Exhibit 10.3

 

Execution Version 

 

SECOND AMENDED AND RESTATED

MORTGAGE BANKING SERVICES AGREEMENT

 

This Second Amended and Restated Mortgage Banking Services Agreement (the
“Agreement”) is dated as of June 30, 2020, by and between PennyMac Loan
Services, LLC, a Delaware limited liability company, for and on behalf of itself
and its Affiliates (collectively, the “Service Provider”), and PennyMac Corp., a
Delaware corporation, for and on behalf of itself and its Affiliates
(collectively, the “Company”), and is effective as of July 1, 2020.

 

RECITALS

 

WHEREAS, the Company engages in the business of purchasing conventional,
government and jumbo residential mortgage loans from originators under the
Correspondent Lending Program (as hereafter defined);

 

WHEREAS, the Service Provider provides mortgage banking services relating to the
acquisition, financing and disposition of residential mortgage loans;

 

WHEREAS, the Company and the Service Provider desire to set forth the terms of
such services and the compensation to which the Service Provider shall be
entitled for performing such services;

 

WHEREAS, the Company and the Service Provider previously entered into that
certain Amended and Restated Mortgage Banking and Warehouse Services Agreement,
dated as of September 12, 2016, as amended by Amendment No. 1 thereto dated as
of May 25, 2017, Amendment No. 2 thereto dated as of October 31, 2017, and
Amendment No. 3 thereto dated as of December 1, 2017 (the “Original Agreement”);
and

 

WHEREAS, the Company and the Service Provider desire to amend and restate the
Original Agreement.

 

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

 

ARTICLE 1

DEFINITIONS

 

Section 1.01        Definitions. For purposes of this Agreement, the following
capitalized terms, unless the context otherwise requires, shall have the
respective meanings set forth below:

 

“Affiliate” means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, “control” when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by management contract or otherwise and the terms “controlling” and
“controlled” have meanings correlative to the foregoing; provided, however, that
Affiliates of the Company shall include only PennyMac Mortgage Investment Trust
and its wholly-owned subsidiaries, and Affiliates of the Service Provider shall
include only PennyMac Financial Services, Inc., Private National Mortgage
Acceptance Company, LLC (“PNMAC”) and PNMAC’s wholly-owned subsidiaries.

 

 

 

“Business Day” means any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the States of California
or New York are authorized or obligated by law or executive order to be closed.

 

“Correspondent” means a lender that originates conventional, government and/or
jumbo residential mortgage loans under the Correspondent Lending Program.

 

“Correspondent Lending Program” means that certain correspondent lending program
established by the Service Provider for the Company and its Affiliates and
pursuant to which the Company acquires Mortgage Loans that satisfy the terms of
the related loan purchase agreement, including the requirements set forth in the
applicable Guide(s), and any additional terms or conditions identified in
acquisition policies and procedures adopted by the Service Provider from time to
time on the Company’s behalf.

 

“Customer Information” means any personally identifiable information or records
in any form (written, electronic, or otherwise) relating to a mortgagor,
including, but not limited to, a mortgagor’s name, address, telephone number,
loan number, loan payment history, delinquency status, insurance carrier or
payment information, tax amount or payment information; the fact that the
mortgagor has a relationship with the lender; and any other mortgagor financial
information.

 

“Dwell Time” means, for the purposes of the Purchase Price, the number of days a
Mortgage Loan is held by the Company prior to its purchase by the Service
Provider, including the date on which the Company purchases the Mortgage Loan
from a Correspondent but excluding the Purchase Date.

 

“Early Purchase Program” means a purchase program offered by the Company to
certain of its Correspondents that provides for the early purchase and sale of
Mortgage Loans by a Correspondent to the Company. Such purchase and sale is
subject to the Company’s holdback of a percentage of the related purchase price
while the Company, through the Service Provider, completes its due diligence and
ensures that such Mortgage Loans meet the eligibility requirements of the
Correspondent Lending Program.

 

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

 

“Fannie Mae Guide” means, collectively, the Fannie Mae Selling Guide and
Servicing Guide, as such Guides may be amended from time to time hereafter.

 

“Fannie Mae Mortgage Loan” means a Mortgage Loan underwritten in accordance with
the guidelines of Fannie Mae described in the Fannie Mae Guide and either
delivered directly into a Fannie Mae security or otherwise sold directly to
Fannie Mae through its cash window.

 

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

 

“Freddie Mac Guide” means the Freddie Mac Single-Family Seller/Servicer Guide,
as such Guide may be amended from time to time hereafter.

 

“Freddie Mac Mortgage Loan” means a mortgage loan underwritten in accordance
with the guidelines of Freddie Mac described in the Freddie Mac Guide and either
delivered directly into a Freddie Mac security or otherwise sold directly to
Freddie Mac through its cash window.

 

“Fulfillment Fees” means the fees set forth on Exhibit A that are payable by the
Company to the Service Provider in partial consideration for the services
provided by the Service Provider.

 

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

 

“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide, as
such Guide may be amended from time to time hereafter.

 

“Ginnie Mae Mortgage Loan” means a Mortgage Loan underwritten in accordance with
the guidelines of Ginnie Mae described in the Ginnie Mae Guide.

 

“Guide” means the Fannie Mae Guide, the Freddie Mac Guide, the Ginnie Mae Guide
or the PennyMac Guide, as applicable.

 

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

 

“Loan Commitment” means a loan commitment or confirmation issued by the Company
to a Correspondent that evidences the intent of the Company to purchase, and the
Correspondent to sell, a Mortgage Loan.

 

“Loan Commitment Price” means the percentage of Par at which the Company has
agreed to purchase, and a Correspondent has agreed to sell, the Mortgage Loan
relating to a Loan Commitment.

