Exhibit 10.1

 

 

 

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

among

 

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as lender (“Lender”)

 

 

and

 

 

PENNYMAC LOAN SERVICES, LLC, as borrower (“Borrower”)

 

 

and

 

 

PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC, as guarantor (“Guarantor”)

 

 

 

Dated as of March 27, 2015

 

 

 

 

 

 

 

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS 2     Section 1.01   Certain Defined Terms. 2 Section
1.02   Other Defined Terms. 23     ARTICLE II GENERAL TERMS 24     Section
2.01   Loan. 24 Section 2.02   Procedure for Borrowing. 24 Section
2.03   Repayment and Prepayment of Principal. 25 Section 2.04   Interest. 25
Section 2.05   Borrowing Base Deficiencies. 25 Section 2.06   Payment Procedure.
26 Section 2.07   Application of Payments. 26 Section 2.08   Use of Proceeds and
Requests for Advances. 28 Section 2.09   Recourse. 28 Section
2.10   Requirements of Law. 28 Section 2.11   Taxes. 29 Section
2.12   Indemnity. 30 Section 2.13   Intentionally Omitted. 30 Section
2.14   Dedicated Accounts. 30 Section 2.15   Additional Securitization
Transactions, Servicing Contracts and Participation Agreements. 31 Section
2.16   Commitment Fee. 31 Section 2.17   Termination. 31 Section
2.18   Repledege Portfolio Excess Spread. 32     ARTICLE III REPRESENTATIONS AND
WARRANTIES 32     Section 3.01   Borrower and Guarantor Existence. 32 Section
3.02   Licenses. 32 Section 3.03   Power. 33 Section 3.04   Due Authorization.
33 Section 3.05   Financial Statements. 33 Section 3.06   No Event of Default.
34 Section 3.07   Solvency. 34 Section 3.08   No Conflicts. 34 Section
3.09   True and Complete Disclosure. 34 Section 3.10   Approvals. 35 Section
3.11   Litigation. 35 Section 3.12   Material Adverse Change. 35

 

i

 

 

Section 3.13   Ownership. 35 Section 3.14   The Servicing Contracts and
Participation Agreements. 36 Section 3.15   Taxes. 36 Section 3.16   Investment
Company. 36 Section 3.17   Chief Executive Office; Jurisdiction of Organization.
36 Section 3.18   Location of Books and Records. 36 Section 3.19   Adjusted
Tangible Net Worth. 36 Section 3.20   ERISA. 36 Section 3.21   Financing of
Assets. 37 Section 3.22   Agreements. 37 Section 3.23   Other Indebtedness. 37
Section 3.24   Agency Approvals; Servicing Facilities. 37 Section 3.25   No
Reliance. 37 Section 3.26   Plan Assets. 38 Section 3.27   No Prohibited
Persons. 38     ARTICLE IV Collateral Security 38     Section 4.01   Collateral;
Security Interest. 38 Section 4.02   Further Documentation. 40 Section
4.03   Limited Pledge of Fannie Mae Servicing 40 Section 4.04   Limited Pledge
of Ginnie Mae Servicing 41 Section 4.05   Limited Pledge of Freddie Mac
Servicing 42 Section 4.06   Acknowledgement Agreements 43 Section 4.07   Changes
in Locations, Name, etc. 43 Section 4.08   Lender’s Appointment as
Attorney-in-Fact. 43 Section 4.09   Performance by Lender of Borrower’s
Obligations. 45 Section 4.10   Proceeds. 45 Section 4.11   Remedies. 45 Section
4.12   Limitation on Duties Regarding Preservation of Collateral. 46 Section
4.13   Powers Coupled with an Interest. 46 Section 4.14   Release of Security
Interest. 46 Section 4.15   Reinstatement. 46 Section 4.16   Subordination. 46  
  ARTICLE V CONDITIONS PRECEDENT 47     Section 5.01   Initial Loan Advance. 47
Section 5.02   Initial and Subsequent Loan Advances. 48     ARTICLE VI COVENANTS
51     Section 6.01   Financial Covenants. 51 Section 6.02   Litigation. 51
Section 6.03   Prohibition of Fundamental Changes. 51 Section 6.04   Portfolio
Performance Data. 51

 

ii

 

 

Section 6.05   Weekly Reporting. 52 Section 6.06   Insurance. 52 Section
6.07   No Adverse Claims. 52 Section 6.08   Assignment. 52 Section
6.09   Security Interest. 52 Section 6.10   Records. 52 Section 6.11   Books. 53
Section 6.12   Approvals. 53 Section 6.13   Material Change in Business. 53
Section 6.14   Collections on Assets and the Dedicated Accounts. 53 Section
6.15   Distributions. 54 Section 6.16   Applicable Law. 54 Section
6.17   Existence. 54 Section 6.18   Chief Executive Office; Jurisdiction of
Organization. 54 Section 6.19   Taxes. 54 Section 6.20   Transactions with
Affiliates. 54 Section 6.21   Guarantees. 54 Section 6.22   Indebtedness. 54
Section 6.23   Termination of Servicing Notice. 55 Section 6.24   True and
Correct Information. 55 Section 6.25   Servicing. 55 Section 6.26   Receivables
Not To Be Evidenced by Promissory Notes. 55 Section 6.27   No Pledge. 55 Section
6.28   Servicing Appraisals. 55 Section 6.29   Plan Assets. 55 Section
6.30   Sharing of Information. 56 Section 6.31   Modification of the Servicing
Contracts and Participation Agreements. 56 Section 6.32   No Amendments/Waivers
of Underlying Spread Documents. 56 Section 6.33   Reserved. 56 Section
6.34   Quality Control. 56 Section 6.35   Reporting Requirements. 56 Section
6.36   Most Favored Status. 59 Section 6.37   Liens on Substantially All Assets.
60 Section 6.38   No Modification of the Participation Agreements. 60 Section
6.39   No Subservicing. 60     ARTICLE VII DEFAULTS/RIGHTS AND REMEDIES OF
LENDER UPON DEFAULT 60     Section 7.01   Events of Default. 60 Section
7.02   No Waiver. 63 Section 7.03   Due and Payable. 63 Section 7.04   Fees. 64
Section 7.05   Default Rate. 64

 

iii

 

 

ARTICLE VIII ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY
LENDER 64     Section 8.01   Entire Agreement. 64 Section 8.02   Waivers,
Separate Actions by Lender. 64     ARTICLE IX SUCCESSORS AND ASSIGNS 64    
Section 9.01   Successors and Assigns. 64 Section 9.02   Participations and
Transfers. 65 Section 9.03   Lender and Participant Register. 65     ARTICLE X
MISCELLANEOUS 66     Section 10.01   Survival. 66 Section
10.02   Indemnification. 66 Section 10.03   Nonliability of Lender. 67 Section
10.04   Governing Law; Jurisdiction, Waiver of Jury Trial:  Waiver of Damages.
67 Section 10.05   Notices. 68 Section 10.06   Severability. 69 Section
10.07   Section Headings. 70 Section 10.08   Counterparts. 70 Section
10.09   Periodic Due Diligence Review. 70 Section 10.10   Hypothecation or
Pledge of Collateral. 70 Section 10.11   Non-Confidentiality of Tax Treatment.
70 Section 10.12   Set-off. 71 Section 10.13   Amendment and Restatement. 71

iv

 

Schedule 1A – Representations and Warranties Regarding the Assets

Schedule 1-B – Representations and Warranties Regarding the Assets Consisting of
Participation Certificates

Schedule 1-C – Representations and Warranties with respect to Underlying Spread
Transactions

Schedule 2 – Eligible Securitization Transactions and Servicing Contracts

Schedule 3 – Responsible Officers of Borrower and Guarantor

Exhibit A – Form of Fourth Amended and Restated Promissory Note

Exhibit B-1 – Form of Power of Attorney (Lender)

Exhibit B-2 – Form of Power of Attorney (SPS)

Exhibit C – Form of Notice of Borrowing

Exhibit D – Existing Indebtedness

Exhibit E – Reserved

Exhibit F – Form of Request for Approval of Eligible Securitization or Servicing
Contract

v

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Third Amended and Restated Loan and Security Agreement (as the same may be
amended, modified, restated or supplemented from time to time, this “Agreement”)
is made as of March 27, 2015 among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL
LLC, as lender (the “Lender”), PENNYMAC LOAN SERVICES, LLC, as borrower (the
“Borrower”) and PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC, as guarantor
(the “Guarantor”).

Lender, Borrower and Guarantor previously entered into a Second Amended and
Restated Loan and Security Agreement, dated as of March 27, 2012, which amended
and restated the terms of an Amended and Restated Loan and Security Agreement,
dated as of September 15, 2011 (the “Existing Loan and Security Agreement”).

The parties hereto have requested that the Existing Loan and Security Agreement
be amended and restated, in its entirety, on the terms and subject to the
conditions set forth herein.

W I T N E S S E T H:

Re:             WHEREAS, the Borrower has made, and may in the future make, the
Servicing Rights (as defined below) subject to this Agreement, subject to
certain Participation Agreements in order to create Portfolio Excess Spread
evidenced by Participation Certificates;

Re:             WHEREAS, in order to finance Servicing Rights and the related
Portfolio Excess Spread (as defined below) and Receivables owned by Borrower
from time to time, Borrower has requested and Lender has made and will make
available to Borrower a revolving credit facility in an amount not to exceed the
Maximum Loan Amount (the “Facility”). Each advance made by Lender to Borrower
pursuant to this Agreement (each, a “Loan Advance” and collectively, the “Loan”)
will be used by Borrower to finance Eligible Assets (as defined below);

Re:             WHEREAS, the parties hereto have agreed that the Existing Loan
and Security Agreement be amended and restated, in its entirety, on the terms
and subject to the conditions set forth herein; and

Re:             WHEREAS, Lender has required and Guarantor has agreed that it
will Guarantee the Obligations hereunder;

Re:             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, Lender and Borrower hereby agree
as follows.

1

 

ARTICLE I

DEFINITIONS

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

“Accepted Servicing Practices” means, with respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, and with respect
to Agency Servicing Rights, those practices required by the Agencies.

“Acknowledgment Agreement” means (a) with respect to Agency Servicing Rights, an
acknowledgment agreement in the form prescribed by Fannie Mae, Freddie Mac or
Ginnie Mae, as applicable to be executed by Borrower, Lender and such Agency as
a condition to the Borrower’s pledging Fannie Mae, Freddie Mac or Ginnie Mae (as
the case may be) Servicing Rights to the Lender and otherwise acceptable to
Lender in its sole discretion and (b) with respect to a Participation
Certificate related to Agency Servicing Rights, an acknowledgment in form and
substance acceptable to Lender in its sole discretion.

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

“Act of Insolvency” means, with respect to any Person or its Affiliates, (i) the
filing of a petition, commencing, or authorizing the commencement of any case or
proceeding, or the voluntary joining of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law
relating to the protection of creditors, or suffering any such petition or
proceeding to be commenced by another which is consented to, not timely
contested or results in entry of an order for relief; (ii) the seeking of the
appointment of a receiver, trustee, custodian or similar official for such party
or an Affiliate or any substantial part of the property of either; (iii) the
appointment of a receiver, conservator, or manager for such party or an
Affiliate by any governmental agency or authority having the jurisdiction to do
so; (iv) the making or offering by such party or an Affiliate of a composition
with its creditors or a general assignment for the benefit of creditors; (v) the
admission by such party or an Affiliate of such party of its inability to pay
its debts or discharge its obligations as they become due or mature; or
(vi) that any governmental authority or agency or any person, agency or entity
acting or purporting to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume custody or control of, all
or any substantial part of the property of such party or of any of its
Affiliates, or shall have taken any action to displace the management of such
party or of any of its Affiliates or to curtail its authority in the conduct of
the business of such party or of any of its Affiliates.

“Additional Repurchase Collateral” has the meaning set forth in Section 4.01(c).

“Adjusted Tangible Net Worth” shall have the meaning set forth in the Pricing
Side Letter.

2

 

“Advance Date” means, subject to the satisfaction of the conditions precedent
set forth in Article V hereof, the nineteenth (19th) day of each calendar month
(or if such day is not a Business Day, the immediately preceding Business Day)
on which a Loan Advance is made by Lender pursuant to Section 2.02 which shall
be the date more particularly set forth on Exhibit C hereto.

“Advance Financing Person” has the meaning set forth in the definition of
“Eligible Securitization Transaction”.

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

“Affiliate” means, with respect to any Person, any “affiliate” of such Person,
as such term is defined in the Bankruptcy Code; provided, however, that in
respect of Borrower or Guarantor the term “Affiliate” shall include only
Guarantor and its wholly owned subsidiaries.

“Agency” means Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.

“Agency Approvals” has the meaning set forth in Section 6.12.

“Agency MBS” means an MBS issued by an Agency.

“Agency Servicing Rights” means Servicing Rights of Borrower with respect to
Mortgage Loans that are subject to an Agency MBS or are owned by or administered
by an Agency.

“Agent means DLJ Mortgage Capital, Inc.

 

“Agreement” means this Third Amended and Restated Loan and Security Agreement,
as it may be amended, supplemented or otherwise modified from time to time.

“Applicable Lending Office” means the “lending office” of Lender (or of an
Affiliate of Lender) designated on the signature page hereof or such other
office of Lender (or of an Affiliate of Lender) as Lender may from time to time
specify to Borrower as the office by which the Loan is to be made and/or
maintained.

“Appraised Value” means, as of any date in respect of any Mortgaged Property,
the value of such Mortgaged Property as determined by a licensed or otherwise
qualified, disinterested and independent appraiser who meets the standards of
the Financial Institutions Reform Recovery and Enforcement Act or the most
recently delivered BPO Value, to the extent one has been delivered.

“Asset” means any (a) Receivable, (b) any Servicing Rights and (c) the related
Participation Certificates (including, for the avoidance of doubt, all Portfolio
Excess Spread), in each case, pledged to secure the Obligations hereunder as
more particularly set forth on Schedule 2.

3

 

“Asset Schedule” means a list of all Assets pledged from time to time by
Borrower to Lender, as such schedule shall be updated from time to time in
accordance with Section 2.02 hereof.

“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended
from time to time.

“Borrower” means PennyMac Loan Services, LLC or its permitted successors and
assigns.

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

“Borrowing Base” means either the Servicing Rights Borrowing Base or the
Receivables Borrowing Base.

“Borrowing Base Deficiency” means either a Servicing Rights Borrowing Base
Deficiency or a Receivables Borrowing Base Deficiency.

“BPO” means a brokers price opinion, delivered by a certified independent
broker, and in form and substance, in each case, satisfactory to Lender.

“BPO Value” means the property value of a Mortgaged Property determined pursuant
to a BPO. All BPO Values shall be delivered to Lender in electronic form
acceptable to Lender. With respect to each BPO Value, upon the request of
Lender, Borrower shall deliver to Lender the related BPO, in form acceptable to
Lender. Notwithstanding anything else set forth herein, Borrower shall deliver
to Lender a BPO Value with respect to each Mortgaged Property on or before the
date on which the related Mortgage Loan is 90 or more days delinquent and every
twelve (12) months thereafter, unless otherwise agreed to by Lender.

“Business Day” means any day other than (A) a Saturday or Sunday and (B) a
public or bank holiday in New York City.

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

“Cash Equivalents” means (a) securities with maturities of 90 days or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
Eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of Lender or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in
either case maturing within 90 days after the day of acquisition, (e) securities
with maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s,
(f) securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.

4

 

“Change in Control” means:

(A)             any transaction or event as a result of which Guarantor ceases
to own, beneficially or of record, 100% of the stock of Borrower, except with
respect to an initial public offering of Borrower’s common stock on a U.S.
national securities exchange;

(B)              the sale, transfer, or other disposition of all or
substantially all of Borrower’s or Guarantor’s assets (excluding any such action
taken in connection with any securitization transaction); or

(C)              the consummation of a merger or consolidation of Borrower or
Guarantor with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or surviving
entity’s stock outstanding immediately after such merger, consolidation or such
other reorganization is owned by Persons who were not stockholders of Borrower
or Guarantor immediately prior to such merger, consolidation or other
reorganization.

“Closing Date” means March 27, 2015.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” has the meaning assigned to such term in Section 4.01(a), and
which, for the avoidance of doubt, shall continue to include the Collateral sold
to Underlying Spread Counterparty by Borrower subject to the Lien of the
Security Agreement.

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

“Collection Policy” means Borrower’s policies regarding Collections and
remittance in accordance with the provisions of this Agreement and the Servicing
Contracts and shall include (a) the application of reimbursements of Servicer
Advances to Receivables in accordance with its usual and customary procedures
with respect to priority for reimbursements, which is to apply such
reimbursements to the earliest Servicer Advances that have been made under a
particular Servicing Contract and with respect to a particular Mortgage Loan
that remains unreimbursed and (b) with respect to Servicing Rights and the
related Servicing Contracts, the charging and collection of fees for servicing
functions, including, without limitation, the charging of late fees, assumption
fees, modification fees and other clerical or administrative fees in the
ordinary course of servicing.

5

 

“Collections” means, with respect to any Mortgage Loan as of any date: (a) the
sum of all amounts, whether in the form of wire transfer, cash, checks, drafts,
or other instruments, received by Borrower in payment of, or applied to, any
amount owed with respect to a Mortgage Loan on or before such date, including,
without limitation, all amounts received on account of such Mortgage Loan, and
(b) cash Proceeds with respect to such Mortgage Loan.

“Commitment” means the obligation of Lender to make Loan Advances to Borrower in
an aggregate outstanding principal amount at any one time not to exceed the
Maximum Loan Amount.

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

“Commitment Period” means the period from and including the Closing Date to but
not including the Termination Date or such earlier date on which the Commitment
shall have terminated pursuant to this Agreement.

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

“CSCOF” means, in Lender’s sole discretion, which may be confirmed by notice to
Borrower (which may be electronic), for each day, the rate of interest
(calculated on a per annum basis) determined by Lender (which such determination
shall be dispositive absent manifest error), equal to the overnight interest
expense incurred by Lender for borrowing funds.

“Dedicated Accounts” means the Receivables Dedicated Account and each Servicing
Rights Dedicated Account.

“Dedicated Account Control Agreement” means the amended and restated letter
agreement among Lender, Borrower and City National Bank in form and substance
reasonably acceptable to Lender, as it may be amended, supplemented or otherwise
modified from time to time.

“Default” means an event, condition or default that, with the giving of notice,
the passage of time, or both, would constitute an Event of Default.

“Delinquency Advance” means any advance made by Borrower under the Servicing
Contracts, to cover due, but uncollected or unavailable as a result of funds not
yet being cleared, principal and interest payments on the Mortgage Loans
included in the portfolio of Mortgage Loans serviced by Borrower pursuant to the
Servicing Contracts, including Mortgage Loans with respect to which the related
Mortgaged Property is being held pending liquidation.

6

 

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“Eligible Asset” means any Asset:

(a)                which relates to a Servicing Contract for Mortgage Loans in
an Eligible Securitization Transaction in which Borrower is acting in the
capacity of servicer;

(b)               which complies with all applicable Laws and other legal
requirements, whether federal, state or local;

(c)                with respect to Assets related to Servicer Advances, which
was originated in connection with the making of a Servicer Advance pursuant to a
Servicing Contract or added to such schedule in the Lender’s sole discretion,
and is in full force and effect and under which the Servicer has not been
terminated;

(d)               in the case of Receivables, in respect of which Borrower has
no knowledge of any fact that has led it to expect that such Receivable will not
be fully recoverable;

(e)                which is genuine and constitutes a legal, valid, binding and
irrevocable payment obligation, enforceable in accordance with the terms of the
Servicing Contract or Participation Agreement, as applicable, under which it has
arisen, subject to no offsets, counterclaims or defenses;

(f)                which provides for payment in U.S. Dollars;

(g)               which was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Asset, the related Servicing Contract or
Participation Agreement (if applicable) or the financing thereof contemplated
hereby unlawful, invalid or unenforceable and is not subject to any legal
limitation on transfer;

(h)               which is owned solely by Borrower (or with respect to Repledge
Portfolio Excess Spread, the Underlying Spread Counterparty) free and clear of
all Liens other than Liens in favor of Lender (and in the case of Repledge
Portfolio Excess Spread, Liens in favor of the Borrower) and has not been sold,
conveyed, pledged or assigned to any other lender, purchaser or Person;

(i)                 which in respect of which no payments have been received
relating to such Asset which have not been attributed to such Asset;

(j)                 for which there exists no dispute regarding the Asset that
results in the Asset being invalid or otherwise not recoverable or payable; and
in respect of which Asset Borrower has complied in all material respects with
the Collection Policy and the related Servicing Contract or Participation
Agreement, as applicable;

7

 

(k)               which is not an obligation of the United States of America,
any State or any agency or instrumentality or political subdivision thereof
(other than Fannie Mae, Freddie Mac or Ginnie Mae);

(l)                 in respect of which the information set forth in the Asset
Schedule and the Servicing Contract and, with respect to the Participation
Certificates, the Participation Agreement, is true and correct in all material
respects;

(m)             in respect of which Borrower has obtained from each Person that
may have an interest in such Asset (i) all acknowledgements or approvals, if
any, that are necessary to pledge such Asset as contemplated hereby (including,
without limitation, the acknowledgement of any securitization trustee relating
thereto) and (ii) releases of any security interests in such Asset;

(n)               which, with respect to Assets pledged to Lender after the
Closing Date, complies with the representations and warranties set forth on
Schedules 1-A, 1-B and 1-C, as applicable, hereto; and

(o)               which is a Ginnie Mae Advance, which advance (i) is subject to
reimbursement by HUD, FHA or VA for FHA Mortgage Insurance Contract or VA Loan
Guaranty Agreement, as applicable, and (ii) a claim for which has not been
rejected by HUD, VA or FHA for any reason which impairs the FHA Mortgage
Insurance Contract or VA Loan Guaranty Agreement, as applicable;

(p)               which with respect to any Asset that constitutes Servicing
Rights,

(i)            constitutes an “account” or a “general intangible” as defined in
the Uniform Commercial Code and is not evidenced by an “instrument,” as defined
in the Uniform Commercial Code as so in effect;

(ii)            relates to an Eligible Securitization Transaction, where the
related Participation Certificate is pledged to the Lender hereunder;

(iii)            arose pursuant to a Servicing Contract that is in full force
and effect and under which the Servicer has not been terminated; and

(iv)            the related Participation Certificate is an Eligible Asset
hereunder;

(q)               which with respect to any Asset that constitutes a
Participation Certificate,

(i)            constitutes a “security” as defined in the Uniform Commercial
Code and is evidenced by a certificate;

(ii)            the related Servicing Rights relate to an Eligible
Securitization Transaction and have been pledged to the Lender hereunder;

(iii)            the Participation Certificate arose pursuant to a Participation
Agreement that is in full force and effect; and

(iv)            the related Servicing Rights are an Eligible Asset hereunder.

in each case as of the related Loan Advance and as of each day that such Asset
shall be pledged to Lender hereunder.

