Exhibit 10.1

 

Second Amendment to the

Amended and Restated

Limited Partnership Agreement

of

PennyMac Operating Partnership, L.P.

 

This Second Amendment (this “Amendment”) is made as of July 5, 2017 by and among
PennyMac GP OP, Inc., a Delaware corporation, as the general partner (the
“General Partner”) of PennyMac Operating Partnership, L.P., a Delaware limited
partnership (the “Partnership”), and as attorney-in-fact for the Persons named
on Exhibit A to the Amended and Restated Limited Partnership Agreement of
PennyMac Operating Partnership, L.P., dated as of August 4, 2009, as amended
(the “Partnership Agreement”), for the purpose of amending the Partnership
Agreement.  Capitalized terms used herein and not defined shall have the
meanings given to them in the Partnership Agreement.

 

WHEREAS, the Board of Trustees (the “Board”) of PennyMac Mortgage Investment
Trust, a Maryland real estate investment trust (the “Company”), by resolutions
duly adopted on June 26, 2017, and the Pricing Committee of the Board, by
resolutions duly adopted on June 27, 2017, classified and designated 8,050,000
Preferred Shares (as defined in the Declaration of Trust of the Company (the
“Declaration of Trust”)) as REIT Series B Preferred Shares (as defined below);

 

WHEREAS, the Company filed Articles Supplementary to the Declaration of Trust
(the “Series B Articles Supplementary”) with the State Department of Assessments
and Taxation of Maryland on June 30, 2017, establishing the REIT Series B
Preferred Shares, with such preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption as described in the
Series B Articles Supplementary;

 

WHEREAS, on July 5, 2017, the Company issued 7,000,000 REIT Series B Preferred
Shares and may issue up to an additional 1,050,000 REIT Series B Preferred
Shares pursuant to a 30-day option granted by the Company to the Underwriters
(as defined below) pursuant to that certain Purchase Agreement, dated June 27,
2017, by and among the Company, the Partnership and PNMAC Capital Management,
LLC, on the one hand, and Morgan Stanley & Co. LLC, Keefe, Bruyette &
Woods, Inc. and RBC Capital Markets, LLC (the “Underwriters”), on the other
hand; and

 

WHEREAS, the General Partner has determined that, in connection with the
issuance of the REIT Series B Preferred Shares, it is necessary and desirable to
amend the Partnership Agreement to create additional Partnership Units having
designations, preferences and other rights which are substantially the same as
the economic rights of the REIT Series B Preferred Shares.

 

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NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
General Partner hereby amends the Partnership Agreement as follows:

 

1. Article 1 of the Partnership Agreement is hereby amended by adding the
following definitions:

 

“REIT Series B Preferred Shares” means the 8.00% Series B Fixed-to-Floating Rate
Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value
per share (liquidation preference Twenty-Five Dollars ($25.00) per share) of the
Company, with such preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption as described in the
Series B Articles Supplementary; and

 

“Series B Articles Supplementary” means the Articles Supplementary of the
Company in connection with its REIT Series B Preferred Shares, as filed with the
State Department of Assessments and Taxation of Maryland on June 30, 2017.

 

“Series B Preferred Units” means the series of Partnership Units representing
units of Limited Partnership Interest designated as the 8.00% Series B
Fixed-to-Floating Rate Cumulative Redeemable Preferred Units (liquidation
preference Twenty-Five Dollars ($25.00) per share), with such preferences,
conversion and other rights, voting powers, restrictions, limitations as to
distributions, qualifications, and terms and conditions of redemption as
described herein.

 

2. In accordance with Section 4.2.A of the Partnership Agreement, set forth
below are the terms and conditions of the Series B Preferred Units hereby
established and issued to the Company in consideration of the Company’s
contribution to the Partnership of the net proceeds from the issuance and sale
of the REIT Series B Preferred Shares by the Company:

 

A. Designation and Number.  A series of Partnership Units, designated as
Series B Preferred Units, is hereby established.  The number of authorized
Series B Preferred Units shall be 8,050,000.