 

“LTV” or “Loan-to-Value Ratio” means, as of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the lesser of (a) the appraised value of the underlying property at the
origination of such Mortgage Loan, and (b) if the underlying property was
purchased within twelve (12) months of the origination of the Mortgage Loan, the
purchase price of such property.

 

“MERS” means Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

 

“MERS Identification Number” means the mortgage identification number for any
Mortgage Loan registered with MERS on the MERS® System.

 

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“MERS® System” means the system of recording transfers of mortgages
electronically maintained by MERS.

 

“Monthly Payment” means the scheduled monthly payment of principal and interest
on a Mortgage Loan.

 

“Mortgage File” means, with respect to a Mortgage Loan, the documents and
instruments relating to such Mortgage Loan that are required to be delivered
under the terms of the PennyMac Guide.

 

“Mortgage Loan” means a one-to-four family residential loan that is secured by a
mortgage, deed of trust or other similar security instrument and originated by a
Correspondent. A Mortgage Loan includes the Mortgage Loan Documents, the
Mortgage File, the monthly payments, any principal payments or prepayments, any
related escrow accounts, the mortgage servicing rights and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.

 

“Mortgage Loan Documents” means, with respect to a mortgage loan, the mortgage,
deed of trust or other similar security instrument, the promissory note, any
assignments and an electronic record or copy of the mortgage loan application.

 

“Par” means the principal balance of a Mortgage Loan.

 

“PennyMac Guide” means the PennyMac Seller’s Guide, as amended and supplemented
from time to time.

 

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

 

“Purchase Date” means the date on which the Service Provider purchases a
Mortgage Loan from the Company.

 

“Purchase Price” means, with respect to each Mortgage Loan, a dollar amount
equal to the sum of (a) Par multiplied by the sum of (i) the Loan Commitment
Price and (ii) the applicable Sourcing Fee, plus (b) accrued interest on Par
from and including the date on which the Company purchases the Mortgage Loan
from a Correspondent to but excluding the Purchase Date, less (c) any loan
administrative fee paid by the Correspondent to the Company in connection with
its purchase of such Mortgage Loan.

 

“Servicing Rights” means, with respect to each Mortgage Loan, the right to do
any and all of the following: (a) service and administer such Mortgage Loan; (b)
collect any payments or monies payable or received for servicing such Mortgage
Loan; (c) collect any late fees, assumption fees, penalties or similar payments
with respect to such Mortgage Loan; (d) enforce the provisions of all agreements
or documents creating, defining or evidencing any such servicing rights and all
rights of the servicer thereunder, including, but not limited to, any clean-up
calls and termination options; (e) collect and apply any escrow payments or
other similar payments with respect to such Mortgage Loan; (f) control and
maintain all accounts and other rights to payments related to any of the
property described in the other clauses of this definition; (g) possess and use
any and all documents, files, records, servicing files, servicing documents,
servicing records, data tapes, computer records, or other information pertaining
to such Mortgage Loan or pertaining to the past, present or prospective
servicing of such Mortgage Loan; and (h) enforce any and all rights, powers and
privileges incident to any of the foregoing.

 

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“Sourcing Fee” means a percentage of Par equal to one (1) basis point, or .01%;
provided, however, that such Sourcing Fee shall be increased to two basis
points, or .02%, during any fiscal quarter in which the average Dwell Time
during the prior fiscal quarter was greater than three (3) calendar days.

 

Section 1.02        General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

 

(a)               The terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;

 

(b)               Accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with United States generally accepted
accounting principles;

 

(c)               References herein to “Articles,” “Sections,” “Subsections,”
“Paragraphs,” and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

 

(d)               A reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;

 

(e)               The words “herein,” “hereof,” “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and

 

(f)                The term “include” or “including” shall mean without
limitation by reason of enumeration.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

 

Section 2.01        Representations, Warranties and Agreements of the Service
Provider. The Service Provider hereby makes to the Company, as of the date
hereof and as of each Purchase Date, the representations and warranties set
forth on Exhibit B.

 

Section 2.02        Representations, Warranties and Agreements of the Company.
The Company hereby makes to the Service Provider, as of the date hereof and as
of each Purchase Date, the representations and warranties set forth on Exhibit
C.

 

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ARTICLE 3

 

TERM, ACQUISITIONS AND SERVICES

 

Section 3.01        Term of Agreement.

 

(a)               This Agreement shall have an initial term of five years from
the date hereof (the “Initial Term”) unless earlier terminated in accordance
with this Section or Section 5.01. After the Initial Term, this Agreement shall
be deemed renewed automatically every 18 months for an additional 18 month
period (an “Automatic Renewal Term”) unless the Company or the Service Provider
terminates this Agreement upon the expiration of the Initial Term or any
Automatic Renewal Term and upon at least 180 days’ prior written notice to the
Company or the Service Provider, as applicable. Notwithstanding the foregoing,
if (i) the Second Amended and Restated MSR Recapture Agreement, between the
Company and the Service Provider, dated as of June 30, 2020 (the “MSR Recapture
Agreement”) is terminated by the Company without cause as provided in such
agreement, (ii) the Fourth Amended and Restated Flow Servicing Agreement,
between PennyMac Operating Partnership, L.P. and the Service Provider, dated as
of June 30, 2020 (the “Servicing Agreement”), is terminated by PennyMac
Operating Partnership, L.P. without cause as provided in such agreement or (iii)
if the Third Amended and Restated Management Agreement, between PennyMac
Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC
Capital Management, LLC, dated as of June 30, 2020 (the “Management Agreement”),
is terminated by PennyMac Mortgage Investment Trust without cause as provided in
such agreement, the Service Provider shall have the right to terminate this
Agreement without cause upon notice to the Company. In addition, if (i) either
of the MSR Recapture Agreement or the Servicing Agreement is terminated by the
Service Provider without cause as provided in each such agreement or (ii) the
Management Agreement is terminated by PNMAC Capital Management, LLC without
cause as provided in such agreement, the Company shall have the right to
terminate this Agreement without cause upon notice to the Service Provider.