8

 

“Eligible Securitization Transaction” means any of those Securitization
Transactions approved by Lender in its sole discretion and listed on Schedule 2
hereof, which may be amended from time to time with the consent of Lender in its
sole discretion and in accordance with Section 2.15 hereof, and which, as of the
date of the related Loan Advance and as of each day that any Asset shall be
pledged to Lender hereunder (unless expressly agreed upon in writing by Lender
to the contrary):

(a)                other than with respect to Ginnie Mae Servicing Rights,
provides that each Asset and/or amounts due in respect thereof are reimbursable
or payable to Borrower under the related Servicing Contract from amounts
subsequently received in collections on account of the related Mortgage Loan
prior to being available to make payments on any related mortgage-backed
securities;

(b)               other than with respect to Ginnie Mae Servicing Rights,
provides that to the extent that any Receivable is non-recoverable from the
proceeds related to such Mortgage Loan, following liquidation of such Mortgage
Loan or the determination that such Receivable is non-recoverable, as the case
may be, as described in the related Servicing Contract, such Receivable is
recoverable from all cash-flows on the related Securitization Transaction prior
to such cash flows being available to make payments on any related
mortgage-backed securities;

(c)                other than with respect to Ginnie Mae Servicing Rights, in
respect of which the Servicing Contract provides for the reimbursement of all
Servicer Advances and payment of all servicing fees at the time of a servicing
transfer upon the termination or resignation of the servicer for any reason,
with or without cause;

(d)               provides that the servicer thereunder may enter into a
facility with another Person to acquire or finance the related Servicer Advances
and that such Person may finance, or re-pledge, assign or otherwise transfer the
Receivables related to such Servicer Advances (any such Person, an “Advance
Financing Person”);

(e)                provides that the Advance Financing Person shall not be
required to meet the eligibility criteria for a successor servicer;

(f)                provides that the Advance Financing Person shall be entitled
to reimbursement of all Servicer Advances directly by the trustee, servicer,
master servicer or other party approved by the Advance Financing Person, or by
withdrawal itself, in the same manner and to the same extent as if the Advance
Financing Person were the servicer thereunder, free and clear of any rights of
any other party;

(g)               with respect to which the Servicing Contract is acceptable to
Lender prior to the initial funding date for such Servicing Contract and is in
full force and effect, at any time any Asset related to such Servicing Contract
is pledged to Lender, and under which the servicer has not been terminated,
resigned or become subject to a right of termination or other “trigger event”;

9

 

(h)               with respect to which the Servicing Contract (other than
Servicing Contracts related to Agency Servicing Rights) does not permit the
reimbursement of Servicer Advances or the payment of servicing fees to be
subject to set-off rights of a successor servicer, trustee or any other third
party; and

(i)                 with respect to which the Servicing Contract (other than
Servicing Contracts related to Agency Servicing Rights) is non-recourse to
Borrower, except for breach of contract claims made against Borrower, remedies
for breaches and representations and warranties made by Borrower, and
indemnification provisions with respect to breaches by Borrower.

“Encumbered Mortgage Servicing Rights” means any mortgage servicing rights that
are subject to any Lien, claim, restriction or other encumbrance that limits in
any way the ability to dispose of or transfer such asset whether or not such
Lien, claim, restriction or other encumbrance relates to any outstanding debt.

“Encumbered Mortgage Servicing Rights Equity” means that portion of the MSR
Valuation of the Encumbered Mortgage Servicing Rights that exceeds the
Indebtedness encumbering such mortgage servicing rights.

“EO13224” has the meaning set forth in Section 3.27.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any corporation or trade or business that, together with
Borrower or Guarantor is treated as a single employer under Section 414(b) or
(c) of the Code or solely for purposes of Section 302 of ERISA and Section 412
of the Code is treated as single employer described in Section 414 of the Code.

“ERISA Event of Termination” means with respect to Borrower or 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 30 days of the occurrence of
such event, or (ii) the withdrawal of Borrower, 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 Borrower,
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 Borrower, 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 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 Borrower, 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 Borrower, 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.

10

 

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

“Existing Indebtedness” has the meaning specified in Section 3.23 hereof.

“Expenses” means all present and future expenses reasonably incurred by or on
behalf of Lender in connection with the negotiation, execution or enforcement of
this Agreement or any of the other Loan Documents and Underlying Spread
Documents, and Participation Agreements, and any amendment, supplement or other
modification or waiver related hereto or thereto, whether incurred heretofore or
hereafter, which expenses shall include the cost of title, lien, judgment and
other record searches; reasonable attorneys’ fees; any ongoing audits or due
diligence costs in connection with valuation, making of Loan Advances or
determining whether a Borrowing Base Deficiency may exist; and costs of
preparing and recording any UCC financing statements or other filings necessary
to perfect the security interest created hereby.

 

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

 

“Facility Payment Date” means the last Business Day of each calendar week.

 

“Fannie Mae” means the Federal National Mortgage Association or any successor
thereto.

“Fannie Mae Contract” has the meaning set forth in Section 4.03.

 

“Fannie Mae Servicing Rights” means Servicing Rights of Borrower with respect to
Mortgage Loans owned, or that have been securitized in MBS guaranteed, by Fannie
Mae.

 

“FHA” means the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto,
and including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.

 

“FHA Approved Mortgagee” means a corporation or institution approved as a
mortgagee by the FHA under the National Housing Act, as amended from time to
time, and applicable FHA Regulations, and eligible to own and service mortgage
loans such as the FHA Loans.

“FHA Loan” means a Mortgage Loan which is the subject of an FHA Mortgage
Insurance Contract.

11

 

“FHA Mortgage Insurance Contract” means the contractual obligation of the FHA
respecting the insurance of a Mortgage Loan.

“FHA Regulations” means the regulations promulgated by the Department of Housing
and Urban Development under the National Housing Act, as amended from time to
time and codified in 24 Code of Federal Regulations, and other Department of
Housing and Urban Development issuances relating to FHA Loans, including the
related handbooks, circulars, notices and mortgagee letters.

“Fidelity Insurance” means insurance coverage with respect to employee errors,
omissions, dishonesty, forgery, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and computer fraud
in an aggregate amount acceptable to Borrower’s regulators.

“Financial Statement Date” has the meaning set forth in Section 3.05(a).

“Financial Statements” means the consolidated financial statements of Guarantor
and Borrower prepared in accordance with GAAP for the year or other period then
ended.

“Fitch” means Fitch Ratings, Inc., or any successor thereto.

“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor
thereto.

“Freddie Mac Servicing Rights” means Servicing Rights of Borrower with respect
to Mortgage Loans owned, or that have been securitized in MBS guaranteed, by
Freddie Mac.

“GAAP” means generally accepted accounting principles in the United States of
America, applied on a consistent basis and applied to both classification of
items and amounts, and shall include, without limitation, the official
interpretations thereof by the Financial Accounting Standards Board, its
predecessors and successors.

“Ginnie Mae” means the Government National Mortgage Association and any
successor thereto.

“Ginnie Mae Account” means (a) the account designated as: Borrower, in its
capacity as seller under the Repurchase Agreement, as agent, trustee, and/or
bailee for Lender, in its capacity as buyer under the Repurchase Agreement,
and/or payments of various mortgagors and/or various owners of interest in loans
– EBO P&I, Account No. 555230001, City National Bank, ABA # 122016066, (b) the
account designated as: Borrower, in its capacity as seller under the Repurchase
Agreement, as agent, trustee, and/or bailee for Lender, in its capacity as buyer
under the Repurchase Agreement, and/or payments of various mortgagors and/or
various owners of interest in loans – FHA/VA Claims, Account No. 555230036, City
National Bank, ABA # 122016066, or (c) such other account as designated in
writing by Lender, in each case, as contemplated by Section 14.ii of the
Repurchase Agreement.

“Ginnie Mae Advance” means a Servicer Advance made by Borrower in connection
with servicing the Ginnie Mae Loans.

12

 

“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide,
Handbook 5500.3, Rev. 1, as amended from time to time, and any related
announcements, directives and correspondence issued by Ginnie Mae.

“Ginnie Mae Loan” means a Mortgage Loan that is subject to a Transaction (as
defined in the Repurchase Agreement) under the Repurchase Agreement and was
purchased from a Ginnie Mae Security in accordance with the terms of the Ginnie
Mae Guide, or purchased by the Borrower shortly after its purchase from a Ginnie
Mae Security.

“Ginnie Mae Security” means a mortgage-backed security guaranteed by Ginnie Mae
pursuant to the Ginnie Mae Guide.

“Ginnie Mae Servicing Rights” means Servicing Rights of Borrower with respect to
Mortgage Loans that are subject to a Ginnie Mae MBS or are owned by or
administered by Ginnie Mae.

“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 Borrower, Guarantor or
Lender, as applicable.

“Guarantee” means, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances for
delinquent taxes and insurance or other obligations in respect of a Mortgaged
Property. The amount of any Guarantee of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs
shall have correlative meanings.

“Guarantor” means Private National Mortgage Acceptance Company, LLC, in its
capacity as guarantor under the Guaranty.

“Guaranty” means the Second Amended and Restated Guaranty, dated as of the date
hereof, as the same may be amended from time to time, pursuant to which
Guarantor fully and unconditionally guarantees the obligations of Borrower
hereunder.

“HUD” means the United States Department of Housing and Urban Development or any
successor thereto.

“Indebtedness” means, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business, so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person; (e) Capital Lease Obligations of such Person; (f) obligations of such
Person under repurchase agreements, sale/buy-back agreements or like
arrangements, including, without limitation, any Indebtedness arising hereunder;
(g) Indebtedness of others Guaranteed by such Person; (h) all obligations of
such Person incurred in connection with the acquisition or carrying of fixed
assets by such Person; (i) Indebtedness of general partnerships of which such
Person is a general partner and (j) with respect to clauses (a)-(i) above both
on and off balance sheet.

13

 

“Interest Payment Date” means, for as long as any Obligations shall remain owing
by Borrower to Lender, the earlier of (i) the first Facility Payment Date of
each calendar month and (ii) the Termination Date.

“Interest Period” means, the period from and including an Interest Payment Date,
up to but excluding the next Interest Payment Date.

“Interest Rate” means CSCOF plus the applicable Margin.

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

“Laws” means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Governmental Authority.

“Lender” means Credit Suisse First Boston Mortgage Capital LLC, together with
its successors, and any assignee of and Participant or Transferee in the Loan.

“License” means any license, permit, approval, right, privilege, quota,
concession, or franchise issued, granted, conferred or otherwise created by a
Governmental Authority.

“Lien” means any lien, claim, charge, restriction, pledge, security interest,
mortgage, deed of trust or other encumbrance.

“Loan” has the meaning assigned to such term in the recitals to this Agreement.

“Loan Advance” has the meaning assigned to such term in the recitals to this
Agreement.

“Loan Documents” means this Agreement, the Pricing Side Letter, the Dedicated
Account Control Agreement, the Note, the Guaranty, the Power of Attorney, the
Underlying Spread Counterparty Power of Attorney, the Security Agreement, the
Securities Account Control Agreement, the Participation Agreements, and the
Underlying Spread Documents as each of the same may hereafter be amended,
supplemented, restated or otherwise modified from time to time.

14

 

“Low Percentage Margin Call” has the meaning specified in Section 2.05(c)
hereof.

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

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

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

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

“Master Spread Acquisition Agreement” means that certain Master Spread
Acquisition and MSR Servicing Agreement, dated as of December 30, 2013, between
the Underlying Spread Counterparty and the Borrower, as amended from time to
time.

“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 Borrower, Guarantor or any Affiliate that is a
party to any Loan Document taken as a whole; (b) a material impairment of the
ability of Borrower, Guarantor or any Affiliate that is a party to any Loan
Document to perform under any Loan Document and to avoid any Event of Default;
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document against Borrower, Guarantor or any Affiliate
that is a party to any Loan Document; or (d) a material adverse effect on the
rights and remedies of Borrower under any of the Underlying Spread Documents.

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

“Maximum Servicer Advance Loan Amount” has the meaning assigned to the term in
the Pricing Side Letter.

“Maximum Servicing Rights Loan Amount” has the meaning assigned to the term in
the Pricing Side Letter.

“MBS” means collateralized mortgage obligations and other mortgage-backed
securities.

“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.

“Mortgage Loan” means a mortgage loan secured by a first mortgage lien on a
one-to-four family residential property.

15

 

“Mortgaged Property” means the real property (including all improvements,
buildings, fixtures and building equipment thereon and all additions,
alterations and replacements made at any time with respect to the foregoing) and
all other collateral securing repayment of the related Mortgage Loan.

“MSR Valuation” shall mean (a) the lesser of (i) the value of the mortgage
servicing rights owned by the Borrower as set forth in the Borrower’s most
recent balance sheet as determined by the Borrower as of such date in accordance
with GAAP and (ii) the Lender’s valuation of such mortgage servicing rights as
determined by the Lender, or (b) if a Third Party Evaluator is used to value the
mortgage servicing rights, the Third Party Evaluator’s valuation of such
mortgage servicing rights as determined by such Third Party Evaluator.

“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been or are required to be made by Borrower
or any ERISA Affiliate and that is covered by Title IV of ERISA.

“Net Income” means, for any period and any Person, the net income of such Person
for such period as determined in accordance with GAAP.

“Net Worth” means, with respect to any Person, an amount equal to, on a
consolidated basis, such Person’s stockholder equity (determined in accordance
with GAAP).

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

“Note” has the meaning assigned to such term in Section 2.01(b).

“Notice” or “Notices” means all requests, demands and other communications, in
writing (including facsimile transmissions), 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.

“Notice of Borrowing” has the meaning assigned to such term in Section 2.02.

“NPV” means, with respect to any Mortgaged Property or REO Property relating to
a Mortgage Loan, the net property value of such Mortgaged Property or REO
Property, as determined by Borrower (which shall equal the net adjusted proceeds
amount as determined by Borrower’s accretion model on a monthly basis) by
reference to the most recently available Appraised Value of such property;
provided that such determination may be adjusted further by Lender in its sole
discretion by subtracting therefrom all outstanding and reasonably anticipated
costs and expenses in connection with such Mortgage Loan, including without
limitation, all Protective Advances and the foreclosure and liquidation of the
related Mortgaged Property or REO Property, as applicable.

16

 

“Obligations” means (a) all of Borrower’s indebtedness, obligations to pay the
outstanding principal balance of the Loan, together with interest thereon on the
Termination Date, outstanding interest due on each Interest Payment Date, and
other obligations and liabilities, to Lender or its Affiliates arising under, or
in connection with, the Loan Documents, whether now existing or hereafter
arising; (b) any and all sums reasonably incurred and paid by Lender or on
behalf of Lender in order to preserve any Collateral or its interest therein;
(c) in the event of any proceeding for the collection or enforcement of any of
Borrower’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 Collateral, or
of any exercise by Lender of its rights under the Loan Documents, including,
without limitation, reasonable attorneys’ fees and disbursements and court
costs; (d) all of Borrower’s indemnity obligations to Lender pursuant to the
Loan Documents; and (e) all of Borrower’s and Guarantor’s obligations under the
Repurchase Agreement and other Repurchase Documents.

“OFAC” has the meaning set forth in Section 3.27.

“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).

“Outstanding Balance” means, of any Receivable at any time, the then outstanding
amount thereof.

“Participant” means any Person that has purchased a participation in this
Agreement pursuant to Section 9.02.

“Participation Agreement” means each Master Spread Participation Agreement or
Master Spread Acquisition Agreement, as applicable, each as amended from time to
time, related to Servicing Rights subject to this Agreement, in form and
substance acceptable to Lender and identified on Schedule 2 hereof.

 

“Participation Certificate” means the original participation certificate issued
and delivered in connection with a Participation Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

“Pension Protection Act” means the Pension Protection Act of 2006.

“Person” means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

“Plan” means an employee benefit or other plan established or maintained by any
Borrower or any ERISA Affiliate and covered by Title IV of ERISA, other than a
Multiemployer Plan.

“Pool Factor Event” has the meaning assigned to such term in the Pricing Side
Letter.

17

 

“Portfolio Excess Spread” means, collectively, the Retained Portfolio Excess
Spread and the Repledge Portfolio Excess Spread.

“Power of Attorney” has the meaning set forth in Section 4.08(e) hereof.

“Pricing Side Letter” means the second amended and restated letter agreement
dated as of the Closing Date, among Lender, Borrower and the Guarantor as the
same may be amended from time to time.

“Proceeds” means “proceeds” as defined in Section 9-102(a)(64) of the UCC.

“Prohibited Person” has the meaning set forth in Section 3.27 hereof.

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

“Protective Advance” means any servicing advance (including, but not limited to,
any advance made to pay taxes and insurance premiums; any advance to pay the
costs of protecting the value of any real property or other security for a
mortgage loan; and any advance to pay the costs of realizing on the value of any
such security) made by Borrower in connection with the Mortgage Loans included
in the portfolio of Mortgage Loans serviced pursuant to the Servicing Contracts.

“Rating Agency” means any of S&P, Moody’s or Fitch.

“Receivables” means, collectively, the reimbursement rights relating to Servicer
Advances under each Servicing Contract, each and every right of Borrower to be
reimbursed for the Servicer Advances under a Servicing Contract, whether now
existing or hereafter arising, and whether or not constituting an “account” or a
“general intangible” under the UCC but not evidenced by “chattel paper” or an
“instrument,” as defined in the UCC, and the Related Security.

“Receivables Borrowing Base” means the aggregate Collateral Value of all
Servicer Advances. The Servicer Advances to be added to the Receivables
Borrowing Base on any Advance Date (other than the initial Advance Date) shall
be (a) those Protective Advances disbursed during the period from and including
the second preceding Servicing Cut-off Date through but not including the
related Servicing Cut-off Date immediately prior to the Advance Date and
(b) those newly disbursed Delinquency Advances disbursed as of the date
preceding the related Advance Date.

“Receivables Borrowing Base Deficiency” has the meaning set forth in Section
2.05(a).

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

“Receivables Dedicated Account” means the demand deposit account “PennyMac Loan
Services, LLC in trust for Credit Suisse First Boston Mortgage Capital LLC –
Receivables Dedicated Account”, which account has been established by Lender for
the purpose of holding cash proceeds of Receivables for the benefit of Lender at
City National Bank.

18

 

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

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

“Related Security” means with respect to any Asset, (a) all security interests
or Liens and property subject thereto from time to time, if any, purporting to
secure payment of such Asset, whether pursuant to the Servicing Contract related
to such Asset or otherwise, together with all financing statements covering any
collateral securing such Asset; (b) all guarantees, indemnities, letters of
credit, insurance or other agreements or arrangements of any kind from time to
time supporting or securing payment of such Asset whether pursuant to the
Servicing Contract related to such Asset or otherwise; and (c) any and all
Proceeds of the foregoing.

“REO Property” means real property acquired by Borrower, including a Mortgaged
Property acquired through foreclosure of a Mortgage Loan or by deed in lieu of
such foreclosure.

“Repledge Portfolio Excess Spread” means any Primary Portfolio Excess Spread or
Secondary Portfolio Excess Spread, each as defined in the Master Spread
Acquisition Agreement, which is subject to an Underlying Spread Transaction,
from time to time.

“Repurchase Agreement” means that certain Amended and Restated Master Repurchase
Agreement, dated as of May 3, 2013, among Credit Suisse First Boston Mortgage
Capital LLC, Borrower and Guarantor, as amended from time to time.

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

“Repurchase Rights” has the meaning set forth in Section 4.01(c) hereof.

“Requirement of Law” means, with respect to any Person, any law, treaty, rule or
regulation or determination of an arbitrator, a court or other governmental
authority, applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

“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 Borrower and Guarantor as of the date
hereof are listed on Schedule 3 hereto.

“Retained Portfolio Excess Spread” means any Portfolio Excess Spread, as defined
in, and participated by, the Borrower under, the applicable Participation
Agreement, from time to time, and retained by Borrower.

19

 

“S&P” means Standard & Poor’s Ratings Services, or any successor thereto.

“SEC” means the Securities and Exchange Commission, or any successor thereto.

“Securities Account Control Agreement” means that certain Amended and Restated
Securities Account Control Agreement dated as of October 31, 2014, among Lender
in its capacity hereunder and in its capacity as buyer under the Repurchase
Agreement, Borrower in its capacity hereunder and in its capacity as seller
under the Repurchase Agreement and in its capacity as servicer under the
Repurchase Agreement, and Securities Intermediary and other parties as joined
thereto from time to time, as may be amended, supplemented or replaced from time
to time.

“Securities Intermediary” means City National Bank, and its permitted successors
and assigns, or such other party specified by Lender and agreed to by Borrower,
which approval shall not be unreasonably withheld.

“Securitization Transaction” means a transaction whereby a Mortgage Loan is
transferred to a trust as part of a publicly-issued and/or privately placed,
rated or unrated, mortgage pass-through transaction including, without
limitation, Agency MBS.

“Security Agreement” means that certain Security and Subordination Agreement,
dated as of December 30, 2013, between the Underlying Spread Counterparty and
the Lender, as amended from time to time.

“Servicer Advance” means a Delinquency Advance or a Protective Advance.

“Servicing Appraisal” means a written appraisal or evaluation by Lender or an
appraiser approved by Lender in its sole good faith discretion evaluating the
Appraised Value of the Servicing Rights pledged hereunder.

“Servicing Contracts” means, collectively, (i) with respect to all Assets other
than Ginnie Mae Advances, those servicing agreements described on Schedule 2
attached hereto, as amended from time to time, to which Borrower is a party,
pursuant to which Borrower acts as the servicer of portfolios of Mortgage Loans
or specified Mortgage Loans, and by which Borrower’s servicing obligations are
governed with respect to an Eligible Securitization Transaction and with respect
to Servicing Rights, in the case of each Servicing Contract between Borrower and
an Agency, subject to an Acknowledgement Agreement with such Agency, and (ii)
with respect to Ginnie Mae Advances, the Repurchase Agreement to the extent of
the servicing requirements set forth therein, pursuant to which Borrower will
service the related Ginnie Mae Loans. For all purposes of this Agreement, the
term “Servicing Contracts” shall include any and all instruments, agreements,
invoices or other writings, which gives rise to or otherwise evidence any of the
Receivables or Servicing Rights.

“Servicing Cut-off Date” means the day of each calendar month used by the
Borrower in order to determine the amount of a Loan Advance which is more
particularly described in Schedule 2 hereto.