 

B. Ranking.  The Series B Preferred Units shall rank, with respect to rights to
the payment of distributions and the distribution of assets in the event of any
liquidation, dissolution or winding up of the Partnership, (a) senior to the
Common Units and to all other Partnership Interests other than the Partnership
Interests referred to in clauses (b) and (c) of this Section 2.B.; (b) on a
parity with the Series A Preferred Units and all other Partnership Interests
with terms specifically providing that those Partnership Interests rank on a
parity with the Series B Preferred Units with respect to rights to the payment
of distributions and the distribution of assets upon any liquidation,
dissolution or winding up of the Partnership; and (c) junior to all Partnership
Interests with terms specifically providing that those Partnership Interests
rank senior to the Series B Preferred Units with respect to rights to the
payment of distributions and the distribution of assets upon any liquidation,
dissolution or winding up of the Partnership.

 

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C. Distributions.

 

(i) Pursuant to Section 5.1 of the Partnership Agreement, holders of the
Series B Preferred Units are entitled to receive, when, as and if authorized by
the General Partner, out of Available Cash, cumulative cash distributions
(i) from, and including, the date on which Series B Preferred Units are first
issued (the “Original Issuance Date”) to, but not including, June 15, 2024 (the
“Fixed Rate Period”), at a fixed rate equal to 8.00% per annum based on the
Twenty-Five Dollars ($25.00) per unit liquidation preference per annum, or $2.00
per unit; and (ii) from, and including, June 15, 2024 and thereafter (the
“Floating Rate Period”), at a floating rate equal to Three-Month LIBOR (as
defined below) as calculated on each applicable Distribution Determination Date
(as defined below) plus a spread of 5.99% per annum based on the Twenty-Five
Dollars ($25.00) per unit liquidation preference.  Distributions on the Series B
Preferred Units shall accumulate daily and shall be cumulative from, and
including, the Original Issuance Date or, if later, the latest Series B
Preferred Unit Distribution Payment Date (as defined below) to which cumulative
distributions have been paid in full (or declared and the corresponding Series B
Preferred Unit Distribution Date (as defined below) for determining unitholders
entitled to payment thereof has passed), and shall be payable quarterly in
arrears on the 15th day of each March, June, September and December (each, a
“Series B Preferred Unit Distribution Payment Date”) with respect to the
immediately preceding Distribution Period; provided, that if any Series B
Preferred Unit Distribution Payment Date is not a Business Day, then the
distribution which would otherwise have been payable on that Series B Preferred
Unit Distribution Payment Date may be paid on the next succeeding Business Day
with the same force and effect as if paid on such Series B Preferred Unit
Distribution Payment Date and no interest, additional distributions or other
sums will accumulate on the amount so payable for the period from and after such
Series B Preferred Unit Distribution Payment Date to such next succeeding
Business Day. The first distribution on the Series B Preferred Units is
scheduled to be paid on September 15, 2017 in the amount of $0.38889 per unit
and will represent accrual for less than the full quarterly period, covering the
period from, and including, the Original Issuance Date to, but not including,
September 15, 2017. That distribution will be paid to the Persons who are the
holders of record of the Series B Preferred Units at the close of business on
the corresponding Series B Preferred Unit Distribution Record Date, which will
be September 1, 2017. Distributions payable on the Series B Preferred Units
during the Fixed Rate Period, including distributions payable for the first
Distribution Period and any partial Distribution Period, will be computed on the
basis of a 360-day year consisting of twelve 30-day months.  Distributions
payable on the Series B Preferred Units during the Floating Rate Period,
including distributions payable for any partial Distribution Period, will be
computed based on the actual number of days and a 360-day year.  Distributions
will be payable to holders of record as they appear in the records of the
Partnership for the Series B Preferred Units at the close of business on the
applicable Partnership Record Date, which shall be the 1st day of the calendar
month, whether or not a Business Day, in which the applicable Series B Preferred
Unit Distribution Payment Date occurs (each, a “Series B Preferred Unit
Distribution Record Date”).  The distributions payable on any Series B Preferred
Unit Distribution Payment Date shall include distributions accumulated to, but
not including, such Series B Preferred Unit Distribution Payment Date.