 

(b)               In the case of a non-renewal or termination of this Agreement
by the Company for any reason, (i) the Company may require that the Service
Provider continue to provide correspondent lending services for up to 6 months
following the date of expiration or termination of this Agreement, and under
such circumstances the then current fee structure and exclusivity obligations
applicable to such services shall remain in effect, and (ii) the Company shall
not, and shall not encourage any Affiliate or non-affiliated third party to,
solicit for employment or retain in any capacity key employees of the Service
Provider or its Affiliates (including any person who served as a key employee of
the Service Provider or its Affiliates during the one year period prior to such
notice), following notice of termination or non-renewal and for one year after
expiration or termination of this Agreement, provided that the Company and its
representatives may engage in general solicitations for employees (including
through any recruiting firm that has not been directed to target employees of
the Service Provider or its Affiliates) and employ, and/or encourage others to
employ, any person who contacts the Company on his or her own initiative,
without any solicitation by the Company, or as a result of such general
advertisements for employment.

 

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(c)               In the case of a non-renewal or termination of this Agreement
by the Service Provider (other than pursuant to the final sentence of Section
5.01 hereof), (i) the Company may require that the Service Provider continue to
provide correspondent lending services for up to 12 months following the date of
expiration or termination of this Agreement, and under such circumstances the
then current fee structure and exclusivity obligations applicable to such
services shall remain in effect, and (ii) the Company shall not, and shall not
encourage any Affiliate or non-affiliated third party to, solicit for employment
or retain in any capacity key employees of the Service Provider or its
Affiliates (including any person who served as a key employee of the Service
Provider or its Affiliates during the one year period prior to such notice),
following notice of termination or non-renewal and for one year after expiration
or termination of this Agreement, provided that the Company and its
representatives may engage in general solicitations for employees (including
through any recruiting firm that has not been directed to target employees of
the Service Provider or its Affiliates) and employ, and/or encourage others to
employ, any person who contacts the Company on his or her own initiative,
without any solicitation by the Company, or as a result of such general
advertisements for employment.

 

Section 3.02        Exclusivity in Favor of Company. During the term of this
Agreement, as between the Company and the Service Provider, (i) the Service
Provider shall perform the services identified in Section 3.03 and Section 3.04
exclusively for the benefit of the Company and (ii) the Service Provider and its
Affiliates shall be prohibited from providing such services for any other third
party; provided, however, if the Company is unable to purchase or finance
Mortgage Loans as contemplated hereunder for any reason, including, without
limitation, a lack of capacity, an inability to comply with applicable law or an
inability to satisfy any income or asset tests applicable to real estate
investment trusts under the Internal Revenue Code of 1986, as amended from time
to time, then such exclusivity and prohibition shall not apply and the Service
Provider shall either purchase such Mortgage Loan from the Company for a cash
purchase price equal to the Purchase Price, and on an “as is” basis and without
recourse of any kind, or use commercially reasonable efforts to facilitate the
sale of such Mortgage Loan on market terms and conditions as determined by the
Service Provider in its sole discretion exercised in good faith.

 

Section 3.03        Mortgage Banking Services. During the term of this
Agreement, the Service Provider shall provide the mortgage banking services set
forth below:

 

(a)               The Service Provider shall provide fulfillment services in
connection with Mortgage Loans to be purchased or acquired by the Company under
the Correspondent Lending Program, as follows:

 

(i)               reviewing the Mortgage File to determine whether it contains
the required Mortgage Loan Documents and contacting Correspondents to obtain
missing documentation or the correction of inaccurate documentation;

 

(ii)              reviewing the Mortgage File and Mortgage Loan Documents to
confirm generally that such Mortgage Loans are being originated and delivered in
accordance with the applicable Guide;

 

(iii)             reviewing such Mortgage Loan and assessing its marketability
for sale and/or securitization into the secondary mortgage market;

 

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(iv)             retrieving data from the Mortgage File that is required in
order for such Mortgage Loan to be properly serviced or as may be necessary or
advisable in connection with a sale, pledge or repurchase transaction;

 

(v)              confirming that the Mortgage Loan is registered with the MERS®
System and has a MERS Identification Number;

 

(vi)             calculating the final purchase price for such Mortgage Loan
based on its review of the Mortgage Loan Documents and then requesting funds and
directing payment to the appropriate party; and

 

(vii)            providing such other services as may be reasonably requested by
the Company or otherwise required in connection with the processing of such
Mortgage Loan from time to time.

 

(b)               From time to time, the Service Provider shall provide general
services as reasonably required by the Company, as follows:

 

(i)                re-reviewing selected Mortgage Loans for consistency with the
applicable Guide;

 

(ii)               reviewing underwriting, fulfillment, compliance and servicing
activities for compliance with the applicable Guide;

 

(iii)             coordinating investor, capital provider and regulatory audit
activities;

 

(iv)             negotiating with Fannie Mae and Freddie Mac with respect to
fees and securities stipulations;

 

(v)              reviewing correspondent lenders or prospective correspondent
lenders for consistency with the applicable Guide;

 

(vi)             reviewing and analyzing financial statements for each
correspondent lender and prepayment and credit performance statistics relating
to the Mortgage Loans sold by such correspondent lender;

 

(vii)           negotiating loan purchase agreements, including any amendments
or extensions thereto, and any applicable Early Purchase Program documentation
between the Company and the Correspondents, administering such agreements, and
monitoring compliance therewith;

 

(viii)           negotiating and establishing repurchase facilities or other
warehouse lines of credit to be provided by third parties in favor of the
Company and its affiliates;

 

(ix)             determining the repurchase facilities or other warehouse lines
of credit to be drawn or used by the Company and its affiliates in connection
with purchases or other acquisitions of Mortgage Loans and monitoring the
duration of such draws or usage;

 