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“Servicing Rights” means all of the Borrower’s rights and interests under any
Servicing Contract, including the rights to (a) service the Mortgage Loans that
are the subject matter of such Servicing Contract and (b) be compensated,
directly or indirectly, for doing so.

“Servicing Rights Borrowing Base” means the aggregate Collateral Value of those
Servicing Rights and the related Participation Certificates pledged to Lender
hereunder.

“Servicing Rights Borrowing Base Deficiency” has the meaning set forth in
Section 2.05(b).

“Servicing Rights Borrowing Base Margin Call” has the meaning set forth in
Section 2.05(b).

“Servicing Rights Collateral” means (i) all Servicing Rights arising under or
related to any Servicing Contract; (ii) all rights to reimbursement of amounts
due under the related Servicing Contract; (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,
without limitation, all of Borrower’s rights, title and interest in and under
the Servicing Contracts); and (v) any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.

“Servicing Rights Dedicated Account” means the (i) demand deposit account
“PennyMac Loan Services, LLC in trust for Credit Suisse First Boston Mortgage
Capital LLC – Servicing Rights Dedicated Account”, which account has been
established by Lender for the purpose of holding cash proceeds of Servicing
Rights other than Agency Servicing Rights and the related Participation
Certificate for the benefit of Lender at City National Bank and (ii) demand
deposit account “PennyMac Loan Services, LLC in trust for Credit Suisse First
Boston Mortgage Capital LLC – GNMA Servicing Rights Dedicated Account”, which
account has been established by Lender for the purpose of holding cash proceeds
of Ginnie Mae Servicing Rights for the benefit of Lender at City National Bank.

“SPS” means Select Portfolio Servicing, Inc. and its successors and permitted
assigns.

“Stop Advance Trigger” means, with respect to a Mortgage Loan, the point at
which, pursuant to Borrower’s recoverability model, Borrower is required to stop
making Delinquency Advances and/or Protective Advances.

“Subordinated Debt” means, Indebtedness of Borrower (i) which is unsecured,
(ii) of which no part of the principal of such Indebtedness is required to be
paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date which is one year following the
Termination Date and (iii) of which the payment of the principal of and interest
on such Indebtedness and other obligations of Borrower in respect of such
Indebtedness are subordinated to (x) the prior payment in full of the principal
of and interest (including post-petition obligations) on the Loan Advances and
(y) all other obligations and liabilities of Borrower to Lender hereunder, in
all cases, on terms and conditions approved in writing by Lender and all other
terms and conditions of which are satisfactory in form and substance to Lender.

21

 

“Subsidiary” means, with respect to any Person, any corporation, partnership or
other entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

“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.

“Test Period” has the meaning assigned to such term in the Pricing Side Letter.

“Third Party Evaluator” shall mean an appraiser approved by Lender in its sole
good faith discretion.

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

“Trigger Event” has the meaning assigned thereto in the Security Agreement.

“Underlying Spread Loan Agreement” means the Loan and Security Agreement,
between Borrower, in its capacity as lender thereunder, and Underlying Spread
Counterparty, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

“Underlying Spread Counterparty” means PennyMac Holdings, LLC, and its permitted
successors and assigns.

“Underlying Spread Counterparty Power of Attorney” means the Power of Attorney
required to be executed and delivered by the Underlying Spread Counterparty
pursuant to the Security Agreement, as the same may be amended from time to
time.

“Underlying Spread Documents” means the Underlying Spread Loan Agreement,
pricing letter, confirmations and all documents ancillary thereto that evidence
an Underlying Spread Transaction in the form approved by Lender in writing in
its sole discretion with any material modifications approved by Lender in
writing in its sole discretion (excluding provisions related to the advance rate
or interest rate of such Underlying Spread Transactions, which shall not be
subject to Lender review or approval).

“Underlying Spread Transaction” means a transaction between Borrower and
Underlying Spread Counterparty whereby Underlying Spread Counterparty pledges
the Repledge Portfolio Excess Spread and the corresponding Participation
Certificate to Borrower against the transfer of funds by Borrower, which
Repledge Portfolio Excess Spread is concurrently or consecutively pledged to
Lender hereunder.

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“Unencumbered Mortgage Servicing Rights” means any mortgage servicing rights
that are not Encumbered Mortgage Servicing Rights.

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

“VA” means the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

“VA Approved Lender” means a lender which is approved by the VA to act as a
lender in connection with the origination of VA Loans.

 

“VA Loan” means a Mortgage Loan which is subject of a VA Loan Guaranty Agreement
as evidenced by a loan guaranty certificate, or a Mortgage Loan which is a
vendor loan sold by the VA.

“VA Loan Guaranty Agreement” means the obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the mortgagor pursuant to the Servicemen’s Readjustment Act, as
amended.

“Weekly Report Date” has the meaning set forth in Section 6.05.

Section 1.02        Other Defined Terms. (a)  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.

(b)               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.”

23

 

ARTICLE II

GENERAL TERMS

Section 2.01        Loan.(a) (a)  Subject to the terms and conditions hereof,
Lender agrees to make the Loan to Borrower in the principal amount outstanding
at any one time not to exceed the Maximum Loan Amount. During the Commitment
Period, Borrower may utilize the Commitment by requesting Loan Advances,
Borrower may repay the Loan in whole or in part at any time during such period,
and additional Loan Advances may be made all in accordance with the terms and
conditions hereof. Lender’s obligation to make a Loan Advance pursuant to the
terms of this Agreement shall terminate on the Termination Date. Notwithstanding
the foregoing, Lender shall have no commitment or obligation to make any Loan
Advance in connection with pledged Servicing Rights to the extent such Loan
Advance exceeds the lesser of (i) the Maximum Servicing Rights Loan Amount and
(ii) the Servicing Rights Borrowing Base. Notwithstanding the foregoing, Lender
shall have no commitment or obligation to make any Loan Advance in connection
with Receivables to the extent such Loan Advance exceeds the lesser of (i) the
Maximum Servicer Advance Loan Amount and (ii) the Receivables Borrowing Base.

(b)               The Loan shall initially be evidenced by a single amended and
restated promissory note (the “Note”) of Borrower in the form of Exhibit A
hereto dated the Closing Date and payable to Lender. Borrower agrees that Lender
is authorized to record on the Note (i) the date and amount of each Loan Advance
made by Lender pursuant hereto and (ii) the date and amount of each payment of
principal of each Loan Advance, in the books and records of Lender in such
manner as is reasonable and customary for Lender, and that a certificate of an
officer of Lender, setting forth in reasonable detail the information so
recorded, shall constitute prima facie evidence of the accuracy of the
information so recorded, absent manifest error; provided that the failure to
make any such recording shall not in any way affect the Obligations of Borrower
or the rights of Lender hereunder or under the Note.

Section 2.02        Procedure for Borrowing. (a)  Borrower may borrow under the
Facility during the Commitment Period on any Advance Date; provided, that
Borrower shall have given Lender irrevocable notice (each, a “Notice of
Borrowing”), which notice (i) shall be substantially in the form of Exhibit C,
(ii) shall be signed by a Responsible Officer of Borrower and be received by
Lender prior to 3:00 p.m. (New York time) three (3) Business Days prior to the
related Advance Date, and (iii) shall specify (A) the dollar amount of the
requested Loan Advance, (B) the aggregate amount of Receivables subject to the
Loan Advance, if applicable, (C) the value of the Portfolio Excess Spread on
Borrower’s books and records, if applicable, (D) the value of the Servicing
Rights on Borrower’s books and records, if applicable; provided that such value
shall break out that portion attributable to the related Portfolio Excess
Spread, (E) the requested Advance Date, (F) the information required to be
included in the Asset Schedule with respect to each such Asset in mutually
acceptable electronic form and (G) the request for approval of the related
Servicing Contract (to the extent not previously approved hereunder). Each
Notice of Borrowing on any Advance Date shall be in an amount equal to at least
$25,000.

(b)               If Borrower shall deliver to Lender a Notice of Borrowing that
satisfies the requirements of Section 2.02(a), Lender will notify Borrower of
its intent to remit the requested Loan Amount one (1) Business Days prior to the
requested Advance Date. If all applicable conditions precedent set forth in
Article V have been satisfied on or prior to the Advance Date, then subject to
the foregoing, on the Advance Date, Lender shall remit the amount of the
requested Loan Advance in U.S. Dollars and in immediately available funds
(i) with respect to that portion of the Loan Advance attributable to a
Delinquency Advance, to the trustee’s account under the related Securitization
Transaction and (ii) with respect to that portion of the Loan Advance
attributable to a Servicing Right or a Protective Advance, to the account
specified by Borrower.

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(c)                In the event that on the Advance Date excess funds remain in
the Dedicated Accounts (after application of payments in accordance with
Section 2.07 but not including any amounts to be disbursed to Borrower), Lender
may apply such excess funds to the amount of the requested Loan Advance.

(d)               Upon making each Loan Advance hereunder, the Asset Schedule
shall be automatically updated to include each of the Assets listed on the Asset
Schedule attached to the Notice of Borrowing.

Section 2.03        Repayment and Prepayment of Principal. (a)  Borrower hereby
promises to repay the entire outstanding principal amount of the Loan on the
Termination Date.

(b)               Without limiting the foregoing, on each Interest Payment Date,
Borrower shall sweep all amounts received with respect to (i) Servicing Rights
to the applicable Servicing Rights Dedicated Account and (ii) Receivables to the
Receivables Dedicated Account in accordance with Section 6.14 hereof to be
applied in accordance with Section 2.07 hereof (provided that Borrower shall
remit to each of the applicable Dedicated Accounts, in accordance with Section
2.14 hereof, all proceeds received with respect to Assets not otherwise required
to be deposited in a segregated custodial or escrow account for the applicable
transaction pursuant to the related Servicing Contract).

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

Section 2.04        Interest. On each Interest Payment Date, Borrower hereby
promises to pay to Lender all accrued and unpaid interest on the Loan, as
invoiced by Lender three (3) Business Days prior to the related Interest Payment
Date (the “Interest Statement Date”); provided that if Lender fails to deliver
such statement on the Interest Statement Date, on such Interest Payment Date
Borrower shall pay the amount which Borrower calculates as the interest due and
upon delivery of the statement, Borrower shall remit to Lender any shortfall, or
Lender shall refund to Borrower any excess, in the interest payment paid.
Interest shall accrue each day on the unpaid principal amount of the Loan at a
rate per annum equal to the Interest Rate. Interest on the Loan shall be
computed on the basis of the actual number of days in each Interest Period and a
360-day year.

Section 2.05        Borrowing Base Deficiencies. (a)  If at any time the
aggregate outstanding amount of Loan Advances made in connection with
Receivables exceeds the Receivables Borrowing Base in effect at such time, as
determined by Lender (such excess, a “Receivables Borrowing Base Deficiency”),
then Lender may by notice to Borrower require Borrower to transfer to Lender
cash in an amount at least equal to the Receivables Borrowing Base Deficiency
(such requirement, a “Receivables Borrowing Base Margin Call”).

(b)               If at any time the aggregate outstanding amount of Loan
Advances made in connection with pledged Servicing Rights exceeds the Servicing
Rights Borrowing Base in effect at such time, as determined by Lender (such
excess, a “Servicing Rights Borrowing Base Deficiency”), then Lender may by
notice to Borrower require Borrower to transfer to Lender cash in an amount at
least equal to the Servicing Rights Borrowing Base Deficiency (such requirement,
a “Servicing Rights Borrowing Base Margin Call” and together with a Receivables
Borrowing Base Margin Call, a “Margin Call”).

25

 

(c)                Notice delivered pursuant to Section 2.05(a) or Section
2.05(b) may be given by any written or electronic means. With respect to a
Margin Call in the amount of less than 5% of the outstanding principal amount of
the Loan (a “Low Percentage 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; 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 Business Day following the date of such
notice. With respect to all Margin Calls other than Low Percentage Margin Calls,
any notice given before 10:00 a.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 such Business Day; notice given after 10:00 a.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. The
foregoing time requirements for satisfaction of a Margin Call are referred to as
the “Margin Deadlines”. The failure of Lender, on 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 Lender to do
so at a later date. Borrower and Lender each agree that a failure or delay by
Lender to exercise its rights hereunder shall not limit or waive Lender’s rights
under this Agreement or otherwise existing by law or in any way create
additional rights for Borrower.

(d)               In the event that a Borrowing Base Deficiency exists, Lender
may retain any funds received by it to which Borrower would otherwise be
entitled hereunder, which funds (i) may be held by Lender against the related
Borrowing Base Deficiency or (ii) may be applied by Lender against the Loan.
Notwithstanding the foregoing, Lender 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. Borrower absolutely, unconditionally, and
irrevocably, shall make, or cause to be made, all payments required to be made
by Borrower hereunder. Borrower shall deposit or cause to be deposited all
amounts constituting collection, payments and proceeds of Assets (including,
without limitation, all fees and proceeds of sale) in the Dedicated Accounts as
set forth in Section 6.14.

Section 2.07        Application of Payments. (a)  On each Facility Payment Date
and each Interest Payment Date, Borrower shall prepare and deliver to Lender and
the depository institution where the Dedicated Accounts have been established a
distribution worksheet detailing the application of amounts on deposit in the
Dedicated Accounts in accordance with this Section 2.07. The application of
payments by Lender to the reduction of the Obligations shall, in the absence of
manifest error, be binding upon Borrower.

26

 

(b)               On each Facility Payment Date (other than any Facility Payment
date which is also an Interest Payment Date which shall be governed by Section
2.07(c)), all amounts on deposit in the Receivables Dedicated Account and then
all amounts on deposit in each Servicing Rights Dedicated Account shall be
applied as follows:

(i)            first, to the payment of all non-principal amounts (including,
without limitation, Expenses) other than accrued and unpaid interest owing with
respect to the Loan;

(ii)            second, in the event that a Servicer Advance is paid in full, to
the payment of outstanding principal with respect to the Loan;

(iii)            third, without limiting the rights of Lender under Section
2.05, to the payment of principal to satisfy any Borrowing Base Deficiency owing
with respect to the Loan;

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

(v)            fifth, any remainder to Borrower.

(c)                On each Interest Payment Date, all amounts on deposit in the
Receivables Dedicated Account and then all amounts on deposit in each Servicing
Rights Dedicated Account shall be applied as follows:

(i)            first, to the payment of any accrued and unpaid interest owing
with respect to the Loan;

(ii)            second, in the same order of priority as set forth in Section
2.07(b)(i)-(v)

(d)               With respect to prepayments pursuant to Section 2.03(c), such
amounts shall be applied as follows:

(i)            first, to all non-principal amounts (including, without
limitation, Expenses) owing with respect to the Loan (other than accrued and
unpaid interest);

(ii)            second, to the payment of accrued and unpaid interest owing with
respect to the Loan;

(iii)            third, to the payment of principal with respect to the Loan
until reduced to zero; and

(iv)            fourth, to payment of all costs and fees and any other
Obligations.

27

 

(e)                Notwithstanding the preceding provisions, if an Event of
Default shall have occurred hereunder, all funds in the Receivables Dedicated
Account and then all funds in each Servicing Rights Dedicated Account shall be
applied as follows:

(i)            first, in the same order of priority as set forth in Section
2.07(c)(i)-(ii);

(ii)            second, to the payment of outstanding principal with respect to
the Loan until reduced to zero;

(iii)            third, to payment of all costs and fees and any other
Obligations; and

(iv)            fourth, any remainder to Borrower.

Section 2.08        Use of Proceeds and Requests for Advances. (a)  The proceeds
of the Loan shall be used exclusively by Borrower to satisfy its obligation to
make Protective Advances and Delinquency Advances pursuant to the terms of the
related Servicing Contract and to finance the Receivables and existing Servicing
Rights or to purchase new Servicing Rights, as applicable.

(b)               To the extent that Borrower is able to apply funds on deposit
in a custodial account or trustee account in order to satisfy its obligation to
make a Protective Advance or a Delinquency Advance pursuant to the terms of the
related Securitization Transaction, Borrower shall first apply such funds in the
custodial account or trustee account in order to make the related Protective
Advance or Delinquency Advance prior to requesting and receiving a Loan Advance
hereunder.

Section 2.09        Recourse. Notwithstanding anything else to the contrary
contained or implied herein or in any other Loan Document, Lender shall have
full, unlimited recourse against Borrower and Guarantor and their respective
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 Lender’s certificate of incorporation
and by-laws or other organizational or governing documents) or any change in the
interpretation or application thereof or compliance by Lender 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 date hereof:

(i)            shall subject Lender to any tax of any kind whatsoever with
respect to this Agreement or the Loan (excluding income taxes, branch profits
taxes, franchise taxes or similar taxes imposed on Lender as a result of any
present or former connection between Lender and the United States, other than
any such connection arising solely from Lender 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 Lender 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 Lender which is not
otherwise included in the determination of the Interest Rate hereunder; or

(iii)            shall impose on Lender any other condition;

28

 

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

(b)               If Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to Lender’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 Lender or any corporation controlling
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) from any Governmental Authority made subsequent to the
date hereof shall have the effect of reducing the rate of return on Lender’s or
such corporation’s capital as a consequence of its obligations hereunder to a
level below that which Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Lender’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
Lender to be material, then from time to time, Borrower shall promptly pay to
Lender such additional amount or amounts as will compensate Lender for such
reduction.

(c)                If Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.10, it shall promptly notify Borrower 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 Lender to Borrower
shall be conclusive in the absence of manifest error.

Section 2.11        Taxes. (a)  Any and all payments by Borrower or Guarantor
under or in respect of this Agreement or any other Loan Documents to which
Borrower or Guarantor 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 Borrower or Guarantor 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
Loan Documents to Lender (including for purposes of Section 2.10 and this
Section 2.11, any assignee, successor or participant), (i) Borrower or
Guarantor, as applicable, shall make all such deductions and withholdings in
respect of Taxes, (ii) Borrower or Guarantor, as applicable, 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 Borrower or Guarantor, as
applicable, shall be increased as may be necessary so that after Borrower or
Guarantor, as applicable, has made all required deductions and withholdings
(including deductions and withholdings applicable to additional amounts payable
under this Section 2.11) such Lender 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 Lender, Taxes that are imposed on
its overall net income (and franchise taxes imposed in lieu thereof) by the
jurisdiction under the laws of which such Lender is organized or of its
Applicable Lending Office, or any political subdivision thereof, unless such
Taxes are imposed as a result of Lender having executed, delivered or performed
its obligations or received payments under, or enforced, this Agreement or any
of the other Loan Documents (in which case such Taxes will be treated as
Non-Excluded Taxes).

29

 

(b)               In addition, Borrower and Guarantor hereby agree 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 Loan Document or from the
execution, delivery or registration of, any performance under, or otherwise with
respect to, this Agreement or any other Loan Document (collectively, “Other
Taxes”).

(c)                Borrower and Guarantor hereby agree to indemnify Lender 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 Borrower or Guarantor, as applicable, under this Section 2.11
imposed on or paid by such Lender and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. The indemnity by Borrower and Guarantor 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 Borrower and Guarantor under the indemnity
set forth in this Section 2.11(c) shall be paid within ten (10) days from the
date on which Lender makes written demand therefor.

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

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

Section 2.13        Intentionally Omitted.

Section 2.14        Dedicated Accounts.

30

 

Lender shall establish and maintain each of the Dedicated Accounts in the form
of a time deposit or demand account. Receivables funds received and retained by
Borrower pursuant to the applicable Servicing Contract shall promptly, in any
event within two (2) Business Days after receipt, be deposited in the
Receivables Dedicated Account. Amounts received on account of Servicing Rights
and Portfolio Excess Spread (including Repledge Portfolio Excess Spread) and
retained by Borrower pursuant to the applicable Servicing Contract or
Participation Agreement, as the case may be, shall promptly, in any event within
two (2) Business Days after receipt, be deposited in the applicable Servicing
Rights Dedicated Account. Funds deposited in the Dedicated Accounts (including
any interest paid on such funds) may be distributed only in accordance with
Section 2.07. Upon the Termination Date and the payment of all amounts due by
Borrower hereunder, all amounts on deposit in the Dedicated Accounts shall be
remitted to Borrower.

Lender, in its capacity as buyer under the Repurchase Agreement, has established
the Ginnie Mae Account under the Repurchase Agreement, and certain amounts on
deposit therein shall constitute proceeds of the Ginnie Mae Advances. Lender
hereby appoints and authorizes Agent to act as agent solely with respect to
performance of the following duties, in each case, on behalf of Lender: (i)
maintaining the Ginnie Mae Account, and (ii) taking such actions as Agent deems
appropriate to administer the Ginnie Mae Account. The Agent shall have no duties
or responsibilities except those expressly set forth in this Section 2.14.

Section 2.15        Additional Securitization Transactions, Servicing Contracts
and Participation Agreements. In the event that Borrower wishes to obtain a Loan
Advance under a Securitization Transaction, Servicing Contract or Participation
Agreement not listed on Schedule 2 hereto, Borrower shall deliver a written
request, substantially in the form of Exhibit F hereto, for approval of such
Securitization Transaction, Servicing Contract or Participation Agreement to
Lender for Lender’s approval, which may be withheld in Lender’s sole discretion.
Upon approval in writing by Lender of such additional Securitization
Transaction, Servicing Contract or Participation Agreement as an Eligible
Securitization Transaction and filing of a UCC-3 amendment adding the
Securitization Transaction, Servicing Contract or Participation Agreement,
Schedule 2 shall be automatically updated to include each additional Eligible
Securitization Transaction, Servicing Contract or Participation Agreement
identified thereon.

Section 2.16        Commitment Fee. Borrower shall pay the Commitment Fee 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
Lender at such account designated by Lender.

Section 2.17        Termination. (a)  Notwithstanding anything to the contrary
set forth herein, if a Borrower Termination Option occurs, Borrower may, upon
five (5) Business Days’ prior notice of such event, terminate this Agreement and
the Termination Date shall be deemed to have occurred (upon the expiration of
the five (5) Business Days).

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

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(c)                In connection with Borrower’s exercise of a Borrower
Termination Option, Lender shall refund to Borrower an amount equal to the
Commitment Fee prorated for the number of days remaining from and including the
deemed Termination Date to but excluding the then scheduled Termination Date.

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

Section 2.18        Repledge Portfolio Excess Spread.

(a)                With respect to any Repledge Portfolio Excess Spread that is
pledged by Borrower, Underlying Spread Counterparty shall first pledge such
Repledge Portfolio Excess Spread under the Security Agreement and also under the
Underlying Spread Loan Agreement, provided that Borrower provides notice thereof
to Lender and such Repledge Portfolio Excess Spread is and continues to be an
Eligible Asset.

