Exhibit 10.3

 

 

 

 

 

 

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

 

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as buyer
(“Buyer”), and

 

 

PENNYMAC OPERATING PARTNERSHIP, L.P., as seller (“Seller”), and

 

 

PENNYMAC MORTGAGE INVESTMENT TRUST, as guarantor (“Guarantor”)

 

 

 

 

 

Dated March 31, 2016

 

 

 

 

   

 

 

 

TABLE OF CONTENTS

 

 

    Page       1. Applicability 1 2. Definitions 1 3. Program; Initiation of
Transactions 19 4. Repurchase 21 5. Price Differential 22 6. Margin Maintenance
22 7. Income Payments 23 8. Security Interest 24 9. Payment and Transfer 25 10.
Conditions Precedent 25 11. Program; Costs 29 12. Servicing 30 13.
Representations and Warranties 31 14. Covenants 37 15. Events of Default 43 16.
Remedies Upon Default 46 17. Reports 48 18. Repurchase Transactions 52 19.
Single Agreement 52 20. Notices and Other Communications 53 21. Entire
Agreement; Severability 54 22. Non assignability 54 23. Set-off 55

 

 

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24. Binding Effect; Governing Law; Jurisdiction 55 25. No Waivers, Etc. 56 26.
Intent 56 27. Disclosure Relating to Certain Federal Protections 57 28. Power of
Attorney 57 29. Buyer May Act Through Affiliates 58 30. Indemnification;
Obligations 58 31. Counterparts 59 32. Confidentiality 59 33. Recording of
Communications 60 34. Commitment Fee 60 35. Condition Subsequent 60 36. Periodic
Due Diligence Review 61 37. Approval of Underlying Repurchase Counterparties and
Servicers 61 38. Authorizations 62 39. Acknowledgement Of Anti-Predatory Lending
Policies 63 40. Documents Mutually Drafted 63 41. Conflicts 63 42. General
Interpretive Principles 63 43. Agency and Allocation Agreement 64 44.
Reaffirmation of Guaranty 64 45. Amendment and Restatement 64

 

 

SCHEDULES

 

Schedule 1 - Representations and Warranties

 

Part I: with Respect to Purchased Mortgage Loans

 

 

 -ii- 

 

 

 

Part II: with Respect to Underlying Repurchase Transactions

 

Schedule 2 – Authorized Representatives

 

EXHIBITS

 

Exhibit A – Form of Purchase Confirmation for Exception Mortgage Loans

 

Exhibit B – Form of Mortgage Loan Schedule

 

Exhibit C – Form of Servicing Renewal Letter

 

Exhibit D – Form of Power of Attorney

 

Exhibit E – Litigation

 

Exhibit F – Officer’s Certificate

 

Exhibit G – Seller’s and Guarantor’s Tax Identification Numbers

 

Exhibit H – Existing Indebtedness

 

Exhibit I – Escrow Instruction Letter

 

Exhibit J – Form of Servicer Notice and Pledge

 

Exhibit K – Form of Servicer Notice

 

 

 

 

 

 

 

 

 

 

 

 -iii- 

 

 

This is an AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as of March
31, 2016, by and among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the
“Buyer”), PENNYMAC OPERATING PARTNERSHIP, L.P. (the “Seller”) and PENNYMAC
MORTGAGE INVESTMENT TRUST (the “Guarantor”).

 

The Buyer, Seller and Guarantor previously entered into a Master Repurchase
Agreement, dated as of September 28, 2012 (the “Existing Master Repurchase
Agreement”).

 

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

 

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

 

1. Applicability

 

From time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer Mortgage Loans (as hereinafter defined) on a
servicing released basis against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Mortgage Loans on a
servicing released basis at a date certain or on demand, against the transfer of
funds by Seller. This Agreement is a commitment by Buyer to engage in the
Transactions as set forth herein up to the Maximum Committed Purchase Price;
provided, that Buyer shall have no commitment to enter into any Transaction
requested that would result in the aggregate Purchase Price of then-outstanding
Transactions exceeding the Maximum Committed Purchase Price, and in no event
shall the aggregate Purchase Price of outstanding Transactions exceed the
Maximum Purchase Price at any time. Each such transaction shall be referred to
herein as a “Transaction” and, unless otherwise agreed in writing, shall be
governed by this Agreement, including any supplemental terms or conditions
contained in any annexes identified herein, as applicable hereunder.

 

2. Definitions

 

Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

 

“Acceptable State” means any state acceptable pursuant to the Underwriting
Guidelines.

 

“Acceptable Underlying Repurchase Transaction” means an Underlying Repurchase
Transaction with an Underlying Repurchase Counterparty in which all right, title
and interest in each underlying Mortgage Loan sold to Seller pursuant to such
Underlying Repurchase Transaction is documented by Underlying Repurchase
Documents that contain the following characteristics:

 

i. The repurchase agreement contains broad repledge, assignment and
rehypothecation provisions in favor of Seller permitting Seller to sell,
transfer and assign to Buyer hereunder, without restriction or rights to consent
by the Underlying Repurchase Counterparty or any other Person, all of Seller’s
right, title and interest in Mortgage Loans purchased by Seller pursuant to such
repurchase agreement;

 

 -1- 

 

ii. The repurchase agreement contains a back-up grant of security interest in
each related Mortgage Loan and Servicing Rights to Seller and broad
subordination language, in each case, similar in form and substance to the
security interest granted to Buyer in Section 8 hereof, and the repurchase
agreement or an ancillary document thereto provides for a provision or
instruction that, (i) unless such Mortgage Loan is a Wet-Ink Mortgage Loan, the
Mortgage File in respect of such Mortgage Loan be delivered by the Underlying
Repurchase Counterparty directly to Buyer or Buyer’s designee and (ii) if such
Mortgage Loan is a Wet-Ink Mortgage Loan, the Settlement Agent has been
instructed to deliver or cause the delivery of the related Mortgage File to
Buyer or Buyer’s designee within the prescribed time period;

 

iii. The repurchase agreement contains a broad grant of a power of attorney to
Seller and Seller’s attorneys-in-fact;

 

iv. The repurchase agreement grants to Seller and its designee or repledgee the
right to immediately terminate the Underlying Repurchase Counterparty’s right or
any third party servicer’s right to service the Mortgage Loans upon the
occurrence of an Event of Default hereunder;

 

v. The repurchase agreement provides broad due diligence and inspection rights
to Seller and its repledgees;

 

vi. The Underlying Electronic Tracking Agreements or other Underlying Repurchase
Documents provide that the Underlying Repurchase Counterparty gives Buyer, as
repledgee thereunder, the authority, following an Event of Default, to change
fields in the MERS® System as appropriate, including, without limitation,
changing the “interim funder” field to insert parties with which Seller enters
into financing arrangements including repurchase agreements with respect to such
Mortgage Loans.

 

vii. The Underlying Repurchase Documents have not been assigned by Seller, and
Seller has not granted a security interest in the Underlying Repurchase
Documents, to any party;

 

viii. A financing statement on Form UCC-1 has been filed in the applicable
filing office naming the Underlying Repurchase Counterparty as debtor/seller and
Seller as secured party/buyer with a collateral description reasonably
acceptable to Buyer, which shall be similar in form and substance to the
Repurchase Assets in which a security interest is granted pursuant to Section 8
hereof;

 

ix. The Underlying Repurchase Documents contain events of default substantially
similar to the events of default contained in this Agreement; and

 

 -2- 

 

x. All of the representations and warranties set forth on Schedule 1, Part 2 are
true and correct in all material respects.

 

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

 

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

 

“Adjusted Tangible Net Worth” has the meaning assigned to such term in the
Pricing Side Letter.

 

“Affiliate” means, with respect to any Person, any “affiliate” of such Person,
as such term is defined in the Bankruptcy Code; provided, however, that any
entity that is otherwise not directly or indirectly owned or controlled by
Seller or Guarantor shall not be deemed an “Affiliate” for the purposes of this
definition.

 

“Aged Loan” means an Aged 60 Day, an Aged 75 Day or an Aged 90 Day Loan.

 

“Aged Non-Agency QM Mortgage Loan” has the meaning assigned to such term in the
Pricing Side Letter.

 

“Aged 60 Day Loan” means a Mortgage Loan which has been subject to a Transaction
hereunder for a period of greater than 30 days but not greater than 60 days.

 

“Aged 75 Day Loan” means a Mortgage Loan other than a Non-Agency QM Mortgage
Loan which has been subject to a Transaction hereunder for a period of greater
than 60 days but not greater than 75 days.

 

 -3- 

 

“Aged 90 Day Loan” means a Mortgage Loan other than a Non-Agency QM Mortgage
Loan which has been subject to a Transaction hereunder for a period of greater
than 75 days but not greater than 90 days.

 

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

 

“Agency Mortgage Loan” means a Conforming Mortgage Loan, a Conforming High LTV
Loan, a FHA Loan and a VA Loan.

 

“Agency Security” means a mortgage-backed security issued by an Agency.

 

“Aging Limit” has the meaning assigned to such term in the Pricing Side Letter.

 

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

 

“Appraised Value” means the value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.

 

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

 

“Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage.

 

“Bailee Letter” has the meaning assigned to such term in the applicable
Custodial Agreement.

 

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

 

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

 

“Bid” has the meaning set forth in Section 4(c) hereof.

 

“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on
which the New York Stock Exchange, the Federal Reserve Bank of New York or the
Custodian is authorized or obligated by law or executive order to be closed.

 

“Buyer” means Credit Suisse First Boston Mortgage Capital LLC, and any successor
or assign hereunder.

 

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

 

 -4- 

 

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

 

“Change in Control” means:

 

(a) any transaction or event as a result of which Guarantor ceases to own,
beneficially or of record, 100% of the stock of Seller;

 

(b) the acquisition by any Person or group (within the meaning of the Securities
Exchange Act of 1934, as amended, and the rules of the Securities and Exchange
Commission thereunder), directly or indirectly, beneficially or of record, of
ownership or control of in excess of 50% of the voting common stock of Guarantor
on a fully diluted basis at any time;

 

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

 

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

 

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

 

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

 

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“Committed Mortgage Loan” means a Mortgage Loan which is the subject of a
Take-out Commitment with a Take-out Investor.

 

“Conforming High LTV Loan” means a Conforming Mortgage Loan with an LTV of 95%
or higher but not to exceed 135%.

 

“Conforming Mortgage Loan” means a first lien Mortgage Loan originated in
accordance with the criteria of an Agency for purchase of Mortgage Loans,
including, without limitation, conventional Mortgage Loans, as determined by
Buyer in its sole discretion.

 

“Custodial Agreement” means each custodial agreement among an Underlying
Repurchase Counterparty, Seller and Custodian, as each may be amended from time
to time, and each in the form and substance approved by Buyer in writing in its
sole discretion and the related Custodial Repledgee Information Notice.

 

“Custodial Mortgage Loan Schedule” has the meaning assigned to such term in the
applicable Custodial Agreement.

 

“Custodial Repledgee Information Notice” means the repledgee information notice
delivered pursuant to the applicable Custodial Agreement.