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(x)             performing quarterly certification and annual recertification
reviews in light of the requirements of the applicable Guide;

 

(xi)            developing and maintaining models for pricing loans and mortgage
servicing rights;

 

(xii)           generating daily rate sheets for correspondent lenders;

 

(xiii)          reviewing daily interest rate lock commitments;

 

(xiv)          monitoring market pricing trends;

 

(xv)           developing and maintaining models for the management of interest
rate and other risks;

 

(xvi)          developing and maintaining hedging strategies and models for
interest rate and risk management;

 

(xvii)         establish hedging instruments and executing hedge transactions;

 

(xviii)        developing and maintaining execution models;

 

(xix)           forming pools to back securities and entering into pooling
transactions;

 

(xx)           using reasonable efforts to resolve issues related to delivery of
Mortgage Loan Documents to or at direction of Fannie Mae and Freddie Mac;

 

(xxi)          monitoring delivery of post-closing documentation, such as final
title policies and recorded mortgages;

 

(xxii)         reviewing post-closing adjustments to pricing and confirming
accurate disbursements to Correspondents;

 

(xxiii)        obtaining and maintaining information technology systems,
including those for secondary marketing, appraisals, data warehouse and accounts
receivable;

 

(xxiv)        complying with reporting requirements imposed on the Company under
applicable Guides and agreements (insofar as neither Service Provider nor any
other Person is required to perform such reporting on behalf of the Company
under another agreement);

 

(xxv)         causing the appointment of the Service Provider as servicer to
service such Mortgage Loan under and in accordance with the Servicing Agreement,
or causing the appointment of a sub-servicer to the extent otherwise required;

 

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(xxvi)        purchasing from the Company at the Purchase Price, on an “as is”
basis and without recourse of any kind, any Ginnie Mae Mortgage Loan purchased
by the Company from a Correspondent pursuant to the related Loan Commitment; and

 

(xxvii)       other similar mortgage banking-related activities.

 

Section 3.04        Ginnie Mae Mortgage Loans; Repurchases. In connection with
any Ginnie Mae Mortgage Loan purchased from the Company by the Service Provider
and in respect of which the Company has a claim for repurchase, indemnity or
otherwise as against a Correspondent, the Service Provider shall be entitled to
pursue any such claim through or in the name of the Company, and the Company
agrees to facilitate any such claim. Any action taken by the Service Provider
under this Section 3.04 shall be at the Service Provider’s sole cost and
expense, and any costs, expenses or losses of any kind incurred by the Company
shall be reimbursed in full by the Service Provider.

 

Section 3.05        Reserved.

 

Section 3.06        Compensation; Expenses.

 

(a)               In consideration for the services provided to the Company by
the Service Provider under this Agreement, the Company shall pay to the Service
Provider the applicable Fulfillment Fees and Early Purchase Program Fees set
forth on Exhibit A.

 

(b)               The Service Provider shall be required to pay all expenses
incurred by it in connection with the services it provides hereunder and shall
not be entitled to reimbursement therefor except as otherwise provided in this
Agreement.

 

(c)               Notwithstanding any provision of this Agreement to the
contrary, if it becomes reasonably necessary or advisable for the Service
Provider to engage in additional services in connection with the occurrence of
any breach by a Correspondent of any terms or conditions to which such
Correspondent is subject under its agreement with the Company under the
Correspondent Lending Program, or initiate and pursue any legal proceeding
against a Correspondent or guarantor thereof, or appear on behalf of the Company
in any bankruptcy, insolvency or other similar proceeding involving a
Correspondent or any guarantor thereof or otherwise engage in post-breach or
post-default resolution activities, then the Service Provider and the Company
shall negotiate in good faith for additional compensation and reimbursement of
expenses to be paid to the Service Provider for the performance of such
additional services.

 

(d)               Notwithstanding anything to the contrary contained herein
(other than subsection (c) above), upon the written request (a “Fee Negotiation
Request”) of the Company or the Service Provider following a determination by
the Company or the Service Provider that the rates of compensation payable to
the Service Provider hereunder differ materially from market rates of
compensation for services comparable to those provided hereunder, which request
includes a proposal for revised rates of compensation hereunder, the parties
hereto shall negotiate in good faith to amend the provisions of this Agreement
relating to the compensation of the Service Provider in order to cause such
compensation to be materially consistent with market rates of compensation for
services comparable to those provided hereunder (a “Fee Amendment”); provided,
however, that no such request shall be made until the second anniversary of the
effective date of this Agreement, after which time each party may make such
request (i) once with respect to fees to be paid during the remainder of the
Initial Term, which request shall be made prior to the expiration of the Initial
Term, and (ii) once with respect to fees to be paid during any Automatic Renewal
Term, which request shall be made at least 210 days prior to the start of such
Automatic Renewal Term. If the parties are unable to reach agreement on the
terms of a Fee Amendment within thirty (30) days of the date of delivery of the
relevant Fee Negotiation Request, then the terms of such Fee Amendment shall be
determined by final and binding arbitration in accordance with Section 3.06(e).

 

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(e)               All disputes, differences and controversies of the Company or
the Service Provider relating to a Fee Amendment (individually, a “Dispute” and,
collectively, “Disputes”) shall be resolved by final and binding arbitration
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules, subject to the following provisions:

 

(i)                 Following the delivery of a written demand for arbitration
by either the Company or the Service Provider, each party shall choose one (1)
arbitrator within ten (10) Business Days after the date of such written demand
and the two chosen arbitrators shall mutually, within ten (10) Business Days
after selection select a third (3rd) arbitrator (each, an “Arbitrator” and
together, the “Arbitrators”), each of whom shall be a retired judge selected
from a roster of arbitrators provided by the AAA. If the third (3rd) Arbitrator
is not selected within fifteen (15) Business Days after delivery of the written
demand for arbitration (or such other time period as the Company and the Service
Provider may agree), the Company and the Service Provider shall promptly request
that the commercial panel of the AAA select an independent Arbitrator meeting
such criteria.