 

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(ii) No distribution on the Series B Preferred Units shall be authorized by the
General Partner or paid or set apart for payment by the Partnership at any time
when the terms and provisions of any agreement of the Partnership, including any
agreement relating to any indebtedness of the Partnership, prohibit the
authorization, payment or setting apart for payment thereof or provide that the
authorization, payment or setting apart for payment thereof would constitute a
breach of the agreement or a default under the agreement, or if the
authorization, payment or setting apart for payment shall be restricted or
prohibited by law.

 

(iii) Notwithstanding anything to the contrary contained herein, distributions
on the Series B Preferred Units shall accumulate whether or not the Partnership
has earnings, whether or not there is sufficient Available Cash for the payment
of those distributions and whether or not those distributions are authorized. 
No interest, or sum in lieu of interest, will be payable in respect of any
distribution payment or payments on the Series B Preferred Units which may be in
arrears, and holders of the Series B Preferred Units will not be entitled to any
distributions in excess of full cumulative distributions described in
Section 2.C.(i) hereof.  Any distribution payment made on the Series B Preferred
Units shall first be credited against the earliest accumulated but unpaid
distribution due with respect to the Series B Preferred Units.

 

(iv) Except as provided in Section 2.C.(v) hereof, unless full cumulative
distributions on all Series B Preferred Units have been or contemporaneously are
paid or authorized and a sum sufficient for the payment thereof is set apart for
payment for all past Distribution Periods, (i) no distributions (other than
distributions paid in Common Units or in any class or series of Partnership
Interests ranking junior to the Series B Preferred Units as to distributions and
upon liquidation) shall be paid or authorized and set apart for payment upon
Common Units, Series A Preferred Units or any other class or series of
Partnership Interests ranking junior to or on a parity with the Series B
Preferred Units as to distributions or upon liquidation, (ii) no other
distribution (other than a repurchase that is considered a distribution as to
which clause (iii) would apply) shall be paid or authorized and set apart for
payment upon Common Units, Series A Preferred Units or any other class or series
of Partnership Interests ranking junior to or on a parity with the Series B
Preferred Units as to distributions or upon liquidation and (iii) no Common
Units, Series A Preferred Units or any other class or series of Partnership
Interests ranking junior to or on a parity with the Series B Preferred Units as
to distributions or upon liquidation shall be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any such Partnership Interests) by the
Partnership (except, in the case of clause (iii), by conversion into or exchange
for Common Units or any other class or series of Partnership Interests ranking
junior to the Series B Preferred Units as to distributions and upon
liquidation); provided, however, that neither the foregoing nor the restriction
described in Section 2.C.(v) hereof shall prevent the purchase or acquisition by
the Partnership of any class or series of Partnership Interests corresponding to
any REIT Series B Preferred Shares or any other class or series of shares of
beneficial interest of the Company to be purchased or acquired by the Company in
accordance with the proviso set forth in Section 4(d) of the Series B Articles
Supplementary.

 

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(v) When distributions are not so paid in full (or authorized and a sum
sufficient for such full payment is not so set apart) upon the Series B
Preferred Units, the Series A Preferred Units and any other class or series of
Partnership Interests ranking on a parity as to distributions with the Series B
Preferred Units, all distributions authorized upon the Series B Preferred Units
and such other class or series of Partnership Interests shall be authorized pro
rata so that the amount of distributions authorized per Series B Preferred Unit,
Series A Preferred Unit and per unit on such other class or series of
Partnership Interests shall in all cases bear to each other the same ratio that
accumulated distributions per Series B Preferred Unit, Series A Preferred Unit
and per unit on such other class or series of Partnership Interests (which shall
not include any accrual in respect of unpaid distributions for prior
Distribution Periods if such Partnership Interests do not have cumulative
distributions) bear to each other.  No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Series B Preferred Units which may be in arrears.