 

“Custodian” means Deutsche Bank Trust Company Americas or such other party
approved in writing by Buyer, which approval shall not be unreasonably withheld.

 

“Default” means an Event of Default or an event that with notice or lapse of
time or both would become an Event of Default.

 

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

 

“Due Date” means the day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

 

“EDGAR” means the Electronic Data-Gathering, Analysis, and Retrieval system
maintained by the SEC.

 

“Effective Date” means the date upon which the conditions precedent set forth in
Section 10 shall have been satisfied.

 

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

 

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

 

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“Escrow Instruction Letter” means the Escrow Instruction Letter from Underlying
Repurchase Counterparty to the Settlement Agent, in the form of Exhibit I
hereto, as the same may be modified, supplemented and in effect from time to
time.

 

“Escrow Payments” means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

 

“ETA Repledgee Information Notice” means the repledgee information notice
delivered pursuant to the applicable Underlying Electronic Tracking Agreement.

 

“Event of Default” has the meaning specified in Section 15 hereof.

 

“Event of Termination” means with respect to Underlying Repurchase Counterparty,
Seller or Guarantor (as applicable) (a) with respect to any Plan, a reportable
event, as defined in Section 4043 of ERISA, as to which the PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified with 30 days of the occurrence of such event, or (b) the withdrawal of
Underlying Repurchase Counterparty, Seller, Guarantor or any ERISA Affiliate
thereof from a Plan during a plan year in which it is a substantial employer, as
defined in Section 4001(a)(2) of ERISA, or (c) the failure by Underlying
Repurchase Counterparty, Seller, Guarantor or any ERISA Affiliate thereof to
meet the minimum funding standard of Section 412 of the Code or Section 302 of
ERISA with respect to any Plan, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Code (or Section 430 (j) of the Code as amended by the Pension Protection
Act) or Section 302(e) of ERISA (or Section 303 (j) of ERISA, as amended by the
Pension Protection Act), or (d) the distribution under Section 4041 of ERISA of
a notice of intent to terminate any Plan or any action taken by Underlying
Repurchase Counterparty, Seller, Guarantor or any ERISA Affiliate thereof to
terminate any plan, or (e) the failure to meet requirements of Section 436 of
the Code resulting in the loss of qualified status under Section 401(a)(29) of
the Code, or (f) the institution by the PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or (g) the receipt by Underlying Repurchase Counterparty, Seller,
Guarantor or any ERISA Affiliate thereof of a notice from a Multiemployer Plan
that action of the type described in the previous clause (f) has been taken by
the PBGC with respect to such Multiemployer Plan, or (h) any event or
circumstance exists which may reasonably be expected to constitute grounds for
Underlying Repurchase Counterparty, Seller, Guarantor or any ERISA Affiliate
thereof to incur liability under Title IV of ERISA or under Sections 412 (b) or
430 (k) of the Code with respect to any Plan.

 

“Exception Mortgage Loan” means any Mortgage Loan which is otherwise ineligible
for purchase hereunder, or which otherwise becomes ineligible for purchase
hereunder and which is approved by Buyer in its sole discretion. Buyer’s
approval of a Mortgage Loan as an Exception Mortgage Loan shall expire on the
earlier of (a) the date set forth by the Buyer in the written notice that such
Mortgage Loan is approved as an Exception Mortgage Loan (an “Exception Notice”)
or (b) the occurrence of any additional event, other than that set forth in the
Exception Notice, which would cause the Mortgage Loan to become ineligible for
purchase hereunder. The Pricing Rate, Market Value, Purchase Price and Asset
Value with respect to Exception Mortgage Loans shall be set in the sole
discretion of Buyer. Buyer may at any time, and in its sole discretion, no
longer consider a Mortgage Loan an Exception Mortgage Loan, in which case such
Mortgage Loan shall have a Market Value of zero.

 

 -7- 

 

“Existing Indebtedness” has the meaning specified in Section 13(a)(23) hereof.

 

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

 

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

 

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

 

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

 

“FHA Mortgage Insurance” means, mortgage insurance authorized under the National
Housing Act, as amended from time to time, and provided by the FHA.

 

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

 

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

 

“FICO” means Fair Isaac & Co., or any successor thereto.

 

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

 

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

 

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America and applied on a consistent basis.

 

 -8- 

 

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

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions over Underlying Repurchase
Counterparty, Seller, Guarantor or Buyer, as applicable.

 

“Governmental Event” means (i) Seller’s or Underlying Repurchase Counterparty’s
(as applicable) failure to obtain licensing from any Governmental Authority
where it is required to be licensed and such failure to be licensed and
requirement to be licensed continue for 30 days following notice to or knowledge
thereof by Seller or Underlying Repurchase Counterparty, (ii) the imposition of
material sanctions on Seller or Underlying Repurchase Counterparty from any
Governmental Authority, or (iii) any material dispute, litigation,
investigation, proceeding or suspension between Seller or Underlying Repurchase
Counterparty (as applicable) and any Governmental Authority or any Person.

 

“Gross Margin” means, with respect to each adjustable rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note.

 

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

 

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

 

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

 

“High Cost Mortgage Loan” means a Mortgage Loan classified as (a) a “high cost”
loan under the Home Ownership and Equity Protection Act of 1994 or (b) a “high
cost,” “threshold,” “covered,” or “predatory” loan under any other applicable
state, federal or local law (or a similarly classified loan using different
terminology under a law, regulation or ordinance imposing heightened regulatory
scrutiny or additional legal liability for residential mortgage loans having
high interest rates, points and/or fees).

 

 -9- 

 

“Income” means with respect to any Purchased Mortgage Loan at any time until
repurchased by the Seller, any principal received thereon or in respect thereof
and all interest, dividends or other distributions thereon.

 

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

 

“Index” means, with respect to any adjustable rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the applicable Mortgage Interest Rate.

 

“Interest Only Adjustment Date” means, with respect to each Interest Only Loan,
the date, specified in the related Mortgage Note on which the Monthly Payment
will be adjusted to include principal as well as interest.

 

“Interest Only Loan” means a Mortgage Loan which only requires payments of
interest for a period of time specified in the related Mortgage Note.

 

“Interest Rate Adjustment Date” means the date on which an adjustment to the
Mortgage Interest Rate with respect to each Mortgage Loan becomes effective.

 

“Lien” means any mortgage, lien, pledge, charge, security interest or similar
encumbrance.

 

“Loan to Value Ratio” or “LTV” means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan to the
lesser of (a) the Appraised Value of the Mortgaged Property at origination or
(b) if the Mortgaged Property was purchased within 12 months of the origination
of such Mortgage Loan, the purchase price of the Mortgaged Property.

 

 -10- 

 

“Margin Call” has the meaning specified in Section 6(a) hereof.

 

“Margin Deadline” has the meaning specified in Section 6(b) hereof.

 

“Margin Deficit” has the meaning specified in Section 6(a) hereof.

 

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

 

“Material Adverse Effect” means, as applicable, (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of, as applicable (i) Underlying
Repurchase Counterparty, or (ii) Seller, Guarantor or any Affiliate that is a
party to any Program Agreement taken as a whole; (b) a material impairment of
the ability of Seller, Guarantor or any Affiliate that is a party to any Program
Agreement to perform under any Program Agreement and to avoid any event of
default; (c) a material impairment of the ability of Underlying Repurchase
Counterparty to perform under Underlying Repurchase Documents and to avoid any
event of default thereunder; or (d) a material adverse effect upon the legality,
validity, binding effect or enforceability of, as applicable, (i) any Program
Agreement against Seller, Guarantor or any Affiliate that is a party to any
Program Agreement or (ii) against Underlying Repurchase Counterparty that is a
party to any Underlying Repurchase Documents, in each case as determined by the
Buyer in its sole good faith discretion.

 

“Maximum Committed Purchase Price” means the “Maximum External Rewarehouse
Committed Purchase Price” as defined in the Pricing Side Letter.

 

“Maximum Purchase Price” means the “Maximum External Rewarehouse Purchase Price”
as defined in the Pricing Side Letter.

 

“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.

 

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

 

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

 

“Monthly Summary Report” means the report comprised of a “scorecard” and a
“report card” in form and substance mutually agreed upon by Buyer and Seller,
together with such other documents as mutually agreed upon by Buyer and Seller,
with respect to each of Seller’s customers.

 

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

 

“Mortgage” means each mortgage, assignment of rents, security agreement and
fixture filing, or deed of trust, assignment of rents, security agreement and
fixture filing, deed to secure debt, assignment of rents, security agreement and
fixture filing, or similar instrument creating and evidencing a lien on real
property and other property and rights incidental thereto.

 

 -11- 

 

“Mortgage File” means, with respect to a Mortgage Loan, the documents and
instruments relating to such Mortgage Loan and set forth in an exhibit to the
applicable Custodial Agreement.

 

“Mortgage Interest Rate” means the rate of interest borne on a Mortgage Loan
from time to time in accordance with the terms of the related Mortgage Note.

 

“Mortgage Interest Rate Cap” means, with respect to an adjustable rate Mortgage
Loan, the limit on each Mortgage Interest Rate adjustment as set forth in the
related Mortgage Note.

 

“Mortgage Loan” means any closed Agency Mortgage Loan or Non-Agency QM Mortgage
Loan, which is a fixed or floating-rate, one-to-four-family residential mortgage
loan evidenced by a promissory note and secured by a first lien mortgage, which
satisfies the requirements set forth in the Underwriting Guidelines and Section
13(b) hereof.

 

“Mortgage Loan Documents” means the documents in the related Mortgage File to be
delivered to the Custodian.

 

“Mortgage Loan Schedule” means with respect to any Transaction as of any date, a
mortgage loan schedule in the form of either (a) Exhibit B attached hereto or
(b) a computer tape or other electronic medium generated by Seller, and
delivered to Buyer and Custodian, which provides information (including, without
limitation, the information set forth on Exhibit B attached hereto) relating to
the Purchased Mortgage Loans in a format acceptable to Buyer.

 

“Mortgage Note” means the promissory note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.

 

“Mortgaged Property” means the real property securing repayment of the debt
evidenced by a Mortgage Note.

 

“Mortgagor” means the obligor or obligors on a Mortgage Note, including any
person who has assumed or guaranteed the obligations of the obligor thereunder.

 

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

 

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

 

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

 

 -12- 

 

“1934 Act” means the Securities Exchange Act of 1934, as amended from time to
time.

 

“Non-Agency QM Mortgage Loan” means a Mortgage Loan that (a) does not meet the
criteria for an Agency Mortgage Loan; (b) meets all applicable criteria as set
forth in the Underwriting Guidelines and (c) is otherwise acceptable to Buyer in
its sole discretion.

 

“Non-Performing Mortgage Loan” means (a) any Mortgage Loan for which any payment
of principal or interest is more than thirty (30) days past due, (b) any
Mortgage Loan with respect to which the related Mortgagor is in bankruptcy or
(c) any Mortgage Loan with respect to which the related Mortgaged Property is in
foreclosure.

 

“Non-Recourse Debt” shall mean Indebtedness payable solely from the assets sold
or pledged to secure such Indebtedness and under which Indebtedness no party has
recourse to Seller, Guarantor or any of their Affiliates if such assets are
inadequate or unavailable to pay off such Indebtedness, and neither Seller,
Guarantor nor any of their Affiliates effectively has any obligation to directly
or indirectly pay any such deficiency.

