.10 or this Section 2.11 shall
require any Buyer to make available any of its tax returns or any other
information that it deems to be confidential or proprietary.

(e) Buyer will timely furnish Seller, or any agent of Seller, any tax forms or
certifications (such as an applicable IRS Form W-8, IRS Form W-9 or any
successors to such IRS forms) that it is legally entitled to provide and that
Seller or its agents may reasonably request (A) to permit Seller or its agents
to make payments to it without, or at a reduced rate of, deduction or
withholding, (B) to enable Seller or its agents to qualify for a reduced rate of
withholding or deduction in any jurisdiction from or through which Seller or its
agents receive payments and (C) to enable Seller or its agents to satisfy
reporting and other obligations under the Code and Treasury Regulations and
under any other applicable laws, and shall update or replace such tax forms or
certifications as appropriate or in accordance with their terms or subsequent
amendments, and acknowledges that the failure to provide, update or replace any
such tax forms or certifications may result in the imposition of withholding or
back-up withholding upon payments to Buyer.

Section 2.12 Indemnity. Without limiting, and in addition to, the provisions of
Section 10.02, the Seller agrees to indemnify the Buyer and to hold the Buyer
harmless from any loss or expense that the Buyer may sustain or incur as a
consequence of (i) a default by the Seller in payment when due of the Repurchase
Price or Price Differential or (ii) a default by the Seller in making any
prepayment of Repurchase Price after the Seller has given a notice thereof in
accordance with Section 2.03.

 

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Section 2.13 Additional Balance and Additional Funding. In the event that Seller
wishes an increase in the VFN Principal Balance, Seller shall deliver to Buyer a
copy of the VFN Note Balance Adjustment Request that is delivered under the
Indenture. If all the Funding Conditions required pursuant to Section 5.02
hereof and in the Indenture have been satisfied, or if such request is made on
or after the Amortization Date, with the consent of the Administrative Agent, in
its sole discretion (provided that the consent of the Administrative Agent shall
not be required in the event that the aggregate outstanding Purchase Price,
after giving effect to the requested increase, does not exceed the Committed
Amount and if such request occurs prior to the Amortization Date) then upon
approval in writing by Buyer of such increase in the VFN Principal Balance (such
increase, upon such approval, an “Additional Balance”), (i) the outstanding VFN
Principal Balance set forth in the Asset Schedule hereof shall be automatically
updated and (ii) if requested by Seller, Buyer shall thereupon deliver to Seller
cash in an amount (the “Additional Funding”) equal to the product of such
Additional Balance and the Purchase Price Percentage.

Section 2.14 Commitment Fee. Seller shall pay the Commitment Fee, if any, as
specified in the Pricing Side Letter. Such payment shall be made in Dollars in
immediately available funds, without deduction, set off or counterclaim, to
Buyer at such account designated in writing by Buyer.

Section 2.15 Termination.

(a) Notwithstanding anything to the contrary set forth herein, if a Seller
Termination Option occurs, Seller may, upon five (5) Business Days’ prior
written notice of such event, terminate this Agreement and the Termination Date
shall be deemed to have occurred (upon the expiration of such five (5) Business
Day period).

(b) In the event that a Seller Termination Option as described in clause (a) of
the definition thereof has occurred and Seller has notified Buyer in writing of
its option to terminate this Agreement, Buyer shall have the right to withdraw
such request for payment within three (3) Business Days of Seller’s notice of
its exercise of the Seller Termination Option and Seller shall no longer have
the right to terminate this Agreement.

(c) For the avoidance of doubt, Seller shall remain responsible for all costs
actually incurred by Buyer pursuant to Sections 2.10 and 2.11.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Buyer as of the Closing Date and as of each
Purchase Date for any Transaction that:

Section 3.01 Seller Existence. Seller has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware.

 

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Section 3.02 Licenses. Seller is duly licensed or is otherwise qualified in each
jurisdiction in which it transacts business for the business which it conducts
and is not in default of any applicable federal, state or local laws, rules and
regulations unless, in either instance, the failure to take such action is not
reasonably likely (either individually or in the aggregate) to cause a Material
Adverse Effect and is not in default of such state’s applicable laws, rules and
regulations. Seller has the requisite power and authority and legal right to
own, sell and grant a lien on all of its right, title and interest in and to the
Note. Seller has the requisite power and authority and legal right to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of, this Agreement, each other Program Agreement and
any Transaction Notice.

Section 3.03 Power. Seller has all requisite corporate or other power, and has
all governmental licenses, authorizations, consents and approvals necessary to
own its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect.

Section 3.04 Due Authorization. Seller has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Program Agreements, as applicable. This Agreement, any
Transaction Notice and the Program Agreements have been (or, in the case of
Program Agreements and any Transaction Notice not yet executed, will be) duly
authorized, executed and delivered by Seller, all requisite or other corporate
action having been taken, and each is valid, binding and enforceable against
Seller in accordance with its terms except as such enforcement may be affected
by bankruptcy, by other insolvency laws, or by general principles of equity.

Section 3.05 Financial Statements. (A) Seller has heretofore furnished to Buyer
a copy of (a) its balance sheet for the fiscal year of Seller ended December 31,
2016 and the related statements of income for Seller for such fiscal year, with
the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the
quarterly fiscal period of Seller ended September 30, 2017 and the related
statements of income for Seller for such quarterly fiscal period. All such
financial statements are accurate, complete and correct and fairly present, in
all material respects, the financial condition of Seller (subject to normal
year-end adjustments) and the results of its operations as at such dates and for
such fiscal periods, all in accordance with GAAP applied on a consistent basis,
and to the best of the Seller’s knowledge, do not omit any material fact as of
the date(s) thereof. Since September 30, 2017, there has been no material
adverse change in the consolidated business, operations or financial condition
of Seller from that set forth in said financial statements nor is Seller aware
of any state of facts which (with notice or the lapse of time) would or could
result in any such material adverse change. Seller has no liabilities, direct or
indirect, fixed or contingent, matured or unmatured, known or unknown, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, said balance sheet and
related statements, and at the present time there are no material unrealized or
anticipated losses from any loans, advances or other commitments of Seller
except as heretofore disclosed to Buyer in writing.

(B) Seller has heretofore caused VFN Guarantor to furnish to Buyer a copy of
(a) its balance sheet for the fiscal year of VFN Guarantor ended December 31,
2016 and the related statements of income for VFN Guarantor for such fiscal
year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance
sheet for the quarterly fiscal

 

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period of VFN Guarantor ended September 30, 2017 and the related statements of
income for VFN Guarantor for such quarterly fiscal period. All such financial
statements are accurate, complete and correct and fairly present, in all
material respects, the financial condition of VFN Guarantor (subject to normal
year-end adjustments) and the results of its operations as at such dates and for
such fiscal periods, all in accordance with GAAP applied on a consistent basis,
and to the best of the Seller’s knowledge, do not omit any material fact as of
the date(s) thereof. Since September 30, 2017, there has been no material
adverse change in the consolidated business, operations or financial condition
of VFN Guarantor from that set forth in said financial statements nor is Seller
aware of any state of facts which (with notice or the lapse of time) would or
could result in any such material adverse change. VFN Guarantor has no
liabilities, direct or indirect, fixed or contingent, matured or unmatured,
known or unknown, or liabilities for taxes, long-term leases or unusual forward
or long-term commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of VFN Guarantor except as heretofore disclosed to Buyer in writing.

Section 3.06 No Event of Default. There exists no Event of Default under
Section 7.01 hereof, which default gives rise to a right to accelerate
indebtedness as referenced in Section 7.03 hereof, under any mortgage, borrowing
agreement or other instrument or agreement pertaining to indebtedness for
borrowed money or to the repurchase of mortgage loans or securities.

Section 3.07 Solvency. Seller is solvent and will not be rendered insolvent by
any Transaction and, after giving effect to such Transaction, will not be left
with an unreasonably small amount of capital with which to engage in its
business. Seller does not intend to incur, nor believes that it has incurred,
debts beyond its ability to pay such debts as they mature and is not
contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of such entity or any of its
assets. Seller is not selling and/or pledging any Repurchase Assets with any
intent to hinder, delay or defraud any of its creditors.

Section 3.08 No Conflicts. The execution, delivery and performance by of Seller
of this Agreement, any Transaction Notice hereunder and the Program Agreements
do not conflict with any term or provision of the organizational documents of
Seller or any law, rule, regulation, order, judgment, writ, injunction or decree
applicable to Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller, which conflict would have a
Material Adverse Effect and will not result in any violation of any such
mortgage, instrument, agreement or obligation to which Seller is a party.

Section 3.09 True and Complete Disclosure. All information, reports, exhibits,
schedules, financial statements or certificates of Seller or any Affiliate
thereof or any of their officers furnished or to be furnished to Buyer in
connection with the initial or any ongoing due diligence of Seller or any
Affiliate or officer thereof, negotiation, preparation, or delivery of the
Program Agreements, taken as a whole, are true and complete in all material
respects and do not omit to disclose any material facts necessary to make the
statements herein or therein, in light of the circumstances in which they are
made, not misleading. All financial statements have been prepared in accordance
with GAAP.

 

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Section 3.10 Approvals. No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required under applicable law in connection with the execution, delivery and
performance by Seller of this Agreement, any Transaction Notice and the Program
Agreements.

Section 3.11 Litigation. There is no action, proceeding or investigation pending
with respect to which Seller has received service of process or, to the best of
Seller’s knowledge threatened against it before any court, administrative agency
or other tribunal (A) asserting the invalidity of this Agreement, any
Transaction, Transaction Notice or any Program Agreement, (B) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement, any
Transaction Notice or any Program Agreement, (C) makes a claim individually or
in the aggregate in an amount greater than $10,000,000, (D) which requires
filing with the SEC in accordance with the 1934 Act or any rules thereunder,
(E) which has resulted in the voluntary or involuntary suspension of a license,
a cease and desist order, or such other action as could adversely impact
Seller’s business, or (F) which might materially and adversely affect the
validity of the Purchased Assets or the performance by it of its obligations
under, or the validity or enforceability of, this Agreement, any Transaction
Notice or any Program Agreement.

Section 3.12 Material Adverse Change. There has been no material adverse change
in the business, operations, financial condition, properties or prospects of
Seller or its Affiliates since the date set forth in the most recent financial
statements supplied to Buyer that is reasonably likely to have a Material
Adverse Effect on Seller.

Section 3.13 Ownership.

(a) Seller has good title to all of the Repurchase Assets, free and clear of all
mortgages, security interests, restrictions, Liens and encumbrances of any kind
other than the Liens created hereby or contemplated herein.