 

(vi) The term “Three-Month LIBOR” shall be calculated for each Distribution
Period during the Floating Rate Period and shall mean, on any Distribution
Determination Date: (i) the rate (expressed as a percentage per year) for
deposits in U.S. dollars having an index maturity of three months, in amounts of
at least $1,000,000, as such rate appears on “Reuters Page LIBOR01” at
approximately 11:00 a.m. (London time) on the relevant Distribution
Determination Date; or if no such rate appears on “Reuters Page LIBOR01” or if
the “Reuters Page LIBOR01” is not available at approximately 11:00 a.m. (London
time) on the relevant Distribution Determination Date, then the General Partner
will select four nationally-recognized banks in the London interbank market and
request that the principal London offices of those four selected banks provide
the General Partner with their offered quotation for deposits in U.S. dollars
for a period of three months, commencing on the first day of the applicable
Distribution Period, to prime banks in the London interbank market at
approximately 11:00 a.m. (London time) on the Distribution Determination Date
for the applicable Distribution Period. Offered quotations must be based on a
principal amount equal to an amount that, in the General Partner’s discretion,
is representative of a single transaction in U.S. dollars in the London
interbank market at that time. If at least two quotations are provided, the
Three-Month LIBOR for such Distribution Period will be the arithmetic mean
(rounded upward, if necessary, to the nearest 0.00001 of 1%) of those
quotations. If fewer than two quotations are provided, the Three-Month LIBOR for
such Distribution Period will be the arithmetic mean (rounded upward, if
necessary, to the nearest 0.00001 of 1%) of the rates quoted at approximately
11:00 a.m. (New York City time) on the Distribution Determination Date for such
Distribution Period by three nationally-recognized banks in New York, New York
selected by the General Partner, for loans in U.S. dollars to
nationally-recognized European banks (as selected by the General Partner), for a
period of three months commencing on the first day of such Distribution Period.
The rates quoted must be based on an amount that, in the General Partner’s
discretion, is representative of a single transaction in U.S. dollars in that
market at that time. If fewer than three New York, New York banks selected by
the General Partner quote rates in the manner described above, the Three-Month
LIBOR for the applicable Distribution Period will be the same as for the
immediately preceding Distribution Period, or, if there was no such Distribution
Period, the distribution shall be calculated at the distribution rate in effect
for the immediately preceding Distribution Period.

 

(vii)  The term “Distribution Determination Date” shall mean the London Business
Day (as defined below) immediately preceding the first day of the applicable
Distribution Period.

 

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(viii)  The term “Distribution Period” shall mean the period from, and
including, a Distribution Payment Date to, but not including, the next
succeeding Distribution Payment Date, except for the initial Distribution
Period, which shall be the period from, and including, the Original Issuance
Date to, but not including, September 15, 2017.

 

(ix) The term “London Business Day” shall mean any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.

 

(x) The term “Reuters Page LIBOR01” shall mean the display so designated on the
Reuters 3000 Xtra (or such other page as may replace the LIBOR01 page on that
service, or such other service as may be nominated by the ICE Benchmark
Administration Limited (“ICE”), or its successor, or such other entity assuming
the responsibility of ICE or its successor in the event ICE or its successor no
longer does so, as the successor service, for the purpose of displaying London
interbank offered rates for U.S. dollar deposits).

 

D. Allocations.

 

Allocations of the Partnership’s items of income, gain, loss and deduction shall
be allocated among holders of Series B Preferred Units in accordance with
Article 6 of the Partnership Agreement.

 

E. Liquidation Preference.

 

(i) In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, the holders of the Series B Preferred Units will
be entitled to be paid out of the assets the Partnership has legally available
for distribution to the Partners pursuant to Section 13.2.A of the Partnership
Agreement, subject to the preferential rights of the holders of Partnership
Interests of any class or series ranking senior to the Series B Preferred Units
with respect to the distribution of assets upon liquidation, dissolution or
winding up, a liquidation preference of Twenty-Five Dollars ($25.00) per
Series B Preferred Unit, plus an amount equal to any accumulated and unpaid
distributions (whether or not earned or authorized) to, but not including, the
date of payment, before any distribution of assets upon liquidation, dissolution
or winding up is made to holders of Common Units or any other class or series of
Partnership Interests ranking junior to the Series B Preferred Units as to
liquidation rights.

 

(ii) In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Partnership are
insufficient to pay the amount of the liquidating distributions on all
outstanding Series B Preferred Units and the corresponding amounts payable on
Partnership Interests of all other classes or series ranking on a parity with
the Series B Preferred Units in the distribution of assets, including the
Series A Preferred Units, then the holders of the Series B Preferred Units, the
Series A Preferred Units and all other such classes or series of Partnership
Interests shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be
respectively entitled.