 

“Obligations” means (a) all of Seller’s indebtedness, obligations to pay the
Repurchase Price on the Repurchase Date, the Price Differential on each Price
Differential Payment Date, and other obligations and liabilities, to Buyer, its
Affiliates or Custodian arising under, or in connection with, the Program
Agreements, whether now existing or hereafter arising; (b) any and all sums paid
by Buyer or on behalf of Buyer in order to preserve any Purchased Mortgage Loan
or its interest therein; (c) in the event of any proceeding for the collection
or enforcement of any of Seller’s indebtedness, obligations or liabilities
referred to in clause (a), the reasonable expenses of retaking, holding,
collecting, preparing for sale, selling or otherwise disposing of or realizing
on any Purchased Mortgage Loan, or of any exercise by Buyer of its rights under
the Program Agreements, including, without limitation, attorneys’ fees and
disbursements and court costs; and (d) all of Seller’s indemnity obligations to
Buyer or Custodian or both pursuant to the Program Agreements.

 

“OFAC” has the meaning set forth in Section 13(a)(27) hereof.

 

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

 

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

 

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

 

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

 

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

 

 -13- 

 

“Power of Attorney” has the meaning specified in Section 28 hereto.

 

“Post Default Rate” has the meaning assigned to such term in the Pricing Side
Letter.

 

“Price Differential” means with respect to any Transaction as of any date of
determination, an amount equal to the product of (a) the Pricing Rate for such
Transaction and (b) the Purchase Price for such Transaction, calculated daily on
the basis of a 360-day year for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending
on (but excluding) the Repurchase Date.

 

“Price Differential Payment Date” means, with respect to a Purchased Mortgage
Loan, the 5th day of the month following the related Purchase Date and each
succeeding 5th day of the month thereafter; provided, that, with respect to such
Purchased Mortgage Loan, the final Price Differential Payment Date shall be the
related Repurchase Date; and provided, further, that if any such day is not a
Business Day, the Price Differential Payment Date shall be the next succeeding
Business Day.

 

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

 

“Pricing Side Letter” means the amended and restated letter agreement dated as
of the date hereof, among Buyer, Seller, PennyMac Corp., PennyMac Holdings, LLC,
PMC REO Financing Trust and the Guarantor, as the same may be amended from time
to time.

 

“Program Agreements” means, collectively, this Agreement, the Pricing Side
Letter, the Guaranty, each Custodial Agreement, each Underlying Electronic
Tracking Agreement for each Underlying Repurchase Counterparty, the Power of
Attorney, the Servicing Agreement, if any, the Servicer Notice or the Servicer
Notice and Pledge, as applicable, the Custodial Repledgee Information Notices,
the ETA Repledgee Information Notices, and, with respect to each Exception
Mortgage Loan, a Purchase Confirmation.

 

“Prohibited Person” has the meaning set forth in Section 13(a)(27) hereof.

 

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

 

“Purchase Confirmation” means, with respect to an Exception Mortgage Loan, a
confirmation of a Transaction, in the form attached as Exhibit A hereto.

 

“Purchase Date” means the date on which Purchased Mortgage Loans are to be
transferred by Seller to Buyer.

 

“Purchase Price” means the price at which each Purchased Mortgage Loan is
transferred by Seller to Buyer, which shall equal:

 

(a) on the Purchase Date, the applicable Purchase Price Percentage multiplied by
the lesser of either: (x) the Market Value of such Purchased Mortgage Loan or
(y) the outstanding principal amount thereof as set forth on the related
Mortgage Loan Schedule;

 

 -14- 

 

(b) on any day after the Purchase Date, except where Buyer and the Seller agree
otherwise, the amount determined under the immediately preceding clause (a)
decreased by the amount of any cash transferred by the Seller to Buyer pursuant
to Section 6 hereof or applied to reduce the Seller’s obligations under
Section 4(b)(ii) or Section 4(c) hereof.

 

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

 

“Purchased Mortgage Loans” means the collective reference to Mortgage Loans
together with the Repurchase Assets related to such Mortgage Loans transferred
by Seller to Buyer in a Transaction hereunder, listed on the related Mortgage
Loan Schedule identified in the Transaction Request and uploaded to the Buyer’s
file transfer protocol website, and which such Mortgage Loans the Custodian has
been or will be instructed to hold for the benefit of Buyer pursuant to the
applicable Custodial Agreement.

 

“Qualified Insurer” means an insurance company duly authorized and licensed
where required by law to transact insurance business and approved as an insurer
by Fannie Mae or Freddie Mac.

 

“Qualified Originator” means an originator of Mortgage Loans which is acceptable
under the Underwriting Guidelines.

 

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller, Servicer, Guarantor, Custodian, Underlying Repurchase
Counterparty, or any other person or entity with respect to a Purchased Mortgage
Loan. Records shall include the Mortgage Notes, any Mortgages, the Mortgage
Files, the credit files related to the Purchased Mortgage Loan and any other
instruments necessary to document or service a Mortgage Loan.

 

“REIT” means a real estate investment trust, as defined in Section 856 of the
Code.

 

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

 

“Reporting Date” means the 5th day of each month or, if such day is not a
Business Day, the next succeeding Business Day.

 

“Repurchase Assets” has the meaning assigned thereto in Section 8 hereof.

 

“Repurchase Date” means the earliest of (a) the Termination Date, (b) the date
set forth in the applicable Purchase Confirmation with respect to an Exception
Mortgage Loan, (c) the date determined by application of Section 16 hereof, (d)
the date that is one year from the Purchase Date and if such date is not a
Business Day, the immediately preceding Business Day, or (e) any other date
requested by Seller upon one (1) Business Day’s prior written notice subject to
Section 4 hereof.

 

 -15- 

 

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

 

“Request for Certification” means a notice sent to the Custodian reflecting the
sale of one or more Purchased Mortgage Loans to Buyer hereunder.

 

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

 

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

 

“Restricted Cash” means for any Person, any amount of cash of such Person that
is contractually required to be set aside, segregated or otherwise reserved.

 

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

 

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

 

“Seller” means PennyMac Operating Partnership, L.P. or its permitted successors
and assigns.

 

“Servicer” means PennyMac Loan Services, LLC or any other servicer approved by
Buyer in its sole discretion.

 

“Servicer Notice” means the notice to the Servicer, which Servicer shall be a
third party other than an Underlying Repurchase Counterparty or Seller,
substantially in the form of Exhibit K hereto.

 

“Servicer Notice and Pledge” means the notice to and pledge by the Servicer if
the Servicer is an affiliate of the Seller substantially in the form of Exhibit
J hereto.

 

“Servicing Agreement” means any servicing agreement approved by Buyer in
writing.

 

“Servicing Rights” means rights of any Person to administer, service or
subservice, the Purchased Mortgage Loans or to possess related Records.

 

“Settlement Agent” means, with respect to any Transaction the subject of which
is a Wet-Ink Mortgage Loan, the entity approved by Buyer, in its sole good-faith
discretion, which may be a title company, escrow company or attorney in
accordance with local law and practice in the jurisdiction where the related
Wet-Ink Mortgage Loan is being originated. A Settlement Agent is deemed approved
unless Buyer notifies Seller otherwise at any time electronically or in writing.

 

 -16- 

 

“SIPA” means the Securities Investor Protection Act of 1970, as amended from
time to time.

 

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

 

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

 

“Take-out Commitment” means a commitment of Underlying Repurchase Counterparty
to either (a) sell one or more identified Mortgage Loans to a Take-out Investor
or (b) (i) swap one or more identified Mortgage Loans with a Take-out Investor
that is an Agency for an Agency Security, and (ii) sell the related Agency
Security to a Take-out Investor, and in each case, the corresponding Take-out
Investor’s commitment back to Underlying Repurchase Counterparty to effectuate
any of the foregoing, as applicable. With respect to any Take-out Commitment
with an Agency, the applicable agency documents list Buyer as the subscriber to
the Agency Security and such Agency Security is delivered to an account
specified by Buyer.

 

“Take-out Investor” means (a) an Agency, (b) PennyMac Corp. or (c) any other
institution which has made a Take-out Commitment and has been approved by Buyer.

 

“Termination Date” means the earlier of (a) March 30, 2017, and (b) the date of
the occurrence of an Event of Default.

 

“Test Period” means any one fiscal quarter.

 

“Transaction” has the meaning set forth in Section 1 hereof.

 

“Transaction Request” means a request via email from Seller to Buyer notifying
Buyer that Seller wishes to enter into a Transaction hereunder that indicates
that it is a Transaction Request under this Agreement.

 

 -17- 

 

“Trust Receipt” means, with respect to any Transaction as of any date, a receipt
in the form attached as an exhibit to the applicable Custodial Agreement, which
shall be issued and delivered to Buyer in its capacity as repledgee pursuant to
the applicable Custodial Agreement.

 

“Underlying Electronic Tracking Agreement” means, to the extent applicable, each
Electronic Tracking Agreement among an Underlying Repurchase Counterparty,
Seller, MERS and MERSCORP Holdings, Inc., as the same may be amended from time
to time, together with the related ETA Repledgee Information Notice executed by
Seller, MERS, MERSCORP Holdings, Inc. and Buyer.

 

“Underlying Interest Rate Protection Agreement” means, with respect to any or
all of the Purchased Mortgage Loans, any short sale of a US Treasury Security,
or futures contract, or mortgage related security, or Eurodollar futures
contract, or options related contract, or interest rate swap, cap or collar
agreement, or similar arrangement providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies, entered into by Underlying Repurchase
Counterparty.

 

“Underlying Repurchase Counterparty” means the counterparty to an Underlying
Repurchase Transaction, who has previously been approved by Buyer in writing in
its sole discretion in accordance with the provisions of Section 37 hereof, that
has sold, or concurrently with a purchase of a Mortgage Loan by Buyer hereunder,
will sell, such Mortgage Loan to Seller.

 

“Underlying Repurchase Documents” means the repurchase agreement, pricing
letter, the applicable Custodial Agreement, the applicable Underlying Electronic
Tracking Agreement, confirmations and all documents ancillary thereto that
evidence an Underlying Repurchase Transaction in the form and substance approved
by Buyer in writing in its sole discretion with any material modifications
approved by Buyer in writing in its sole discretion (excluding provisions
related to the price or pricing rate of such Underlying Repurchase Transactions,
which shall not be subject to Buyer review or approval).

 

“Underlying Repurchase Transaction” means a transaction between Seller and an
Underlying Repurchase Counterparty whereby the Underlying Repurchase
Counterparty sells one or more Mortgage Loans to Seller against the transfer of
funds by Seller, with the simultaneous agreement by Seller to transfer to such
Underlying Repurchase Counterparty such Mortgage Loans at a date certain against
the transfer of funds by such Underlying Repurchase Counterparty, which Mortgage
Loans are concurrently or consecutively purchased by Buyer hereunder.