(b) Each item of the Repurchase Assets was acquired by Seller in the ordinary
course of its business, in good faith, for value and without notice of any
defense against or claim to it on the part of any Person.

(c) There are no agreements or understandings between Seller and any other party
which would modify, release, terminate or delay the attachment of the security
interests granted to Buyer under this Agreement.

(d) The provisions of this Agreement are effective to create in favor of Buyer a
valid security interest in all right, title and interest of Seller in, to and
under the Repurchase Assets.

(e) Upon the filing of financing statements on Form UCC-1 naming Buyer as
“Secured Party” and Seller as “Debtor”, and describing the Repurchase Assets, in
the recording offices of the Secretary of State of Delaware the security
interests granted hereunder in the Repurchase Assets will constitute fully
perfected first priority security interests under the Uniform Commercial Code in
all right, title and interest of Seller in, to and under such Repurchase Assets
to the extent that such security interests can be perfected by filing under the
Uniform Commercial Code.

 

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Section 3.14 The Note. Seller has (i) delivered the Note to Buyer, (ii) duly
endorsed the Note to Buyer or Buyer’s designee, (iii) notified the Indenture
Trustee of such transfer and (iv) completed all documents required to effect
such transfer in the Note Register, including receipt by the Note Registrar of
the Rule 144A Note Transfer Certificate and such other information and documents
that may be required pursuant to the terms of the Indenture. In addition, Buyer
has received all other Program Agreements (including all exhibits and schedules
referred to therein or delivered pursuant thereto), all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof and all agreements and other material documents relating thereto,
and Seller hereby certifies that the copies delivered to Buyer by Seller are
true and complete. None of such documents has been amended, supplemented or
otherwise modified (including waivers) since the respective dates thereof,
except by amendments, copies of which have been delivered to Buyer. Each such
document to which Seller is a party has been duly executed and delivered by
Seller and is in full force and effect, and no default or material breach has
occurred and is continuing thereunder.

Section 3.15 Taxes. Seller and its Subsidiaries have timely filed all tax
returns that are required to be filed by them and have paid all taxes, except
for any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided. The charges, accruals and reserves on the books of
Seller and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of Seller, adequate.

Section 3.16 Investment Company. Neither Seller nor any of its Subsidiaries is
an “investment company”, or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act.

Section 3.17 Chief Executive Office; Jurisdiction of Organization. On the
Closing Date, Seller’s chief executive office, is, and has been, located at the
address specified in Section 10.05 for notices. On the Effective Date, Seller’s
jurisdiction of organization is the State of Delaware. Seller shall provide
Buyer with thirty (30) days advance notice of any change in Seller’s principal
office or place of business or jurisdiction. Seller has no trade name. During
the preceding five (5) years, Seller has not been known by or done business
under any other name, corporate or fictitious, and has not filed or had filed
against it any bankruptcy receivership or similar petitions nor has it made any
assignments for the benefit of creditors.

Section 3.18 Location of Books and Records. The location where Seller keeps its
books and records, including all computer tapes and records relating to the
Repurchase Assets is its chief executive office.

Section 3.19 ERISA. Each Plan to which Seller or its Subsidiaries make direct
contributions, and, to the knowledge of Seller, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law.

 

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Section 3.20 Financing of Note and Additional Balances. Each Transaction will be
used to purchase the Note and funding of the Additional Balances as provided
herein, which Note will be conveyed and/or sold by Seller to Buyer.

Section 3.21 Agreements. Neither Seller nor any Subsidiary of Seller is a party
to any agreement, instrument, or indenture or subject to any restriction
materially and adversely affecting its business, operations, assets or financial
condition, except as disclosed in the financial statements described in
Section 3.05 hereof. Neither Seller nor any Subsidiary of Seller is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or indenture
which default could have a material adverse effect on the business, operations,
properties, or financial condition of Seller as a whole. No holder of any
indebtedness of Seller or of any of its Subsidiaries has given notice of any
asserted default thereunder.

Section 3.22 Other Indebtedness. All Indebtedness (other than Indebtedness
evidenced by this Agreement) of Seller existing on the Closing Date is listed on
Exhibit B hereto (the “Existing Indebtedness”).

Section 3.23 No Reliance. Seller has made its own independent decisions to enter
into the Program Agreements and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including legal counsel and accountants) as it
has deemed necessary. Seller is not relying upon any advice from Buyer as to any
aspect of the Transactions, including the legal, accounting or tax treatment of
such Transactions.

Section 3.24 Plan Assets. Seller is not an employee benefit plan as defined in
Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the
Code, and the Purchased Assets are not “plan assets” within the meaning of 29
CFR § 2510.3 101 as amended by Section 3(42) of ERISA, in Seller’s hands, and
transactions by or with Seller are not subject to any state or local statute
regulating investments or fiduciary obligations with respect to governmental
plans within the meaning of Section 3(32) of ERISA.

Section 3.25 No Prohibited Persons. Neither Seller nor any of its Affiliates,
officers, directors, partners or members, is an entity or person (or to the
Seller’s knowledge, owned or controlled by an entity or person): (i) that is
listed in the Annex to, or is otherwise subject to the provisions of EO13224;
(ii) whose name appears on the OFAC most current list of “Specifically
Designated National and Blocked Persons” (which list may be published from time
to time in various mediums including the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a “Prohibited Person”).

Section 3.26 Compliance with 1933 Act. Neither Seller nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of the
Note, any interest in the Note or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the Note,
any interest in the Note or any other similar security from, or

 

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otherwise approached or negotiated with respect to the Note, any interest in the
Note or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the Note under
the 1933 Act or which would render the disposition of the Note a violation of
Section 5 of the 1933 Act or require registration pursuant thereto.

ARTICLE IV

CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST

Section 4.01 Ownership. Upon payment of the Purchase Price and delivery of the
Note to Buyer, Buyer shall become the sole owner of the Purchased Assets, free
and clear of all liens and encumbrances.

Section 4.02 Security Interest.

(a) Although the parties intend (other than for U.S. federal tax purposes) that
all Transactions hereunder be sales and purchases and not loans, in the event
any such Transactions are deemed to be loans, and in any event, Seller hereby
pledges to Buyer as security for the performance by Seller of its Obligations
and hereby grants, assigns and pledges to Buyer a fully perfected first priority
security interest in all of Seller’s right, title and interest in, to and under
each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the “Primary Repurchase Assets”:

(i) the Note identified on the Asset Schedule;

(ii) all rights to reimbursement or payment of the Note and/or amounts due in
respect thereof under the Note identified on the Asset Schedule;

(iii) all records, instruments or other documentation evidencing any of the
foregoing;

(iv) all “general intangibles”, “accounts”, “chattel paper”, “securities
accounts”, “investment property”, “deposit accounts” and “money” as defined in
the Uniform Commercial Code relating to or constituting any and all of the
foregoing (including all of Seller’s rights, title and interest in and under the
Base Indenture and the Series 2017-VF1 Indenture Supplement); and

(v) any and all replacements, substitutions, distributions on or proceeds of any
and all of the foregoing.

(b) Seller hereby assigns, pledges, conveys and grants a security interest in
all of its right, title and interest in, to and under the Repurchase Assets to
Buyer to secure the Obligations. Seller agrees to mark its computer records,
tapes and other electronic medium to evidence the interests granted to Buyer
hereunder.

 

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(c) Subject to the priority interest of the Indenture Trustee, Buyer and Seller
hereby agree that in order to further secure Seller’s Obligations hereunder,
Seller hereby grants to Buyer a security interest (subject and subordinated to
Fannie Mae’s rights under the Acknowledgment Agreement and the Fannie Mae
Requirements) in (i) as of the Closing Date, Seller’s rights (but not its
obligations) under the Program Agreements including any rights to receive
payments thereunder or any rights to collateral thereunder whether now owned or
hereafter acquired, now existing or hereafter created (collectively, the
“Repurchase Rights”) and (ii) all collateral however defined or described under
the Program Agreements to the extent not otherwise included under the
definitions of Primary Repurchase Assets or Repurchase Rights (such collateral,
“Additional Repurchase Assets,” and collectively with the Primary Repurchase
Assets and the Repurchase Rights, the “Repurchase Assets”).

(d) Seller hereby delivers an irrevocable instruction to the buyer under the
Repurchase Documents that upon receipt of notice of an Event of Default under
this Agreement, the buyer thereunder is authorized and instructed to remit to
Buyer hereunder directly any amounts otherwise payable to Seller and to deliver
to Buyer all collateral otherwise deliverable to Seller. In furtherance of the
foregoing, upon repayment of the outstanding purchase price under the Roll-Up
Agreement and termination of all obligations of the buyer thereunder or other
termination of the Repurchase Documents following repayment of all obligations
thereunder that the Repurchase Document buyer is hereby instructed to deliver to
Buyer hereunder any collateral (as such term may be defined under the Repurchase
Documents) then in its possession or control.

(e) The foregoing provisions of this Section 4.02 are intended to constitute a
security agreement or other arrangement or other credit enhancement related to
this Agreement and the Transactions hereunder as defined under Sections
101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

Section 4.03 Further Documentation. At any time and from time to time, upon the
written request of Buyer, and at the sole expense of Seller, Seller will
promptly and duly execute and deliver, or will promptly cause to be executed and
delivered, such further instruments and documents and take such further action
as Buyer may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted,
including the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any applicable jurisdiction with respect to
the Liens created hereby. Seller also hereby authorizes Buyer to file any such
financing or continuation statement to the extent permitted by applicable law.

Section 4.04 Changes in Locations, Name, etc. Seller shall not (a) change the
location of its chief executive office/chief place of business from that
specified in Section 3.17 or (b) change its name or identity, unless it shall
have given Buyer at least thirty (30) days’ prior written notice thereof and
shall have delivered to Buyer all Uniform Commercial Code financing statements
and amendments thereto as Buyer shall request and taken all other actions deemed
necessary by Buyer to continue its perfected status in the Repurchase Assets
with the same or better priority.

 

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Section 4.05 Performance by Buyer of Seller’s Obligations. If Seller fails to
perform or comply with any of its agreements contained in the Program Agreements
and Buyer may itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the reasonable (under the circumstances)
out-of-pocket expenses of Buyer actually incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Pricing Rate shall be payable by Seller to Buyer on demand and
shall constitute Obligations. Such interest shall be computed on the basis of
the actual number of days in each Price Differential Period and a 360-day year.