(b)               Borrower hereby agrees and acknowledges that such Underlying
Spread Transaction is subject to and subordinate to (i) Lender’s rights
hereunder and (ii) Lender’s security interest in the Repledge Portfolio Excess
Spread and rights under the Security Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each of Borrower and Guarantor represents and warrants to Lender as of the date
hereof and as of each Advance Date that:

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

Section 3.02        Licenses. Each of Borrower and Guarantor 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. Borrower has the requisite power
and authority and legal right to service Mortgage Loans and to own, sell and
grant a lien on all of its right, title and interest in and to the Assets. Each
of Borrower and Guarantor 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 Loan Document and
any Notice of Borrowing.

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Section 3.03        Power. Each of Borrower and Guarantor 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. Each of Borrower and Guarantor has all
necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Loan Documents, as
applicable. This Agreement, any Notice of Borrowing and the Loan Documents have
been (or, in the case of Loan Documents and any Notice of Borrowing not yet
executed, will be) duly authorized, executed and delivered by Borrower and
Guarantor, all requisite or other corporate action having been taken, and each
is valid, binding and enforceable against Borrower and Guarantor 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)  Guarantor has heretofore
furnished to Lender a copy of (a) its consolidated balance sheet and the
consolidated balance sheets of its consolidated Subsidiaries for the fiscal year
of Guarantor ended December 31, 2014 and the related consolidated statements of
income for Guarantor and its consolidated Subsidiaries for such fiscal year,
with the opinion thereon of Deloitte & Touche LLP and (b) its consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal period of Guarantor ended December 31,
2014 and the related consolidated statements of income for Guarantor and its
consolidated Subsidiaries for such quarterly fiscal period. All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial condition of Guarantor and its Subsidiaries
and the consolidated results of their operations as at such dates and for such
fiscal periods, all in accordance with GAAP applied on a consistent basis as at
the end of, and for, such period (subject to normal year-end adjustments). Since
December 31, 2014, there has been no material adverse change in the consolidated
business, operations or financial condition of Guarantor and its consolidated
Subsidiaries taken as a whole from that set forth in said financial statements
nor is Guarantor aware of any state of facts which (with notice or the lapse of
time) would or could result in any such material adverse change. Guarantor has,
on the date of the statements delivered pursuant to this Section 3.05 (the
“Financial Statement Date”) 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 Guarantor except as heretofore disclosed
to Lender in writing.

(b)               Borrower has heretofore furnished to Lender a copy of (a) its
balance sheet for the fiscal year of Borrower ended December 31, 2014 and the
related statements of income for Borrower for such fiscal year, with the opinion
thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly
fiscal period of Borrower ended December 31, 2014 and the related statements of
income for Borrower for such quarterly fiscal period. All such financial
statements are complete and correct and fairly present, in all material
respects, the financial condition of Borrower 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. Since December 31, 2014, there has been no
material adverse change in the consolidated business, operations or financial
condition of Borrower from that set forth in said financial statements nor is
Borrower aware of any state of facts which (with notice or the lapse of time)
would or could result in any such material adverse change. Borrower has, on the
Financial Statement Date 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 Borrower except as heretofore disclosed
to Lender in writing.

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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, and there
is no Event of Default by Underlying Spread Counterparty under the Underlying
Spread Documents.

Section 3.07        Solvency. Each of Borrower and Guarantor is solvent and will
not be rendered insolvent by any Loan Advance (including, for the avoidance of
doubt, the pledge of any Repledge Portfolio Excess Spread by Borrower) and,
after giving effect to such Loan Advance, will not be left with an unreasonably
small amount of capital with which to engage in its business. Neither Borrower
nor Guarantor intends 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. Borrower is not
pledging any Collateral with any intent to hinder, delay or defraud any of its
creditors.

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

Section 3.09        True and Complete Disclosure. All information, reports,
exhibits, schedules, financial statements or certificates of Borrower, Guarantor
or any Affiliate thereof or any of their officers furnished or to be furnished
to Lender in connection with the initial or any ongoing due diligence of
Borrower, Guarantor or any Affiliate or officer thereof, negotiation,
preparation, or delivery of the Loan Documents 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 Borrower or Guarantor of this Agreement, any Notice of Borrowing
and the Loan Documents.

Section 3.11        Litigation. There is no action, proceeding or investigation
pending with respect to which either Borrower or Guarantor has received service
of process or, to the best of Borrower’s or Guarantor’s knowledge threatened
against it before any court, administrative agency or other tribunal (A)
asserting the invalidity of this Agreement, any Loan Advance, Notice of
Borrowing or any Loan Document, (B) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement, any Notice of Borrowing or
any Loan Document, (C) makes a claim individually or in the aggregate in an
amount greater than $10,000,000, (D) which requires filing with the Securities
and Exchange Commission in accordance with the 1934 Act or any rules thereunder
or (E) which might materially and adversely affect the validity of the Mortgage
Loans or the performance by it of its obligations under, or the validity or
enforceability of, this Agreement, any Notice of Borrowing or any Loan Document.

Section 3.12        Material Adverse Change. There has been no material adverse
change in the business, operations, financial condition, properties or prospects
of Borrower, Guarantor or their Affiliates since the date set forth in the most
recent financial statements supplied to Lender.

Section 3.13        Ownership. (a)  Borrower has good title to all of the
Collateral (other than the Repledge Portfolio Excess Spread for which Borrower
has the right to pledge such Repledge Portfolio Excess Spread hereunder), 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 Collateral was acquired by Borrower 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 Borrower
and any other party which would modify, release, terminate or delay the
attachment of the security interests granted to Lender under this Agreement.

(d)               The provisions of this Agreement are effective to create in
favor of Lender a valid security interest in all right, title and interest of
Borrower in, to and under the Collateral.

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

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Section 3.14        The Servicing Contracts and Participation Agreements. Lender
has received copies of each Servicing Contract and Participation Agreement
(including, without limitation, 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 Borrower hereby
certifies that the copies delivered to Lender by Borrower 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 Lender. On and after the initial Advance
Date, each such document to which Borrower is a party has been duly executed and
delivered by Borrower and is in full force and effect, and no default or
material breach has occurred and is continuing thereunder.

Section 3.15        Taxes. Borrower, Guarantor and their 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 Borrower, Guarantor and their Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of Borrower or Guarantor, as
applicable, adequate.

Section 3.16        Investment Company. Neither Borrower 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 of 1940,
as amended; provided, however, that any entity that is under the management of
PNMAC Capital Management LLC in its capacity as an “investment adviser” within
the meaning of the Investment Advisers Act of 1940 and is otherwise not directly
or indirectly owned or controlled by Borrower shall not be deemed a “Subsidiary”
for the purposes of this Section 3.16.

Section 3.17        Chief Executive Office; Jurisdiction of Organization. On the
date hereof, Borrower’s chief executive office, is, and has been, located at
6101 Condor Drive, Moorpark, CA 93021. On the Effective Date, Borrower’s
jurisdiction of organization is the State of Delaware. Borrower shall provide
Lender with thirty days advance notice of any change in Borrower’s principal
office or place of business or jurisdiction. Borrower has no trade name. During
the preceding five years, Borrower 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 Borrower
keeps its books and records, including all computer tapes and records relating
to the Collateral is its chief executive office.

Section 3.19        Adjusted Tangible Net Worth. On the Effective Date,
Borrower’s Adjusted Tangible Net Worth is not less than the amount set forth in
Section 2.1 of the Pricing Side Letter.

Section 3.20        ERISA. Each Plan to which Borrower, Guarantor or their
Subsidiaries make direct contributions, and, to the knowledge of Borrower and
Guarantor, 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 3.21        Financing of Assets. Each Loan Advance will be used to
finance one or more Assets which Assets will be pledged by Borrower to Lender.

Section 3.22        Agreements. Neither Borrower nor any Subsidiary of Borrower
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 Borrower nor any Subsidiary of
Borrower 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 Borrower as a whole. No holder
of any indebtedness of Borrower or of any of its Subsidiaries has given notice
of any asserted default thereunder.

Section 3.23        Other Indebtedness. All Indebtedness (other than
Indebtedness evidenced by this Agreement) of Borrower existing on the date
hereof is listed on Exhibit D hereto (the “Existing Indebtedness”).

 

Section 3.24        Agency Approvals; Servicing Facilities. Borrower has
adequate financial standing, servicing facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same types
as may from time to time constitute Mortgage Loans and in accordance with
Accepted Servicing Practices. With respect to Ginnie Mae Servicing Right and to
the extent necessary, Borrower is an FHA Approved Mortgagee and a VA Approved
Lender. Borrower is also approved by Fannie Mae and Ginnie Mae as an approved
lender and Freddie Mac as an approved seller/servicer, and, to the extent
necessary, approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act. In each such case, Borrower
is in good standing, with no event having occurred or Borrower having any reason
whatsoever to believe or suspect will occur, including a change in insurance
coverage which would either make Borrower unable to comply with the eligibility
requirements for maintaining all such applicable approvals or require
notification to the relevant Agency or to the Department of Housing and Urban
Development, FHA or VA. Should Borrower for any reason cease to possess all such
applicable approvals, or should notification to the relevant Agency or to the
Department of Housing and Urban Development, FHA or VA be required, Borrower
shall so notify Lender immediately in writing.

Section 3.25        No Reliance. Each of Borrower and Guarantor has made its own
independent decisions to enter into the Loan Documents and each Loan Advance and
as to whether such Loan Advance is appropriate and proper for it based upon its
own judgment and upon advice from such advisors (including without limitation,
legal counsel and accountants) as it has deemed necessary. Neither Borrower nor
Guarantor is relying upon any advice from Lender as to any aspect of the Loan
Advances, including without limitation, the legal, accounting or tax treatment
of such Loan Advances.

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Section 3.26        Plan Assets. Neither Borrower nor Guarantor is 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 Collateral are not “plan assets” within
the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of ERISA, in
Borrower’s or Guarantor’s hands, and transactions by or with Borrower or
Guarantor 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 3.27        No Prohibited Persons. Neither Borrower nor any of its
Affiliates, officers, directors, partners or members, is an entity or person (or
to the Borrower’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
Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name
appears on the United States Treasury Department’s Office of Foreign Assets
Control (“OFAC”) most current list of “Specifically Designated National and
Blocked Persons” (which list may be published from time to time in various
mediums including, but not limited to, 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”).

ARTICLE IV

Collateral Security

Section 4.01        Collateral; Security Interest. (a)  All of Borrower’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 “Collateral”:

(i)            all Assets identified on an Asset Schedule or Schedule 2 herein;

(ii)            all Servicing Rights arising under or related to any Servicing
Contract and related Servicing Rights Collateral;

(iii)            all Receivables arising under or related to any Servicing
Contract;

(iv)            all rights to reimbursement or payment of Assets and/or amounts
due in respect thereof under the related Servicing Contract, Securitization
Transaction or Participation Agreement identified on Schedule 2 hereof;

(v)            the Dedicated Accounts and the Ginnie Mae Account;

(vi)            all rights under the Underlying Spread Documents;

(vii)            all rights under each Participation Agreement (other than
rights with respect to Mortgage Loans that are not related to Agency Servicing
Rights included within any Participation Agreement);

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

(ix)            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, without limitation, all of Borrower’s rights, title
and interest in and under the Participation Agreements and the Servicing
Contracts); and

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

(b)               Borrower hereby assigns, pledges and grants a security
interest in all of its right, title and interest in, to and under the Collateral
to Lender to secure the Obligations. Borrower agrees to mark its computer
records and tapes to evidence the interests granted to Lender hereunder.

(c)                Lender and Borrower hereby agree that in order to further
secure Borrower’s Obligations hereunder, Borrower hereby grants to Lender a
security interest in (i) as of the date hereof, Borrower’s rights (but not its
obligations) under the Repurchase Documents including without limitation 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 Repurchase Documents to the extent not otherwise included
under the definitions of Collateral or Repurchase Rights (such collateral,
“Additional Repurchase Collateral”). Borrower shall deliver 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 Lender hereunder directly any amounts
otherwise payable to Borrower and to deliver to Lender all collateral otherwise
deliverable to Borrower. In furtherance of the foregoing, such notice shall also
require, upon repayment of the outstanding purchase price under the Repurchase
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 deliver to Lender hereunder any
collateral (as such term may be defined under the Repurchase Documents) then in
its possession or control.

(d)               The parties acknowledge that each Agency has certain rights
under the applicable Acknowledgement Agreement to cause the Borrower to transfer
servicing under certain circumstances as more particularly set forth therein. To
the extent that an Agency requires a transfer of servicing to Lender’s
Affiliate, SPS or another Affiliate, and in order to secure Borrower’s
obligations to effect such transfer, Borrower hereby assigns, pledges, conveys
and grants a security interest in all of its right, title and interest in, to
and under the Servicing Rights to SPS, whether now owned or hereafter acquired,
now existing or hereafter created and wherever located. The parties acknowledge
that, to the extent that an Agency exercises its rights to cause the Borrower to
transfer the Servicing Rights and Portfolio Excess Spread to Lender, SPS or
another Affiliate without the requirement of payment therefor, such transfer
shall be deemed a transfer in exchange for debt forgiveness by Lender in an
amount equal to the lesser of (x) the fair market value of such Servicing Rights
and Portfolio Excess Spread and (y) the outstanding balance of the Loans
attributable to such Servicing Rights and Portfolio Excess Spread, each as
determined by Lender. SPS shall have all the rights and remedies against
Borrower and the Collateral as set forth herein and under the UCC.

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(e)                Lender and Borrower hereby acknowledge and agree that the
Underlying Spread Counterparty has acquired the Repledge Portfolio Excess Spread
subject to the Lien of the Lender created under the Security Agreement and in
order to evidence such Lien, Underlying Spread Counterparty shall reaffirm such
Lien, and pursuant to the Security Agreement, grant a security interest in and
Lien on the Repledge Portfolio Excess Spread and related collateral as more
particularly set forth in the Security Agreement.

Section 4.02        Further Documentation. At any time and from time to time,
upon the written request of Lender, and at the sole expense of Borrower,
Borrower 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 Lender 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, without limitation, 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. Borrower also
hereby authorizes Lender and SPS to file any such financing or continuation
statement to the extent permitted by applicable law.

 

Section 4.03        Limited Pledge of Fannie Mae Servicing. Notwithstanding
anything to the contrary herein or any of the other Loan Documents, the pledge
of the Borrower’s right, title and interest in mortgage servicing rights under
servicing contracts with Fannie Mae shall only secure the Borrower’s debt to the
Lender incurred for the purposes of (a) purchasing additional Mortgage Loan
servicing rights and retaining current Mortgage Loan servicing rights, (b)
purchasing a mortgage banking company (including a management buyout of an
existing mortgage banking company) or (c) securing a warehouse line of credit;
provided, that the foregoing provisions of this paragraph shall be deemed
automatically supplemented or amended if and to the extent Fannie Mae
supplements or amends the corresponding requirement, whether in its rules,
regulations, guides, Servicing Contracts, Acknowledgment Agreements, or
published announcements or otherwise waives or grants exceptions from such
requirement, and in each instance, with the same substantive force and effect;
provided further that the security interest created hereby is subject to the
following provision to be included in each financing statement filed in respect
hereof (defined terms used below shall have the meaning set forth in the
applicable Acknowledgment Agreement):

The Security Interest created by this financing statement is subject and
subordinate to all rights, powers, and prerogatives of Fannie Mae under and in
connection with (i) the terms and conditions of that certain Acknowledgment
Agreement, with respect to the Security Interest, by and between Fannie Mae,
PennyMac Loan Services, LLC (the “Debtor”) and Credit Suisse First Boston
Mortgage Capital LLC, (ii) the Mortgage Selling and Servicing Contract and all
applicable Pool Purchase Contracts between Fannie Mae and the Debtor, and (iii)
the Selling Guide, Servicing Guide, and other Guides, as each of such Guides is
amended from time to time ((ii) and (iii) collectively, the “Fannie Mae
Contract”), which rights, powers, and prerogatives include, without limitation,
the right of Fannie Mae to terminate the Fannie Mae Contract with or without
cause and the right to sell, or have transferred, the Servicing Rights as
therein provided.

 

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Section 4.04        Limited Pledge of Ginnie Mae Servicing. To the extent that
the pledge of the Borrower’s right, title and interest in mortgage servicing
rights under Servicing Contracts with Ginnie Mae shall at any time be included
within the security interest created hereby, the Lender acknowledges and agrees
that (x) the Borrower is entitled to servicing income with respect to a given
mortgage pool only so long as Borrower is an issuer in good standing pursuant to
Ginnie Mae rules, regulations, guides and similar announcements; (y) upon the
Borrower’s loss of such good-standing issuer status, the Lender’s rights to any
servicing income related to a given mortgage pool also terminate; and (z) the
pledge of the Borrower’s rights to servicing income conveys no rights (such as a
right to become a substitute servicer or issuer) that are not otherwise
specifically provided for in the rules, regulations, guides or similar
announcements by Ginnie Mae, provided that this sentence shall automatically be
deemed amended or modified if and to the extent Ginnie Mae amends the
corresponding requirement, whether in its rules, regulations, guides, Servicing
Contracts, Acknowledgment Agreements, if any, or published announcements and
provided further that the security interest created hereby is subject to the
following provision to be included in each financing statement filed in respect
hereof (defined terms used below shall have the meaning set forth in the
applicable Acknowledgment Agreement):

 

The property subject to the security interest reflected in this instrument
includes all of the right, title and interest of PennyMac Loan Services, LLC
(“Debtor”) in certain mortgages and/or participation interests related to such
mortgages (“Pooled Mortgages”) and pooled under the mortgage-backed securities
program of the Government National Mortgage Association (“Ginnie Mae”), pursuant
to section 306(g) of the National Housing Act, 12 U.S.C. § 1721(g);

To the extent that the security interest reflected in this instrument relates in
any way to the Pooled Mortgages, such security interest is subject and
subordinate to all rights, powers and prerogatives of Ginnie Mae, whether now
existing or hereafter arising, under and in connection with: (i) 12 U.S.C. §
1721(g) and any implementing regulations; (ii) the terms and conditions of that
certain Acknowledgment Agreement, with respect to the Security Interest, by and
between Ginnie Mae, Debtor and Credit Suisse First Boston Mortgage Capital LLC
(iii) applicable Guaranty Agreements and contractual agreements between Ginnie
Mae and the Debtor; and (iv) the Ginnie Mae Mortgage-Backed Securities Guide,
Handbook 5500.3 Rev. 1, and other applicable guides; and

such rights, powers and prerogatives of Ginnie Mae include, but are not limited
to, Ginnie Mae’s right, by issuing a letter of extinguishment to Debtor, to
effect and complete the extinguishment of all redemption, equitable, legal or
other right, title or interest of the Debtor in the Pooled Mortgages, in which
event the security interest as it relates in any way to the Pooled Mortgages
shall instantly and automatically be extinguished as well.

 

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Section 4.05        Limited Pledge of Freddie Mac Servicing. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
the pledge of Borrower’s right, title and interest in mortgage servicing rights
under Servicing Contracts with Freddie Mac shall only secure Borrower’s
indebtedness and obligations to Lender incurred for (i) the purposes of securing
(a) a warehouse line of credit and used for one of the purposes set forth in
clauses (b) through (e), (b) a loan whose proceeds have been or will be used to
acquire rights in such Freddie Mac Servicing Contract in accordance with the
provisions of the Freddie Mac Sellers’ and Servicers’ Guide, (c) a loan whose
proceeds have been or will be used to acquire assets of, or stock issued by,
Borrower, (d) a loan whose proceeds have been or will be used to purchase from
another mortgage banking company the contract right to service Mortgage Loans,
or to purchase assets of, or stock issued by, such company, (e) a loan whose
proceeds have been or will be used as working capital, or (ii) any other purpose
which Freddie Mac, in its sole and absolute discretion, considers to be
consistent with the purposes of its Acknowledgment Agreement to be executed
among Borrower, Lender and Freddie Mac; provided, that the foregoing provisions
of this paragraph shall be deemed automatically supplemented or amended if and
to the extent Freddie Mac supplements or amends the corresponding requirement,
whether in its rules, regulations, guides, Servicing Contracts, Acknowledgment
Agreements or published announcements or otherwise waives or grants exceptions
from such requirement, and in each instance, with the same substantive force and
effect; and provided further that the security interest created hereby is
subject to the following provision to be included in each financing statement
filed in respect hereof (defined terms used below shall have the meaning set
forth in the applicable Acknowledgment Agreement):

The security interest referred to in this financing statement is subject and
subordinate in each and every respect (a) to all rights, powers and prerogatives
of one or more of the following: the Federal Home Loan Mortgage Corporation
(“Freddie Mac”), the Federal National Mortgage Association (“Fannie Mae”), the
Government National Mortgage Association (“Ginnie Mae”) or such other investors
that own mortgage loans, or which guaranty payments on securities based on and
backed by pools of mortgage loans, identified on the exhibit(s) or schedule(s)
attached to this financing statement (the “Investors”); and (b) to all claims of
an Investor arising out of any and all defaults and outstanding obligations of
the debtor to the Investor. Such rights, powers and prerogatives of the
Investors may include, without limitation, one or more of the following: the
right of an Investor to disqualify the debtor from participating in a mortgage
selling or servicing program or a securities guaranty program with the Investor;
the right to terminate contract rights of the debtor relating to such a mortgage
selling or servicing program or securities guaranty program; and the right to
transfer and sell all or any portion of such contract rights following the
termination of those rights.

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Section 4.06        Acknowledgement Agreements. Notwithstanding any other
provision hereof to the contrary, Lender may elect, but shall not be obligated,
to treat Agency Servicing Rights and the related Participation Certificates as
having zero Collateral Value until the date on which an Acknowledgment Agreement
covering such has been executed and delivered by the Borrower, Lender and Fannie
Mae, Freddie Mac, Ginnie Mae or such other investor, as applicable.

Section 4.07        Changes in Locations, Name, etc. Borrower 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 Lender at least 30 days’ prior written notice thereof and
shall have delivered to Lender all Uniform Commercial Code financing statements
and amendments thereto as Lender shall request and taken all other actions
deemed necessary by Lender to continue its perfected status in the Collateral
with the same or better priority.

Section 4.08        Lender’s Appointment as Attorney-in-Fact.