 

“Underwriting Guidelines” means, as applicable, the Fannie Mae Single-Family
Selling and Servicing Guide, the Freddie Mac Single-Family Seller/Servicer
Guide, FHA Underwriting Guidelines or VA Underwriting Guidelines and such other
guidelines as are identified and approved in writing by Buyer.

 

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

 

 -18- 

 

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

 

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

 

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

 

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

 

“Violation Deadline” has the meaning assigned thereto in Section 4(c) hereof.

 

“Warehouse Facility” means a mortgage loan warehouse facility, warehouse line of
credit (including both on and off balance sheet facilities), and any other such
facility with terms and conditions similar to the terms and conditions of this
Agreement and the purpose of which is to fund the origination and/or purchase of
newly originated Mortgage Loans pending sale or securitization.

 

“Wet-Ink Documents” means, with respect to any Wet-Ink Mortgage Loan, the (a)
Transaction Request and (b) the Mortgage Loan Schedule.

 

“Wet-Ink Mortgage Loan” means a Mortgage Loan which Seller is selling to Buyer
simultaneously with the origination thereof.

 

3. Program; Initiation of Transactions

 

a. From time to time, Buyer will purchase from Seller certain Mortgage Loans
that have been originated or acquired by Seller from an Underlying Repurchase
Counterparty pursuant to an Underlying Repurchase Transaction. This Agreement is
a commitment by Buyer to enter into Transactions with Seller up to an aggregate
amount equal to the Maximum Committed Purchase Price. This Agreement is not a
commitment by Buyer to enter into Transactions with Seller for amounts exceeding
the Maximum Committed Purchase Price, but rather, sets forth the procedures to
be used in connection with periodic requests for Buyer to enter into
Transactions with Seller. Seller hereby acknowledges that, beyond the Maximum
Committed Purchase Price, Buyer is under no obligation to agree to enter into,
or to enter into, any Transaction pursuant to this Agreement. All Purchased
Mortgage Loans shall exceed or meet the Underwriting Guidelines, and shall be
serviced by a Servicer. The aggregate Purchase Price of Purchased Mortgage Loans
subject to outstanding Transactions shall not exceed the Maximum Purchase Price.

 

 -19- 

 

b. Seller shall request that Buyer enter into a Transaction by delivering (i) to
Buyer, a Transaction Request on or before 3:00 p.m. (New York City time) on the
Purchase Date for Transactions involving Wet-Ink Mortgage Loans and one (1)
Business Day prior to the proposed Purchase Date for Transactions involving all
Mortgage Loans other than Wet-Ink Mortgage Loans, and (ii) to Buyer and
Custodian a Request for Certification and related Mortgage Loan Schedule, in
accordance with the applicable Custodial Agreement. In the event the Mortgage
Loan Schedule provided by Seller contains erroneous computer data, is not
formatted properly or the computer fields are otherwise improperly aligned,
Buyer shall provide written or electronic notice to Seller describing such error
and Seller shall correct the computer data, reformat or properly align the
computer fields itself and resubmit the Mortgage Loan Schedule as required
herein.

 

c. With respect to each Exception Mortgage Loan, upon receipt of the Transaction
Request, Buyer shall, consistent with this Agreement, specify the terms for such
proposed Transaction, including the Purchase Price, the Pricing Rate, the Market
Value and the Repurchase Date in respect of such Transaction. The terms thereof
shall be set forth in the Purchase Confirmation to be delivered to Seller on or
prior to the Purchase Date.

 

d. With respect to each Exception Mortgage Loan, the Purchase Confirmation,
together with this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to which the
Purchase Confirmation relates, and Seller’s acceptance of the related proceeds
shall constitute Seller’s agreement to the terms of such Purchase Confirmation.
It is the intention of the parties that, with respect to each Exception Mortgage
Loan, each Purchase Confirmation shall not be separate from this Agreement but
shall be made a part of this Agreement. In the event of any conflict between
this Agreement and, with respect to each Exception Mortgage Loan, a Purchase
Confirmation, the terms of the Purchase Confirmation shall control with respect
to the related Transaction.

 

e. Upon the satisfaction of the applicable conditions precedent set forth in
Section 10 hereof, all of Seller’s interest in the Repurchase Assets shall pass
to Buyer on the Purchase Date, against the transfer of the Purchase Price to
Seller. Upon transfer of the Mortgage Loans to Buyer as set forth in this
Section and until termination of any related Transactions as set forth in
Sections 4 or 16 of this Agreement, ownership of each Mortgage Loan, including
each document in the related Mortgage File and Records, is vested in Buyer;
provided that, prior to the recordation by the Custodian as provided for in the
applicable Custodial Agreement record title in the name of Underlying Repurchase
Counterparty to each Mortgage shall be retained by Underlying Repurchase
Counterparty in trust, for the benefit of Buyer, for the sole purpose of
facilitating the supervision of the servicing of the Mortgage Loans. For the
avoidance of doubt, with respect to the Wet-Ink Mortgage Loans, the Purchase
Price shall be remitted directly to the Settlement Agent.

 

 

 

 

 

 -20- 

 

f. With respect to Mortgage Loans that are not Wet-Ink Mortgage Loans, Seller
shall cause the delivery of the Mortgage File to the Custodian, as more
particularly set forth in the applicable Custodial Agreement.

 

g. With respect to each Wet-Ink Mortgage Loan, by no later than the seventh
(7th) Business Day following the applicable Purchase Date, Seller shall cause
the related Settlement Agent to deliver to the Custodian the remaining documents
in the Mortgage File, as more particularly set forth in the applicable Custodial
Agreement.

 

4. Repurchase

 

a. Seller shall repurchase the related Purchased Mortgage Loans from Buyer on
each related Repurchase Date. Such obligation to repurchase exists without
regard to any prior or intervening liquidation or foreclosure with respect to
any Purchased Mortgage Loan (but liquidation or foreclosure proceeds received by
Buyer shall be applied to reduce the Repurchase Price for such Purchased
Mortgage Loan on each Price Differential Payment Date except as otherwise
provided herein). Seller is obligated to repurchase and take physical possession
of the Purchased Mortgage Loans from Buyer or its designee (including the
Custodian) at Seller’s expense on the related Repurchase Date.

 

b. Provided that no Default shall have occurred and is continuing, and Buyer has
received the related Repurchase Price upon repurchase of the Purchased Mortgage
Loans, Buyer agrees to release its ownership interest hereunder in the Purchased
Mortgage Loans (including, the Repurchase Assets related thereto) at the request
of Seller. The Purchased Mortgage Loans (including the Repurchase Assets related
thereto) shall be delivered to Seller free and clear of any lien, encumbrance or
claim. With respect to payments in full by the related Mortgagor of a Purchased
Mortgage Loan, Seller agrees to (i) provide Buyer with a copy of a report from
the related Servicer indicating that such Purchased Mortgage Loan has been paid
in full, (ii) remit to Buyer, within two (2) Business Days, the Repurchase Price
with respect to such Purchased Mortgage Loan and (iii) provide Buyer a notice
specifying each Purchased Mortgage Loan that has been prepaid in full. Buyer
agrees to release its ownership interest in Purchased Mortgage Loans which have
been prepaid in full after receipt of evidence of compliance with clauses (i)
through (iii) of the immediately preceding sentence.

 

c. In the event that at any time any Purchased Mortgage Loan violates the
applicable sublimit set forth in the definition of Market Value, Buyer may, in
its sole discretion, redesignate such Mortgage Loan as an Exception Mortgage
Loan. If Buyer does not redesignate such Mortgage Loan as an Exception Mortgage
Loan, and if Seller fails to notify Buyer within five (5) Business Days
following notice or knowledge of such violation that Seller does not want to
receive a bid for such Mortgage Loan as described below, Buyer or an Affiliate
of Buyer may offer to terminate Seller’s right and obligation to repurchase such
Mortgage Loan by paying Seller a price to be set by Buyer in its sole discretion
(a “Bid”). Seller, within one (1) Business Day of receipt of Buyer’s bid (the
“Violation Deadline”) may, in its sole discretion, either (i) accept Buyer’s
bid, terminating Seller’s right and obligation to repurchase such Mortgage Loan
under this Agreement or (ii) immediately repurchase the Mortgage Loan at the
Repurchase Price in accordance with this Section 4. Any amount paid by Buyer or
its Affiliate to terminate Seller’s right and obligation to repurchase a
Purchased Mortgage Loan if a Bid is accepted pursuant to this Section shall be
applied by Buyer toward the outstanding Repurchase Price for the applicable
Transaction.

 

 -21- 

 

5. Price Differential

 

a. On each Business Day that a Transaction is outstanding, the Pricing Rate
shall be reset and, unless otherwise agreed, the accrued and unpaid Price
Differential shall be settled in cash on each related Price Differential Payment
Date. Two (2) Business Days prior to the Price Differential Payment Date, Buyer
shall give Seller written or electronic notice of the amount of the Price
Differential due on such Price Differential Payment Date. On the Price
Differential Payment Date, Seller shall pay to Buyer the Price Differential for
such Price Differential Payment Date (along with any other amounts to be paid
pursuant to Sections 7 and 34 hereof), by wire transfer in immediately available
funds.

 

b. If Seller fails to pay all or part of the Price Differential by 3:00 p.m.
(New York City time) on the related Price Differential Payment Date, with
respect to any Purchased Mortgage Loan, Seller shall be obligated to pay to
Buyer (in addition to, and together with, the amount of such Price Differential)
interest on the unpaid Repurchase Price at a rate per annum equal to the Post
Default Rate until the Price Differential is received in full by Buyer.

 

6. Margin Maintenance

 

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

 

b. Notice delivered pursuant to Section 6(a) may be given by any written or
electronic means. With respect to all Margin Calls, any notice given before
10:00 a.m. (New York City time) on a Business Day shall be met, and the related
Margin Call satisfied, no later than 5:00 p.m. (New York City time) on such
Business Day; notice given after 10:00 a.m. (New York City time) on a Business
Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m.
(New York City time) on the following Business Day (the foregoing time
requirements for satisfaction of a Margin Call are referred to as the “Margin
Deadlines”). The failure of Buyer, on any one or more occasions, to exercise its
rights hereunder, shall not change or alter the terms and conditions to which
this Agreement is subject or limit the right of Buyer to do so at a later date.
Seller and Buyer each agree that a failure or delay by Buyer to exercise its
rights hereunder shall not limit or waive Buyer’s rights under this Agreement or
otherwise existing by law or in any way create additional rights for Seller.

 

 -22- 

 

c. In the event that a Margin Deficit exists with respect to any Purchased
Mortgage Loan, Buyer may retain any funds received by it to which the Seller
would otherwise be entitled hereunder, which funds (i) shall be held by Buyer
against the related Margin Deficit and (ii) may be applied by Buyer against the
Repurchase Price of any Purchased Mortgage Loan for which the related Margin
Deficit remains otherwise unsatisfied. Notwithstanding the foregoing, the Buyer
retains the right, in its sole discretion, to make a Margin Call in accordance
with the provisions of this Section 6.

 

7. Income Payments

 

a. If Income is paid in respect of any Purchased Mortgage Loan during the term
of a Transaction, such Income shall be the property of Buyer. Upon an Event of
Default, Seller shall cause Servicer and any Underlying Repurchase Counterparty
to deposit all Income to the account set forth in Section 9, upon receipt
thereof, in accordance with Section 12(c) hereof.