Section 4.06 Proceeds. If an Event of Default shall occur and be continuing,
(a) all proceeds of Repurchase Assets received by Seller consisting of cash,
checks and other liquid assets readily convertible to cash items shall be held
by Seller in trust for Buyer, segregated from other funds of Seller, and shall
forthwith upon receipt by Seller be turned over to Buyer in the exact form
received by Seller (duly endorsed by Seller to Buyer, if required) and (b) any
and all such proceeds received by Buyer (whether from Seller or otherwise) may,
in the sole discretion of Buyer, be held by Buyer as collateral security for,
and/or then or at any time thereafter may be applied by Buyer against, the
Obligations (whether matured or unmatured), such application to be in such order
as Buyer shall elect. Any balance of such proceeds remaining after the
Obligations shall have been paid in full and this Agreement shall have been
terminated shall be paid over to Seller or to whomsoever may be lawfully
entitled to receive the same.

Section 4.07 Remedies. If an Event of Default shall occur and be continuing,
Buyer may exercise, in addition to all other rights and remedies granted to it
in this Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party under
the Uniform Commercial Code (including Buyer’s rights to a strict foreclosure
under Section 9-620 of the Uniform Commercial Code). Without limiting the
generality of the foregoing, Buyer may seek the appointment of a receiver,
liquidator, conservator, trustee, or similar official in respect of Seller or
any of Seller’s property. Without limiting the generality of the foregoing,
Buyer may terminate the Participation Interest in accordance with the
Participation Agreement. Buyer without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required under this Agreement or by law referred to below) to or upon Seller or
any other Person (each and all of which demands, presentments, protests,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Repurchase Assets,
or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the Repurchase Assets
or any part thereof (or contract to do any of the foregoing), in one or more
parcels or as an entirety at public or private sale or sales, at any exchange,
broker’s board or office of Buyer or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. Buyer shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Repurchase Assets so sold, free of any right or equity of redemption in
Seller, which right or equity is hereby waived or released. Seller further
agrees, at Buyer’s request, to assemble the Repurchase Assets and make them
available to Buyer at places which Buyer shall reasonably select, whether at
Seller’s premises or elsewhere. Buyer shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable (under the circumstances) out-of-pocket costs and
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safekeeping of any of the Repurchase Assets or in any way relating to the
Repurchase Assets or the rights of Buyer hereunder, including reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as Buyer may elect, and only after such application
and after the payment by Buyer of any other amount required or permitted by any
provision of law, including Section 9-615 of the Uniform Commercial Code, need
Buyer account for the surplus, if any, to Seller. To the extent permitted by
applicable law, Seller waives all claims, damages and demands it may acquire
against Buyer arising out of the exercise by Buyer of any of its rights
hereunder, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of Buyer. If any notice of a proposed sale or
other disposition of Repurchase Assets shall be required by law, such notice
shall be deemed reasonable and proper if given at least ten (10) days before
such sale or other disposition. Seller shall remain liable for any deficiency
(plus accrued interest thereon as contemplated herein) if the proceeds of any
sale or other disposition of the Repurchase Assets are insufficient to pay the
Obligations and the fees and disbursements in amounts reasonable under the
circumstances, of any attorneys employed by Buyer to collect such deficiency.
Notwithstanding anything to the contrary herein or in any of the other Program
Agreements, the remedies set forth in this Section 4.07 concerning any actions
with respect to the MSRs arising under or related to any Servicing Contract
shall be subject to the Acknowledgment Agreement and Fannie Mae Requirements.

Section 4.08 Limitation on Duties Regarding Preservation of Repurchase Assets.
Buyer’s duty with respect to the custody, safekeeping and physical preservation
of the Repurchase Assets in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as
Buyer deals with similar property for its own account. Neither Buyer nor any of
its directors, officers or employees shall be liable for failure to demand,
collect or realize upon all or any part of the Repurchase Assets or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Repurchase Assets upon the request of Seller or otherwise.

Section 4.09 Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Repurchase Assets are irrevocable and
powers coupled with an interest.

Section 4.10 Release of Security Interest. Upon the latest to occur of (a) the
repayment to Buyer of all Obligations hereunder, and (b) the occurrence of the
Termination Date, Buyer shall release its security interest in any remaining
Repurchase Assets hereunder and shall promptly execute and deliver to Seller
such documents or instruments as Seller shall reasonably request to evidence
such release.

Section 4.11 Reinstatement. All security interests created by this Article IV
shall continue to be effective, or be reinstated, as the case may be, if at any
time any payment, or any part thereof, of any Obligation of Seller is rescinded
or must otherwise be restored or returned by the Buyer upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, Seller or any substantial part of its property,
or otherwise, all as if such release had not been made.

 

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Section 4.12 Subordination. Seller shall not seek in any Insolvency Event of the
Issuer to be treated as part of the same class of creditors as Buyer and shall
not oppose any pleading or motion by Buyer advocating that Buyer and Seller
should be treated as separate classes of creditors. Seller acknowledges and
agrees that its rights with respect to the Repurchase Assets are and shall
continue to be at all times while the obligations are outstanding junior and
subordinate to the rights of Buyer under this Agreement.

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01 Initial Transaction. The obligation of Buyer to enter into
Transactions with the Seller hereunder is subject to the satisfaction,
immediately prior to or concurrently with the entering into such Transaction, of
the condition precedent that Buyer shall have received all of the following
items, each of which shall be satisfactory to Buyer and its counsel in form and
substance:

(a) Program Agreements and Note. The Program Agreements and Note, in all
instances duly executed and delivered by the parties thereto and being in full
force and effect, free of any modification, breach or waiver.

(b) Security Interest. Evidence that all other actions necessary or, in the
opinion of Buyer, desirable to perfect and protect Buyer’s interest in the
Repurchase Assets have been taken, including duly authorized and filed Uniform
Commercial Code financing statements on Form UCC-1.

(c) Organizational Documents. A certificate of the corporate secretary of Seller
in form and substance acceptable to Buyer, attaching certified copies of
Seller’s certificate of formation, operating agreement and corporate resolutions
approving the Program Agreements and transactions thereunder (either
specifically or by general resolution) and all documents evidencing other
necessary corporate action or governmental approvals as may be required in
connection with the Program Agreements.

(d) Good Standing Certificate. A certified copy of a good standing certificate
from the jurisdiction of organization of Seller, dated as of no earlier than the
date ten (10) Business Days prior to the Closing Date.

(e) Incumbency Certificate. An incumbency certificate of the corporate secretary
of each of Seller, certifying the names, true signatures and titles of the
representatives duly authorized to request transactions hereunder and to execute
the Program Agreements.

(f) Fees. Buyer shall have received payment in full of all fees and Expenses
(including the Commitment Fee, if any) which are payable hereunder to Buyer on
or before such date.

 

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Section 5.02 All Transactions. The obligation of Buyer to enter into each
Transaction pursuant to this Agreement is subject to the following conditions
precedent:

(a) Transaction Notice and Asset Schedule. In accordance with Section 2.02
hereof, Buyer shall have received from Seller a Transaction Notice with an
updated Asset Schedule which includes the Note and any Additional Balance, if
applicable, related to a proposed Transaction hereunder on such Business Day.

(b) No Margin Deficit. After giving effect to each new Transaction, the
aggregate outstanding amount of the Purchase Price shall not exceed the Asset
Value of the Note then in effect.

(c) No Default. No Default or Event of Default shall have occurred and be
continuing.

(d) Requirements of Law. Buyer shall not have determined that the introduction
of or a change in any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyer has made it
unlawful, and no Governmental Authority shall have asserted that it is unlawful,
for Buyer to enter into Transactions with a Pricing Rate based on Base Rate.

(e) Representations and Warranties. Both immediately prior to the related
Transaction and also after giving effect thereto and to the intended use
thereof, the representations and warranties made by Seller in each Program
Agreement shall be true, correct and complete on and as of such Purchase Date in
all material respects with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).

(f) Note. Buyer shall have received the Note and evidence of the Additional
Balances relating to any Purchased Assets, which is in form and substance
satisfactory to Buyer in its sole discretion.

(g) Material Adverse Change. None of the following shall have occurred and/or be
continuing:

(A) Buyer’s corporate bond rating as calculated by S&P or Moody’s has been
lowered or downgraded to a rating below investment grade by S&P or Moody’s;

(B) an event or events shall have occurred in the good faith determination of
Buyer resulting in the effective absence of a “lending market” for financing
debt obligations secured by mortgage loans or servicing receivables or
securities backed by mortgage loans or servicing receivables or an event or
events shall have occurred resulting in Buyer not being able to finance the Note
through the “lending market” with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such event or events; or

 

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(C) there shall have occurred a material adverse change in the financial
condition of Buyer which affects (or can reasonably be expected to affect)
materially and adversely the ability of Buyer to fund its obligations under this
Agreement.

(h) Fees. Buyer shall have received payment in full of all fees and Expenses
(including the Commitment Fee, if any) which are payable hereunder to Buyer on
or before such date.

Section 5.03 Closing Subject to Conditions Precedent. The obligation of the
Buyer to purchase the Note is subject to the satisfaction on or prior to the
Closing Date of the following conditions (any or all of which may be waived by
the Buyer):

(a) Performance by the Issuer and PMC. All the terms, covenants, agreements and
conditions of the Transaction Documents to be complied with, satisfied, observed
and performed by the Issuer, and PMC on or before the Closing Date shall have
been complied with, satisfied, observed and performed in all material respects.

(b) Representations and Warranties. Each of the representations and warranties
of the Issuer and PMC made in the Transaction Documents shall be true and
correct in all material respects as of the Closing Date (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof and except to the extent they expressly relate to an earlier or later
time).

(c) Officer’s Certificate. The Administrative Agent, the Buyer and the Indenture
Trustee shall have received in form and substance reasonably satisfactory to the
Administrative Agent an officer’s certificate from PMC and a certificate of an
Authorized Officer of the Issuer, dated the Closing Date, each certifying to the
satisfaction of the conditions set forth in the preceding paragraphs (a) and
(b), in each case together with incumbency, by-laws, resolutions and good
standing.

(d) Opinions of Counsel to the Issuer and PMC. Counsel to the Issuer and PMC
shall have delivered to the Administrative Agent, the Buyer and the Indenture
Trustee favorable opinions, dated the Closing Date and satisfactory in form and
substance to the Administrative Agent and its counsel, relating to corporate
matters, enforceability, securities contract, non-consolidation and perfection
and an opinion as to which state’s law applies to security interest and
perfection matters. In addition to the foregoing, PMC, as servicer, shall have
caused its counsel to deliver to the Issuer, the Buyer, as purchaser of the Note
hereunder, the Administrative Agent and the Indenture Trustee an opinion as to
certain tax matters dated as of the Closing Date, satisfactory in form and
substance to the Administrative Agent, the Buyer and their respective counsel.