(a)  Borrower hereby irrevocably constitutes and appoints Lender and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Borrower and in the name of Borrower or in its own name, from time to
time in Lender’s discretion if an Event of Default shall have occurred and be
continuing, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, Borrower
hereby gives Lender the power and right, on behalf of Borrower, without assent
by, but with notice to, Borrower to do the following:

 

(i)    in the name of Borrower or its own name, or otherwise, to take possession
of and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any Collateral and to
file any claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Lender for the purpose of collecting
any and all such moneys due with respect to any Collateral whenever payable;

(ii)    to pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral;

(iii)    request that Fannie Mae Servicing Rights, Freddie Mac Servicing Rights,
Ginnie Mae Servicing Rights and Servicing Rights in respect of Mortgage Loans
owned by any other investor be transferred to Lender or to another servicer
approved by Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the
case may be) and perform (without assuming or being deemed to have assumed any
of the obligations of Borrower thereunder) all aspects of each servicing
contract that is Collateral consisting of Servicing Rights;

43

 

(iv)    request distribution to Lender of sale proceeds or any applicable
contract termination fees arising from the sale or termination of such Servicing
Rights and remaining after satisfaction of Borrower’s relevant obligations to
Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the case may be),
including costs and expenses related to any such sale or transfer of such
Servicing Rights and other amounts due for unmet obligations of Borrower to
Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the case may be)
under applicable Fannie Mae Guides, Freddie Mac Guides, Ginnie Mae Guides or
such other investor’s contract;

(v)    deal with investors and any and all subservicers and master servicers in
respect of any of the Collateral in the same manner and with the same effect as
if done by Borrower;

(vi)    (A) to direct any party liable for any payment under any Collateral to
make payment of any and all moneys due or to become due thereunder directly to
Lender or as Lender shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against Borrower with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges or
releases as Lender may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender’s option and Borrower’s expense,
at any time, and from time to time, all acts and things which Lender deems
necessary to protect, preserve or realize upon the Collateral and Lender’s Liens
thereon and to effect the intent of this Agreement, all as fully and effectively
as Borrower might do.

 

(b)               Borrower hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable until such time as all
Obligations have been paid in full and this Agreement is terminated.

(c)                Borrower also authorizes Lender, at any time and from time to
time, to execute, in connection with any sale provided for in Section 4.11
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.

(d)               The powers conferred on Lender are solely to protect Lender’s
interests in the Collateral and shall not impose any duty upon Lender to
exercise any such powers. Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither Lender
nor any of its officers, directors, or employees shall be responsible to
Borrower for any act or failure to act hereunder, except for Lender’s own gross
negligence or willful misconduct.

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(e)                In addition to the foregoing, Borrower agrees to execute a
power of attorney (the “Power of Attorney”) in favor of Lender in the form of
Exhibit B-1 hereto to be delivered on the date hereof and in favor of SPS in the
form of Exhibit B-2 hereto to be delivered on the date hereof.

Section 4.09        Performance by Lender of Borrower’s Obligations. If Borrower
fails to perform or comply with any of its agreements contained in the Loan
Documents and Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable (under the
circumstances) out-of-pocket expenses of Lender actually incurred in connection
with such performance or compliance, together with interest thereon at a rate
per annum equal to the Interest Rate shall be payable by Borrower to Lender on
demand and shall constitute Obligations. Such interest shall be computed on the
basis of the actual number of days in each Interest Period and a 360-day year.

Section 4.10        Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by Borrower consisting of
cash, checks and other near-cash items shall be held by Borrower in trust for
Lender, segregated from other funds of Borrower, and shall forthwith upon
receipt by Borrower be turned over to Lender in the exact form received by
Borrower (duly endorsed by Borrower to Lender, if required) and (b) any and all
such proceeds received by Lender (whether from Borrower or otherwise) may, in
the sole discretion of Lender, be held by Lender as collateral security for,
and/or then or at any time thereafter may be applied by Lender against, the
Obligations (whether matured or unmatured), such application to be in such order
as Lender 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 Borrower or to whomsoever may be lawfully
entitled to receive the same.

Section 4.11        Remedies. If an Event of Default shall occur and be
continuing, Lender 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 without limitation,
Lender’s rights to a strict foreclosure under Section 9-620 of the Uniform
Commercial Code). Without limiting the generality of the foregoing, Lender may
seek the appointment of a receiver, liquidator, conservator, trustee, or similar
official in respect of Borrower or any of Borrower’s property. Without limiting
the generality of the foregoing, Lender may terminate the Participation Interest
in accordance with the Participation Agreement. Without limiting the generality
of the foregoing, Lender 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 Borrower
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 Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral 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 Lender 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. Lender 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
Collateral so sold, free of any right or equity of redemption in Borrower, which
right or equity is hereby waived or released. Borrower further agrees, at
Lender’s request, to assemble the Collateral and make it available to Lender at
places which Lender shall reasonably select, whether at Borrower’s premises or
elsewhere. Lender 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 expenses of every kind
actually incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of Lender
hereunder, including without limitation reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as Lender may elect, and only after such application and after the payment
by Lender of any other amount required or permitted by any provision of law,
including without limitation Section 9-615 of the Uniform Commercial Code, need
Lender account for the surplus, if any, to Borrower. To the extent permitted by
applicable law, Borrower waives all claims, damages and demands it may acquire
against Lender arising out of the exercise by Lender of any of its rights
hereunder, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of Lender. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. Borrower shall remain liable for any deficiency (plus accrued
interest thereon as contemplated herein) if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
fees and disbursements in amounts reasonable under the circumstances, of any
attorneys employed by Lender to collect such deficiency.

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Section 4.12        Limitation on Duties Regarding Preservation of Collateral.
Lender’s duty with respect to the custody, safekeeping and physical preservation
of the Collateral 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
Lender deals with similar property for its own account. Neither Lender 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 Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Borrower or otherwise.

Section 4.13        Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.

Section 4.14        Release of Security Interest. Upon the latest to occur of
(a) the repayment of the Loan, and (b) the occurrence of the Termination Date,
Lender shall release its security interest in any remaining Collateral hereunder
and shall promptly execute and deliver to Borrower such documents or instruments
as Borrower shall reasonably request to evidence such release; provided, that
such release shall not be required until such time as the Acknowledgment
Agreement is terminated.

Section 4.15        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 Borrower
or Guarantor is rescinded or must otherwise be restored or returned by the
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower or Guarantor or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, Borrower or Guarantor or any substantial part of its property, or
otherwise, all as if such release had not been made.

Section 4.16        Subordination.

(a)                It is anticipated that in connection with the transactions
contemplated by the Loan Documents, that (x) the Underlying Spread Counterparty
is pledging the Repledge Portfolio Excess Spread to the Borrower subject to the
Lien of the Lender and (y) Borrower hereby reaffirms such Lien. Borrower
acknowledges and agrees that its rights with respect to the Collateral under the
Master Spread Acquisition Agreement are and shall continue to be at all times
junior and subordinate to (i) the rights of Lender under this Agreement and (ii)
the rights of the Lender under the Security Agreement. In connection with the
foregoing, Borrower agrees to subordinate all of the rights under the Master
Spread Acquisition Agreement to the rights of the Lender hereunder and under the
other Loan Documents. In furtherance of the foregoing, notwithstanding any
rights or remedies available to Borrower under the Master Spread Acquisition
Agreement and Underlying Spread Documents, applicable law or otherwise, Borrower
shall not, directly or indirectly, exercise any remedies available to it under
the Master Spread Acquisition Agreement and Underlying Spread Documents or at
law or equity for ninety-one (91) days following the date that all Obligations
are paid in full under the Loan Documents. For the avoidance of doubt, in no
instance shall the Lender succeed to any liabilities or obligations of Borrower
under the Master Spread Acquisition Agreement or the Underlying Spread
Documents.

(b)               In furtherance of the foregoing, Borrower agrees to not assert
any objection to, and shall be deemed to have otherwise consented to, a
disposition of any assets subject to the Master Spread Acquisition Agreement,
Underlying Spread Documents or the Loan Documents during an Act of Insolvency of
Underlying Spread Counterparty or Borrower, free and clear of any lien,
encumbrance, pledge or other claims under Section 363 of the Bankruptcy Code (or
any similar bankruptcy law) if Lender has consented to such disposition.

46

 

(c)                If an Act of Insolvency of Underlying Spread Counterparty or
Borrower occurs, the Borrower agrees not to contest (or support any other Person
contesting) any request by Lender for adequate protection, or any objection by
Lender to any motion, relief, action or proceeding based on Lender claiming a
lack of adequate protection.

(d)               Until the obligations under the Loan Documents are paid in
full, the Borrower shall not oppose any request by Lender for relief from the
automatic stay or any other stay in any Act of Insolvency of Underlying Spread
Counterparty or Borrower.

(e)                Borrower shall not oppose or seek to challenge any claim by
Lender for allowance and payment in any Act of Insolvency of Underlying Spread
Counterparty or Borrower, of obligations under the Loan Documents consisting of
post-petition interest, fees, costs or other charges to the extent of the value
of Lender’s lien, encumbrance, pledge or other claims on the assets that are the
subject of this Agreement, the Security Agreement or the Underlying Spread
Documents, without regard to the existence of a lien, encumbrance, pledge or
other claims of Underlying Spread Counterparty applicable to the obligations of
the other parties to the Loan Documents.

(f)                Borrower shall not seek in any Act of Insolvency of the
Underlying Spread Counterparty or Borrower, to be treated as part of the same
class of creditors as Lender and shall not oppose any pleading or motion by
Lender advocating that Lender and Underlying Spread Counterparty and Borrower
should be treated as separate classes of creditors. Borrower acknowledges and
agrees that its rights with respect to the Collateral are and shall continue to
be at all times junior and subordinate to the rights of Lender under this
Agreement.

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01        Initial Loan Advance. The obligation of Lender to make its
initial Loan Advance hereunder following the date hereof is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan
Advance, of the condition precedent that Lender shall have received all of the
following items, each of which shall be satisfactory to Lender and its counsel
in form and substance:

(a)                Loan Documents. The Loan Documents and a notice to the master
servicer and trustee of the Eligible Securitization Transactions and the
Servicing Contracts, as applicable, set forth on Schedule 2, 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 Lender, desirable to perfect and protect Lender’s interest
in the Collateral have been taken, including, without limitation, duly
authorized and filed Uniform Commercial Code financing statements on Form UCC-1.

(c)                Organizational Documents. A certificate of the corporate
secretary of each of Borrower and Guarantor in form and substance acceptable to
Lender, attaching certified copies of Borrower’s and Guarantor’s charter, bylaws
and corporate resolutions approving the Loan Documents 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 Loan Documents.

(d)               Good Standing Certificate. A certified copy of a good standing
certificate from the jurisdiction of organization of Borrower and Guarantor,
dated as of no earlier than the date 10 Business Days prior to the Advance Date
with respect to the initial Loan Advance hereunder.

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

(f)                Servicing Contracts. Fully executed copies of each Servicing
Contract certified as true, correct and complete by Borrower.

(g)               Fees. Payment of any fees due to Lender hereunder.

(h)               Insurance. Evidence that Borrower has added Lender as an
additional loss payee under the Borrower’s Fidelity Insurance.

Section 5.02        Initial and Subsequent Loan Advances. The making of each
Loan Advance to Borrower (including the initial Loan Advance) on any Business
Day is subject to the satisfaction of the following further conditions
precedent, both immediately prior to the making of such Loan Advance and also
after giving effect thereto and to the intended use thereof:

(a)                Due Diligence Review. Without limiting the generality of
Section 10.09 hereof, Lender shall have completed, to its satisfaction, its due
diligence review of the related Assets and Borrower and Guarantor.

(b)               Borrowing Request and Asset Schedule. In accordance with
Section 2.02 hereof, Lender shall have received from Borrower a Notice of
Borrowing with an updated Asset Schedule which includes Assets related to a
proposed Loan Advance hereunder on such Business Day.

(c)                Borrowing Base. After giving effect to each new Loan Advance
(i) the aggregate outstanding principal amount of Loan Advances made in
connection with Receivables shall not exceed the Receivables Borrowing Base then
in effect (calculated as of the Servicing Cut-off Date) and (ii) the aggregate
outstanding principal amount of Loan Advances made in connection with pledged
Servicing Rights and the related Participation Certificates shall not exceed the
Servicing Rights Borrowing Base then in effect.

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

(e)                Requirements of Law. Lender 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 Lender
has made it unlawful, and no Governmental Authority shall have asserted that it
is unlawful, for Lender to enter into Loan Advances with an Interest Rate based
on CSCOF.

(f)                Representations and Warranties. Both immediately prior to the
related Loan Advance and also after giving effect thereto and to the intended
use thereof, the representations and warranties made by Borrower in each Loan
Document shall be true, correct and complete on and as of such Advance 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).

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(g)               Servicing Contracts; Assets. Lender shall have:

(i)            received the applicable Servicing Contract relating to any
pledged Assets, which Lender shall have determined prior to making the first
Loan Advance related to an Asset that relates to such Servicing Contract that
such Servicing Contract is in form and substance satisfactory to Lender in its
sole discretion;

(ii)            reviewed the applicable pool of Mortgage Loans serviced by
Borrower pursuant to such Servicing Contracts, which pool shall be satisfactory
to Lender in its sole discretion;

(iii)            if required by Lender, received a fully executed amendment to
each Servicing Contract necessary to cause such Servicing Contract to satisfy
requirements for an Eligible Securitization Transaction or an Eligible Asset, in
form and substance satisfactory to Lender;

(iv)            received copies of all other consents and notices required under
the related Servicing Contract and with respect to Agency Servicing Rights, the
related Acknowledgement Agreement, each in form and substance satisfactory to
Lender;

(v)            with respect to Loan Advances made in respect to Servicer
Advances, received a report from Borrower indicating all Protective Advances
that have been disbursed and all Delinquency Advances will be disbursed by
Borrower into the certificate account under the related Servicing Contract,
which report shall include backup setting forth the date, amount and federal
reference number for each such disbursement;

(vi)            with respect to Loan Advances made in respect of Servicing
Rights, the Borrower shall have delivered to the Lender the Borrower’s related
pricing valuation on or prior to the date which is five Business Days prior to
the requested Advance Date; Borrower shall promptly deliver to Lender any
reports or documents ordered, created, prepared or reviewed in connection with
such pricing valuations, whether such reports or documents are created or
prepared by Borrower or a third party; provided, however, that it is understood
that any such pricing valuation, report or document shall be reviewed by the
Lender for the sole purpose of making credit decisions with respect to the
related Loan Advance, and the Lender shall not use such information for any
purpose other than making credit decisions with respect to the related Loan
Advance;

(vii)            received an updated Servicing Appraisal in accordance with
Section 6.28; and

(viii)            received a copy of the Participation Agreement, which Lender
shall have determined, prior to making the first Loan Advance related to an
Asset that relates to such Participation Agreement, is in form and substance
satisfactory to Lender in its sole discretion.

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(h)               Repledge Portfolio Excess Spread. If such Loan Advance is with
respect to Repledge Portfolio Excess Spread, (i) Lender shall have received and
approved the Underlying Spread Documents in its sole discretion and following
such approval received duly executed copies thereof by the parties thereto, (ii)
the Underlying Spread Counterparty shall have satisfied all conditions precedent
to the entry into such Underlying Spread Transaction under the Underlying Spread
Loan Agreement and (iii) Lender shall have received all of the following items,
each of which shall be satisfactory to Lender and its counsel in form and
substance:

(A)             an amendment to the Master Spread Acquisition and MSR Servicing
Agreement (i) requiring all cash to be remitted to the Dedicated Account and
(ii) in order to evidence the transfer of the Repledge Portfolio Excess Spread
from Borrower to Underlying Spread Counterparty thereunder;

(B)              an amendment to the Security and Subordination Agreement
permitting all proceeds to be remitted to the Dedicated Account;

(C)              (i) a security interest, general corporate and enforceability
opinion or opinions of counsel to Borrower and Guarantor, including an
Investment Company Act opinion indicating that it is not necessary to register
Borrower under the Investment Company Act of 1940, as amended, and (ii) an
opinion of outside counsel to Borrower and Guarantor covering comparable matters
with respect to the Underlying Spread Documents; and

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

(A)             Lender’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 Lender 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 Lender not being able to
finance Eligible Assets through the “lending market” with traditional
counterparties at rates which would have been reasonable prior to the occurrence
of such event or events; or

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

(j)                 Participation Certificate. With respect to any Asset that
constitutes a Participation Certificate, Lender shall have received the original
Participation Certificate registered into the name of the Lender.

(k)               Fees. Lender shall have received payment in full of all fees
and Expenses (including, without limitation the Commitment Fee) which are
payable hereunder to Lender on or before such date.

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ARTICLE VI

COVENANTS

Borrower 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        Financial Covenants. Borrower shall at all times comply with
all financial covenants and/or financial ratios set forth in Section 2 of the
Pricing Side Letter.

Section 6.02        Litigation. Borrower and Guarantor, as applicable, will
promptly, and in any event within ten (10) days after service of process on any
of the following, give to Lender notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are threatened or pending) or other legal or arbitrable
proceedings affecting Borrower, Guarantor or any of their 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
Loan Documents 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), Borrower and
Guarantor, as applicable, will provide to Lender a litigation docket listing all
litigation, actions, suits, arbitrations, investigations (including, without
limitation, any of the foregoing which are threatened or pending) or other legal
or arbitrable proceedings affecting Borrower, Guarantor or any of their
Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority. Borrower and Guarantor, as applicable, will promptly
provide notice of any judgment, which with the passage of time, could cause an
Event of Default hereunder.

Section 6.03        Prohibition of Fundamental Changes. Borrower 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
Borrower may merge or consolidate with (a) any wholly owned subsidiary of
Borrower, or (b) any other Person if Borrower is the surviving entity; and
provided further, that if after giving effect thereto, no Default would exist
hereunder.

Section 6.04        Portfolio Performance Data. On the first Weekly Report Date
of each calendar month, Borrower will furnish to Lender electronically, in a
format mutually acceptable to Lender and Borrower, servicing information,
including, without limitation, those fields reasonably requested by Lender from
time to time, on a loan-by-loan basis and in the aggregate, with respect to the
Mortgage Loans serviced by Borrower for the month (or any portion thereof) prior
to the Weekly Report Date.

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Section 6.05        Weekly Reporting. Borrower shall at all times maintain a
current list (which may be stored in electronic form) of all Assets. Borrower
shall deliver to Lender 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 Lender. Each such updated Asset Schedule shall
indicate the Outstanding Balance of each Receivable as of the close of the
preceding week. In addition, Borrower will deliver to Lender a copy of each and
every remittance report (and, at Lender’s reasonable request, any other report)
prepared by Borrower or any other party to a Servicing Contract that identifies
or indicates any reimbursement to Borrower of any Servicer Advance thereunder.
Borrower shall deliver each such report to Lender not more than five (5)
Business Days after Borrower has either prepared or received such report
pursuant to the Servicing Contract. As of each Weekly Report Date, Borrower
hereby certifies, represents and warrants to Lender that (A) each such updated
Asset Schedule is true, complete and correct in all material respects and
(B) except as set forth in the Weekly Report, as of such Weekly Report Date, all
of the Servicing Contracts are in full force and effect and Borrower has not
been terminated as the servicer or subservicer under any Servicing Contract.

Section 6.06        Insurance. Borrower or Guarantor shall continue to maintain,
for Borrower, and its Subsidiaries, Fidelity Insurance in an aggregate amount at
least equal to $1,400,000. Borrower or Guarantor shall maintain, for Borrower,
and its Subsidiaries, Fidelity Insurance in respect of its officers, employees
and agents, with respect to any claims made in connection with all or any
portion of the Assets. Borrower or Guarantor shall notify Lender of any material
change in the terms of any such Fidelity Insurance.

Section 6.07        No Adverse Claims. Borrower warrants and will defend the
right, title and interest of Lender in and to all Collateral against all adverse
claims and demands.

Section 6.08        Assignment. Except as permitted herein, Borrower 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 Loan Documents), any of the
Collateral or any interest therein, provided that this Section 6.08 shall not
prevent any transfer of Collateral in accordance with the Loan Documents.

Section 6.09        Security Interest. Borrower shall do all things necessary to
preserve the Collateral so that they remain subject to a first priority
perfected security interest hereunder. Without limiting the foregoing, Borrower
will comply with all rules, regulations and other laws of any Governmental
Authority and cause the Collateral to comply with all applicable rules,
regulations and other laws. Borrower will not allow any default for which
Borrower is responsible to occur under any Collateral or any Loan Document and
Borrower shall fully perform or cause to be performed when due all of its
obligations under any Collateral and any Loan Document.

Section 6.10        Records. (a)  Borrower shall collect and maintain or cause
to be collected and maintained all Records relating to the Collateral in
accordance with industry custom and practice for assets similar to the
Collateral, including those maintained pursuant to Section 6.11, and all such
Records shall be in Borrower’s possession unless Lender otherwise approves.
Borrower will not allow any such papers, records or files that are an original
or an only copy to leave Borrower’s possession, except for individual items
removed in connection with servicing a specific Mortgage Loan, in which event
Borrower will obtain or cause to be obtained a receipt from a financially
responsible person for any such paper, record or file. Borrower will maintain
all such Records in good and complete condition in accordance with industry
practices for assets similar to the Collateral and preserve them against loss.

52

 

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

(c)                Upon reasonable advance notice from Lender, Borrower shall
(x) make any and all such Records available to Lender 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 Lender or
its authorized agents to discuss the affairs, finances and accounts of Borrower
with its chief operating officer and chief financial officer and to discuss the
affairs, finances and accounts of Borrower with its independent certified public
accountants.

Section 6.11        Books. Borrower 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 pledge of Collateral to Lender.

Section 6.12        Approvals. Borrower shall maintain all licenses, permits or
other approvals necessary for Borrower to conduct its business and to perform
its obligations under the Loan Documents, and Borrower shall conduct its
business strictly in accordance with applicable law. Borrower shall maintain its
status with Fannie Mae as an approved lender and Freddie Mac as an approved
seller/servicer, and in each case, Borrower is in good standing (“Agency
Approvals”). Borrower shall service all Assets in accordance with the applicable
Agency guide in all material respects. Should Borrower, for any reason, cease to
possess all such applicable Agency Approvals, or should notification to the
relevant Agency or to the Department of Housing and Urban Development, FHA or VA
as described in Section 3.24 hereof be required, Borrower shall so notify Lender
immediately in writing. Notwithstanding the preceding sentence, Borrower shall
take all necessary action to maintain all of its applicable Agency Approvals at
all times during the term of this Agreement and each outstanding Loan.

Section 6.13        Material Change in Business. Neither Borrower nor Guarantor
shall make any material change in the nature of its business as carried on at
the date hereof.

Section 6.14        Collections on Assets and the Dedicated Accounts. Prior to
the Borrower making any withdrawal from the custodial account or any other
clearing account maintained under the related Servicing Contract, the Borrower
shall instruct the related depository institution to remit all collections,
payments and proceeds in respect of any Receivable pledged hereunder to be
deposited into the Receivables Dedicated Account and on account of Servicing
Rights, including the Portfolio Excess Spread, to the applicable Servicing
Rights Dedicated Account; provided that any amounts received on account of
Ginnie Mae Advances in the Ginnie Mae Account shall be remitted to the Dedicated
Account in accordance with the Securities Account Control Agreement. Borrower
shall not withdraw or direct the withdrawal or remittance of any amounts on
account of any Receivables or Servicing Rights income related to any Servicing
Contract from any custodial account into which such amounts have been deposited
other than to remit to each of the applicable Dedicated Accounts or, solely with
respect to Ginnie Mae Advances on deposit in the Ginnie Mae Account, as provided
in the Securities Account Control Agreement.