 

(ii)              The rules of arbitration shall be the Commercial Rules of the
American Arbitration Association; provided, however, that notwithstanding any
provisions of the Commercial Arbitration Rules to the contrary, unless otherwise
mutually agreed to by the Company and the Service Provider, the sole discovery
available to each party shall be its right to conduct up to two (2) non-expert
depositions of no more than three (3) hours of testimony each.

 

(iii)            The Arbitrators shall render a decision by majority decision
within three (3) months after the date of appointment, unless the Company and
the Service Provider agree to extend such time. The decision shall be final and
binding upon the Company and the Service Provider; provided, however, that such
decision shall not restrict either the Company or the Service Provider from
terminating this Agreement pursuant to the terms hereof.

 

(iv)             Each party shall pay its own expenses in connection with the
resolution of Disputes, including attorneys’ fees, unless determined otherwise
by the Arbitrator.

 

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(v)               The Company and the Service Provider agree that the existence,
conduct and content of any arbitration pursuant to this Section 3.06(e) shall be
kept confidential and neither the Company nor the Service Provider shall
disclose to any Person any information about such arbitration, except in
connection with such arbitration or as may be required by law or by any
regulatory authority (or any exchange on which such party’s securities are
listed) or for financial reporting purposes in such party’s financial
statements.

 

Section 3.07        Net Funding. The Company and the Service Provider
acknowledge and agree that the Service Provider may provide third party services
including, without limitation, underwriting, administrative and other
mortgage-related services to Correspondents from time to time under bilateral or
tri-party agreements by and between the Service Provider and the Correspondent
or by and among the Service Provider, the Correspondent and the Company,
respectively. In connection with the Service Provider’s provision of such
services, and for administrative purposes only, the Service Provider may cause
the Company to “net fund” its purchase of Mortgage Loans from a Correspondent by
reducing any Loan Commitment Price(s) paid by the Company to the Correspondent
by the amount of fees owed to the Service Provider by such Correspondent;
provided, however, that any such “net funding” shall comply with the terms of
any applicable bailee letter governing the terms of the related purchase. The
Service Provider shall then be entitled to collect the amount of such fees
relating to such reduction directly from the Company. Any such “net funding”
shall be at no cost to the Company and, in effect, a pass through of the Service
Provider’s fees through the reduction in the Loan Commitment Price(s) on an
individual or aggregate basis.

 

Section 3.08        Reporting. On or before the tenth (10th) Business Day of
each month, the Service Provider shall provide the Company with a report
identifying all Mortgage Loans purchased by the Company from a Correspondent
during the prior month, the aggregate unpaid principal balance of such Mortgage
Loans, the aggregate Fulfillment Fees paid by the Company to the Service
Provider during such month and, as applicable, the aggregate Purchase Prices
paid by the Service Provider to the Company during such month. The Service
Provider, upon the Company’s request, shall also provide the Company with
reports regarding the financial results of the Service Provider and/or its
affiliates and any such other matters as the Company shall reasonably request,
but in no case more frequently than quarterly.

 

ARTICLE 4

LIABILITIES OF SERVICE PROVIDER AND COMPANY

 

Section 4.01        Liability of the Company and the Service Provider. The
Company and the Service Provider shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by the Company and Service Provider herein.

 

Section 4.02        Merger or Consolidation of the Service Provider.

 

(a)               The Service Provider shall keep in full effect its existence,
rights and franchises as an entity and maintain its qualification to service
mortgage loans for each of Fannie Mae, Freddie Mac and HUD and comply with the
laws of each State in which any Mortgaged Property is located to the extent
necessary to protect the validity and enforceability of this Agreement, and to
perform its duties under this Agreement.

 

12

 

 

(b)               Any Person into which the Service Provider may be merged,
converted, or consolidated, or any Person resulting from any merger, conversion
or consolidation to which the Service Provider shall be a party, or any Person
succeeding to the business of the Service Provider, shall be the successor of
the Service Provider hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that no Person shall so become the
successor of the Service Provider hereunder unless such Person satisfies all
legal requirements, including, without limitation, with respect to licensing,
that are necessary to be satisfied in order for such Person to perform the
Service Provider’s duties hereunder.

 

Section 4.03        Service Provider Not to Resign. The Company has entered into
this Agreement with the Service Provider in reliance upon the independent status
of the Service Provider, and the representations as to the adequacy of its
servicing facilities, plant, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Service Provider shall not assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all or substantially all of its property or assets in the
absence of prior written consent of the Company, which consent shall be granted
or withheld in the reasonable discretion of the Company. The Service Provider
shall not resign from the obligations and duties hereby imposed on it except by
mutual consent of the Service Provider and the Company or upon the determination
that its duties hereunder are no longer permissible under applicable law and
such incapacity cannot be cured by the Service Provider. Any such determination
permitting the resignation of the Service Provider shall be evidenced by an
Opinion of Counsel to such effect delivered to the Company, which Opinion of
Counsel shall be in form and substance acceptable to the Company. No such
resignation shall become effective until the Company or another successor
designated by the Company shall have assumed the Service Provider’s
responsibilities and obligations hereunder.

 

Section 4.04        No Duty to Supervise. The parties hereto acknowledge that
the Company is not obligated to supervise the performance of the Service
Provider under this Agreement or any subcontractor for Service Provider under
any subcontracting agreement.

 

Section 4.05        Indemnification.