(e) Officer’s Certificate of Indenture Trustee. The Administrative Agent and the
Buyer shall have received in form and substance reasonably satisfactory to the
Administrative Agent an Officer’s Certificate from the Indenture Trustee, dated
the Closing Date, with respect to the Base Indenture, together with incumbency
and good standing.

 

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(f) Opinions of Counsel to the Indenture Trustee. Counsel to the Indenture
Trustee shall have delivered to the Administrative Agent and the Buyer a
favorable opinion dated the Closing Date and reasonably satisfactory in form and
substance to the Administrative Agent and its counsel related to the
enforceability of the Base Indenture.

(g) Opinions of Counsel to the Owner Trustee. Delaware counsel to the Owner
Trustee of the Issuer shall have delivered to the Administrative Agent and the
Buyer favorable opinions regarding the formation, existence and standing of the
Issuer and of the Issuer’s execution, authorization and delivery of each of the
Transaction Documents to which it is a party and such other matters as the
Administrative Agent and the Buyer may reasonably request, dated the Closing
Date and reasonably satisfactory in form and substance to the Administrative
Agent and the Buyer and their respective counsel.

(h) Filings and Recordations. The Administrative Agent, the Buyer and the
Indenture Trustee shall have received evidence reasonably satisfactory to the
Administrative Agent of (i) the completion of all recordings, registrations and
filings as may be necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect or evidence: (A) the assignment by PMC, as Seller,
to the Issuer of the ownership interest in the Collateral conveyed pursuant to
the PC Repurchase Agreement and the proceeds thereof and (ii) the completion of
all recordings, registrations, and filings as may be necessary or, in the
reasonable opinion of the Administrative Agent, desirable to perfect or evidence
the grant of a first priority perfected security interest in the Issuer’s
ownership interest in the Collateral in favor of the Indenture Trustee, subject
to no Liens prior to the Lien created by the Base Indenture.

(i) Documents. The Administrative Agent, the Buyer and the Indenture Trustee
shall have received a duly executed counterpart of each of the Transaction
Documents, in form acceptable to the Buyer, the Note and each and every document
or certification delivered by any party in connection with any such Transaction
Documents or the Note, and each such document shall be in full force and effect.

(j) Actions or Proceedings. No action, suit, proceeding or investigation by or
before any Governmental Authority shall have been instituted to restrain or
prohibit the consummation of, or to invalidate, any of the transactions
contemplated by the Transaction Documents, the Note and the documents related
thereto in any material respect.

(k) Approvals and Consents. All Governmental Actions of all Governmental
Authorities required with respect to the transactions contemplated by the
Transaction Documents, the Note and the documents related thereto shall have
been obtained or made.

(l) Fees, Costs and Expenses. Buyer shall have received payment in full of all
fees and Expenses (including the Commitment Fee, if any) which are payable
hereunder to Buyer on or before the Closing Date, and the fees, costs and
expenses payable by the Issuer and PMC on or prior to the Closing Date pursuant
to this Agreement or any other Transaction Document shall have been paid in
full.

(m) [Reserved].

 

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(n) Other Documents. PMC shall have furnished to the Administrative Agent, the
Buyer and the Indenture Trustee such other opinions, information, certificates
and documents as the Administrative Agent may reasonably request.

(o) MSR Valuation Agent. PMC shall have engaged the MSR Valuation Agent pursuant
to an agreement reasonably satisfactory to the Administrative Agent.

(p) Proceedings in Contemplation of Sale of the Note. All actions and
proceedings undertaken by the Issuer and PMC in connection with the issuance and
sale of the Note as herein contemplated shall be satisfactory in all respects to
the Administrative Agent, the Buyer and their respective counsel.

(q) Advance Rate Reduction Event, Servicer Termination Events, Events of Default
and Funding Interruption Events. No Advance Rate Reduction Event, Servicer
Termination Event, Event of Default or Funding Interruption Event shall then be
occurring.

(r) [Reserved].

(s) Satisfaction of Conditions. Each of the Funding Conditions shall have been
satisfied.

If any condition specified in this Section 5.03 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Buyer by notice to PMC at any time at or prior to the Closing Date, and the
Buyer shall incur no liability as a result of such termination.

ARTICLE VI

COVENANTS

Seller covenants and agrees that until the payment and satisfaction in full of
all Obligations, whether now existing or arising hereafter, shall have occurred:

Section 6.01 Litigation. Seller will promptly, and in any event within ten
(10) days after service of process on any of the following, give to Buyer notice
of all litigation, actions, suits, arbitrations, investigations (including any
of the foregoing which are threatened or pending) or other legal or arbitrable
proceedings affecting Seller or any of its Subsidiaries or affecting any of the
Property of any of them before any Governmental Authority that (i) questions or
challenges the validity or enforceability of any of the Program Agreements or
any action to be taken in connection with the transactions contemplated hereby,
(ii) makes a claim individually or in the aggregate in an amount greater than
$10,000,000, or (iii) which, individually or in the aggregate, if adversely
determined, could be reasonably likely to have a Material Adverse Effect. On the
fifth (5th) day of each calendar month (or if such day is not a Business Day,
the next succeeding Business Day), Seller will provide to Buyer a litigation
docket listing all litigation, actions, suits, arbitrations, investigations
(including any of the foregoing which are threatened or pending) or other legal
or arbitrable proceedings affecting Seller or any of its Subsidiaries or
affecting any of the Property of any of them before any Governmental Authority.
Seller will promptly provide notice of any judgment, which with the passage of
time, could cause an Event of Default hereunder.

 

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Section 6.02 Prohibition of Fundamental Changes. Seller shall not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation, winding up or dissolution) or sell
all or substantially all of its assets; provided, that Seller may merge or
consolidate with (a) any wholly owned subsidiary of Seller, or (b) any other
Person if Seller is the surviving entity; and provided further, that if after
giving effect thereto, no Default would exist hereunder.

Section 6.03 Weekly Reporting. Seller shall at all times maintain a current list
(which may be stored in electronic form) of the Note and Additional Balances.
Seller shall deliver to Buyer on the third Business Day of each week (the
“Weekly Report Date”) a cumulative Asset Schedule, each of which, when so
delivered, shall replace the current Asset Schedule and which may be delivered
in electronic form acceptable to Buyer. Each such updated Asset Schedule shall
indicate the outstanding VFN Principal Balance of the Note as of the close of
the preceding week. As of each Weekly Report Date, Seller hereby certifies,
represents and warrants to Buyer that each such updated Asset Schedule is true,
complete and correct in all material respects.

Section 6.04 No Adverse Claims. Seller warrants and will defend the right, title
and interest of Buyer in and to all Purchased Assets against all adverse claims
and demands.

Section 6.05 Assignment. Except as permitted herein, Seller shall not sell,
assign, transfer or otherwise dispose of, or grant any option with respect to,
or pledge, hypothecate or grant a security interest in or lien on or otherwise
encumber (except pursuant to the Program Agreements), any of the Purchased
Assets or any interest therein, provided that this Section 6.05 shall not
prevent any transfer of Purchased Assets in accordance with the Program
Agreements.

Section 6.06 Security Interest. Seller shall do all things necessary to preserve
the Purchased Assets so that they remain subject to a first priority perfected
security interest hereunder. Without limiting the foregoing, Seller will comply
with all rules, regulations and other laws of any Governmental Authority and
cause the Purchased Assets to comply with all applicable rules, regulations and
other laws. Seller will not allow any default for which Seller is responsible to
occur under any Purchased Assets or any Program Agreement and Seller shall fully
perform or cause to be performed when due all of its obligations under any
Purchased Assets and any Program Agreement.

Section 6.07 Records.

(a) Seller shall collect and maintain or cause to be collected and maintained
all Records relating to the Purchased Assets in accordance with industry custom
and practice for assets similar to the Purchased Assets, including those
maintained pursuant to Section 6.08, and all such Records shall be in Seller’s
or Buyer’s possession unless Buyer otherwise approves. Seller will maintain all
such Records in good and complete condition in accordance with industry
practices for assets similar to the Purchased Assets and preserve them against
loss.

 

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(b) For so long as Buyer has an interest in or lien on any Purchased Assets,
Seller will hold or cause to be held all related Records in trust for Buyer.
Seller shall notify, or cause to be notified, every other party holding any such
Records of the interests and liens in favor of Buyer granted hereby.

(c) Upon reasonable advance notice from Buyer, Seller shall (x) make any and all
such Records available to Buyer to examine any such Records, either by its own
officers or employees, or by agents or contractors, or both, and make copies of
all or any portion thereof, and (y) permit Buyer or its authorized agents to
discuss the affairs, finances and accounts of Seller with its chief operating
officer and chief financial officer and to discuss the affairs, finances and
accounts of Seller with its independent certified public accountants.

Section 6.08 Books. Seller shall keep or cause to be kept in reasonable detail
books and records of account of its assets and business and shall clearly
reflect therein the transfer of Purchased Assets to Buyer.

Section 6.09 Approvals. Seller shall maintain all licenses, permits or other
approvals necessary for Seller to conduct its business and to perform its
obligations under the Program Agreements, and Seller shall conduct its business
strictly in accordance with applicable law.

Section 6.10 Material Change in Business. Seller shall not make any material
change in the nature of its business as carried on at the Closing Date.

Section 6.11 Distributions. If an Event of Default has occurred and is
continuing, Seller shall not pay any dividends with respect to any capital stock
or other equity interests in such entity, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Seller.

Section 6.12 Applicable Law. Seller shall comply with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority.

Section 6.13 Existence. Seller shall preserve and maintain its legal existence
and all of its material rights, privileges, licenses and franchises.

Section 6.14 Chief Executive Office; Jurisdiction of Organization. Seller shall
not move its chief executive office from the address referred to in Section 3.17
or change its jurisdiction of organization from the jurisdiction referred to in
Section 3.17 unless it shall have provided Buyer at least thirty (30) days’
prior written notice of such change.

Section 6.15 Taxes. Seller shall timely file all tax returns that are required
to be filed by them and shall timely pay and discharge all taxes, assessments
and governmental charges or levies imposed on it or on its income or profits or
on any of its property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained.

 

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Section 6.16 Transactions with Affiliates. Other than the purchase of the Note,
Seller will 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 (a) does not result in a Default hereunder, (b) is in
the ordinary course of Seller’s business and (c) is upon fair and reasonable
terms no less favorable to Seller than it would obtain in a comparable arm’s
length transaction with a Person which is not an Affiliate, or make a payment
that is not otherwise permitted by this Section 6.16 to any Affiliate.