53

 

Section 6.15        Distributions. If an Event of Default has occurred and is
continuing, neither Borrower nor Guarantor shall 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
Borrower or Guarantor.

Section 6.16        Applicable Law. Borrower and Guarantor shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority.

Section 6.17        Existence. Each of Borrower and Guarantor shall preserve and
maintain its legal existence and all of its material rights, privileges,
licenses and franchises.

Section 6.18        Chief Executive Office; Jurisdiction of Organization.
Borrower 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 Lender 30 days’ prior
written notice of such change.

Section 6.19        Taxes. Borrower and Guarantor 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.

Section 6.20        Transactions with Affiliates. Borrower will not enter into
any transaction, including, without limitation, 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 Borrower’s business and (c) is upon fair and reasonable terms
no less favorable to Borrower 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 6.20 to any Affiliate.

Section 6.21        Guarantees. Borrower shall not create, incur, assume or
suffer to exist any Guarantees, except (i) to the extent reflected in Borrower’s
financial statements or notes thereto and (ii) to the extent the aggregate
Guarantees of Borrower do not exceed $250,000.

Section 6.22        Indebtedness. Borrower shall not incur any additional
material Indebtedness (other than (i) the Existing Indebtedness specified on
Exhibit D hereto; (ii) Indebtedness incurred with Lender 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 Lender.

54

 

Section 6.23        Termination of Servicing Notice. Borrower shall give notice
to Lender promptly upon (a) receipt or notice or knowledge of any default,
notice of termination of servicing for cause under any Servicing Contract or
other servicing agreement regardless of whether such agreement or the rights
thereunder constitute “Collateral” hereunder or (b) receipt or notice or
knowledge of any resignation of servicing, termination of servicing or notice of
resignation of or termination of servicing, under any Servicing Contract or
other servicing agreement regardless of whether such agreement or the rights
thereunder constitute “Collateral” hereunder.

Section 6.24        True and Correct Information. All information, reports,
exhibits, schedules, financial statements or certificates of Borrower, Guarantor
any Affiliate thereof or any of their officers furnished to Lender hereunder and
during Lender’s diligence of Borrower and Guarantor 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 Borrower and Guarantor to
Lender 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 6.25        Servicing. Borrower shall maintain adequate financial
standing, servicing facilities, procedures and experienced personnel necessary
for the sound servicing of mortgage loans of the same types as may from time to
time constitute Mortgage Loans and in accordance with Accepted Servicing
Practices and the Servicing Contracts.

Section 6.26        Receivables Not To Be Evidenced by Promissory Notes.
Borrower shall not take any action, or permit any other Person to take any
action, to cause any of the Receivables or Servicing Rights to be evidenced by
any “instrument” (as such term is defined in the Uniform Commercial Code),
except in connection with the enforcement or collection of the Receivables;
provided that each Participation Certificate pledged hereunder shall be a
security (as such term is defined in the Uniform Commercial Code).

Section 6.27        No Pledge. Except as contemplated herein, neither Borrower
nor Guarantor shall (a) pledge, transfer or convey any security interest in the
Dedicated Account or the Ginnie Mae Account to any Person without the express
written consent of Lender or (b) pledge, grant a security interest or assign any
existing or future rights to service any of the Collateral or to be compensated
for servicing any of the Collateral, or pledge or grant to any other Person any
security interest in any Assets or Servicing Contracts.

Section 6.28        Servicing Appraisals. Borrower shall provide a new Servicing
Appraisal to the Lender once each calendar quarter; provided, that Lender shall
have the right in its sole good faith discretion to require independent
appraisals or evaluations more frequently than every calendar quarter; and
provided further that the Servicing Appraisal for each calendar quarter must be
provided to Lender no later than forty-five (45) days following the end of such
quarter.

Section 6.29        Plan Assets. Borrower 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 Borrower 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 Loan Advance hereunder. Loan Advances by or with
Borrower or Guarantor 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.

55

 

Section 6.30        Sharing of Information. Borrower shall allow Lender to
exchange information related to Borrower and the Loan Advances hereunder with
third party lenders and Borrower shall permit each third party lender to share
such information with Lender.

 

Section 6.31        Modification of the Servicing Contracts and Participation
Agreements. Borrower shall not consent with respect to any Servicing Contracts
or Participation Agreements related to any Asset that constitutes Collateral, to
(i) the modification, amendment or termination of such Servicing Contracts or
Participation Agreements, (ii) the waiver of any provision of such Servicing
Contracts or Participation Agreements or (iii) the resignation of Borrower as
servicer under the Servicing Contracts, or the assignment, transfer, or material
delegation of any of its rights or obligations, under such Servicing Contracts
or Participation Agreements, without the prior written consent of Lender
exercised in Lender’s sole discretion.

Section 6.32        No Amendments/Waivers of Underlying Spread Documents.
Without the prior written consent of Lender, Borrower shall not, and shall not
agree, consent to or suffer to exist any material amendment, modification,
supplement, waiver or forbearance with respect to any of the Underlying Spread
Documents or any of Borrower’s rights thereunder.

Section 6.33        Reserved.

Section 6.34        Quality Control. Borrower shall maintain an internal quality
control program that verifies, on a regular basis, the existence and accuracy of
all legal documents, credit documents, property appraisals, and underwriting
decisions related to Servicing Rights and Receivables. Such program shall be
capable of evaluating and monitoring the overall quality of Borrower’s servicing
activities. Such program shall (i) guard against dishonest, fraudulent, or
negligent acts; and (ii) guard against errors and omissions by officers,
employees, or other authorized persons.

Section 6.35        Reporting Requirements. (a)  Borrower or Guarantor shall
furnish to Lender (i) promptly, copies of any material and adverse notices
(including, without limitation, notices of defaults, breaches, potential
defaults or potential breaches) and any material financial information that is
not otherwise required to be provided by Borrower or Guarantor hereunder which
is given to Borrower’s lenders, (ii) immediately, notice of the occurrence of
(1) any Event of Default hereunder; (2) any default or material breach under any
Servicing Contract; (3) any default or material breach by Borrower, or Guarantor
of any obligation under any Loan Document or any material contract or agreement
of Borrower or Guarantor or (4) 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:

56

 

(1)               as soon as available and in any event within forty (40)
calendar days after the end of each calendar month, the unaudited consolidated
balance sheets of Guarantor and its consolidated Subsidiaries and the unaudited
balance sheet of Borrower, each as at the end of such period and the related
unaudited consolidated statements of income for Guarantor and its consolidated
Subsidiaries and Borrower 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 Guarantor or Borrower, as applicable, 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
Guarantor and its consolidated Subsidiaries or Borrower, as applicable, 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 consolidated
cash flow statements of Guarantor and its consolidated Subsidiaries and the
unaudited cash flow statements of Borrower, each 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 Guarantor or Borrower, as
applicable, 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 Guarantor and its consolidated
Subsidiaries or Borrower, as applicable, 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 Guarantor and Borrower, the consolidated
balance sheets of Guarantor and its consolidated Subsidiaries and the balance
sheet of Borrower, each as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
Guarantor and its consolidated Subsidiaries and Borrower for such year, setting
forth in each case 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 Lender in its sole discretion, shall have no “going concern”
qualification and shall state that said consolidated financial statements or
financial statements, as applicable, fairly present the consolidated financial
condition or financial condition, as applicable, and results of operations of
Guarantor and its respective consolidated Subsidiaries or Borrower, as
applicable, as at the end of, and for, such fiscal year in accordance with GAAP;

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

57

 

(5)               if applicable, copies of any 10-Ks, 10-Qs, registration
statements and other “corporate finance” SEC filings (other than 8-Ks) by
Guarantor, Borrower or any Affiliate, within 5 Business Days of their filing
with the SEC; provided, that, Guarantor, Borrower or any Affiliate will provide
Lender with a copy of the annual 10-K filed with the SEC by Guarantor, Borrower
or their Affiliates, no later than 90 days after the end of the year;

(6)               as soon as available, and in any event within thirty (30) days
of receipt, copies of relevant portions of all final written Agency, FHA,
Governmental Authority and investor audits, examinations, evaluations,
monitoring reviews and reports of its operations (including those prepared on a
contract basis) which provide for or relate to (i) material corrective action
required, (ii) material sanctions proposed, imposed or required, including
without limitation notices of defaults, notices of termination of approved
status, notices of imposition of supervisory agreements or interim servicing
agreements, and notices of probation, suspension, or non-renewal, or
(iii) “report cards,” “grades” or other classifications of the quality of
Borrower’s operations;

(7)               from time to time such other information regarding the
financial condition, operations, or business of Borrower or Guarantor as Lender
may reasonably request;

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

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

a.                   change in the insurance coverage required of Borrower or
Guarantor, with a copy of evidence of same attached;

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

c.                   any material change in accounting policies or financial
reporting practices of Borrower;

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

e.                   any material change in the Indebtedness of Borrower,
including, without limitation, any default, renewal, non-renewal, termination,
increase in available amount or decrease in available amount related thereto;

58

 

f.                   promptly upon receipt of notice or knowledge of any lien or
security interest (other than security interests created hereby or by the other
Loan Documents) on, or claim asserted against, any of the Collateral;

g.                  the transfer, expiration without renewal, termination or
other loss of all or any part of any Servicing Contract, or the right of
Borrower to service Mortgage Loans thereunder (or the termination or replacement
of Borrower thereunder), the reason for such transfer, loss, termination or
replacement, if known to Borrower, and the effects that such transfer, loss,
termination or replacement will have (or will likely have) on the prospects for
full and timely collection of all amounts owing to Borrower under or in respect
of that Servicing Contract or the income relating to the Portfolio Excess Spread
under that Servicing Contract;

h.                  any other event, circumstance or condition that has
resulted, or has a possibility of resulting, in a Material Adverse Effect with
respect to Borrower; and

i.                    the occurrence of any material employment dispute and a
description of the strategy for resolving it that has the possibility of
resulting in a Material Adverse Effect.

(b)               Officer’s Certificates. Borrower will furnish to Lender, at
the time Borrower furnishes each set of financial statements pursuant to Section
6.35(a)(iii)(1), (2) or (3) above, a certificate of a Responsible Officer of
Borrower in the form of Exhibit A to the Pricing Side Letter.

(c)                Quality Control Reports. Periodic internal quality control
reports and internal audit reports as they are distributed to the board of
directors of Borrower or Guarantor.

(d)               Other. Borrower shall deliver to Lender any other reports or
information reasonably requested by Lender or as otherwise required pursuant to
this Agreement.

Section 6.36        Most Favored Status. Borrower, Guarantor and Lender each
agree that should Borrower, Guarantor or any Affiliate thereof enter into a
repurchase agreement or credit facility with any Person other than Lender or an
Affiliate of Lender 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 without limitation covenants covering the same or
similar subject matter set forth or referred to in Section 6.15 hereof and
Section 2 of the Pricing Side Letter;

(b)               a security interest to any Person other than Lender or an
Affiliate of Lender in substantially all assets of Borrower, Guarantor or any
Affiliate thereof; or

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

59

 

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 Lender or an Affiliate of Lender;
provided, that in the event that such More Favorable Agreement is terminated,
upon notice by Borrower to Lender of such termination, the original terms of
this Agreement shall be deemed to be automatically reinstated. Borrower,
Guarantor and Lender 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 Borrower, Guarantor or any Affiliate thereof
entering into a repurchase agreement or other credit facility with any Person
other than Lender, Borrower or Guarantor, as applicable, shall deliver to Lender
a true, correct and complete copy of such repurchase agreement, loan agreement,
guaranty or other financing documentation.

Section 6.37        Liens on Substantially All Assets. Borrower shall not grant
a security interest to any Person other than Lender or an Affiliate of Lender in
substantially all assets of Borrower unless Borrower has entered into an
amendment to this Agreement that grants to Lender a pari passu security interest
on such assets.

Section 6.38        No Modification of the Participation Agreements. Borrower
shall not consent, with respect to the Participation Agreements related to any
Collateral, to (i) the modification, amendment or termination of such
Participation Agreements, (ii) the waiver of any provision of such Participation
Agreements or (iii) the assignment, transfer, or material delegation of any of
its rights or obligations, under Participation Agreements, without the prior
written consent of Lender exercised in Lender’s sole discretion. Notwithstanding
anything to the contrary set forth in the Participation Agreements, the Lender
is hereby appointed and is an intended third party beneficiary thereof, with
full enforcement rights as if a party thereto.

Section 6.39        No Subservicing. Borrower shall not permit any of the
Collateral to be subject to any subservicing agreement or subservicing
arrangement without the prior written consent of the Lender.

ARTICLE VII

DEFAULTS/RIGHTS AND REMEDIES OF LENDER 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 Borrower to (i) make any payment
of interest or principal or any other sum which has become due, on a Facility
Payment Date, Interest Payment Date or the Termination 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 Borrower to Lender or to any Affiliate of
Lender, or (ii) cure any Borrowing Base Deficiency when due pursuant to
Section 2.05 hereof.

(b)               Cross Default. (i) Borrower, Guarantor or Affiliates thereof
shall be in default under (i) any Repurchase Document; (ii) any Indebtedness, in
the aggregate, in excess of $1 million of Borrower, Guarantor 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 Borrower,
Guarantor 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 Borrower or
Guarantor of this Agreement or any rights hereunder without first obtaining the
specific written consent of Lender, or the granting by Borrower of any security
interest, lien or other encumbrances on any Collateral to any person other than
Lender.

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

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

(f)                Immediate Breach of Representation or Covenant or Obligation.
A breach by Borrower of any of the representations, warranties or covenants or
obligations set forth in Sections 3.01, 3.07, 3.12, 3.19, 3.23, 6.01, 6.03,
6.17, 6.21, 6.22, 6.27, 6.29 or 6.32 of this Agreement.

(g)               Additional Breach of Representation or Covenant. A material
breach by Borrower or Guarantor 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 6.05, three (3) Business Days.

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

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

(j)                 Failure to Pledge. Borrower fails to pledge a material
portion of the Collateral to Lender on the applicable Advance Date (provided
Lender has tendered the related Loan Advance).

(k)               Judgment. A final judgment or judgments for the payment of
money in excess of $10,000,000 shall be rendered against Borrower, Guarantor 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 30 days from the date of entry
thereof.

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(l)                 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 Borrower, Guarantor
or any Affiliate thereof, or shall have taken any action to displace the
management of Borrower, Guarantor or any Affiliate thereof or to curtail its
authority in the conduct of the business of Borrower, Guarantor or any Affiliate
thereof, or takes any action in the nature of enforcement to remove, limit or
restrict the approval of Borrower, Guarantor 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 30 days.

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

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

(o)               Financial Statements. Borrower’s or Guarantor’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
Borrower or Guarantor as a “going concern” or a reference of similar import.

(p)               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 Borrower or any Affiliate of Borrower shall seek to disaffirm, terminate,
limit or reduce its obligations hereunder or Guarantor’s obligations under the
Guaranty;

(q)               Servicing Contracts. (i) with respect to any Asset, a notice
of termination of servicing for cause has been delivered, or a notice of
termination of servicing for any other reason has been delivered, which has not
been rescinded within five Business Days following delivery of such notice under
any Servicing Contract (following the expiration of any applicable grace or cure
period in the applicable Servicing Contract) unless all Loan Advances secured by
such Assets are repaid (A) with respect to a notice of termination of servicing
for cause, within five Business Days following delivery of such notice of
termination as described herein or (B) with respect to any other notice of
termination, on or before the date of such termination of servicing; (ii) any
actual termination or resignation of servicing under any Servicing Contract
shall have occurred unless all Loan Advances secured by such Assets are repaid
on or before the date of such termination; or (iii) a material default by
Borrower has occurred under the Participation Agreement;

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(r)                 Dedicated Accounts. Borrower or any other Person shall have
withdrawn any amounts on deposit in the Dedicated Accounts without the consent
of Lender other than funds that do not constitute collections or recoveries of
Receivables and funds deposited or withdrawn in error;

(s)                Rating Agency Triggers. On and after the Borrower receives a
residential servicer rating or residential special loan servicer rating, such
rating shall have fallen by at least two ratings (taking into account pluses and
minuses) with at least one Rating Agency.

(t)                 Trigger Event. A Trigger Event shall have occurred and
Borrower shall have failed to either repay the entire outstanding principal
amount of the Loan Advance on account of all Repledge Portfolio Excess Spread
that constitutes Collateral within three (3) Business Days thereof.

(u)               Underlying Spread Documents. (i) Any material provision of any
Underlying Spread Document shall at any time for any reason cease to be valid
and binding or in full force and effect; or (ii) Underlying Spread Counterparty
shall deny that it has any or further liability or obligation under any material
provision of any Underlying Spread Document; or (iii) Borrower or Underlying
Spread Counterparty shall fail to perform or observe any material covenant,
term, obligation or agreement contained in any Underlying Spread Document or
defaults in the performance or observance of any of its material obligations
under any Underlying Spread Document and such default shall continue after the
earlier of (x) the expiration of the grace period applicable thereto under such
Underlying Spread Document and (y) two (2) Business Days; or (iv) the validity
or enforceability of any material provision of any Underlying Spread Document
shall be contested by any party thereto; or (v) any representation or warranty
set forth on Schedule 1-C shall be untrue in any material respect; unless in
each case of clauses (i) through (v), the related Repledge Portfolio Excess
Spread subject to the Underlying Spread Document is repurchased by Underlying
Spread Counterparty within two (2) Business Days following notice or knowledge
thereof.

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

Section 7.03        Due and Payable. Upon the occurrence of any Event of Default
which has not been waived in writing by Lender, Lender may, by notice to
Borrower, declare all Obligations to be immediately due and payable, and any
obligation of Lender to make any Loan Advance to Borrower shall thereupon
immediately terminate. Upon such declaration, the Obligations shall become
immediately due and payable, both as to principal and interest, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note 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 Lender to make any Loan
Advance to Borrower shall immediately terminate. Lender may enforce payment of
the same and exercise any or all of the rights, powers and remedies possessed by
Lender, whether under this Agreement or any other Loan Document or afforded by
applicable law.

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

Section 7.05        Default Rate. Without regard to whether Lender 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 Interest
Rate under the Note shall be increased, to the extent permitted by law, as set
forth in clauses (iii)(A) and (iii)(B), as applicable, of the definition of
“Margin”.

ARTICLE VIII

ENTIRE AGREEMENT; AMENDMENTS
AND WAIVERS; SEPARATE ACTIONS BY LENDER

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 of the Note or any of the Loan Documents, nor consent to the departure
by Borrower 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.

Section 8.02        Waivers, Separate Actions by Lender. Any amendment or waiver
effected in accordance with this Article VIII shall be binding upon Lender and
Borrower; and Lender’s failure to insist upon the strict performance of any
term, condition or other provision of this Agreement, the Note or any of the
Loan Documents, or to exercise any right or remedy hereunder or thereunder,
shall not constitute a waiver by Lender 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, the Note or any of the Loan
Documents, and each and every term, condition and other provision of this
Agreement, the Note and the Loan Documents 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 and under any Note or under any of the Loan Documents
shall be deemed to be continuing unless and until waived in writing by Lender,
as provided in Section 7.02.

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, and all subsequent holders of the Note, any portion
thereof, or any interest therein. Borrower shall not have the right to assign
all or any part of this Agreement or any interest herein without the prior
written consent of Lender.

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Section 9.02        Participations and Transfers. (a)  Lender 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 Lender’s rights
and obligations under this Agreement, the Note and the other Loan Documents;
provided, that (i) Borrower has consented to such sale; provided, however,
Borrower’s consent shall not be required in the event that (A) such Participant
is an Affiliate of Lender or (B) an Event of Default has occurred and (ii) each
such sale shall represent an interest in the Note in an aggregate principal
amount of $1,000,000 or more. In the event of any such sale by Lender of
participating interests to a Participant, Lender shall remain the holder of the
Note for all purposes under this Agreement and Borrower shall continue to deal
solely and directly with Lender in connection with Lender’s rights and
obligations under this Agreement.

(b)               Lender 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 Lender’s rights and
obligations under this Agreement, the Note and the other Loan Documents;
provided, that (i) Borrower has consented to such assignment, pledge,
hypothecation, or other transfer; provided, however, Borrower’s consent shall
not be required in the event that (A) such Transferee is an Affiliate of Lender
or (B) an Event of Default has occurred; (ii) absent an Event of Default, Lender
shall give at least ten days’ prior notice thereof to Borrower; and (iii) that
each such sale shall represent an interest in the Note in an aggregate principal
amount of $1,000,000 or more. In the event of any such assignment, pledge,
hypothecation or transfer by Lender of Lender’s rights under this Agreement, the
Note and the other Loan Documents, Borrower shall continue to deal solely and
directly with Lender in connection with Lender’s rights and obligations under
this Agreement. Lender (acting as agent for Borrower) 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 principal amount
of the interest in the Note held by each thereof. The entries in the Register
shall be prima facie conclusive and binding, and Borrower may treat each Person
whose name is recorded in the Register as the owner of the principal amount of
the Note recorded therein for all purposes of this Agreement. No assignment
shall be effective until it is recorded in the Register.

(c)                Upon written request of Lender and surrender of the Note,
Borrower hereby agrees to exchange the Note for one or more new Notes, each in
the denomination and in the name of such Person or Persons requested by Lender
(provided, that each new Note shall represent an interest in the Note in an
aggregate initial principal amount of $1,000,000 or more).

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

Section 9.03        Lender 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
Lender under this Agreement. Any assignment or transfer by Lender 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 Lender of a
participation in such rights and obligations in accordance with Section 9.02.

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(b)               Borrower or an agent of Borrower shall maintain a register
(the “Register”) on which it will record the Loans made hereunder, and each
assignment and acceptance and participation. The Register shall include the
names and addresses of Lenders (including all assignees, successors and
Participants), and the principal amount of the Loans owing to such Lender.
Failure to make any such recordation, or any error in such recordation shall not
affect Borrower’s obligations in respect of such Loans. If Lender sells a
participation in any Loan, it shall provide Borrower, or maintain as agent of
Borrower, the information described in this paragraph and permit Borrower to
review such information as reasonably needed for Borrower to comply with its
obligations under this Agreement or under any applicable law or governmental
regulation or procedure.