 

b. Provided no Event of Default has occurred and is continuing, on each Price
Differential Payment Date, Seller shall remit to Buyer an amount equal to the
Price Differential out of the interest portion of the Income paid in respect to
the Purchased Mortgage Loans for the preceding month in accordance with Section
5 of this Agreement. Provided no Event of Default has occurred and is
continuing, upon termination of any Transaction or portion thereof, Servicer
shall retain from the Income relating thereto any servicing fee and other
amounts due under any Servicing Agreement and remit all remaining amounts as
follows:

 

(1) first, to Buyer in payment of any accrued and unpaid Price Differential, to
the extent not paid by Seller to Buyer pursuant to Section 5;

 

(2) second, without limiting the rights of Buyer under Section 6 of this
Agreement, to Buyer, in the amount of any unpaid Margin Deficit;

 

(3) third, to Buyer in reduction of the Repurchase Price of the Purchased
Mortgage Loans, an amount equal to the full or partial prepayments of principal
received on or with respect to such Purchased Mortgage Loans;

 

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

 

(5) fifth, to Seller, any remaining amounts.

 

c. Notwithstanding any provision to the contrary in this Section 7, within two
(2) Business Days of receipt by Seller or Underlying Repurchase Counterparty of
any prepayment of principal in full, with respect to a Purchased Mortgage Loan,
Seller shall remit or cause to be remitted such amount to Buyer and Buyer shall
immediately apply any such amount received by Buyer to reduce the amount of the
Repurchase Price due upon termination of the related Transaction.

 

 -23- 

 

8. Security Interest

 

a. On each Purchase Date, Seller hereby sells, assigns and conveys all of
Seller’s rights and interest in the Purchased Mortgage Loans identified on the
related Mortgage Loan Schedule. Although the parties intend that all
Transactions hereunder be sales and purchases and not loans, in the event any
such Transactions are deemed to be loans, and in any event, Seller hereby
pledges to Buyer as security for the performance by Seller of the Obligations
and hereby grants, assigns and pledges to Buyer a fully perfected first priority
security interest in the Purchased Mortgage Loans, any Agency Security or right
to receive such Agency Security when issued to the extent backed by any of the
Purchased Mortgage Loans, the Records, and all related Servicing Rights, the
Program Agreements (to the extent such Program Agreements and Seller’s right
thereunder relate to the Purchased Mortgage Loans), any related Take-out
Commitments, any Property relating to the Purchased Mortgage Loans, all
insurance policies and insurance proceeds relating to any Purchased Mortgage
Loan or the related Mortgaged Property, including, but not limited to, any
payments or proceeds under any related primary insurance, hazard insurance and
FHA Mortgage Insurance Contracts and VA Loan Guaranty Agreements (if any),
Income, Underlying Interest Rate Protection Agreements to the extent of the
Purchased Mortgage Loans protected thereby, accounts (including any interest of
Seller in escrow accounts) related to the Purchased Mortgage Loans, and any
other contract rights, instruments, accounts, payments, rights to payment
(including payments of interest or finance charges), general intangibles and
other assets relating to the Purchased Mortgage Loans (including, without
limitation, any other accounts) or any interest in the Purchased Mortgage Loans
(excluding any rights and interests in or under the Underlying Repurchase
Documents and the Underlying Repurchase Documents themselves), and any proceeds
(including the related securitization proceeds) and distributions with respect
to any of the foregoing and any other property, rights, title or interests as
are specified on a Transaction Request and/or Trust Receipt, in all instances,
whether now owned or hereafter acquired, now existing or hereafter created
(collectively, the “Repurchase Assets”).

 

b. Reserved.

 

c. The Seller and Guarantor each acknowledge that neither of them, nor any
Underlying Repurchase Counterparty has rights to service the Purchased Mortgage
Loans but only has rights as a party to any Servicing Agreement. Without
limiting the generality of the foregoing and in the event that the Seller or
Guarantor are deemed to retain any residual Servicing Rights, and for the
avoidance of doubt, each of Seller and Guarantor grants, assigns and pledges to
Buyer a security interest in the Servicing Rights and proceeds related thereto
and in all instances, whether now owned or hereafter acquired, now existing or
hereafter created.

 

 -24- 

 

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

 

e. Seller agrees to execute, deliver and/or file such documents and perform such
acts as may be reasonably necessary to fully perfect Buyer’s security interest
created hereby. Furthermore, the Seller hereby authorizes the Buyer to file
financing statements relating to the Repurchase Assets, as the Buyer, at its
option, may deem appropriate. The Seller shall pay the filing costs for any
financing statement or statements prepared pursuant to this Section 8.

 

f. Seller acknowledges and agrees that its rights with respect to the Repurchase
Assets (including without limitation its security interest in the Purchased
Mortgage Loans and any other collateral purchased by Seller in an Underlying
Repurchase Transaction and in which a security interest is granted to Buyer
pursuant to this Section 8) are and shall continue to be at all times junior and
subordinate to the rights of Buyer under this Agreement. Seller agrees that it
will provide notice of any action it takes with respect to the Repurchase Assets
at any time any such Repurchase Assets are owned by or pledged to Buyer under
this Agreement.

 

9. Payment and Transfer

 

Unless otherwise mutually agreed in writing, all transfers of funds to be made
by Seller hereunder shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to Buyer at the following account
maintained by Buyer: Account No. 3091 0312, for the account of CSFB
Buyer/PennyMac Operating Partnership, L.P.-Inbound Account, Citibank, ABA No.
021 000 089 or such other account as Buyer shall specify to Seller in writing.
Seller acknowledges that it has no rights of withdrawal from the foregoing
account. All Purchased Mortgage Loans transferred by one party hereto to the
other party shall be in the case of a purchase by Buyer in suitable form for
transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as Buyer may reasonably
request. All Purchased Mortgage Loans shall be evidenced by a Trust Receipt. Any
Repurchase Price received by Buyer after 2:00 p.m. (New York City time) shall be
deemed received on the next succeeding Business Day.

 

10. Conditions Precedent

 

a. Effective Date. As conditions precedent to the Effective Date, Buyer shall
have received on or before the day of such initial Transaction the following, in
form and substance satisfactory to Buyer and duly executed by Seller, Guarantor
and each other party thereto, as applicable:

 

 -25- 

 

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

 

(2) Reserved.

 

(3) Security Interest. Evidence that all other actions necessary or, in the
opinion of Buyer, desirable to perfect and protect Buyer’s interest in the
Purchased Mortgage Loans and other Repurchase Assets have been taken, including,
without limitation, duly authorized and filed Uniform Commercial Code financing
statements on Form UCC-1.

 

(4) Organizational Documents. A certificate of the corporate secretary of the
Seller, Guarantor and PennyMac GP OP, Inc. substantially in the form of Exhibit
F hereto, attaching certified copies of Seller’s certificate of formation and
operating agreement, Guarantor’s declaration of trust and Seller’s limited
partnership certificate and limited partnership agreement and in each case
resolutions approving the Program Agreements and transactions thereunder (either
specifically or by general resolution) and all documents evidencing other
necessary corporate action or governmental approvals as may be required in
connection with the Program Agreements.

 

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

 

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

 

(7) Opinion of Counsel. An opinion of Seller’s and Guarantor’s counsel, in form
and substance acceptable to Buyer as to (i) general corporate matters, (ii)
enforceability, (iii) creation and perfection, (iv) bankruptcy safe harbors and
(v) Investment Company Act.

 

(8) Reserved.

 

(9) Fees. Payment of any fees due to Buyer hereunder.

 

(10) Insurance. Evidence that Seller has added Buyer as an additional loss payee
under the Seller’s Fidelity Insurance.

 

(11) Underlying Repurchase Documents. Form of Underlying Repurchase Documents.

 

 -26- 

 

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

 

(1) Due Diligence Review. Without limiting the generality of Section 36 hereof,
Buyer shall have completed, to its satisfaction, its due diligence review of the
related Mortgage Loans and the applicable Underlying Repurchase Counterparty,
Seller, Guarantor and the Servicer.

 

(2) Required Documents.

 

(a) With respect to each Purchased Mortgage Loan which is not a Wet-Ink Mortgage
Loan, the Mortgage File has been delivered to the Custodian in accordance with
the applicable Custodial Agreement;

 

(b) With respect to each Wet-Ink Mortgage Loan, the Wet-Ink Documents have been
delivered to Buyer or Custodian, as the case may be, in accordance with the
applicable Custodial Agreement.

 

(3) Transaction Documents. Buyer or its designee shall have received on or
before the day of such Transaction (unless otherwise specified in this
Agreement) the following, in form and substance satisfactory to Buyer and (if
applicable) duly executed:

 

(a) A Transaction Request and Mortgage Loan Schedule delivered by Seller
pursuant to Section 3(b) or 3(c) hereof and a Purchase Confirmation with respect
to an Exception Mortgage Loan.

 

(b) The Request for Certification and the related Mortgage Loan Schedule
delivered by Seller, and the Trust Receipt and Custodial Mortgage Loan Schedule
delivered by Custodian.

 

(c) Such certificates, opinions of counsel or other documents as Buyer may
reasonably request.

 

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

 

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

 

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

 

 -27- 

 

(7) Underlying Electronic Tracking Agreement. To the extent Seller is selling
Mortgage Loans with respect to an Underlying Repurchase Counterparty which are
registered on the MERS® System, Seller shall have delivered (i) an Underlying
Electronic Tracking Agreement with the applicable Underlying Repurchase
Counterparty, Seller and MERS each as a party, entered into, duly executed and
delivered by the parties thereto and being in full force and effect, free of any
modification, breach or waiver, (ii) the MERS Identification Numbers for each
Mortgage Loan registered on the MERS® System, and (iii) the ETA Repledgee
Information Notice executed by Seller, MERS, MERSCORP Holdings, Inc. and Buyer.

 

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

 

(a) Credit Suisse AG, New York Branch’s corporate bond rating as calculated by
S&P or Moody’s has been lowered or downgraded to a rating below investment grade
by S&P or Moody’s;

 

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

 

(c) an event or events shall have occurred resulting in the effective absence of
a “securities market” for securities backed by mortgage loans or an event or
events shall have occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been reasonable prior to
such event or events; or

 

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

 

(9) Underlying Repurchase Documents. Seller shall provide a Transaction Request
(as defined in the Underlying Repurchase Documents) or other comparable
document, which shall reference the applicable Mortgage Loan Schedule which
shall describe the Purchased Mortgage Loans. All Underlying Repurchase Documents
and any Custodial Repledgee Information Notice or ETA Repledgee Information
Notice, applicable to each Purchased Mortgage Loan have been duly executed and
delivered by Seller and the Underlying Repurchase Counterparty and any other
applicable party and are in form and substance satisfactory to Buyer in all
material respects, in its sole discretion.

 

 -28- 

 

(10) Acceptable Underlying Repurchase Transaction. Such Mortgage Loan is sold to
Seller by an Underlying Repurchase Counterparty pursuant to an Acceptable
Underlying Repurchase Transaction.