Section 6.17 Guarantees. Seller shall not create, incur, assume or suffer to
exist any Guarantees, except (i) to the extent reflected in Seller’s financial
statements or notes thereto and (ii) to the extent the aggregate Guarantees of
Seller do not exceed $250,000.

Section 6.18 Indebtedness. Seller shall not incur any additional material
Indebtedness other than (i) the Existing Indebtedness specified on Exhibit B
hereto; (ii) Indebtedness incurred with Buyer or its Affiliates;
(iii) Indebtedness incurred in connection with new or existing secured lending
facilities and (iv) usual and customary accounts payable for a mortgage
company), without the prior written consent of Buyer.

Section 6.19 True and Correct Information. All information, reports, exhibits,
schedules, financial statements or certificates of Seller, any Affiliate thereof
or any of their officers furnished to Buyer hereunder and during Buyer’s
diligence of Seller are and will be true and complete in all material respects
and do not omit to disclose any material facts necessary to make the statements
herein or therein, in light of the circumstances in which they are made, not
misleading. All required financial statements, information and reports delivered
by Seller to Buyer pursuant to this Agreement shall be prepared in accordance
with U.S. GAAP, or, if applicable, to SEC filings, the appropriate SEC
accounting regulations.

Section 6.20 No Pledge. Except as contemplated herein, Seller shall not pledge,
grant a security interest or assign any existing or future rights to service any
of the Repurchase Assets or pledge or grant to any other Person any security
interest in the Note.

Section 6.21 Plan Assets. Seller shall not be an employee benefit plan as
defined in Section 3 of Title I of ERISA, or a plan described in
Section 4975(e)(1) of the Code and Seller shall not use “plan assets” within the
meaning of 29 CFR § 2510.3 101, as amended by Section 3(42) of ERISA to engage
in this Agreement or any Transaction hereunder. Transactions to or with Seller
shall not be subject to any state or local statute regulating investments of or
fiduciary obligations with respect to governmental plans within the meaning of
Section 3(32) of ERISA.

Section 6.22 Sharing of Information. Seller shall allow Buyer to exchange
information related to Seller and the Transactions hereunder with third party
lenders and Seller shall permit each third party lender to share such
information with Buyer.

Section 6.23 Modification of the Base Indenture and Series 2017-VF1 Indenture
Supplement. Seller shall not consent with respect to any of the Base Indenture
and the Series 2017-VF1 Indenture Supplement related to the Purchased Assets, to
(i) the modification, amendment or termination of such the Base Indenture and
the Series 2017-VF1 Indenture

 

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Supplement, (ii) the waiver of any provision of the Base Indenture and the
Series 2017-VF1 Indenture Supplement, or (iii) the resignation of PMC as
servicer under the Base Indenture and the Series 2017-VF1 Indenture Supplement,
or the assignment, transfer, or material delegation of any of its rights or
obligations, under such the Base Indenture and the Series 2017-VF1 Indenture
Supplement, without the prior written consent of Buyer exercised in Buyer’s sole
discretion.

Section 6.24 Reporting Requirements.

(a) Seller shall furnish to Buyer (i) promptly, copies of any material and
adverse notices (including notices of defaults, breaches, potential defaults or
potential breaches) and any material financial information that is not otherwise
required to be provided by Seller hereunder which is given to Seller’s lenders,
(ii) promptly, notice of the occurrence of (1) any Event of Default hereunder;
(2) any default or material breach by Seller of any obligation under any Program
Agreement or any material contract or agreement of Seller or (3) the occurrence
of any event or circumstance that such party reasonably expects has resulted in,
or will, with the passage of time, result in, a Material Adverse Effect or an
Event of Default and (iii) the following:

(1) as soon as available and in any event within forty (40) calendar days after
the end of each calendar month, the unaudited balance sheet of Seller, as at the
end of such period and the related unaudited consolidated statements of income
for Seller for such period and the portion of the fiscal year through the end of
such period, accompanied by a certificate of a Responsible Officer of Seller,
which certificate shall state that said consolidated financial statements or
financial statements, as applicable, fairly present in all material respects the
consolidated financial condition or financial condition, as applicable, and
results of operations of Seller in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end adjustments);

(2) as soon as available and in any event within forty (40) calendar days after
the end of each calendar quarter, the unaudited cash flow statements of Seller,
as at the end of such period and the portion of the fiscal year through the end
of such period, accompanied by a certificate of a Responsible Officer of Seller,
which certificate shall state that said consolidated financial statements or
financial statements, as applicable, fairly present in all material respects the
consolidated financial condition or financial condition, as applicable, and
results of operations of Seller in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end adjustments);

(3) as soon as available and in any event within ninety (90) days after the end
of each fiscal year of Seller, the balance sheet of Seller, as at the end of
such fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for Seller for such year, setting forth in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion and the scope of audit shall be acceptable to Buyer in
its sole discretion, shall have no “going concern” qualification and shall state
that said consolidated

 

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financial statements or financial statements, as applicable, fairly present the
consolidated financial condition or financial condition, as applicable, and
results of operations of Seller as at the end of, and for, such fiscal year in
accordance with GAAP;

(4) such other prepared statements that Buyer may reasonably request;

(5) [reserved];

(6) from time to time such other information regarding the financial condition,
operations, or business of Seller as Buyer may reasonably request;

(7) as soon as reasonably possible, and in any event within thirty (30) days
after a Responsible Officer of Seller has knowledge of the occurrence of any
ERISA Event of Termination, stating the particulars of such ERISA Event of
Termination in reasonable detail;

(8) as soon as reasonably possible, notice of any of the following events:

a. any material dispute, litigation, investigation, proceeding or suspension
between Seller on the one hand, and any Governmental Authority or any Person;

b. any material change in accounting policies or financial reporting practices
of Seller;

c. any material issues raised upon examination of Seller or Seller’s facilities
by any Governmental Authority;

d. any material change in the Indebtedness of Seller, including any default,
renewal, non-renewal, termination, increase in available amount or decrease in
available amount related thereto;

e. promptly upon receipt of notice or knowledge of any lien or security interest
(other than security interests created hereby or by the other Program
Agreements) on, or claim asserted against, any of the Purchased Assets; and

f. any other event, circumstance or condition that has resulted, or has a
reasonable possibility of resulting, in a Material Adverse Effect with respect
to Seller.

(b) Officer’s Certificates. Seller will furnish to Buyer, at the time Seller
furnishes each set of financial statements pursuant to Section 6.24(a)(iii)(1),
(2) or (3) above, an Officer’s Compliance Certificate of Seller.

 

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(c) Other. Seller shall deliver to Buyer any other reports or information
reasonably requested by Buyer or as otherwise required pursuant to this
Agreement and the Indenture (including all reports and information delivered by
the Issuer, the Administrator or the Indenture Trustee relating to the Note).

(d) Regulatory Reporting Compliance. Seller shall, on or before the last
Business Day of the fifth (5th) month following the end of each of Seller’s
fiscal years (December 31), beginning with the fiscal year ending in 2017,
deliver to Buyer 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 Seller by its accountants, and such other reports as Seller may
prepare relating to its servicing functions as Seller.

Section 6.25 Liens on Substantially All Assets. Seller shall not grant a
security interest to any Person other than Buyer or an Affiliate of Buyer in
substantially all assets of Seller unless Seller has entered into an amendment
to this Agreement that grants to Buyer a pari passu security interest on such
assets.

Section 6.26 Litigation Summary. On each date on which the Officer’s Compliance
Certificate is delivered, Seller shall provide to Buyer a true and correct
summary of all material actions, notices, proceedings and investigations pending
with respect to which Seller has received service of process or other form of
notice or, to the best of Seller’s knowledge, threatened against it, before any
court, administrative or governmental agency or other regulatory body or
tribunal.

Section 6.27 Hedging. On each date on which the Officer’s Compliance Certificate
is delivered, Seller shall provide a true and correct summary of all interest
rate protection agreements entered into or maintained by Seller.

Section 6.28 MSR Valuation. On each date on which the Officer’s Compliance
Certificate is delivered, Seller shall provide a detailed summary of the Market
Value Percentage of MSRs most recently delivered in the Market Value Report.

Section 6.29 Most Favored Status. Seller and Buyer each agree that should Seller
or any Affiliate thereof enter into a repurchase agreement or credit facility
with any Person other than Buyer or an Affiliate of Buyer which by its terms
provides any of the following (each, a “More Favorable Agreement”):

(a) more favorable terms with respect to any guaranties or financial covenants,
including covenants covering the same or similar subject matter set forth or
referred to in Section 6.11 hereof and Section 2 of the Pricing Side Letter;

(b) a security interest to any Person other than Buyer or an Affiliate of Buyer
in substantially all assets of Seller or any Affiliate thereof; or

(c) a requirement that Seller has added or will add any Person other than Buyer
or an Affiliate of Buyer as a loss payee under Seller’s Fidelity Insurance;

 

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then the terms of this Agreement shall be deemed automatically amended to
include such more favorable terms contained in such More Favorable Agreement,
such that such terms operate in favor of Buyer or an Affiliate of Buyer;
provided, that in the event that such More Favorable Agreement is terminated,
upon notice by Seller to Buyer of such termination, the original terms of this
Agreement shall be deemed to be automatically reinstated. Seller and Buyer
further agree to execute and deliver any new guaranties, agreements or
amendments to this Agreement evidencing such provisions, provided that the
execution of such amendment shall not be a precondition to the effectiveness of
such amendment, but shall merely be for the convenience of the parties hereto.
Promptly upon Seller or any Affiliate thereof entering into a repurchase
agreement or other credit facility with any Person other than Buyer, Seller
shall deliver to Buyer a true, correct and complete copy of such repurchase
agreement, loan agreement, guaranty or other financing documentation.

Section 6.30 Servicer Administration. If at any time PMC intends to service the
Mortgage Loans directly without a subservicer, PMC shall not less than ninety
(90) days prior to the anticipated servicing transfer date, provide notice to
the Administrative Agent of such intention and solicit Administrative Agent’s
prior written consent, which the Administrative Agent shall have sixty (60) days
from the receipt of the notice to provide and which consent may not be
unreasonably withheld. If the Administrative Agent denies the request for
consent in writing, then PMC shall repurchase the Note not later than the later
of (x) the sixtieth (60th) day following receipt of the Administrative Agent’s
denial letter or (y) such anticipated servicing transfer date.