 

(a)               The Service Provider shall indemnify the Company, its
directors, officers, employees and agents and hold them harmless against any and
all claims, losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments, and any other costs, fees and expenses that
any of them may sustain by reason of the Service Provider’s (i) willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement, (ii) reckless disregard of its obligations or duties under
this Agreement, or (iii) breach of its representations or warranties under this
Agreement, or (iv) gross negligence in the performance of its duties under any
agreement with a Correspondent pursuant to which it performs underwriting
services relating to a Mortgage Loan purchased by the Company and where such
Mortgage Loan is subject to a repurchase or indemnity claim from one of the
Company’s investors as a result of such gross negligence, or (v) exercise of its
rights under Section 3.04 or use of the “net funding” mechanism provided under
Section 3.07 of this Agreement, in either case without regard to any action,
inaction or fault of any kind on the part of the Service Provider or the
Company. For the purposes of this Section 4.05, the term “gross negligence”
shall include any ordinary negligence to the extent systemic in nature or
otherwise occurring on a regular basis.

 

13

 

 

(b)               The Company shall indemnify the Service Provider, its
directors, officers, employees and agents and hold them harmless against any and
all claims, losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments, and any other costs, fees and expenses that
any of them may sustain by reason of the Company’s (i) willful misfeasance, bad
faith or gross negligence in the performance of its duties under this Agreement,
(ii) reckless disregard of its obligations or duties under this Agreement, or
(iii) breach of its representations or warranties under this Agreement.

 

ARTICLE 5

TERMINATION

 

Section 5.01        Termination. Except as otherwise specifically set forth
herein (including in Section 3.01 above), the obligations and responsibilities
of the Service Provider shall terminate upon the mutual consent of the Service
Provider and the Company in writing. In addition, the Company shall be entitled
to terminate the Service Provider hereunder upon any of the following events:
(i) the failure by the Service Provider duly to observe or perform in any
material respect any other covenant or agreement on the part of the Service
Provider set forth in this Agreement that continues unremedied for a period of
thirty (30) days after the date on which notice of such failure, requiring the
same to be remedied, is given to the Service Provider by the Company; provided,
however, that, with respect to any such failure that is susceptible to cure but
not curable within such 30-day period, the Service Provider shall have an
additional cure period of thirty (30) days to effect such cure so long as the
Service Provider has commenced to cure such failure within the initial 30-day
period, the Service Provider is diligently pursuing a full cure and the Service
Provider has provided evidence of such curability and such diligent pursuit that
is reasonably satisfactory to the Company; (ii) any breach of any representation
or warranty on the part of the Service Provider set forth in this Agreement that
continues unremedied for a period of thirty (30) days after the date on which
notice of such breach, requiring the same to be remedied, is given to the
Service Provider by the Company; provided, however, that, with respect to any
such breach that is susceptible to cure but not curable within such 30-day
period, the Service Provider shall have an additional cure period of thirty (30)
days to effect such cure so long as the Service Provider has commenced to cure
such failure within the initial 30-day period, the Service Provider is
diligently pursuing a full cure and the Service Provider has provided evidence
of such curability and such diligent pursuit that is reasonably satisfactory to
the Company; (iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, shall have been entered against the Service Provider
and such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; (iv) the Service Provider shall consent to the
appointment of a conservator or receiver or liquidator in any insolvency,
bankruptcy, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Service Provider or of or relating to
all or substantially all of its property; (v) the Service Provider shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or (vi) without the prior consent of the
Company or as expressly permitted or required by the other provisions of this
Agreement, the Service Provider attempts to assign this Agreement or its right
to compensation hereunder, or to delegate its duties hereunder, in each case
whether in whole or in part, or the Service Provider sells or otherwise disposes
of all or substantially all of its property or assets. Further, the Service
Provider shall be entitled at any time during the term of this Agreement, to
terminate this Agreement upon at least 60 days’ prior written notice of
termination from the Service Provider to the Company, if the Company shall have
defaulted in the performance of any material term of this Agreement, and such
default has continued uncured for a period of 30 days after the Company’s
receipt of written notice of such default from the Service Provider.

 

14

 

 

Section 5.02        Succession.

 

(a)               Upon the appointment by the Company of a successor Service
Provider following the Service Provider’s termination or resignation, the
Service Provider shall immediately deliver to such successor the funds in any
account maintained by the Service Provider and the related documents and
statements held by it hereunder and the Service Provider shall account for all
funds. The Service Provider shall execute and deliver such instruments and do
all such other things as may reasonably be required to more fully and definitely
vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Service Provider.

 

(b)               No termination of this Agreement or resignation or termination
of the Service Provider hereunder shall relieve the Service Provider or the
Company of the covenants, representations and warranties made herein or any
liability that accrued or arose hereunder prior to the effective date of
termination or resignation.

 

ARTICLE 6

MISCELLANEOUS

 

Section 6.01        Notices. All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon the
delivery or mailing thereof, as the case may be, sent by registered or certified
mail, return receipt requested:

 

(i)             if to the Service Provider:

 

PennyMac Loan Services, LLC
Attn: Managing Director, Mortgage Fulfillment
3043 Townsgate Road
Westlake Village, CA 91361

 

15

 

 

With a copy to:

 

PennyMac Loan Services, LLC
Attn: Chief Legal Officer
3043 Townsgate Road
Westlake Village, CA 91361

 

(ii)            if to the Company:

 

PennyMac Corp.
Attn: Chief Legal Officer
3043 Townsgate Road
Westlake Village, CA 91361

 

With copies to:

 

PennyMac Operating Partnership, L.P.
Attn: Chief Legal Officer
3043 Townsgate Road
Westlake Village, CA 91361

 

and

 

Stoner Fox Law Group, LLP

Attn: John Stoner

120 Vantis, Suite 300

Aliso Viejo, California 92656

 

or such other address as may hereafter be furnished to the other parties by like
notice.

 

Section 6.02        Amendment. Neither this Agreement, nor any terms hereof, may
be amended, supplemented or modified except in an instrument in writing executed
by the parties hereto.

 

Section 6.03        Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.

 

Section 6.04        Binding Effect; Beneficiaries. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. No provision of this
Agreement is intended or shall be construed to give to any Person, other than
the parties hereto, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.