 

(11) Escrow Instruction Letter. Evidence that an Escrow Instruction Letter has
been delivered by Underlying Repurchase Counterparty to the related Settlement
Agent.

 

11. Program; Costs

 

a. Seller shall pay the fees and expenses of Buyer’s counsel in connection with
the original preparation and execution of the Program Agreements. Seller shall
reimburse Buyer for any of Buyer’s reasonable out-of-pocket costs, including due
diligence review costs and reasonable attorney’s fees incurred by Buyer in
determining the acceptability to Buyer of any Mortgage Loans. Seller shall also
pay, or reimburse Buyer if Buyer shall pay, any termination fee, which may be
due any servicer. Legal fees for any subsequent amendments to this Agreement or
related documents shall be borne by Seller. Seller shall pay ongoing custodial
fees and expenses as set forth in each Custodial Agreement, and any other
ongoing fees and expenses under any other Program Agreement.

 

b. If Buyer determines that, due to the introduction of, any change in, or the
compliance by Buyer with (i) any eurocurrency reserve requirement or (ii) the
interpretation of any law, regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), there shall be an increase in the cost to Buyer in engaging in the present
or any future Transactions, then Seller agrees to pay to Buyer, from time to
time, upon demand by Buyer (with a copy to Custodian) the actual cost of
additional amounts as specified by Buyer to compensate Buyer for such increased
costs; provided that this Section 11(b) shall only apply to the extent that such
increased costs are not reflected in Buyer’s calculation of Base Rate.

 

c. With respect to any Transaction, Buyer may conclusively rely upon, and shall
incur no liability to Seller in acting upon, any request or other communication
that Buyer reasonably believes to have been given or made by a person authorized
to enter into a Transaction on Seller’s behalf, whether or not such person is
listed on the certificate delivered pursuant to Section 10(a)(6) hereof. In each
such case, Seller hereby waives the right to dispute Buyer’s record of the terms
of the Purchase Confirmation, request or other communication.

 

d. Notwithstanding the assignment of the Program Agreements with respect to each
Purchased Mortgage Loan to Buyer, Seller agrees and covenants with Buyer to
enforce diligently Seller’s rights and remedies set forth in the Program
Agreements.

 

 -29- 

 

e. Any payments made by Seller or Guarantor to Buyer shall be free and clear of,
and without deduction or withholding for, any taxes; provided, however, that if
such payer shall be required by law to deduct or withhold any taxes from any
sums payable to Buyer, then such payer shall (A) make such deductions or
withholdings and pay such amounts to the relevant authority in accordance with
applicable law, (B) pay to Buyer the sum that would have been payable had such
deduction or withholding not been made, and (C) at the time Price Differential
is paid, pay to Buyer all additional amounts as specified by Buyer to preserve
the after-tax yield Buyer would have received if such tax had not been imposed,
and otherwise indemnify Buyer for any such taxes imposed.

 

12. Servicing

 

a. Pursuant to the Servicing Agreement, Seller has contracted with Servicer to
service the Mortgage Loans consistent with the degree of skill and care that
Seller customarily requires with respect to similar Mortgage Loans owned or
managed by it and in accordance with Accepted Servicing Practices. The Seller
and Servicer shall (i) comply with all applicable Federal, State and local laws
and regulations, (ii) maintain all state and federal licenses necessary for it
to perform its servicing responsibilities hereunder and (iii) not impair the
rights of Buyer in any Mortgage Loans or any payment thereunder. Buyer may
terminate the servicing of any Mortgage Loan with the then-existing servicer in
accordance with Section 12(e) hereof.

 

b. Seller shall and shall cause the Servicer to hold or cause to be held all
escrow funds collected by Seller and Servicer with respect to any Purchased
Mortgage Loans in trust accounts and shall apply the same for the purposes for
which such funds were collected.

 

c. Seller shall and shall cause the Servicer to deposit all collections received
by Servicer on the Purchased Mortgage Loans in the account set forth in Section
9 upon an Event of Default.

 

d. Seller shall provide to Buyer a Servicer Notice and Pledge, or in the event
that the Servicer is not an Affiliate of Seller, a Servicer Notice, addressed to
and agreed to by the Servicer of the related Purchased Mortgage Loans, advising
such Servicer of such matters as Buyer may reasonably request, including,
without limitation, recognition by the Servicer of Buyer’s interest in such
Purchased Mortgage Loans and the Servicer’s agreement that upon receipt of
notice of an Event of Default from Buyer, it will follow the instructions of
Buyer with respect to the Purchased Mortgage Loans and any related Income with
respect thereto.

 

e. Upon the occurrence and continuation of an Event of Default hereunder, Buyer
shall have the right to immediately terminate the Servicer’s right to service
the Purchased Mortgage Loans without payment of any penalty or termination fee
under the Servicing Agreement. Seller and the Servicer shall cooperate in
transferring the servicing of the Purchased Mortgage Loans to a successor
servicer appointed by Buyer in its sole discretion.

 

 -30- 

 

f. If Seller should discover that, for any reason whatsoever, Seller or any
entity responsible to Seller for managing or servicing any such Purchased
Mortgage Loan has failed to perform fully Seller’s obligations under the Program
Agreements or any of the obligations of such entities with respect to the
Purchased Mortgage Loans, Seller shall promptly notify Buyer.

 

g. Servicer shall service the Purchased Mortgage Loans on behalf of Buyer for
ninety (90) day intervals which will automatically terminate if not renewed by
Buyer, which renewal shall be evidenced by delivery of a renewal letter
substantially in the form of Exhibit C hereto.

 

h. For the avoidance of doubt, the Seller retains no economic rights to the
servicing of the Purchased Mortgage Loans; provided that the Seller shall and
shall cause the Servicer to continue to service the Purchased Mortgage Loans
hereunder as part of the Obligations hereunder. As such, the Seller expressly
acknowledges that the Purchased Mortgage Loans are sold to Buyer on a “servicing
released” basis.

 

13. Representations and Warranties

 

a. Except as otherwise specifically set forth below, each of Seller and
Guarantor represents and warrants to Buyer as of the date hereof and as of each
Purchase Date for any Transaction that:

 

(1) Seller and Guarantor Existence. Seller has been duly organized and is
validly existing as a limited partnership in good standing under the laws of the
State of Delaware. Guarantor has been duly organized and is validly existing as
a real estate investment trust in good standing under the laws of the State of
Maryland.

 

(2) Licenses. Each of Seller and Guarantor is duly licensed or is otherwise
qualified in each jurisdiction in which it transacts business for the business
which it conducts and is not in default of any applicable federal, state or
local laws, rules and regulations unless, in either instance, the failure to
take such action is not reasonably likely (either individually or in the
aggregate) to cause a Material Adverse Effect with respect to Seller, Guarantor
or any Affiliate. Each of the Seller and Guarantor has the requisite power and
authority, legal right and necessary licenses (including from VA and FHA, if
applicable) to originate and purchase Mortgage Loans (as applicable) and to own,
sell and grant a lien on all of its right, title and interest in and to the
Mortgage Loans, and to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, each
Program Agreement and any Transaction Request.

 

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

 

 -31- 

 

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

 

(5) Financial Statements. Guarantor has heretofore furnished to Buyer a copy of
(a) its consolidated balance sheets for the fiscal year ended December 31, 2015
and the related consolidated statements of income and retained earnings and of
cash flows for such fiscal year, with the opinion thereon of Deloitte & Touche
LLP and (b) its consolidated balance sheets for each quarterly fiscal period
ended June 30, 2015 and September 30, 2015 and the related consolidated
statements of income and retained earnings and of cash flows for it and its
consolidated Subsidiaries for such quarterly fiscal periods. All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial condition of Guarantor and its consolidated
Subsidiaries, as applicable and the consolidated results of their operations as
at such dates and for such fiscal periods, all in accordance with GAAP (other
than monthly financial statements solely with respect to footnotes, year-end
adjustments and cash flow statements) applied on a consistent basis. Guarantor
has, on the date of the statements delivered pursuant to this Section (the
“Statement Date”) no liabilities, direct or indirect, fixed or contingent,
matured or unmatured, known or unknown, or liabilities for taxes, long-term
leases or unusual forward or long-term commitments not disclosed by, or reserved
against in, said balance sheet and related statements, and at the present time
there are no material unrealized or anticipated losses from any loans, advances
or other commitments of Seller except as heretofore disclosed to Buyer in
writing.

 

(6) Event of Default. There exists no Event of Default under Section 15(b)
hereof, which default gives rise to a right to accelerate indebtedness as
referenced in Section 15(b) hereof, under any mortgage, borrowing agreement or
other instrument or agreement pertaining to indebtedness for borrowed money or
to the repurchase of mortgage loans or securities.

 

(7) Solvency. Each of Seller and Guarantor is solvent and will not be rendered
insolvent by any Transaction and, after giving effect to such Transaction, will
not be left with an unreasonably small amount of capital with which to engage in
its business. Neither Seller nor Guarantor intend to incur, nor believe that
they have incurred, debts beyond their ability to pay such debts as they mature
and are not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of such entity
or any of its assets. The amount of consideration being received by Seller upon
the sale of the Purchased Mortgage Loans to Buyer constitutes reasonably
equivalent value and fair consideration for such Purchased Mortgage Loans.
Seller is not transferring any Purchased Mortgage Loans with any intent to
hinder, delay or defraud any of its creditors.

 

 -32- 

 

(8) No Conflicts. The execution, delivery and performance by each of Seller and
Guarantor of each Program Agreement do not conflict with any term or provision
of the formation documents or by-laws of Seller or Guarantor or any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to Seller or
Guarantor of any court, regulatory body, administrative agency or governmental
body having jurisdiction over Seller or Guarantor, which conflict would have a
Material Adverse Effect with respect to Seller, Guarantor or any Affiliate and
will not result in any violation of any such mortgage, instrument, agreement or
obligation to which Seller or Guarantor is a party.

 

(9) True and Complete Disclosure. All information, reports, exhibits, schedules,
financial statements or certificates of Seller, Guarantor, or any Affiliate
thereof or any of their officers furnished or to be furnished to Buyer in
connection with the initial or any ongoing due diligence of Seller, Guarantor,
or any Affiliate or officer thereof, negotiation, preparation, or delivery of
the Program Agreements are true and complete and do not omit to disclose any
material facts necessary to make the statements herein or therein, in light of
the circumstances in which they are made, not misleading. All financial
statements have been prepared in accordance with GAAP (other than monthly
financial statements solely with respect to footnotes, year-end adjustments and
cash flow statements).

 

(10) Approvals. No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by
Seller or Guarantor of each Program Agreement.

 

(11) Litigation. Except as set forth on Exhibit E, there is no action,
proceeding or investigation pending with respect to which either Seller or
Guarantor has received service of process or, to the best of Seller’s or
Guarantor’s knowledge threatened against it before any court, administrative
agency or other tribunal (A) asserting the invalidity of any Program Agreement,
(B) seeking to prevent the consummation of any of the transactions contemplated
any Program Agreement, (C) making a claim individually or in the aggregate in an
amount greater than $10,000,000, (D) which requires filing with the Securities
and Exchange Commission in accordance with the 1934 Act or any rules thereunder
or (E) which might materially and adversely affect the validity of the Mortgage
Loans or the performance by it of its obligations under, or the validity or
enforceability of any Program Agreement.