ARTICLE VII

DEFAULTS/RIGHTS AND REMEDIES OF BUYER UPON DEFAULT

Section 7.01 Events of Default. Each of the following events or circumstances
shall constitute an “Event of Default”:

(a) Payment Failure. Failure of Seller to (i) make any payment (which failure
continues for a period of two (2) Business Days following written notice (which
may be in electronic form) from Buyer) of Price Differential or Repurchase Price
or any other sum which has become due, on a Price Differential Payment Date or a
Repurchase Date or otherwise, whether by acceleration or otherwise, under the
terms of this Agreement, any other warehouse and security agreement or any other
document, in each case evidencing or securing Indebtedness of Seller to Buyer or
to any Affiliate of Buyer, or (ii) cure any Margin Deficit when due pursuant to
Section 2.05 hereof.

(b) Cross Default. Seller or Affiliates thereof shall be in default under
(i) any Program Agreement or any Repurchase Document; provided that any such
default under the Indenture shall constitute an “Event of Default” only if it
continues unremedied for a period of two (2) Business Days after a Responsible
Officer of the Seller obtains actual knowledge of such failure, or receives
written notice from Buyer of such default; (ii) any Indebtedness, in the
aggregate, in excess of $1 million of Seller or any Affiliate thereof which
default (1) involves the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness, or (iii) any other contract or contracts, in
the aggregate in excess of $1 million to which Seller or any Affiliate thereof
is a party which default (1) involves the failure to pay a matured obligation,
or (2) permits the acceleration of the maturity of obligations by any other
party to or beneficiary of such contract.

 

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(c) Assignment. Assignment or attempted assignment by Seller of this Agreement
or any rights hereunder without first obtaining the specific written consent of
Buyer, or the granting by Seller of any security interest, lien or other
encumbrances on any Purchased Assets to any person other than Buyer.

(d) Insolvency. An Act of Insolvency shall have occurred with respect to Seller
or any Affiliate thereof.

(e) Material Adverse Change. Any material adverse change in the Property,
business, financial condition or operations of Seller or any of its Affiliates
shall occur, in each case as determined by Buyer in its sole good faith
discretion, or any other condition shall exist which, in Buyer’s sole good faith
discretion, constitutes a material impairment of Seller’s ability to perform its
obligations under this Agreement or any other Program Agreement.

(f) Immediate Breach of Representation or Covenant or Obligation. A breach by
Seller of any of the representations, warranties or covenants or obligations set
forth in Sections 3.01 (Seller Existence), 3.07 (Solvency), 3.12 (Material
Adverse Change), Section 3.22 (Other Indebtedness), Section 6.02 (Prohibition of
Fundamental Changes), Section 6.13 (Existence), Section 6.17 (Guarantees),
Section 6.18 (Indebtedness), Section 6.20 (No Pledge) or Section 6.21 (Plan
Assets) of this Agreement.

(g) Additional Breach of Representation or Covenant. A material breach by Seller
of any other material representation, warranty or covenant set forth in this
Agreement (and not otherwise specified in Section 7.01(f) above), if such breach
is not cured within five (5) Business Days or, in the case of a breach of
Section 6.03, three (3) Business Days, and in the case of a breach of Section 2
of the Pricing Side Letter (Financial Covenants), one (1) Business Day.

(h) Change in Control. The occurrence of a Change in Control.

(i) Failure to Transfer. Seller fails to transfer a material portion of the
Purchased Assets to Buyer on the applicable Purchase Date (provided Buyer has
tendered the related Purchase Price).

(j) Judgment. A final judgment or judgments for the payment of money in excess
of $10,000,000 shall be rendered against Seller or any of their Affiliates by
one or more courts, administrative tribunals or other bodies having jurisdiction
and the same shall not be satisfied, discharged (or provision shall not be made
for such discharge) or bonded, or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof.

(k) Government Action. Any Governmental Authority 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 Seller or any Affiliate thereof,
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management of Seller or any Affiliate thereof or to curtail its authority in the
conduct of the business of Seller or any Affiliate thereof, or takes any action
in the nature of enforcement to remove, limit or restrict the approval of Seller
or Affiliate as an issuer, buyer or a seller/servicer of mortgage loans or
securities backed thereby, and such action provided for in this subparagraph
(l) shall not have been discontinued or stayed within thirty (30) days.

(l) Inability to Perform. A Responsible Officer of Seller or VFN Guarantor shall
admit its inability to, or its intention not to, perform any of Seller’s
Obligations or VFN Guarantor’s obligations hereunder or the VFN Repo Guaranty.

(m) Security Interest. This Agreement shall for any reason cease to create a
valid, first priority security interest in any material portion of the
Repurchase Assets purported to be covered hereby.

(n) Financial Statements. Seller’s audited annual financial statements or the
notes thereto or other opinions or conclusions stated therein shall be qualified
or limited by reference to the status of Seller as a “going concern” or a
reference of similar import.

(o) Validity of Agreement. For any reason, this Agreement at any time shall not
be in full force and effect in all material respects or shall not be enforceable
in all material respects in accordance with its terms, or any Lien granted
pursuant thereto shall fail to be perfected and of first priority, or Seller or
any Affiliate of Seller shall seek to disaffirm, terminate, limit or reduce its
obligations hereunder or VFN Guarantor’s obligations under the VFN Repo
Guaranty.

(p) VFN Guarantor Breach. A breach by VFN Guarantor of any material
representation, warranty or covenant set forth in the VFN Repo Guaranty or any
other Program Agreement, any “event of default” by VFN Guarantor under the VFN
Repo Guaranty, any repudiation of the VFN Repo Guaranty by VFN Guarantor, or if
the VFN Repo Guaranty is not enforceable against VFN Guarantor.

(q) PMH Documents.

(i) Any material provision of any PMH Document shall at any time for any reason
cease to be valid and binding or in full force and effect.

(ii) PMH shall deny that it has any or further liability or obligation under any
material provision of any PMH Document.

(iii) PMC or PMH shall fail to perform or observe any material covenant, term,
obligation or agreement contained in any PMH Document or defaults in the
performance or observance of any of its material obligations under any PMH
Document and such default shall continue after the earlier of (x) the expiration
of the grace period applicable thereto under such PMH Document and (y) two (2)
Business Days.

(iv) The validity or enforceability of any material provision of any PMH
Document shall be contested by any party thereto.

 

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(v) Any representation or warranty set forth on Schedule 1-C to the PC
Repurchase Agreement shall be untrue in any material respect; unless in each
case of clauses (i) through (v) above, the related Sold MSR Excess Spread
subject to the PMH Document is repurchased by PMH within two (2) Business Days
following notice or knowledge thereof.

(r) Subservicer Side Letter Agreement. Failure of Seller to deliver to Buyer a
fully executed and effective Subservicer Side Letter Agreement on or before the
Closing Date.

Section 7.02 No Waiver. An Event of Default shall be deemed to be continuing
unless expressly waived by Buyer in writing.

Section 7.03 Due and Payable. Upon the occurrence of any Event of Default which
has not been waived in writing by Buyer, Buyer may, by notice to Seller, declare
all Obligations to be immediately due and payable, and any obligation of Buyer
to enter into Transactions with Seller shall thereupon immediately terminate.
Upon such declaration, the Obligations shall become immediately due and payable,
both as to Purchase Price outstanding and Price Differential, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, anything contained herein or other evidence of such
Obligations to the contrary notwithstanding, except with respect to any Event of
Default set forth in Section 7.01(d), in which case all Obligations shall
automatically become immediately due and payable without the necessity of any
notice or other demand, and any obligation of Buyer to enter into Transactions
with Seller shall immediately terminate. Buyer may enforce payment of the same
and exercise any or all of the rights, powers and remedies possessed by Buyer,
whether under this Agreement or any other Program Agreement or afforded by
applicable law.

Section 7.04 Fees. The remedies provided for herein are cumulative and are not
exclusive of any other remedies provided by law. Seller agrees to pay to Buyer
reasonable attorneys’ fees and reasonable legal expenses incurred in enforcing
Buyer’s rights, powers and remedies under this Agreement and each other Program
Agreement.

Section 7.05 Default Rate. Without regard to whether Buyer has exercised any
other rights or remedies hereunder, if an Event of Default shall have occurred
and be continuing, the applicable Margin in respect of the Pricing Rate shall be
increased, to the extent permitted by law, as set forth in clause (ii) of the
definition of “Margin”.

ARTICLE VIII

ENTIRE AGREEMENT; AMENDMENTS

AND WAIVERS; SEPARATE ACTIONS BY BUYER

Section 8.01 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) constitutes the entire agreement of the parties hereto and
supersedes any and all prior or contemporaneous agreements, written or oral, as
to the matters contained herein, and no modification or waiver of any provision
hereof or any of the Program Agreements, nor consent to the departure by Seller
therefrom, shall be effective unless the same is in writing, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which it is given.

 

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Section 8.02 Waivers, Separate Actions by Buyer. Any amendment or waiver
effected in accordance with this Article VIII shall be binding upon Buyer and
Seller; and Buyer’s failure to insist upon the strict performance of any term,
condition or other provision of this Agreement or any of the Program Agreements,
or to exercise any right or remedy hereunder or thereunder, shall not constitute
a waiver by Buyer of any such term, condition or other provision or Default or
Event of Default in connection therewith, nor shall a single or partial exercise
of any such right or remedy preclude any other or future exercise, or the
exercise of any other right or remedy; and any waiver of any such term,
condition or other provision or of any such Default or Event of Default shall
not affect or alter this Agreement or any of the Program Agreements, and each
and every term, condition and other provision of this Agreement and the Program
Agreements shall, in such event, continue in full force and effect and shall be
operative with respect to any other then existing or subsequent Default or Event
of Default in connection therewith. An Event of Default hereunder or under any
of the Program Agreements shall be deemed to be continuing unless and until
waived in writing by Buyer.

ARTICLE IX

SUCCESSORS AND ASSIGNS

Section 9.01 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, any portion thereof, or any interest therein. Seller shall
not have the right to assign all or any part of this Agreement or any interest
herein without the prior written consent of Buyer.

Section 9.02 Participations and Transfers.

(a) Buyer may in accordance with applicable law at any time sell to one or more
banks or other entities (“Participants”) participating interests in all or a
portion of Buyer’s rights and obligations under this Agreement and the other
Program Agreements; provided, that (i) Seller has consented to such sale;
provided, however, Seller’s consent shall not be required in the event that
(A) such Participant is an Affiliate of Buyer or (B) an Event of Default has
occurred; (ii) each such sale shall represent an interest in a Transaction in a
Purchase Price of $1,000,000 or more and (iii) other than with respect to a
participating interest consisting of a pro rata interest in all payments due to
Buyer under this Agreement and prior to an Event of Default Buyer receives an
opinion of a nationally recognized tax counsel experienced in such matters that
such sale 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, each for U.S. federal income tax
purposes. In the event of any such sale by Buyer of participating interests to a
Participant, Buyer shall remain a party to the Transaction for all purposes
under this Agreement and Seller shall continue to deal solely and directly with
Buyer in connection with Buyer’s rights and obligations under this Agreement.