 

16

 

 

 

Section 6.05        Headings. The section and subsection headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.

 

Section 6.06        Further Assurances. The Service Provider agrees to execute
and deliver such instruments and take such further actions as the Owner may,
from time to time, reasonably request in order to effectuate the purposes and to
carry out the terms of this Agreement.

 

Section 6.07        Governing Law. This Agreement shall be construed in
accordance with the substantive laws of the State of New York applicable to
agreements made and to be performed entirely in such State, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws. The parties hereto intend that the provisions of Section 5-1401
of the New York General Obligations Law shall apply to this Agreement.

 

Section 6.08        Relationship of Parties. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the
parties. The duties and responsibilities of the Service Provider shall be
rendered by it as an independent contractor and not as an agent of the Company.
The Servicer shall have full control of all of its acts, doings, proceedings,
relating to or requisite in connection with the discharge of its duties and
responsibilities under this Agreement.

 

Section 6.09        Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.

 

Section 6.10        No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of a party hereto, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

 

Section 6.11        Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and form integral parts of this Agreement.

 

Section 6.12        Counterparts. This Agreement may be executed by the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

Section 6.13        Protection of Confidential Information. All Customer
Information in the possession of the Service Provider other than information
independently obtained by the Service Provider is and shall remain confidential
and proprietary information of the Company. The Service Provider shall not
disclose any Customer Information to any person or entity except for the purpose
of carrying out its obligations under this Agreement. The Service Provider
represents and warrants that it has, and will continue to have for so long as it
retains Customer Information, adequate administrative, technical, and physical
safeguards (a) to ensure the security and confidentiality of customer records
and information, (b) to protect against any anticipated threats or hazards to
the security or integrity of such records, and (c) to protect against
unauthorized access to or use of such records or information which could result
in substantial harm or inconvenience to any customer.

 

17

 

 

Section 6.14        WAIVER OF TRIAL BY JURY.

 

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND,
THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

 

Section 6.15        LIMITATION OF DAMAGES.

 

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE PARTIES AGREE
THAT NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE
AND STRICT LIABILITY), OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE, PROVIDED,
HOWEVER, THAT SUCH IMITATION SHALL NOT BE APPLICABLE WITH RESPECT TO ANY THIRD
PARTY CLAIM MADE AGAINST A PARTY.

 

Section 6.16        SUBMISSION TO JURISDICTION; WAIVERS.

 

EACH OF THE OWNER AND THE SERVICER HEREBY IRREVOCABLY (I) SUBMITS, FOR ITSELF IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION
AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE JURISDICTION OF ANY
NEW YORK STATE AND FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN IN NEW
YORK CITY WITH RESPECT TO MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT;
(II) AGREES THAT ALL CLAIMS WITH RESPECT TO ANY ACTION OR PROCEEDING REGARDING
SUCH MATTERS MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL
COURTS; (III) WAIVES, TO THE FULLEST POSSIBLE EXTENT, WITH RESPECT TO SUCH
COURTS, THE DEFENSE OF AN INCONVENIENT FORUM; AND (IV) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.

 

18

 

 

IN WITNESS WHEREOF, the Company and the Service Provider have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.

 

  PENNYMAC CORP.   (Company)       By: /s/ Andrew S. Chang   Name:   Andrew S.
Chang   Title: Senior Managing Director and Chief Financial Officer      
PENNYMAC LOAN SERVICES, LLC   (Service Provider)       By: /s/ Douglas E. Jones
  Name: Douglas E. Jones   Title: President

 

 

 

 

EXHIBIT A

 

(Compensation)

 

Fulfillment Fees

 

The aggregate Fulfillment Fees for Mortgage Loans during any fiscal quarter,
commencing on and after July 1, 2020, shall not exceed:

 

(a) the product of (i) the number of Mortgage Loans with respect to which the
Company issues Loan Commitments during such quarter, (ii) a factor of either .99
or .80 (representing the estimated pull through rate) depending on whether the
Loan Commitments are subject to a “mandatory trade confirmation” or a “best
efforts lock confirmation,” respectively, and (iii) (A) $585.00 for each
pull-through adjusted Loan Commitment issued during such quarter up to and
including a total of 16,500, and (B) $315.00 for each pull-through adjusted Loan
Commitment issued during such quarter in excess of 16,500, the payment of which
shall made no later than the end of the calendar month following the calendar
month of such Loan Commitments, plus

 

(b) (I) for the first 16,500 Mortgage Loans that are purchased by the Company
from an approved Correspondent during such quarter (the “Tier 1 Purchased
Loans”), funding fees in an amount no greater than the product of (i) $355.00,
and (ii) the number of such Tier 1 Purchased Loans, plus (II) for all Mortgage
Loans purchased in excess of 16,500 during such quarter (the “Tier 2 Purchased
Loans”), funding fees in an amount no greater than the product of (i) $195.00,
and (ii) the number of such Tier 2 Purchased Loans, the payment of which shall
be made no later than the end of the calendar month following the calendar month
in which such Purchased Loans were purchased by the Company; plus

 

(c) in the case of all Mortgage Loans other than Fannie Mae Mortgage Loans and
Freddie Mac Mortgage Loans that are purchased by the Company from an approved
Correspondent during such quarter, supplemental fees in an amount no greater
than the product of (i) $750.00, and (ii) the number of such Mortgage Loans sold
and securitized, the payment of which shall be made no later than the end of the
calendar month following the calendar month in which such Mortgage Loan was sold
or securitized.