 

 -33- 

 

(12) Material Adverse Change. There has been no material adverse change in the
business, operations, financial condition, properties or prospects of Seller,
Guarantor or their Affiliates since the date set forth in the most recent
financial statements supplied to Buyer as determined by Buyer in its sole good
faith discretion.

 

(13) Ownership. Upon payment of the Purchase Price and the filing of the
financing statement and delivery of the Mortgage Files to the Custodian and the
Custodian’s receipt of the related Request for Certification, Buyer shall become
the sole owner of the Purchased Mortgage Loans and related Repurchase Assets,
free and clear of all liens and encumbrances. Seller has not assigned, pledged,
or otherwise conveyed or encumbered any Mortgage Loan to any other Person, and
immediately prior to the sale and backup pledge of such Mortgage Loan to Buyer,
Seller, was the sole owner thereof and had good and marketable title thereto,
free and clear of all Liens. Seller has not assigned, pledged, or otherwise
conveyed or encumbered any Repurchase Transaction Document to any other Person
and Seller is the sole owner thereof, free and clear of all Liens.

 

(14) Reserved.

 

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

 

(16) Investment Company. None of Seller, Guarantor or any of their Subsidiaries
is an “investment company,” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended;
provided, however, that any entity that is under the management of PNMAC Capital
Management LLC in its capacity as an “investment adviser” within the meaning of
the Investment Advisers Act of 1940 and is otherwise not directly or indirectly
owned or controlled by Seller shall not be deemed a “Subsidiary” for the
purposes of this Section 13(a)(16).

 

(17) Chief Executive Office; Jurisdiction of Organization. On the Effective
Date, Seller’s chief executive office, is, and has been, located at 3043
Townsgate Road, Westlake Village, California 91361. On the Effective Date,
Seller’s jurisdiction of organization is the State of Delaware. Seller shall
provide Buyer with thirty days advance notice of any change in Seller’s
principal office or place of business or jurisdiction. Seller has no trade name.
During the preceding five years, Seller has not been known by or done business
under any other name, corporate or fictitious, and has not filed or had filed
against it any bankruptcy receivership or similar petitions nor has it made any
assignments for the benefit of creditors.

 

 -34- 

 

(18) Location of Books and Records. The location where Seller keeps its books
and records, including all computer tapes and records relating to the Purchased
Mortgage Loans and the related Repurchase Assets is its chief executive office.

 

(19) Adjusted Tangible Net Worth. On the Effective Date, Seller’s and
Guarantor’s Adjusted Tangible Net Worth are not less than the amounts set forth
in Section 14.dd(i) hereof.

 

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

 

(21) Adverse Selection. Seller has not selected the Purchased Mortgage Loans in
a manner so as to adversely affect Buyer’s interests.

 

(22) Agreements. Neither Seller nor any Subsidiary of Seller is a party to any
agreement, instrument, or indenture or subject to any restriction materially and
adversely affecting its business, operations, assets or financial condition,
except as disclosed in the financial statements described in Section 13(a)(5)
hereof. Neither Seller nor any Subsidiary of Seller is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, instrument, or indenture which default
could have a material adverse effect on the business, operations, properties, or
financial condition of Seller as a whole. No holder of any indebtedness of
Seller or of any of its Subsidiaries has given notice of any asserted default
thereunder.

 

(23) Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by
this Agreement) of Seller existing on the date hereof is listed on Exhibit H
hereto (the “Existing Indebtedness”).

 

(24) Reserved.

 

(25) No Reliance. Each of Seller and Guarantor has made its own independent
decisions to enter into the Program Agreements and each Transaction and as to
whether such Transaction is appropriate and proper for it based upon its own
judgment and upon advice from such advisors (including without limitation, legal
counsel and accountants) as it has deemed necessary. Neither Seller nor
Guarantor is relying upon any advice from Buyer as to any aspect of the
Transactions, including without limitation, the legal, accounting or tax
treatment of such Transactions.

 

 -35- 

 

(26) Plan Assets. Neither Seller nor Guarantor is an employee benefit plan as
defined in Section 3 of Title I of ERISA, or a plan described in Section
4975(e)(1) of the Code, and the Purchased Mortgage Loans are not “plan assets”
within the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of ERISA,
in the Seller’s hands, and transactions by or with Seller or Guarantor are not
subject to any state or local statute regulating investments or fiduciary
obligations with respect to governmental plans within the meaning of Section
3(32) of ERISA.

 

(27) No Prohibited Persons. Neither the Seller nor Guarantor, nor any of their
Affiliates, officers, directors, partners or members, is an entity or person (or
to the Seller’s or Guarantor’s knowledge, owned or controlled by an entity or
person): (i) that is listed in the Annex to, or is otherwise subject to the
provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”);
(ii) whose name appears on the United States Treasury Department’s Office of
Foreign Assets Control (“OFAC”) most current list of “Specifically Designated
National and Blocked Persons” (which list may be published from time to time in
various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a “Prohibited Person”).

 

(28) Servicing. Each Servicer has adequate financial standing and adequate
servicing facilities, procedures and experienced personnel necessary for the
sound servicing of mortgage loans of the same types as may from time to time
constitute Mortgage Loans and in accordance with Accepted Servicing Practices.

 

(29) Real Estate Investment Trust. Guarantor is a REIT.

 

b. With respect to (i) every Purchased Mortgage Loan, Seller represents and
warrants to Buyer as of the applicable Purchase Date for any Transaction and
each date thereafter that each representation and warranty set forth on Part I
of Schedule 1 is true and correct in all material respects and (ii) every
Underlying Repurchase Transaction, Underlying Repurchase Document and Underlying
Repurchase Counterparty, as applicable, Seller represents and warrants to Buyer
as of the applicable Purchase Date for any Transaction and each date thereafter
that each representation and warranty set forth on Part II of Schedule 1 is true
and correct in all material respects.

 

c. The representations and warranties set forth in this Agreement shall survive
transfer of the Purchased Mortgage Loans to Buyer and shall continue for so long
as the Purchased Mortgage Loans are subject to this Agreement. Upon discovery by
Seller, Servicer or Buyer of any breach of any of the representations or
warranties set forth in this Agreement, the party discovering such breach shall
promptly give notice of such discovery to the others. Buyer has the right to
require, in its unreviewable discretion, Seller to repurchase within one (1)
Business Day after receipt of notice from Buyer any Purchased Mortgage Loan (i)
for which a breach of one or more of the representations and warranties
referenced in Section 13(b) exists and which breach has a material adverse
effect on the value of such Mortgage Loan or the interests of Buyer or (ii)
which is determined by Buyer, in its good faith discretion, to be generally
unacceptable for inclusion in a securitization.

 

 -36- 

 

14. Covenants

 

Each of Seller and Guarantor covenants with Buyer that, during the term of this
facility:

 

a. Litigation. Seller and Guarantor, as applicable, will promptly, and in any
event within ten (10) days after service of process on any of the following,
give to Buyer notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
threatened or pending) or other legal or arbitrable proceedings affecting
Seller, Guarantor or any of their Subsidiaries or affecting any of the Property
of any of them before any Governmental Authority that (i) questions or
challenges the validity or enforceability of any of the Program Agreements or
any action to be taken in connection with the transactions contemplated hereby,
(ii) makes a claim individually or in the aggregate in an amount greater than
$10,000,000, or (iii) which, individually or in the aggregate, if adversely
determined, could be reasonably likely to have a Material Adverse Effect with
respect to Seller or Guarantor. Seller and Guarantor, as applicable, will
promptly provide notice of any judgment, which with the passage of time, could
cause an Event of Default hereunder.

 

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

 

c. Servicing. Seller shall not permit the Mortgage Loans to be serviced by any
servicer other than a servicer expressly approved in writing by Buyer.

 

d. Insurance. The Seller or Guarantor shall continue to maintain, for Seller and
its Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to
$300,000. The Seller or Guarantor shall maintain, for Seller and its
Subsidiaries, Fidelity Insurance in respect of its officers, employees and
agents, with respect to any claims made in connection with all or any portion of
the Repurchase Assets. The Seller or Guarantor shall notify the Buyer of any
material change in the terms of any such Fidelity Insurance.

 

 -37- 

 

e. No Adverse Claims. Seller warrants and will defend, and shall cause any
Servicer and each Underlying Repurchase Counterparty to defend, the right, title
and interest of Buyer in and to all Purchased Mortgage Loans and the related
Repurchase Assets against all adverse claims and demands.

 

f. Assignment. Except as permitted herein, neither Seller nor any Servicer shall
sell, assign, transfer or otherwise dispose of, or grant any option with respect
to, or pledge, hypothecate or grant a security interest in or lien on or
otherwise encumber (except pursuant to the Program Agreements), any of the
Purchased Mortgage Loans or any interest therein, provided that this Section
shall not prevent any transfer of Purchased Mortgage Loans in accordance with
the Program Agreements. Except as set forth herein, Seller shall not assign any
of its rights under any Underlying Repurchase Documents to any Person.

 

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

 

h. Records.

 

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

 

 -38- 

 

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

 

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

 

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

 

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

 

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

 

l. Reserved.

 

m. Distributions. If an Event of Default has occurred and is continuing, neither
Seller nor Guarantor shall pay any dividends with respect to any capital stock
or other equity interests in such entity, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Seller or
Guarantor.

 

n. Applicable Law. Seller and Guarantor shall comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority.

 

o. Existence. Seller and the Guarantor shall preserve and maintain their legal
existence and all of their material rights, privileges, material licenses and
franchises.

 

p. Chief Executive Office; Jurisdiction of Organization. Seller shall not move
its chief executive office from the address referred to in Section 13(a)(17) or
change its jurisdiction of organization from the jurisdiction referred to in
Section 13(a)(17) unless it shall have provided Buyer 30 days’ prior written
notice of such change.

 

 -39- 

 

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

 

r. Transactions with Affiliates. Seller will not enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(a) otherwise permitted under the Program Agreements, (b) in the ordinary course
of Seller’s business and (c) upon fair and reasonable terms no less favorable to
Seller than it would obtain in a comparable arm’s length transaction with a
Person which is not an Affiliate, or make a payment that is not otherwise
permitted by this Section to any Affiliate.

 

s. Guarantees. Seller shall not create, incur, assume or suffer to exist any
Guarantees, except (i) to the extent reflected in Seller’s financial statements
or notes thereto, (ii) to the extent the aggregate Guarantees of Seller
(excluding Guarantees incurred pursuant to clauses (iii), (iv) and (v) below) do
not exceed $250,000, (iii) to guarantee the Existing Indebtedness specified on
Exhibit H hereto, (iv) to guarantee Indebtedness incurred in connection with new
or existing secured lending facilities, and (v) to the extent incurred in
connection with an intercompany lending agreement.

 

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

 

u. Reserved.

 

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

 

w. Reserved.