 

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(b) Buyer may in accordance with applicable law at any time assign, pledge,
hypothecate, or otherwise transfer to one or more banks, financial institutions,
investment companies, investment funds or any other Person (each, a
“Transferee”) all or a portion of Buyer’s rights and obligations under this
Agreement and the other Program Agreements; provided, that (i) Seller has
consented to such assignment, pledge, hypothecation, or other transfer;
provided, however, Seller’s consent shall not be required in the event that
(A) such Transferee is an Affiliate of Buyer or (B) an Event of Default has
occurred; (ii) absent an Event of Default, Buyer shall give at least ten days’
prior notice thereof to Seller; and (iii) that each such sale shall represent an
interest in the Transactions in an aggregate Purchase Price of $1,000,000 or
more and (iv) other than with respect to an assignment, pledge, hypothecation or
transfer consisting of a pro rata interest in all payments due to Buyer under
this Agreement and prior to an Event of Default Buyer received an opinion of a
nationally recognized tax counsel experienced in such matters that such
assignment, pledge, hypothecation or transfer 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, each for U.S. federal income tax purposes. In the event of any such
assignment, pledge, hypothecation or transfer by Buyer of Buyer’s rights under
this Agreement and the other Program Agreements, Seller shall continue to deal
solely and directly with Buyer in connection with Buyer’s rights and obligations
under this Agreement. Buyer (acting as agent for Seller) shall maintain at its
address referred to in Section 10.05 a register (the “Register”) for the
recordation of the names and addresses of Transferees, and the Purchase Price
outstanding and Price Differential in the Transactions held by each thereof. The
entries in the Register shall be prima facie conclusive and binding, and Seller
may treat each Person whose name is recorded in the Register as the owner of the
Transactions recorded therein for all purposes of this Agreement. No assignment
shall be effective until it is recorded in the Register.

(c) All actions taken by Buyer pursuant to this Section 9.02 shall be at the
expense of Buyer. Buyer may distribute to any prospective assignee any document
or other information delivered to Buyer by Seller.

Section 9.03 Buyer and Participant Register.

(a) Subject to acceptance and recording thereof pursuant to paragraph (b) of
this Section 9.03, from and after the effective date specified in each
assignment and acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such assignment and acceptance, have
the rights and obligations of Buyer under this Agreement. Any assignment or
transfer by Buyer of rights or obligations under this Agreement that does not
comply with this Section 9.03 shall be treated for purposes of this Agreement as
a sale by such Buyer of a participation in such rights and obligations in
accordance with Section 9.02.

(b) Seller or an agent of Seller shall maintain a register (the “Transaction
Register”) on which it will record the Transactions entered into hereunder, and
each assignment and acceptance and participation. The Transaction Register shall
include the names and addresses of Buyers (including all assignees, successors
and Participants), and the Purchase Price of the Transactions entered into by
Buyer. Failure to make any such recordation, or any error in such recordation
shall not affect Seller’s obligations in respect of such Transactions. If Buyer
sells a participation in any Transaction, it shall provide Seller, or maintain
as agent of Seller, the information described in this paragraph and permit
Seller to review such information as reasonably needed for Seller to comply with
its obligations under this Agreement or under any applicable law or governmental
regulation or procedure.

 

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ARTICLE X

MISCELLANEOUS

Section 10.01 Survival. This Agreement and the other Program Agreements and all
covenants, agreements, representations and warranties herein and therein and in
the certificates delivered pursuant hereto and thereto, shall survive the
entering into of the Transaction and shall continue in full force and effect so
long as any Obligations are outstanding and unpaid.

Section 10.02 Indemnification. Seller shall, and hereby agrees to, indemnify,
defend and hold harmless Buyer, any Affiliate of Buyer and their respective
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) as a consequence of, or arising out of or by reason of any
litigation, investigations, claims or proceedings which arise out of or are in
any way related to, (i) this Agreement or any other Program Agreement or the
transactions contemplated hereby or thereby, (ii) Seller’s servicing practices
or procedures; (iii) any actual or proposed use by Seller of the proceeds of the
Purchase Price, and (iv) any Default, Event of Default or any other breach by
Seller of any of the provisions of this Agreement or any other Program
Agreement, including amounts paid in settlement, court costs and reasonable fees
and disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing. If and to the extent that any Obligations are unenforceable
for any reason, Seller hereby agrees to make the maximum contribution to the
payment and satisfaction of such Obligations which is permissible under
applicable law. Seller’s obligations set forth in this Section 10.02 shall
survive any termination of this Agreement and each other Program Agreement and
the payment in full of the Obligations, and are in addition to, and not in
substitution of, any other of its obligations set forth in this Agreement or
otherwise. In addition, Seller shall, upon demand, pay to Buyer all costs and
Expenses (including the reasonable fees and disbursements of counsel) paid or
incurred by Buyer in (i) enforcing or defending its rights under or in respect
of this Agreement or any other Program Agreement, (ii) collecting the Purchase
Price outstanding, (iii) foreclosing or otherwise collecting upon any Repurchase
Assets and (iv) obtaining any legal, accounting or other advice in connection
with any of the foregoing.

Section 10.03 Nonliability of Buyer. The parties hereto agree that,
notwithstanding any affiliation that may exist between Seller and Buyer, the
relationship between Seller and Buyer shall be solely that of arms-length
participants. Buyer shall not have any fiduciary responsibilities to Seller.
Seller (i) agrees that Buyer shall not have any liability to Seller (whether
sounding in tort, contract or otherwise) for losses suffered by Seller in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by this agreement, the other loan
documents or any other agreement entered into in connection herewith or any act,
omission or event occurring in connection therewith, unless it is determined by
a judgment of a court that is binding on Buyer (which

 

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judgment shall be final and not subject to review on appeal), that such losses
were the result of acts or omissions on the part of Buyer constituting gross
negligence or willful misconduct and (ii) waives, releases and agrees not to sue
upon any claim against Buyer (whether sounding in tort, contract or otherwise),
except a claim based upon gross negligence or willful misconduct. Whether or not
such damages are related to a claim that is subject to such waiver and whether
or not such waiver is effective, Buyer shall not have any liability with respect
to, and Seller hereby waives, releases and agrees not to sue upon any claim for,
any special, indirect, consequential or punitive damages suffered by Seller in
connection with, arising out of, or in any way related to the transactions
contemplated or the relationship established by this Agreement, the other loan
documents or any other agreement entered into in connection herewith or
therewith or any act, omission or event occurring in connection herewith or
therewith, unless it is determined by a judgment of a court that is binding on
Buyer (which judgment shall be final and not subject to review on appeal), that
such damages were the result of acts or omissions on the part of Buyer, as
applicable, constituting willful misconduct or gross negligence.

Section 10.04 Governing Law; Submission to Jurisdiction; Waivers.

(a) This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Seller
acknowledges that the obligations of Buyer hereunder or otherwise are not the
subject of any VFN Repo Guaranty by, or recourse to, any direct or indirect
parent or other Affiliate of Buyer. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR
DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, 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.

(b) EACH OF THE PARTIES HERETO AND THE BUYER, BY THEIR ACCEPTANCE OF THE NOTE,
HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, 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;

 

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(ii) 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;

(iii) 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;

(iv) 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; AND

(v) 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 THE
INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY.

Section 10.05 Notices. Any and all notices (with the exception of Transaction
Notices, which shall be delivered via facsimile only), statements, demands or
other communications hereunder may be given by a party to the other by mail,
email, facsimile, messenger or otherwise to the address specified below, or so
sent to such party at any other place specified in a notice of change of address
hereafter received by the other. All notices, demands and requests hereunder may
be made orally, to be confirmed promptly in writing, or by other communication
as specified in the preceding sentence.

If to Seller:

PennyMac Corp.

3043 Townsgate Road, Suite 300

Westlake Village, CA 91361

Attention: Pamela Marsh/Josh Smith

Phone Number: (805) 330-6059/ (818) 746-2877

E-mail: pamela.marsh@pnmac.com; josh.smith@pnmac.com;

contract.finance@pnmac.com

with a copy to:

PennyMac Corp.

3043 Townsgate Road, Suite 300

Westlake Village, CA 91361

Attention: Jeff Grogin

Phone Number: (818) 224-7050

E-mail: jeff.grogin@pnmac.com

 

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If to Buyer:

For Transaction Notice:

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 2nd floor

New York, NY 10010

Attention: Christopher Bergs, Resi Mortgage Warehouse Ops

Phone: 212-538-5087

E-mail: christopher.bergs@credit-suisse.com

with a copy to:

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, NY 10010

Attention: Margaret Dellafera

Phone Number: 212-325-6471

Fax Number: 212-743-4810

E-mail: margaret.dellafera@credit-suisse.com

For all other Notices:

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, NY 10010

Attention: Margaret Dellafera

Phone Number: 212-325-6471

Fax Number: 212-743-4810

E-mail: margaret.dellafera@credit-suisse.com

Section 10.06 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. In case any provision in or obligation under this
Agreement or any other Program Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

 

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Section 10.07 Section Headings. The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not in any
way affect the meaning or construction of any provision of this Agreement.

Section 10.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile or other
electronic means shall be effective as delivery of a manually executed
counterpart of this Agreement.

Section 10.09 Periodic Due Diligence Review. Seller acknowledges that Buyer has
the right to perform continuing due diligence reviews with respect to Seller and
the Purchased Assets, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
Seller agree that upon reasonable (but no less than five (5) Business Days’)
prior written notice unless an Event of Default shall have occurred, in which
case no notice is required, to Seller, Buyer or its authorized representatives
will be permitted during normal business hours, and in a manner that does not
unreasonably interfere with the ordinary conduct of Seller’s business, to
examine, inspect, and make copies and extracts of, any and all documents,
records, agreements, instruments or information relating to such Purchased
Assets in the possession or under the control of Seller. Seller also shall make
available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Purchased Assets. Without limiting
the generality of the foregoing, Seller acknowledges that Buyer may enter into a
Transaction related to any Purchased Assets from Seller based solely upon the
information provided by Seller to Buyer in the Asset Schedule and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Purchased Assets related to a
Transaction. Seller agrees to cooperate with Buyer and any third party
underwriter in connection with such underwriting, including providing Buyer and
any third party underwriter with access to any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession, or under the control, of Seller.