 

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(iii) Holders of Series B Preferred Units shall be entitled to written notice of
any such payment upon the voluntary or involuntary liquidation, dissolution or
winding up of the Partnership no fewer than 30 days and no more than 60 days
prior to the payment date. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Units shall have no right or claim to any of the remaining assets of the
Partnership.

 

(iv) The consolidation or merger of the Partnership with or into any other
limited partnership, corporation or entity or of any other entity with or into
the Partnership, or the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Partnership, shall not be
deemed to constitute a liquidation, dissolution or winding up of the
Partnership.

 

F. Redemption.

 

In connection with redemption by the Company of any of its REIT Series B
Preferred Shares in accordance with the provisions of the Series B Articles
Supplementary, the Partnership shall provide cash to the Company for such
purpose which shall be equal to the REIT Series B Preferred Share redemption
price (as set forth in the Series B Articles Supplementary), plus any
accumulated and unpaid distributions on the REIT Series B Preferred Shares to,
but not including, the REIT Series B Preferred Share redemption date (as set
forth in the Series B Articles Supplementary) (or, as applicable, any
accumulated and unpaid distributions payable pursuant to Section 6(j) of the
Series B Articles Supplementary), and one Series B Preferred Unit shall be
concurrently redeemed with respect to each REIT Series B Preferred Share so
redeemed by the Company.  From and after the REIT Series B Preferred Share
redemption date, the Series B Preferred Units so redeemed shall no longer be
outstanding and all rights hereunder, to distributions or otherwise, with
respect to such Series B Preferred Units shall cease.

 

G. Conversion.  The Series B Preferred Units are not convertible into or
exchangeable for any other property or securities of the Partnership, except as
provided in this Section 2.G.

 

(i) In the event of a conversion of any REIT Series B Preferred Shares into REIT
Shares in accordance with the Series B Articles Supplementary, upon conversion
of such REIT Series B Preferred Shares, the Partnership shall convert an equal
whole number of the Series B Preferred Units into a number of Common Units equal
to the number of REIT Shares into which such REIT Series B Preferred Shares were
converted.  In the event of the conversion of any REIT Series B Preferred Shares
into Alternative Conversion Consideration (as defined in the Series B Articles
Supplementary) in accordance with the Series B Articles Supplementary, the
Partnership shall retire a number of Series B Preferred Units equal to the
number of REIT Series B Preferred Shares converted into such Alternative
Conversion Consideration.  In the event of a conversion of the REIT Series B
Preferred Shares into REIT Shares, to the extent the Company is required to pay
cash in lieu of fractional REIT Shares pursuant to the Series B Articles
Supplementary in connection with such conversion, the Partnership shall
distribute an equal amount of cash to the Company.

 

(ii) Following any such conversion and/or retirement by the Partnership pursuant
to this Section G., the General Partner shall make such revisions to the
Partnership Agreement as it determines are necessary to reflect such conversion.

 

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H. Voting Rights.  Except as required by applicable law, holders of Series B
Preferred Units shall not have any voting or consent rights in respect of their
Partnership Interests represented by the Series B Preferred Units.

 

I. Transfer Restrictions.  The Series B Preferred Units shall not be
transferable except in accordance with Section 11.2 of the Partnership
Agreement.

 

3. Except as modified herein, all terms and conditions of the Partnership
Agreement shall remain in full force and effect, which terms and conditions the
General Partner hereby ratifies and confirms.

 

4. This Amendment shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflict of laws.

 

5. If any provision of this Amendment is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

 

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IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date
first written above.

 

 

PENNYMAC GP OP, INC., a Delaware corporation, as General Partner of PennyMac
Operating Partnership, L.P. and on behalf of existing Limited Partners

 

 

 

By:

/s/ Jeffrey P. Grogin

 

 

Name: Jeffrey P. Grogin

 

 

Title: Senior Managing Director and Chief Administrative and Legal Officer and
Secretary

 

[Signature Page to Second Amendment to the LPA]]

 

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