ARTICLE X

MISCELLANEOUS

Section 10.01    Survival. This Agreement and the other Loan Documents and all
covenants, agreements, representations and warranties herein and therein and in
the certificates delivered pursuant hereto and thereto, shall survive the making
by Lender of the Loan and the execution and delivery to Lender of the Note and
shall continue in full force and effect so long as the Note and any other
Obligations are outstanding and unpaid.

Section 10.02    Indemnification. Borrower shall, and hereby agrees to,
indemnify, defend and hold harmless Lender, any Affiliate of Lender 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 Loan Document or any
Servicing Contract, or the transactions contemplated hereby or thereby,
(ii) Borrower’s servicing practices or procedures; (iii) any actual or proposed
use by Borrower of the proceeds of the Loan, and (iv) any Default, Event of
Default or any other breach by Borrower of any of the provisions of this
Agreement or any other Loan Document, including, without limitation, 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,
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of such Obligations which is permissible under applicable law.
Borrower’s obligations set forth in this Section 10.02 shall survive any
termination of this Agreement and each other Loan Document 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,
Borrower shall, upon demand, pay to Lender all costs and Expenses (including the
reasonable fees and disbursements of counsel) paid or incurred by Lender in
(i) enforcing or defending its rights under or in respect of this Agreement or
any other Loan Document, (ii) collecting the Loan, (iii) foreclosing or
otherwise collecting upon any Collateral and (iv) obtaining any legal,
accounting or other advice in connection with any of the foregoing. For the
avoidance of doubt, the foregoing indemnity includes, without limitation, any
claims arising from or relating to the Portfolio Excess Spread or the Master
Spread Acquisition Agreement.

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Section 10.03    Nonliability of Lender. The parties hereto agree that,
notwithstanding any affiliation that may exist between Borrower and Lender, the
relationship between Borrower and Lender shall be solely that of a borrower and
a lender. Lender shall not have any fiduciary responsibilities to Borrower.
Borrower (i) agrees that Lender shall not have any liability to Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by
Borrower 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 Lender (which
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 Lender constituting gross
negligence or willful misconduct and (ii) waives, releases and agrees not to sue
upon any claim against Lender (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, Lender shall not have any liability with
respect to, and Borrower hereby waives, releases and agrees not to sue upon any
claim for, any special, indirect, consequential or punitive damages suffered by
Borrower 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
Lender (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 Lender, as
applicable, constituting willful misconduct or gross negligence.

Section 10.04    Governing Law; Jurisdiction, Waiver of Jury Trial: Waiver of
Damages. (a)  This Agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Borrower
acknowledges that the obligations of Lender hereunder or otherwise are not the
subject of any guaranty by, or recourse to, any direct or indirect parent or
other Affiliate of Lender. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

(b)               EACH OF BORROWER AND GUARANTOR HEREBY WAIVES TRIAL BY JURY.
EACH OF BORROWER AND GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
TO THE LOAN DOCUMENTS IN ANY ACTION OR PROCEEDING. EACH OF BORROWER AND
GUARANTOR HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, EXCLUSIVE
PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS.

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(c)                Borrower further irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to Borrower at the address set forth in Section 10.05 hereof.

(d)               Nothing herein shall affect the right of Lender to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Borrower in any other jurisdiction.

(e)                Borrower waives the posting of any bond otherwise required of
Lender in connection with any judicial process or proceeding to enforce any
judgment or other court order entered in favor of Lender, or to enforce by
specific performance, temporary restraining order or preliminary or permanent
injunction this Agreement or any of the other Loan Documents.

Section 10.05    Notices. Any and all notices (with the exception of Notice of
Borrowings, 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 Borrower or Guarantor:

PennyMac Loan Services, LLC
6101 Condor Drive
Moorpark, CA 93021
Attention: Pamela Marsh/Kevin Chamberlain
Phone Number: (805) 330-6059/ (818) 746-2877
E-mail: pamela.marsh@pnmac.com;   kevin.chamberlain@pnmac.com

 

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with a copy to:

PennyMac Loan Services, LLC
6101 Condor Drive
Moorpark, CA 93021
Attention: Jeff Grogin
Phone Number: (818) 224-7050
E-mail: jeff.grogin@pnmac.com

 

If to Lender:

 

For Notice of Borrowing:

CSFBMC LLC
c/o Credit Suisse Securities (USA) LLC
One Madison Avenue, 2nd floor
New York, New York 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
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, the Note or any other Loan Document 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.

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

Section 10.10    Hypothecation or Pledge of Collateral. Lender shall have free
and unrestricted use of all Collateral and nothing in this Agreement shall
preclude Lender from engaging in repurchase transactions with all or a portion
of the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating all or a portion of the Collateral.

Section 10.11    Non-Confidentiality of Tax Treatment.(a) This Agreement and its
terms, provisions, supplements and amendments, and notices hereunder, are
proprietary to Lender and Agent or Borrower and Guarantor, 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 Lender,
Borrower or Guarantor, as applicable, except for (i) disclosure to Lender’s,
Borrower’s or Guarantor’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 Loan Documents, the parties hereto may disclose
to any and all Persons, without limitation of any kind, the federal, state and
local tax treatment of the Loan, any fact relevant to understanding the federal,
state and local tax treatment of the Loan, 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 Borrower may not disclose the name of or identifying
information with respect to Lender or any pricing terms (including, without
limitation, the Interest Rate, Advance Rate, Commitment Fee) or other nonpublic
business or financial information (including any sublimits and financial
covenants) that is unrelated to the federal, state and local tax treatment of
the Loan and is not relevant to understanding the federal, state and local tax
treatment of the Loan, without the prior written consent of Lender.

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

Section 10.12    Set-off. In addition to any rights and remedies of Lender
hereunder and by law, Lender shall have the right, without prior notice to
Borrower or Guarantor, any such notice being expressly waived by Borrower and
Guarantor to the extent permitted by applicable law to set-off and appropriate
and apply against any Obligation from Borrower, Guarantor or any Affiliate
thereof to Lender 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 Borrower), 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
Lender or any Affiliate thereof to or for the credit or the account of Borrower,
Guarantor or any Affiliate thereof. Lender agrees promptly to notify Borrower or
Guarantor after any such set off and application made by Lender; provided that
the failure to give such notice shall not affect the validity of such set off
and application.

Section 10.13    Amendment and Restatement. The terms and provisions of the
Existing Loan and Security Agreement shall be amended and restated in their
entirety by the terms and provisions of this Agreement.

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IN WITNESS WHEREOF, Borrower, Guarantor and Lender have caused this Third
Amended and Restated Loan and Security Agreement to be executed and delivered by
their duly authorized officers or trustees as of the date first above written.

 

 

CREDIT SUISSE FIRST BOSTON

     MORTGAGE CAPITAL LLC, as Lender

By: /s/ Elie Chau
Name: Elie Chau
Title: Vice President

 

 

PENNYMAC LOAN SERVICES, LLC,

     as Borrower

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Executive Vice President, Treasurer

PRIVATE NATIONAL MORTGAGE ACCEPTANCE

     COMPANY, LLC, as Guarantor

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Executive Vice President, Treasurer

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SCHEDULE 1-A

 

REPRESENTATIONS AND WARRANTIES REGARDING THE ASSETS

The Borrower makes the following representations and warranties to the Lender,
with respect to Servicing Contracts subject to a Loan Advance, as of the date of
this Agreement, the date of any Loan Advance, and while the Loan Documents are
in full force and effect. The representations and warranties shall be limited to
Servicing Contracts that are acquired on or after the date of this Agreement.
For purposes of this Schedule 1 and the representations and warranties set forth
herein, a breach of a representation or warranty shall be deemed to have been
cured with respect to the Servicing Contracts if and when the Borrower has taken
or caused to be taken action such that the event, circumstance or condition that
gave rise to such breach no longer adversely affects such Servicing Contracts.

 

(a)                Asset Schedule. The Asset Schedule most recently submitted to
Lender is a true and complete list of the Assets pledged hereunder as of the
date of submission.

(b)               Servicing Contracts. All of the Servicing Contracts with
respect to such Assets are in full force and effect and have not been modified
and Borrower as servicer has not been terminated thereunder.

(c)                Assignment. Pursuant to this Agreement, Borrower grants to
the Lender a valid security interest in all the right, title and interest of
such Borrower in and to the Assets and the other Related Security, which
security interest is perfected and of first priority, enforceable against, and
creating an interest prior in right to, all creditors of and purchasers from
Borrower.

(d)               No Liens. Each Asset pledged on such Advance Date is owned by
the related Borrower free and clear of any Lien, except as provided herein, and
is not subject to any dispute or other Adverse Claim, except as provided herein.
The Lender’s security interest in such Assets, the Related Security and the
Collections with respect thereto, is free and clear of any Lien, except as
provided herein. The Borrower has not and will not prior to the time of the
pledge of any such interest to the Lender have sold, pledged, assigned,
transferred or subjected and will not thereafter sell, pledge, assign, transfer
or subject to a Lien any of such Assets, the Related Security or the Collections
other than in accordance with the terms of this Agreement.

(e)                Filings. On or prior to each Advance Date, all financing
statements and other documents required to be recorded or filed in order to
perfect the Lender’s security interest in, and protect the Assets and the other
related Assets against all creditors of, and purchasers from, Borrower and all
other Persons whatsoever have been duly filed in each filing office necessary
for such purpose, and all filing fees and taxes, if any, payable in connection
with such filings have been paid in full.

(f)                Collection Policy. Borrower has complied in all material
respects with the Collection Policy in regard to each Asset and related
Servicing Contract. Borrower has not extended or modified the terms of any Asset
or the related Servicing Contract except in accordance with the Collection
Policy.

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(g)               Bona Fide Asset. Each Asset being pledged on an Advance Date
is an obligation arising out of the making of a Servicer Advance by the related
Borrower or a predecessor servicer, in its capacity as a servicer or subservicer
of a portfolio of mortgage loans, pursuant to a Servicing Contract. The Borrower
has no knowledge of any fact that should have led it to expect at the time of
the creation of each Asset that such Asset would not be paid in full when due.
As of the Advance Date, the Borrower has not received any Collections or other
payments in respect of the Assets, and each Asset is an Eligible Asset.

(h)               Servicer Advances Reimbursable. The terms of the Servicing
Contracts provide that each Servicer Advance is reimbursable to the related
Borrower from collections on the related mortgage loan, or collections on other
mortgage loans serviced or subserviced by the Borrowers pursuant to the related
Servicing Contract.

(i)                 Compliance with Servicing Contract. Each Servicer Advance
has been made in accordance with the terms of the related Servicing Contract.

(j)                 Adverse Selection. Borrower has not selected the Assets in a
manner that will adversely affect Lender’s interests.

(k)               No Subservicing. Except as otherwise disclosed to Lender, all
of the Servicing Rights pledged hereunder constitute direct servicing rights
(and not subservicing rights.)

(l)                 Good Title. Borrower has good title to all of the Collateral
other than the Portfolio Excess Spread, free and clear of all mortgages,
security interests, restrictions, Liens and encumbrances of any kind other than
the Liens created by the Loan Documents. The Underlying Spread Counterparty has
good title to the Repledge Portfolio Excess Spread, subject to the Lien created
hereby and further perfected pursuant to the Security Agreement, but otherwise,
free and clear of all mortgages, security interests, restrictions, Liens and
encumbrances of any kind.

(m)             No Defenses. Each item of Collateral was acquired by Borrower 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 and there are no
agreements or understandings between Borrower and any other party which would
modify, release, terminate or delay the attachment of the security interests
granted to Lender under this Agreement and no obligor has any defense, set off,
claim or counterclaim against Borrower that can be asserted against Lender,
whether in any proceeding to enforce the Lender’s rights in the related Mortgage
Loan or otherwise.

(n)               Amount Outstanding. The amount represented by Borrower to
Lender as owing by an obligor under each Mortgage Loan being serviced under a
Servicing Contract is the correct amount actually owing by that obligor.

(o)               Servicing Compliance with Applicable Laws. Seller has complied
with the terms of the Servicing Contract and applicable laws in all material
respects.

74

 

SCHEDULE 1-B

 

REPRESENTATIONS AND WARRANTIES RE: ASSETS CONSISTING OF PARTICIPATION
CERTIFICATES

The Borrower makes the following representations and warranties to the Lender,
with respect to Participation Certificates related to Servicing Rights subject
to a Loan Advance, as of the date of this Agreement, the date of any Loan
Advance, and while the Loan Documents are in full force and effect. The
representations and warranties shall be limited to Participation Certificates
related to Servicing Rights that are acquired on or after the date of this
Agreement. For purposes of this Schedule 1 and the representations and
warranties set forth herein, a breach of a representation or warranty shall be
deemed to have been cured with respect to the Participation Certificates related
to Servicing Rights if and when the Borrower has taken or caused to be taken
action such that the event, circumstance or condition that gave rise to such
breach no longer adversely affects such Participation Certificates related to
Servicing Rights.

(a)                The representations and warranties with respect to the
related Servicing Contract set forth on Schedule 1-A are true and correct in all
material respects.

(b)               The Participation Certificate is a participation interest in
the Portfolio Excess Spread evidenced by such Participation Certificate.

(c)                Borrower has good and marketable title to, and is the sole
owner and holder of, such Participation Certificate, Borrower is transferring
such Participation
Certificate free and clear of any and all liens, pledges, encumbrances, charges,
security interests or any other ownership interests of any nature encumbering
such Participation Certificate, other than the first priority security interest
of Lender granted pursuant to this Agreement, and no Participation Certificate
document is subject to any assignment, participation, or pledge.

(d)               No (i) monetary default, breach or violation exists with
respect to any agreement or other document governing or pertaining to such
Participation Certificate, the related Portfolio Excess Spread, (ii) material
non-monetary default, breach or violation exists with respect to such
Participation Certificate, the related Portfolio Excess Spread, or (iii) event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration.

(e)                None of the Participation Certificates (i) is dealt in or
traded on a securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the UCC, (iii)
is Investment Property or (iv) is held in a Securities Account. For purposes of
this paragraph (e), capitalized terms undefined in this Agreement have the
meaning given to such term in the Uniform Commercial Code.

(f)                The Participation Certificate constitutes all the issued and
outstanding participation interests of all classes issued pursuant to the
Participation Agreement and is certificated.

(g)               The Participation Certificate has been duly and validly
issued.

75

 

(h)               All consents of any Person required for the grant of the
security interests in the Participation Certificates to Lender provided for
herein have been obtained and are in full force and effect.

(i)                 Upon delivery to the Lender of the Participation
Certificates (and assuming the continuing possession by the Lender of such
certificate in accordance with the requirements of applicable law) and the
filing of a financing statement covering the Participation Certificate in the
State of Delaware and naming the Borrower as debtor and the Lender as secured
party, Borrower has pledged to Lender all of its right, title and interest to
the Participation Certificates to Lender. The Lien granted hereunder is a first
priority Lien in the Participation Certificate.

(j)                 The Borrower has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, the Participation Agreement
without the consent of Lender.

(k)               Participation Agreement.

(i)            Each Participation Agreement with respect to such Assets is in
full force and effect and, except to the extent approved in writing by Lender,
the terms of the Participation Agreement have not been impaired, altered or
modified in any respect.

(ii)            A true and correct copy of the Participation Agreement has been
delivered to Lender.

(iii)            Borrower has complied with all terms of each Participation
Agreement pledged hereunder and has fulfilled all obligations with respect
thereto.

(iv)            Except to the extent approved in writing by Lender, there is no
material default, breach, violation or event of acceleration existing under the
Participation Agreement and no event has occurred which, with the passage of
time or giving of notice or both and the expiration of any grace or cure period,
would constitute a material default, breach, violation or event of termination
thereunder, and Borrower has not waived any such default, breach, violation or
event of termination.

(v)            The Participation Agreement is genuine, and is the legal, valid
and binding obligation of the Borrower enforceable in accordance with its terms,
except as such enforcement may be affected by bankruptcy, by other insolvency
laws or by general principles of equity. Borrower had legal capacity to enter
into the Participation Agreement, and the Participation Agreement has been duly
and properly executed by Borrower and Servicer.

(vi)            Pursuant to the Participation Agreement, to the extent the sale
would be re-characterized, Borrower grants to the holder a valid security
interest in all the right, title and interest of Borrower in and to the
Portfolio Excess Spread, which security interest is perfected and of first
priority, enforceable against, creating an interest prior in right to, all
creditors of Borrower.

76

 

 

SCHEDULE 1-C

 

REPRESENTATIONS AND WARRANTIES RE:
UNDERLYING SPREAD TRANSACTIONS

The Borrower makes the following representations and warranties to the Lender,
with respect to Underlying Spread Transactions, as of the date of this
Agreement, the date of the Underlying Spread Transactions, and as of each date
the Loan Documents are in full force and effect. For purposes of this Schedule
1-C and the representations and warranties set forth herein, a breach of a
representation or warranty shall be deemed to have been cured with respect to
the Underlying Spread Transactions if and when the Borrower has taken or caused
to be taken action such that the event, circumstance or condition that gave rise
to such breach no longer adversely affects such Underlying Spread Transaction.

(a)                Validity of Underlying Spread Documents. The Underlying
Spread Documents and any other agreement executed and delivered by Underlying
Spread Counterparty or guarantor thereto, as applicable, in connection with an
Underlying Spread Transaction are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its
terms, except as such enforcement may be affected by bankruptcy, by other
insolvency laws or by general principles of equity. Underlying Spread
Counterparty and Borrower had legal capacity to enter into the Underlying Spread
Transaction and Underlying Spread Counterparty had the legal capacity to execute
and deliver the Underlying Spread Documents and any such agreement, and the
Underlying Spread Documents and any such other related agreement to which
Underlying Spread Counterparty or Borrower are parties have been duly and
properly executed by Underlying Spread Counterparty and Borrower, as applicable.
The Underlying Spread Documents to which Underlying Spread Counterparty is a
party constitute legal, valid, binding and enforceable obligations of Underlying
Spread Counterparty. The Underlying Spread Transaction and the Underlying Spread
Documents are in full force and effect, and the enforceability of the Underlying
Spread Documents has not been contested by Underlying Spread Counterparty.

(b)               Original Terms Unmodified. Except to the extent approved in
writing by Lender, neither the terms of the Underlying Spread Documents nor the
terms of the Underlying Spread Transactions have been (i) materially amended,
modified, supplemented or restated or (ii) amended, modified, supplemented or
restated in any manner that would affect the Lender’s rights hereunder or under
any other Loan Document (including without limitation Lender’s rights to the
Repledge Portfolio Excess Spread).

(c)                No Defenses. The Underlying Spread Transaction is not subject
to any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of the terms of
any Underlying Spread Documents, or the exercise of any right thereunder, render
any Underlying Spread Document unenforceable in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.

(d)               No Bankruptcy. Underlying Spread Counterparty is not a debtor
in any state or federal bankruptcy or insolvency proceeding. Underlying Spread
Counterparty has not threatened and is not contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Underlying Spread Counterparty’s assets
or any of the Repledge Portfolio Excess Spread.

77

 

(e)                Compliance with Applicable Laws; Consents. Any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity and disclosure laws and unfair and
deceptive practices laws applicable to the Underlying Spread Transaction have
been complied with, and the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations. All consents of
and all filings with any federal or state Governmental Authority necessary in
connection with the execution, delivery or performance of the Underlying Spread
Transaction have been obtained or made and are in full force and effect.

(f)                No Waiver. Except to the extent approved in writing by
Lender, Borrower has not waived the performance by Underlying Spread
Counterparty of any action under the Underlying Spread Documents, if Underlying
Spread Counterparty’s failure to perform such action would cause the Underlying
Spread Transaction to be in default in any material respect nor, except to the
extent approved in writing by Lender, has Borrower waived any such default
resulting from any action or inaction by Underlying Spread Counterparty.

(g)               No Defaults. There is no material default, breach, violation
or event which would permit acceleration existing under the Underlying Spread
Documents and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a material default,
breach, violation or event which would permit acceleration, and neither Borrower
nor any of its affiliates nor any of their respective predecessors, have waived
any default, breach, violation or event which would permit acceleration; and all
maintenance charges and assessments (including assessments payable in the future
installments, which previously became due and owing) have been paid.

(h)               Delivery of Underlying Spread Documents. True and correct
copies of the Underlying Spread Documents have been delivered to Lender.

(i)                 Organization. Underlying Spread Counterparty has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its formation. Underlying Spread Counterparty has requisite
power and authority to (i) own its properties, (ii) transact the business in
which it is now engaged, (iii) execute and deliver the Underlying Spread
Documents and (iv) consummate the transactions contemplated thereby. Underlying
Spread Counterparty is duly qualified to do business and is in good standing in
the jurisdictions where it is required to be so qualified in connection with the
ownership, maintenance, management and operation of its business. Underlying
Spread Counterparty possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged.

(j)                 No Conflicts. The execution, delivery and performance of the
Underlying Spread Documents by Underlying Spread Counterparty do not conflict
with or constitute a default under, or result in the creation or imposition of
any lien (other than pursuant to the Underlying Spread Documents) under, any
material servicing agreement, participation agreement, agreement, partnership
agreement, or other agreement or instrument to which Underlying Spread
Counterparty is a party or to which any of its property is subject, nor will
such action result in any violation of the provisions of any statute of any
Governmental Authority having jurisdiction over Underlying Spread Counterparty,
and any qualification of or with any governmental authority required for the
execution, delivery, and performance by Underlying Spread Counterparty of the
Underlying Spread Documents has been obtained and is in full force and effect.

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(k)               Compliance. Underlying Spread Counterparty is in compliance in
all material respects with all applicable legal requirements. Underlying Spread
Counterparty is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the violation of which might
adversely affect the condition (financial or otherwise) or business of
Underlying Spread Counterparty.

(l)                 Underlying Spread Documents Not Assigned. No Underlying
Spread Document is assigned to any third party other than the Lender. The
Underlying Spread Documents permit Borrower to assign, pledge, transfer or
rehypothecate the Repledge Portfolio Excess Spread and all other collateral
pledged to Borrower pursuant to the Underlying Spread Documents. The Underlying
Spread Documents expressly provide that the Underlying Spread Counterparty’s
rights to redemption are solely with respect to Borrower, but to the extent that
a court of competent jurisdiction determines that a right of redemption exists
with respect to the Lender hereunder, such redemption may only be for the full
amount of Loan Advances then outstanding.

(m)             Solvency. The pledge of the Repledge Portfolio Excess Spread
subject to the Underlying Spread Documents is not undertaken with the intent to
hinder, delay or defraud any of Underlying Spread Counterparty’s creditors.
Underlying Spread Counterparty is not insolvent within the meaning of 11 U.S.C.
Section 101(32) and the transfer and pledge of the Repledge Portfolio Excess
Spread pursuant to the Underlying Spread Documents (i) will not cause Underlying
Spread Counterparty to become insolvent, (ii) will not result in any property
remaining with Underlying Spread Counterparty to be unreasonably small capital,
and (iii) will not result in debts that would be beyond Underlying Spread
Counterparty’s ability to pay as same mature. Underlying Spread Counterparty
receives reasonably equivalent value in exchange for the transfer and pledge of
the Repledge Portfolio Excess Spread in accordance with the Underlying Spread
Documents.