 

To the extent any Loan Commitments issued prior to July 1, 2020 result in the
funding of Mortgage Loans on or after July 1, 2020, the aggregate Fulfillment
Fees for all such Mortgage Loans purchased from an approved Correspondent shall
equal (a) no greater than the product of (i) 0.35% and (ii) the aggregate
initial unpaid principal balance (the “Initial UPB”) of all such Mortgage Loans
purchased in such month, the payment of which shall made no later than the end
of the calendar month following the calendar month in which such Mortgage Loan
was purchased, plus (b) in the case of all Mortgage Loans other than Fannie Mae
Mortgage Loans and Freddie Mac Mortgage Loans, no greater than the product of
(i) 0.50% and (ii) the aggregate Initial UPB of all such Mortgage Loans sold and
securitized in any month, the payment of which shall be made no later than the
end of the calendar month following the calendar month in which such Mortgage
Loan was sold or securitized.

 

B-1

 

 

No Fulfillment Fee shall be due or payable to the Service Provider with respect
to any Ginnie Mae Mortgage Loan or any Mortgage Loan acquired from the Servicer
Provider.

 

For the purposes of this Exhibit A, “mandatory trade confirmation” and “best
efforts lock confirmation” shall have the meanings ascribed to them in the
PennyMac Guide.

 

Early Purchase Program Fees

 

With respect to each Early Purchase Program, the Service Provider shall be
entitled to fees that accrue (a) at a rate equal to $1,500 per annum, and (b) in
the amount of $35 with respect to each Mortgage Loan purchased by the Company
thereunder. The fee described in clause (a) shall accrue and be payable monthly
not later than the last Business Day of each month from and after the execution
of the Early Purchase Program documentation. The fee described in clause (b)
shall accrue and be payable monthly not later than the fifth (5th) Business Day
following the month during which the related Mortgage Loan first becomes subject
to a transaction thereunder.

 

B-2

 

 

EXHIBIT B

 

(Representations and Warranties of the Service Provider)

 

(a)               Due Organization and Good Standing. The Service Provider is
duly organized, validly existing and in good standing as a limited liability
company under the laws of the State of Delaware and has the power and authority
to own its assets and to transact the business in which it is currently engaged,
and the Service Provider is in material compliance with the laws of each state
or other jurisdiction in which any Mortgaged Property is located to the extent
necessary to perform its obligations under this Agreement.

 

(b)               No Violation of Organizational Documents or Agreements. The
execution and delivery of this Agreement by the Service Provider, and the
performance and compliance with the terms of this Agreement by the Service
Provider, will not violate the Service Provider’s organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
agreement or other instrument to which the Service Provider is a party or which
is applicable to it or any of its assets.

 

(c)               Full Power and Authority. The Service Provider has the full
power and authority to enter into and consummate all transactions contemplated
by this Agreement, has duly authorized the execution, delivery and performance
of this Agreement, and has duly executed and delivered this Agreement.

 

(d)               Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation of the Service Provider, enforceable against
the Service Provider in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors’ rights generally, and (B) general
principles of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.

 

(e)               No Violation of Law, Regulation or Order. The Service Provider
is not in violation of, and its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not constitute
a violation of, any law, any order or decree of any court or arbiter, or, to the
Service Provider’s knowledge, any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation, in the
Service Provider’s good faith and reasonable judgment, is likely to affect
materially and adversely either the ability of the Service Provider to perform
its obligations under this Agreement or the financial condition of the Service
Provider.

 

B-3

 

 

(f)                No Material Litigation. No litigation is pending or, to the
best of the Service Provider’s knowledge, threatened against the Service
Provider that, if determined adversely to the Service Provider, would prohibit
the Service Provider from entering into this Agreement or that, individually or
in the aggregate, in the Service Provider’s good faith and reasonable judgment,
is likely to materially and adversely affect either the ability of the Service
Provider to perform its obligations under this Agreement or the financial
condition of the Service Provider.

 

(g)               No Consent Required. Any consent, approval, authorization or
order of any court or governmental agency or body required under federal or
state law for the execution, delivery and performance by the Service Provider of
or compliance by the Service Provider with this Agreement or the consummation of
the transactions contemplated by this Agreement has been obtained and is
effective except where the lack of consent, approval, authorization or order
would not have a material adverse effect on the performance by the Service
Provider under this Agreement.

 

(h)               Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Service Provider.

 

B-4

 

 

EXHIBIT C

 

(Representations and Warranties of the Company)

 

(a)               Due Organization and Good Standing. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware and has the power and authority to own its assets and
to transact the business in which it is currently engaged.

 

(b)               No Violation of Organizational Documents or Agreements. The
execution and delivery of this Agreement by the Company, and the performance and
compliance with the terms of this Agreement by the Company, will not violate the
Company’s organizational documents or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to which the
Company is a party or which is applicable to it or any of its assets.

 

(c)               Full Power and Authority. The Company has the full power and
authority to enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.

 

(d)               Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation of the Company, enforceable against the
Company in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors’ rights generally, and (B) general principles of
equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law.

 

(e)               No Violation of Law, Regulation or Order. The Company is not
in violation of, and its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not constitute
a violation of, any law, any order or decree of any court or arbiter, or, to the
Company’s knowledge, any order, regulation or demand of any federal, state or
local governmental or regulatory authority, which violation, in the Company’s
good faith and reasonable judgment, is likely to affect materially and adversely
either the ability of the Company to perform its obligations under this
Agreement or the financial condition of the Company.

 

(f)                No Material Litigation. No litigation is pending or, to the
best of the Company’s knowledge, threatened against the Company that, if
determined adversely to the Company, would prohibit the Company from entering
into this Agreement or that, in the Company’s good faith and reasonable
judgment, is likely to materially and adversely affect either the ability of the
Company to perform its obligations under this Agreement or the financial
condition of the Company.

 

(g)               No Consent Required. Any consent, approval, authorization or
order of any court or governmental agency or body required under federal or
state law for the execution, delivery and performance by the Company of or
compliance by the Company with this Agreement or the consummation of the
transactions contemplated by this Agreement has been obtained and is effective
except where the lack of consent, approval, authorization or order would not
have a material adverse effect on the performance by the Company under this
Agreement.

 

C-1