Section 10.10 Hypothecation or Pledge of Repurchase Assets. Buyer shall have
free and unrestricted use of all Repurchase Assets and nothing in this Agreement
shall preclude Buyer from engaging in repurchase transactions with all or a
portion of the Repurchase Assets or otherwise pledging, repledging,
transferring, hypothecating, or rehypothecating all or a portion of the
Repurchase Assets; provided that prior to an Event of Default, such pledge,
repledge, transfer, hypothecation or rehypothecation is treated as a financing
or hedging transaction for U.S. federal income tax purposes or a pro rata
interest in all payments due to Buyer under this Agreement; provided, further
that other than with respect to a pro rata interest in all payments due to Buyer
under this Agreement and prior to an Event of Default Buyer receives an opinion
of a nationally recognized tax counsel experienced in such matters that such
repurchase transaction, pledge, repledge, transfer, hypothecation or
rehypothecation 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, each for U.S.
federal income tax purposes.

 

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Section 10.11 Non-Confidentiality of Tax Treatment.

(a) This Agreement and its terms, provisions, supplements and amendments, and
notices hereunder, are proprietary to Buyer or Seller, as applicable and shall
be held by each party hereto, as applicable in strict confidence and shall not
be disclosed to any third party without the written consent of Buyer or Seller,
except for (i) disclosure to Buyer’s or Seller’s direct and indirect Affiliates
and Subsidiaries, attorneys or accountants, but only to the extent such
disclosure is necessary and such parties agree to hold all information in strict
confidence, or (ii) disclosure required by law, rule, regulation or order of a
court or other regulatory body. Notwithstanding the foregoing or anything to the
contrary contained herein or in any other Program Agreements, the parties hereto
may disclose to any and all Persons, without limitation of any kind, the
federal, state and local tax treatment of the Transactions, any fact relevant to
understanding the federal, state and local tax treatment of the Transactions,
and all materials of any kind (including opinions or other tax analyses)
relating to such federal, state and local tax treatment and that may be relevant
to understanding such tax treatment; provided that Seller may not disclose the
name of or identifying information with respect to Buyer or any pricing terms
(including the Pricing Rate, Purchase Price Percentage, Purchase Price and
Commitment Fee (if any)) or other nonpublic business or financial information
(including any sublimits) that is unrelated to the federal, state and local tax
treatment of the Transactions and is not relevant to understanding the federal,
state and local tax treatment of the Transactions, without the prior written
consent of Buyer.

(b) Notwithstanding anything in this Agreement to the contrary, Seller shall
comply with all applicable local, state and federal laws, including all privacy
and data protection law, rules and regulations that are applicable to the
Repurchase Assets and/or any applicable terms of this Agreement (the
“Confidential Information”). Seller understands that the Confidential
Information may contain “nonpublic personal information”, as that term is
defined in Section 509(4) of the GLB Act, and Seller agrees to maintain such
nonpublic personal information that it receives hereunder in accordance with the
GLB Act and other applicable federal and state privacy laws. Seller shall
implement such physical and other security measures as shall be necessary to
(a) ensure the security and confidentiality of the “nonpublic personal
information” of the “customers” and “consumers” (as those terms are defined in
the GLB Act) of Buyer or any Affiliate of Buyer which Seller holds, (b) protect
against any threats or hazards to the security and integrity of such nonpublic
personal information, and (c) protect against any unauthorized access to or use
of such nonpublic personal information. Seller represents and warrants that it
has implemented appropriate measures to meet the objectives of Section 501(b) of
the GLB Act and of the applicable standards adopted pursuant thereto, as now or
hereafter in effect. Upon request, Seller will provide evidence reasonably
satisfactory to allow Buyer to confirm that the providing party has satisfied
its obligations as required under this Section 10.11. Without limitation, this
may include Buyer’s review of audits, summaries of test results, and other
equivalent evaluations of Seller. Seller shall notify Buyer immediately
following discovery of any breach or compromise of the security,
confidentiality, or integrity of nonpublic personal information of the customers
and consumers of Buyer or any Affiliate of Buyer provided directly to Seller by
Buyer or such Affiliate. Seller shall provide such notice to Buyer by personal
delivery, by facsimile with confirmation of receipt, or by overnight courier
with confirmation of receipt to the applicable requesting individual.

 

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Section 10.12 Set-off. In addition to any rights and remedies of Buyer hereunder
and by law, Buyer shall have the right, without prior notice to Seller, any such
notice being expressly waived by Seller to the extent permitted by applicable
law to set-off and appropriate and apply against any Obligation from Seller or
any Affiliate thereof to Buyer or any of its Affiliates any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other obligation (including to return funds to Seller), credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by or due from Buyer or any Affiliate thereof to or for the credit or the
account of Seller or any Affiliate thereof. Buyer agrees promptly to notify
Seller after any such set off and application made by Buyer; provided that the
failure to give such notice shall not affect the validity of such set off and
application.

Section 10.13 Intent.

(a) The parties recognize that each Transaction is a “master netting agreement”
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended and a “securities contract” as that term is defined in Section 741 of
Title 11 of the United States Code, as amended and that all payments hereunder
are deemed “margin payments” or “settlement payments” as defined in Title 11 of
the United States Code.

(b) It is understood that either party’s right to liquidate Purchased Assets
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Section 4.07, Section 7.03 or Section 10.12 hereof is
a contractual right to liquidate such Transaction as described in Sections 555
and Section 561 of Title 11 of the United States Code, as amended.

(c) The parties agree and acknowledge that if a party hereto is an “insured
depository institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).

(d) It is understood that this Agreement constitutes a “netting contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA).

(e) This Agreement is intended to be a “securities contract,” within the meaning
of Section 555 under the Bankruptcy Code, and a “master netting agreement,”
within the meaning of Section 561 under the Bankruptcy Code.

 

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(f) It is the intention of the parties that, for U.S. federal income tax
purposes and for accounting purposes, each Transaction constitute a financing,
and that Seller be (except to the extent that Buyer shall have exercised its
remedies following an Event of Default) the owner of the Purchased Assets for
such purposes. Unless prohibited by applicable law, Seller and Buyer shall treat
the Transactions as described in the preceding sentence (including on any and
all filings with any U.S. federal, state, or local taxing authority and agree
not to take any action inconsistent with such treatment).

 

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IN WITNESS WHEREOF, Seller and Buyer have caused this Master Repurchase
Agreement to be executed and delivered by their duly authorized officers or
trustees as of the date first above written.

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Buyer By:   /s/ Michael Eaton  
Name: Michael Eaton   Title: Authorized Signatory By:   /s/ Elie Chau   Name:
Elie Chau   Title: Authorized Signatory

[Signature Page to VF1 Master Repurchase Agreement]

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

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent By:  
/s/ Dominic Obaditch   Name: Dominic Obaditch   Title: Vice President

[Signature Page to VF1 Master Repurchase Agreement]

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

PENNYMAC CORP.,

as Seller

By:   /s/ Pamela Marsh   Name: Pamela Marsh   Title: Managing Director,
Treasurer

[Signature Page to VF1 Master Repurchase Agreement]

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

SCHEDULE 1

RESPONSIBLE OFFICERS – SELLER

SELLER AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for Seller under this Agreement:

Responsible Officers for execution of Program Agreements and amendments:

 

Name

    

Title

  

Signature

Pamela Marsh      Managing Director, Treasurer   

 

Responsible Officers for execution of Transaction Notices and day-to-day
operational functions:

Name

    

Title

  

Signature

Pamela Marsh      Managing Director, Treasurer   

 

Maurice Watkins      Managing Director, Capital Markets   

 

Thomas Rettinger      Managing Director, Portfolio Risk Management   

 

Richard Hetzel      Authorized Representative   

 

Adeshola Makinde      Authorized Representative   

 

 

Schedule 1-1

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

SCHEDULE 2

ASSET SCHEDULE

 

Note

   Initial Note
Balance      Additional
Balance(s)      Outstanding VFN
Principal Balance      Maximum VFN
Principal Balance  

PMT ISSUER TRUST—FMSR, Class A-VF1 Variable Funding Note

   $ 473,403,372.15      $ 0      $ 473,403,372.15      $ 1,000,000,000  

 

Schedule 2-1

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SCHEDULE 3

BUYER ACCOUNT

 

Name of Bank:    BNY Mellon ABA Number of Bank:   

*****

Name of Account:    CSFB Mortgage Capital Account Number:   

*****

 

Schedule 3-1

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EXHIBIT A

FORM OF TRANSACTION NOTICE

Dated: [                    ]

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

Attention: Dominic Obaditch

Email: dominic.obaditch@credit-suisse.com

TRANSACTION NOTICE

Ladies and Gentlemen:

We refer to the Master Repurchase Agreement, dated as of [        ], 2017 (the
“Agreement”), among PennyMac Corp. (the “Seller”), Credit Suisse AG, Cayman
Islands Branch (the “Buyer”) and Credit Suisse First Boston Mortgage Capital LLC
(the “Administrative Agent”). Each capitalized term used but not defined herein
shall have the meaning specified in the Agreement. This notice is being
delivered by Seller pursuant to Section 2.02 of the Agreement.

Please be notified that Seller hereby irrevocably requests that the Buyer enter
into the following Transaction(s) with the Seller as follows:

1. Maximum VFN Principal Balance: [$                    ]

2. Initial Note Balance/Purchase Price requested: [$                    ]

3. Additional Balance/Purchase Price requested: [$                    ]

4. Purchase Date: [                    ]

5. Repurchase Date: [                    ]

6. Pricing Rate / Repurchase Price: [$                    ]

Seller requests that the proceeds of the Purchase Price be deposited in Seller’s
account at             , ABA Number             , account number            ,
References:             , Attn:             .

Seller hereby represents and warrants that each of the representations and
warranties made by Seller in each of the Program Agreements to which it is a
party is true and correct in all material respects, in each case, on and as of
the date hereof, except to the extent such representations and warranties
expressly relate to an earlier date. Attached hereto is a true and complete
updated copy of the Asset Schedule.

 

Exhibit A-1

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

PENNYMAC CORP., as Seller

By:    

 

Exhibit A-2

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

Asset Schedule

 

Note

   Initial Note
Balance      Additional
Balance(s)      Outstanding
VFN
Principal
Balance      Maximum
VFN
Principal
Balance  

PMT ISSUER TRUST—FMSR, Class A-VF1 Variable Funding Note

   $ [________ ]     $ [________ ]     $ [________ ]     $ [________ ] 

 

Exhibit A-3

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EXHIBIT B

EXISTING INDEBTEDNESS

[SEE ATTACHED]

 

Exhibit B-1