(n)               Ownership. Borrower has the right to pledge the Repledge
Portfolio Excess Spread. The Repledge Portfolio Excess Spread has not been
assigned or pledged by Borrower other than pursuant to this Agreement and the
Security Agreement. Underlying Spread Counterparty has good, indefeasible and
marketable title to the Repledge Portfolio Excess Spread, and has full right to
pledge and assign the Repledge Portfolio Excess Spread to Lender under the
Security Agreement free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has full right
and authority subject to no interest or participation of, or agreement with, any
other party, to assign and pledge the Repledge Portfolio Excess Spread pursuant
to the Security Agreement.

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(o)               Reserved.

(p)               No Plan Assets. Underlying Spread Counterparty is not an
“employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I
of ERISA, and none of the assets of the Mortgagor constitutes or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101.

(q)               No Prohibited Persons. Neither Underlying Spread Counterparty
nor any of its Affiliates, officers, directors, partners or members, is an
entity or person or 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 United States Treasury Department’s OFAC most
current list of “Specifically Designated National and Blocked Persons” (which
list may be published from time to time in various mediums including, but not
limited to, 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.

(r)                 Financial Information. Based upon Underlying Spread
Counterparty’s representations and warranties, all financial data, including,
without limitation the statements of cash flow and income and operating expense,
that have been delivered to Borrower (i) are true, complete, and correct in all
material respects, and (ii) accurately represent the financial condition of
Underlying Spread Counterparty as of the date of such reports.

(s)                Repledge Portfolio Excess Spread Assignable; Lender’s
Security Interest. (i) The Underlying Spread Documents have been delivered to
Lender and (ii) the UCC-1 Financing Statement naming Underlying Spread
Counterparty as debtor and Borrower as secured party identifying the Repledge
Portfolio Excess Spread as collateral has been filed in the applicable filing
office.

(t)                 Reserved.

(u)               Borrower Diligence. Borrower has delivered to Lender all
information regarding Underlying Spread Counterparty as Lender has requested and
such information is satisfactory to Lender in all material respects.

(v)               Underlying Spread Documents.

(i)               The Underlying Spread Loan Agreement contains broad repledge,
assignment and rehypothecation provisions in favor of Borrower permitting
Borrower to pledge and assign to Lender hereunder, without restriction or rights
to consent by Underlying Spread Counterparty or any other Person, all of
Borrower’s right, title and interest in the Repledge Portfolio Excess Spread
pledged by Underlying Spread Counterparty thereunder;

 

(ii)               The Underlying Spread Loan Agreement contains a grant of
security interest in the Repledge Portfolio Excess Spread subject to an
Underlying Spread Transaction to Borrower, similar in form and substance to the
security interest granted to Lender in Section 4.01 of the Agreement;

 

(iii)               The Underlying Spread Loan Agreement contains a broad grant
of a power of attorney to Borrower and Borrower’s attorneys-in-fact, including
Lender; and

 

(iv)               The Underlying Spread Loan Agreement requires that all cash
proceeds with respect to the Repledge Portfolio Excess Spread to be promptly
remitted to the Servicing Rights Dedicated Account.

 

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SCHEDULE 2

ELIGIBLE SECURITIZATION TRANSACTIONS, SERVICING CONTRACTS AND PARTICIPATION
AGREEMENTS

 

Description of Eligible Securitization Transaction Related Servicing Cut-off
Date Related Advance Date       Ginnie Mae I MBS and Ginnie Mae II MBS, in
either case issued by Seller and guaranteed by Ginnie Mae upon Seller's
securitization of a pool of Ginnie Mae eligible mortgage loans insured or
guaranteed by the FHA or VA, as applicable.  Seller's issuance of the related
MBS and its servicing of the underlying mortgage loans are governed in all
respects by Ginnie Mae's 5500.3 REV-1: Mortgage-Backed Securities Guide, as the
same may be amended from time to time. The first Business Day of the calendar.
The 15th calendar day of the month (or, if the 15th calendar day is not a
Business Day, the first Business Day thereafter)

 

Participation Agreements

 

Master Spread Acquisition and MSR Servicing Agreement, dated as of December 30,
2013, between PennyMac Holdings, LLC and PennyMac Loan Services, LLC, as
amended, restated or modified from time to time

Master Spread Participation Agreement, dated March 27, 2015, by and among
PennyMac Loan Services, LLC and PennyMac Loan Services, LLC, as initial
participant, as amended, restated or modified from time to time

 

81

 

SCHEDULE 3

RESPONSIBLE OFFICERS – BORROWER

BORROWER AUTHORIZATIONS

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

Responsible Officers for execution of Loan Documents and amendments

Name   Title   Signature

 

 

Responsible Officers for execution of Notice of Borrowings and day-to-day
operational functions

Name   Title   Signature

 

 

 

82

 

 

RESPONSIBLE OFFICERS - GUARANTOR

 

Name   Title   Signature

 

 

 

 

 

 

 

 

 

 

83

 

 

EXHIBIT A

FORM OF
FOURTH AMENDED AND RESTATED PROMISSORY NOTE

$257,000,000 or such lesser or greater amount as advanced
under the Loan and Security Agreement

New York, New York
March 27, 2015

FOR VALUE RECEIVED, the undersigned, PennyMac Loan Services, LLC, a Delaware
limited liability company (the “Borrower”), hereby unconditionally promises to
pay to the order of Credit Suisse First Boston Mortgage Capital LLC (the
“Lender”), at the office of Lender located at One Madison Avenue, New York, New
York 10010, or as otherwise required by the Third Amended and Restated Loan and
Security Agreement (as amended, supplemented or otherwise modified from time to
time, the “Loan and Security Agreement”), referred to below, in lawful money of
the United States of America and in immediately available funds, the principal
sum of TWO HUNDRED FIFTY SEVEN MILLION DOLLARS ($257,000,000) (or such lesser or
greater amount as shall equal the aggregate unpaid principal amount of the Loan
made by Lender to Borrower under the Loan and Security Agreement), on the dates
and in the principal amounts provided in the Loan and Security Agreement, and to
pay interest on the unpaid principal amount of such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Loan and Security Agreement, which amount shall be payable not
later than the Termination Date pursuant to the terms of the Loan and Security
Agreement.

The undersigned further agrees to pay interest in like money at such office or
as otherwise required by the Loan and Security Agreement on the unpaid principal
amount hereof from time to time on the dates and at the applicable rates per
annum set forth in the Loan and Security Agreement until paid in full (both
before and after judgment).

The holder of this Fourth Amended and Restated Promissory Note is authorized to
record the date and amount of each payment or prepayment of principal with
respect to the Loan and each interest rate and interest period with respect
thereto, on the schedules annexed hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part hereof,
which recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that failure to make any such recordation on
this Fourth Amended and Restated Promissory Note shall not affect the
obligations of Borrower under this Fourth Amended and Restated Promissory Note
or the Loan and Security Agreement.

This Fourth Amended and Restated Promissory Note is the Note referred to in the
Third Amended and Restated Loan and Security Agreement, dated as of March 27,
2015, between Borrower and Lender (as amended, restated, supplemented or
otherwise modified from time to time, the “Loan and Security Agreement”), and is
entitled to the benefits thereof and is subject to optional prepayment in whole
or in part as provided therein. Terms used herein which are defined in the Loan
and Security Agreement shall have such defined meanings unless otherwise defined
herein or unless the context otherwise requires.

84

 

Upon the occurrence of any one or more of the Events of Default specified in the
Loan and Security Agreement, all amounts then remaining unpaid on this Fourth
Amended and Restated Promissory Note shall become, or may be declared to be,
immediately due and payable, all as provided therein.

This Fourth Amended and Restated Promissory Note may not be transferred except
in compliance with the terms and provisions of the Loan and Security Agreement.
As provided in the Loan and Security Agreement, and subject to the provisions
therein, Lender may participate, assign, pledge, hypothecate, or otherwise
transfer to one or more banks, financial institutions, investment companies,
investment funds or any other Person all or a portion of Lender’s rights and
obligations under this Fourth Amended and Restated Promissory Note, the Loan and
Security Agreement and the other Loan Documents.

This Fourth Amended and Restated Promissory Note amends and restates in its
entirety the Third Amended and Restated Promissory Note dated August 29, 2014
(the “Existing Promissory Note”) and is given as a continuation, rearrangement
and extension, and not a novation, release or satisfaction of the Existing
Promissory Note. The issuance and delivery of this Fourth Amended and Restated
Promissory Note is in substitution for the Existing Promissory Note.

This Fourth Amended and Restated Promissory Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York,
without regard to the conflict-of-laws principles thereof.

 

[SIGNATURE PAGE FOLLOWS]

 

85

 

IN WITNESS WHEREOF, Borrower has caused this Fourth Amended and Restated
Promissory Note to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.

 

PENNYMAC LOAN SERVICES, LLC

 

By:____________________________________
      Name:
      Title:

 

 

 

 

 

 

 

 

 

 

86

 

 

SCHEDULE OF PAYMENTS

Interest Payment Date

Interest Period

CSCOF and Interest Rate for such Interest Period

Interest Accrued During such Interest Period

Total Payment Received on such Payment Date

Amount Applied to Interest

Amount Applied to Principal

Unpaid Principal Amount

Notation Made By

                                                                               
         

 

 

 

 

 

 

87

 

EXHIBIT B-1

FORM OF POWER OF ATTORNEY

Reference is made to the Third Amended and Restated Loan and Security Agreement,
dated as of March 27, 2015 (as amended from time to time, the “Agreement”) among
PennyMac Loan Services, LLC (the “Borrower”), Private National Mortgage
Acceptance Company, LLC (the “Guarantor”) and Credit Suisse First Boston
Mortgage Capital LLC (the “Lender”).

KNOW ALL MEN BY THESE PRESENTS, Borrower hereby irrevocably constitutes and
appoints Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Borrower and in the name of
Borrower or in its own name, from time to time in Lender’s discretion, in
accordance with the terms of the Agreement, for the purpose of carrying out the
terms of the Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Agreement, and, without limiting the generality
of the foregoing, Borrower hereby gives Lender the power and right, on behalf of
Borrower, without assent by, but with notice to, Borrower, if permitted under
the terms of the Agreement, to do the following:

(v)            in the name of Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to (i) all
receivables arising under or related to any servicing contract described in the
Agreement; (ii) all servicing rights arising under or related to any servicing
contract described in the Agreement; (iii) all rights to reimbursement of assets
under related servicing contracts described in the Agreement; (iv) any accounts
described in the Agreement; (v) all records, instruments or other documentation
evidencing any of the foregoing; (vi) 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, without limitation, all of
Borrower’s rights, title and interest in and under any related servicing
contracts described in the Agreement); and (vii) any and all replacements,
substitutions, distributions on or proceeds of any and all of the foregoing (any
and all property listed in clauses (i) through (vii), collectively, the
“Collateral”) and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by Lender for the
purpose of collecting any and all such moneys due with respect to any Collateral
whenever payable;

(vi)            to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral;

(vii)            request that Fannie Mae Servicing Rights, Freddie Mac Servicing
Rights, Ginnie Mae Servicing Rights and Servicing Rights in respect of Mortgage
Loans owned by any other investor be transferred to Lender or to another
servicer approved by Fannie Mae, Freddie Mac, Ginnie Mae or such other investor
(as the case may be) and perform (without assuming or being deemed to have
assumed any of the obligations of Borrower thereunder) all aspects of each
servicing contract that is Servicing Rights Collateral;

88

 

(viii)            request distribution to Lender of sale proceeds or any
applicable contract termination fees arising from the sale or termination of
such Servicing Rights and remaining after satisfaction of Borrower’s relevant
obligations to Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as
the case may be), including costs and expenses related to any such sale or
transfer of such Servicing Rights and other amounts due for unmet obligations of
Borrower to Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the
case may be) under applicable Fannie Mae Guides, Freddie Mac Guides, Ginnie Mae
Guides or such other investor’s contract;

(ix)            deal with investors and any and all subservicers and master
servicers in respect of any of the servicing rights in the same manner and with
the same effect as if done by Borrower; and

(x)            (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due thereunder
directly to Lender or as Lender shall direct; (B) to ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of any Collateral;
(C) to sign and endorse any invoices, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against Borrower with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges or
releases as Lender may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender’s option and Borrower’s expense,
at any time, and from time to time, all acts and things which Lender deems
necessary to protect, preserve or realize upon the Collateral and Lender’s Liens
thereon and to effect the intent of the Agreement, all as fully and effectively
as Borrower might do.

This power of attorney is a power coupled with an interest and shall be
irrevocable until such time as all Obligations have been paid in full and the
Agreement is terminated.

Borrower also authorizes Lender, at any time and from time to time, to execute,
in connection with any sale provided for in the Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.

89

 

The powers conferred on Lender are solely to protect Lender’s interests in the
Collateral and shall not impose any duty upon Lender to exercise any such
powers. Lender shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and neither Lender nor any of its
officers, directors, or employees shall be responsible to Borrower for any act
or failure to act hereunder, except for Lender’s own gross negligence or willful
misconduct.

Any capitalized term used but not defined herein shall have the meaning assigned
to such term in the Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, BORROWER HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY
ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS
TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH
REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND
LENDER ON ITS OWN BEHALF AND ON BEHALF OF LENDER’S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

90

 

IN WITNESS WHEREOF Borrower has caused this Power of Attorney to be executed and
Borrower’s seal to be affixed this day of March, 2015.

 

PENNYMAC LOAN SERVICES, LLC

 

 

By:____________________________________
Name:
Title:

 

 

 

 

 

 

 

 

 

 

 

91

 

 

STATE OF [       ] )     ) ss.: COUNTY OF [       ] )  

 

On the ____________ day of March, 2015 before me, a Notary Public in and for
said State, personally appeared ___________, known to me to be
______________________________________________ of Borrower, the institution that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day
and year in this certificate first above written.

 

_______________________________________
                      Notary Public

My Commission expires __________________

92

 

EXHIBIT B-2

FORM OF POWER OF ATTORNEY

Reference is made to the Third Amended and Restated Loan and Security Agreement,
dated as of March 27, 2015 (as amended from time to time, the “Agreement”) among
PennyMac Loan Services, LLC (the “Borrower”), Private National Mortgage
Acceptance Company, LLC (the “Guarantor”) and Credit Suisse First Boston
Mortgage Capital LLC (the “Lender”).

KNOW ALL MEN BY THESE PRESENTS, Borrower hereby irrevocably constitutes and
appoints Select Portfolio Servicing, Inc. (“SPS”) and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Borrower and in the name of Borrower or in its own name, from time to
time in SPS’s discretion, in accordance with the terms of the Agreement, for the
purpose of carrying out the terms of the Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of the Agreement, and,
without limiting the generality of the foregoing, Borrower hereby gives SPS the
power and right, on behalf of Borrower, without assent by, but with notice to,
Borrower, if permitted under the terms of the Agreement, to do the following:

(xi)            in the name of Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to (i) all
receivables arising under or related to any servicing contract described in the
Agreement; (ii) all servicing rights arising under or related to any servicing
contract described in the Agreement; (iii) all rights to reimbursement of assets
under related servicing contracts described in the Agreement; (iv) any accounts
described in the Agreement; (v) all records, instruments or other documentation
evidencing any of the foregoing; (vi) 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, without limitation, all of
Borrower’s rights, title and interest in and under any related servicing
contracts described in the Agreement); and (vii) any and all replacements,
substitutions, distributions on or proceeds of any and all of the foregoing (any
and all property listed in clauses (i) through (vii), collectively, the
“Collateral”) and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by SPS for the
purpose of collecting any and all such moneys due with respect to any Collateral
or related Mortgage Loans whenever payable;

(xii)            to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral or related Mortgage Loans;

(xiii)            request that Fannie Mae Servicing Rights, Freddie Mac
Servicing Rights, Ginnie Mae Servicing Rights and Servicing Rights in respect of
Mortgage Loans owned by any other investor be transferred to SPS or to another
servicer approved by Fannie Mae, Freddie Mac, Ginnie Mae or such other investor
(as the case may be) and perform (without assuming or being deemed to have
assumed any of the obligations of Borrower thereunder) all aspects of each
servicing contract that is Servicing Rights Collateral;

93

 

(xiv)            request distribution to SPS of sale proceeds or any applicable
contract termination fees arising from the sale or termination of such Servicing
Rights and remaining after satisfaction of Borrower’s relevant obligations to
Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the case may be),
including costs and expenses related to any such sale or transfer of such
Servicing Rights and other amounts due for unmet obligations of Borrower to
Fannie Mae, Freddie Mac, Ginnie Mae or such other investor (as the case may be)
under applicable Fannie Mae Guides, Freddie Mac Guides, Ginnie Mae Guides or
such other investor’s contract;

(xv)            deal with investors and any and all subservicers and master
servicers in respect of any of the servicing rights and related Mortgage Loans
in the same manner and with the same effect as if done by Borrower; and

(xvi)            (A) to direct any party liable for any payment under any
Collateral or the related Mortgage Loans to make payment of any and all moneys
due or to become due thereunder directly to SPS or as SPS shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (C) to sign and endorse any invoices,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit, action or proceeding brought
against Borrower with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as SPS may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though SPS were the absolute owner thereof for all purposes, and
to do, at SPS’s option and Borrower’s expense, at any time, and from time to
time, all acts and things which SPS deems necessary to protect, preserve or
realize upon the Collateral and SPS’s Liens thereon and to effect the intent of
the Agreement, all as fully and effectively as Borrower might do.

This power of attorney is a power coupled with an interest and shall be
irrevocable until such time as all Obligations have been paid in full and the
Agreement is terminated.

Borrower also authorizes SPS, at any time and from time to time, to execute, in
connection with any sale provided for in the Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.

The powers conferred on SPS are solely to protect SPS’s interests in the
Collateral and shall not impose any duty upon SPS to exercise any such powers.
SPS shall be accountable only for amounts that it actually receives as a result
of the exercise of such powers, and neither SPS nor any of its officers,
directors, or employees shall be responsible to Borrower for any act or failure
to act hereunder, except for SPS’s own gross negligence or willful misconduct.

Any capitalized term used but not defined herein shall have the meaning assigned
to such term in the Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, BORROWER HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY
ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS
TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH
REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SPS
ON ITS OWN BEHALF AND ON BEHALF OF SPS’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND
HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY
ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON
THE PROVISIONS OF THIS INSTRUMENT.

94

 

IN WITNESS WHEREOF Borrower has caused this Power of Attorney to be executed and
Borrower’s seal to be affixed this day of March, 2015.

 

PENNYMAC LOAN SERVICES, LLC

 

By:____________________________________
       Name:
       Title:

 

 

 

 

95

 

 

STATE OF [       ] )     ) ss.: COUNTY OF [       ] )  

 

On the ____________ day of March, 2015 before me, a Notary Public in and for
said State, personally appeared , known to me to be
______________________________________________ of Borrower, the institution that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day
and year in this certificate first above written.

_______________________________________
                      Notary Public

My Commission expires __________________

 

96

 

EXHIBIT C

FORM OF NOTICE OF BORROWING

Dated: [_________]

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
Eleven Madison Avenue
New York, NY 10010
Attention: [NAME]
Fax No.: [NUMBER]

NOTICE OF BORROWING

Ladies and Gentlemen:

We refer to the Third Amended and Restated Loan and Security Agreement, dated as
of March 27, 2015 (the “Loan and Security Agreement”), among PennyMac Loan
Services, LLC (the “Borrower”), Private National Mortgage Acceptance Company,
LLC (the “Guarantor”) and Credit Suisse First Boston Mortgage Capital LLC. Each
capitalized term used but not defined herein shall have the meaning specified in
the Loan and Security Agreement. This notice is being delivered by Borrower
pursuant to Section 2.02 of the Loan and Security Agreement.

Please be notified that Borrower hereby irrevocably requests that the following
Loan Advance(s) be made available to Borrower as follows:

 

Principal Amount of Notice of Borrowing Amount of Borrowing Base Outstanding
Principal Amount            

The requested Advance Date is _______________.

Borrower requests that the proceeds of the Loan Advance be deposited in
Borrower’s account at _______, ABA Number _______, account number ____,
References: _____, Attn: _______.

Borrower hereby represents and warrants that each of the representations and
warranties made by Borrower in each of the Loan Documents 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 Asset
Schedule, which includes the Assets to be subject to the requested Loan Advance.

 

PENNYMAC LOAN SERVICES, LLC

 

By:____________________________________

97

 

[Asset Schedule]

 

 

 

 

 

 

 

 

 

98

 

EXHIBIT D

EXISTING INDEBTEDNESS

 

 

ATTACHED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

EXHIBIT E

RESERVED

 

 

 

 

 

 

100

 

EXHIBIT F

FORM OF REQUEST FOR APPROVAL OF
ELIGIBLE SECURITIZATION, PARTICIPATION AGREEMENT OR

SERVICING CONTRACT

Dated: [_________]

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
Eleven Madison Avenue
New York, NY 10010
Attention: [NAME]
Fax No.: [NUMBER]

REQUEST FOR APPROVAL OF
ELIGIBLE SECURITIZATION, PARTICIPATION AGREEMENT
OR SERVICING CONTRACT

Ladies and Gentlemen:

 

We refer to the Third Amended and Restated Loan and Security Agreement, dated as
of March 27, 2015 (the “Loan and Security Agreement”), by and among PennyMac
Loan Services, LLC (“Borrower”), Private National Mortgage Acceptance Company,
LLC (“Guarantor”) and Credit Suisse First Boston Mortgage Capital LLC. Each
capitalized term used but not defined herein shall have the meaning specified in
the Loan and Security Agreement. This request is being delivered by Borrower
pursuant to Section 2.15 of the Loan and Security Agreement.

Borrower hereby requests that the following Securitization Transaction(s),
Participation Agreement(s) or Servicing Contract(s) be approved as Eligible
Securitization Transaction(s), Participation Agreement(s) or additional
Servicing Contract(s), as applicable:

SERVICING CONTRACTS:

Description of Servicing Contract Related Servicing Cut-off Date    

 

PARTICIPATION AGREEMENTS:

Description of Participation Agreement Pool No. (or Freddie Mac Contract No.)
Participation Date      

101

 

 

PennyMac Loan Services, LLC, as Borrower

 

By:____________________________________

ACKNOWLEDGED AND AGREED:

Credit Suisse First Boston Mortgage Capital LLC, as Lender

By: _____________________________
        Name:
        Title:

 

 

 

 

 

 

 

 

 

102