 

 -40- 

 

x. Take-out Payments. With respect to each Committed Mortgage Loan, Seller shall
arrange or caused to be arranged that all payments under the related Take-out
Commitment shall be paid directly to Buyer at the account set forth in Section 9
hereof, or to an account approved by Buyer in writing prior to such payment.
With respect to any Agency Take-out Commitment, if applicable, (1) with respect
to the wire transfer instructions as set forth in Freddie Mac Form 987 (Wire
Transfer Authorization for a Cash Warehouse Delivery) such wire transfer
instructions are identical to Buyer’s wire instructions or Buyer has approved
such wire transfer instructions in writing in its sole discretion, or (2) the
Payee Number set forth on Fannie Mae Form 1068 (Fixed-Rate, Graduated-Payment,
or Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069
(Adjustable-Rate Mortgage Loan Schedule), as applicable, shall be identical to
the Payee Number that has been identified by Buyer in writing as Buyer’s Payee
Number or Buyer shall have previously approved the related Payee Number in
writing in its sole discretion; with respect to any Take-out Commitment with an
Agency, the applicable agency documents shall list Buyer as sole subscriber,
unless otherwise agreed to in writing by Buyer, in Buyer’s sole discretion.

 

y. Reserved.

 

z. Plan Assets. Neither Seller nor Guarantor shall be an employee benefit plan
as defined in Section 3 of Title I of ERISA, or a plan described in Section
4975(e)(1) of the Code and the Seller shall not use “plan assets” within the
meaning of 29 CFR §2510.3 101, as amended by Section 3(42) of ERISA to engage in
this Agreement or any Transaction hereunder. Transactions by or with Seller or
Guarantor shall not be subject to any state or local statute regulating
investments of or fiduciary obligations with respect to governmental plans
within the meaning of Section 3(32) of ERISA.

 

aa. Sharing of Information. The Seller and Guarantor shall allow the Buyer to
exchange information related to the Seller and Guarantor and the Transaction
hereunder with third party lenders and the Seller and Guarantor shall permit
each third party lender to share such information with the Buyer.

 

bb. Negative Pledge. Seller shall not sell, assign, transfer or otherwise
dispose of, or grant any option with respect to, or pledge, hypothecate, or
grant a security interest in or lien on or otherwise encumber any of the
Underlying Repurchase Documents or any interest therein (except for Mortgage
Loans subject thereto).

 

cc. Quality Control. Seller shall cause each Underlying Repurchase Counterparty
to maintain an internal quality control program that verifies, on a regular
basis, the existence and accuracy of all legal documents, credit documents,
property appraisals, and underwriting decisions related to Mortgage Loans.

 

dd. Financial Covenants. Seller and Guarantor shall at all times comply with all
financial covenants and/or financial ratios set forth below.

 

 -41- 

 

(1) Adjusted Tangible Net Worth. (A) Seller shall maintain an Adjusted Tangible
Net Worth of at least $700,000,000, and (B) Guarantor shall maintain an Adjusted
Tangible Net Worth of at least $860,000,000.

 

(2) Indebtedness to Adjusted Tangible Net Worth Ratio. Seller’s ratio of
Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt,
including any securitization debt and, (B) any intercompany debt eliminated in
consolidation) to Adjusted Tangible Net Worth shall not exceed 5:1. Guarantor’s
ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse
Debt, including any securitization debt, and (B) any intercompany debt
eliminated in consolidation) to Adjusted Tangible Net Worth shall not exceed
5:1.

 

(3) Maintenance of Profitability. Guarantor shall maintain profitability of at
least $1.00 in Net Income for at least one of the two prior Test Periods.

 

(4) Maintenance of Liquidity. The Seller and the Guarantor shall ensure that, as
of the end of each calendar month, they have consolidated cash and Cash
Equivalents other than Restricted Cash in amounts not less than (i) with respect
to the Seller, $40,000,000, and (ii) with respect to the Guarantor, $40,000,000.

 

ee. Most Favored Status. Seller, Guarantor and the Buyer each agree that should
Seller enter into a Warehouse Facility with any Person other than the Buyer or
an Affiliate of the Buyer which by its terms provides more favorable terms to
the Buyer with respect to the financial covenants set forth in Section 14(dd)
hereof (a “More Favorable Agreement”), the terms of this Agreement shall be
deemed automatically amended to include such more favorable terms contained in
such More Favorable Agreement; provided, that in the event that such More
Favorable Agreement is terminated, upon notice by the Seller to the Buyer of
such termination, the original terms of this Agreement shall be deemed to be
automatically reinstated. The Seller, the Guarantor, and the Buyer further agree
to execute and deliver any new agreements or amendments to this Agreement
evidencing such provisions, provided that the execution of such amendment shall
not be a precondition to the effectiveness of such amendment, but shall merely
be for the convenience of the parties hereto. Promptly upon Seller entering into
a repurchase agreement or other credit facility with any Person other than the
Buyer, Seller shall notify Buyer that it has entered into such repurchase
agreement or other credit facility and deliver to Buyer a summary of the
material terms related to the comparable financial covenants of such repurchase
agreement or other credit facility in form and substance acceptable to Buyer.

 

ff. No Amendments/Waivers of Underlying Repurchase Documents. Without the prior
written consent of Buyer, Seller shall not, and shall not agree, consent to or
suffer to exist any amendment, modification, supplement, waiver or forbearance
with respect to any of the Underlying Repurchase Documents or any of Seller’s
rights thereunder.

 

 -42- 

 

15. Events of Default

 

Each of the following shall constitute an “Event of Default” hereunder:

 

a. Payment Failure. Failure of Seller to (i) make any payment of Price
Differential or Repurchase Price or any other sum which has become due, on a
Price Differential Payment Date or a Repurchase Date or otherwise, whether by
acceleration or otherwise, under the terms of this Agreement, any other
warehouse and security agreement or any other document evidencing or securing
Indebtedness of Seller to Buyer or to any Affiliate of Buyer, or (ii) cure any
Margin Deficit when due pursuant to Section 6 hereof.

 

b. Cross Default. Seller, Guarantor or any Affiliates thereof shall be in
default under (i) any Indebtedness, in the aggregate, in excess of $1.5 million
of Seller, Guarantor or any Affiliate thereof, which default (1) involves the
failure to pay a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary with respect to
such Indebtedness, or (ii) any other contract or contracts, in the aggregate in
excess of $1.5 million to which Seller, Guarantor or any Affiliate thereof is a
party which default (1) involves the failure to pay a matured obligation, or (2)
permits the acceleration of the maturity of obligations by any other party to or
beneficiary of such contract.

 

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

 

d. Insolvency. An Act of Insolvency shall have occurred with respect to Seller,
Guarantor or any Affiliate.

 

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

 

f. Breach of Specified Representation or Covenant or Obligation. A breach by
Seller or Guarantor of any of the representations, warranties or covenants or
obligations set forth (i) in Sections 13(a)(1), 13(a)(7), 13(a)(12), 13(a)(19),
14b, 14m, 14o, 14s, or 14z of this Agreement or (ii) Sections 13(a)(23), 14t,
14dd or 14ee of this Agreement and such breach identified in this clause (ii)
shall remain unremedied for one (1) Business Day.

 

 -43- 

 

g. Breach of Take-out Payment Covenant. A breach by Seller or Guarantor of the
covenant set forth in Section 14(x), if such breach is not cured within one (1)
Business Day.

 

h. Breach of Non-Specified Representation or Covenant. A breach by Seller or
Guarantor of any other representation, warranty or covenant set forth in this
Agreement in any material respect (and not otherwise specified in Sections 15(f)
and (g) above), if such breach is not cured within five (5) Business Days (other
than the representations and warranties set forth in Schedule 1, which shall be
considered solely for the purpose of determining the Market Value, the existence
of a Margin Deficit and the obligation to repurchase such Purchased Mortgage
Loan) unless (i) such party shall have made any such representations and
warranties with knowledge that they were materially false or misleading at the
time made, (ii) any such representations and warranties have been determined by
Buyer in its sole discretion to be materially false or misleading on a regular
basis, or (iii) Buyer, in its sole discretion, determines that such breach of a
material representation, warranty or covenant materially and adversely affects
(A) the condition (financial or otherwise) of such party, its Subsidiaries or
Affiliates; or (B) Buyer’s determination to enter into this Agreement or
Transactions with such party, then such breach shall constitute an immediate
Event of Default and Seller shall have no cure right hereunder).

 

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

 

j. Failure to Transfer. Seller fails to transfer the Purchased Mortgage Loans to
Buyer on the applicable Purchase Date (provided Buyer has tendered the related
Purchase Price).

 

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

 

l. Government Action. Any Governmental Authority or any person, agency or entity
acting or purporting to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume custody or control of, all
or any substantial part of the Property of Seller, Guarantor or any Affiliate
thereof, or shall have taken any action to displace the management of Seller,
Guarantor or any Affiliate thereof or to curtail its authority in the conduct of
the business of Seller, Guarantor or any Affiliate thereof, or takes any action
in the nature of enforcement to remove, limit or restrict the approval of
Seller, Guarantor or Affiliate as an issuer, buyer or a seller/servicer of
Mortgage Loans or securities backed thereby, and such action provided for in
this Section 15l shall not have been discontinued or stayed within 30 days.

 

 -44- 

 

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

 

n. Security Interest. This Agreement shall for any reason cease to create a
valid, first priority security interest in any material portion of the Purchased
Mortgage Loans or other Repurchase Assets purported to be covered hereby.

 

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

 

p. Underlying Repurchase Documents and Underlying Repurchase Counterparties. (A)
Any material provision of any Underlying Repurchase Document shall at any time
for any reason cease to be valid and binding or in full force and effect; or (B)
the Underlying Repurchase Counterparty shall deny that it has any or further
liability or obligation under any material provision of any Underlying
Repurchase Document; or (C) [reserved]; or (D) the validity or enforceability of
any material provision of any Underlying Repurchase Document shall be contested
by any party thereto; unless in each case of clauses (A) through (D), the
related Mortgage Loans subject to the Underlying Repurchase Document are
repurchased by Seller within two (2) Business Days following notice or knowledge
thereof.

 

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

 

r. REIT Qualification. The failure of Guarantor to qualify as a REIT and Buyer
has delivered notice of an Event of Default to the Seller with respect thereto.

 

s. Governmental Event. Buyer shall determine, in its sole discretion, that a
Governmental Event, individually or collectively, and whether unforeseen or
arising out of Seller’s existing applications, communications and correspondence
with any Governmental Authority or Person, has had, or is likely to have, a
Material Adverse Effect with respect to Seller, Guarantor or any Affiliate, or
an adverse effect upon its ability to perform its obligations under this
Agreement or any other material agreement to which it is a party or that may
otherwise materially impair, limit or restrict Seller's ability to conduct its
business or its operations.

 

An Event of Default shall be deemed to be continuing unless expressly waived by
Buyer in writing.

 

 -45- 

 

16. Remedies Upon Default

 

In the event that an Event of Default shall have occurred:

 

a. Buyer may, at its option (which option shall be deemed to have been exercised
immediately upon the occurrence of an Act of Insolvency of Seller or any
Affiliate), declare an Event of Default to have occurred hereunder and, upon the
exercise or deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred, be deemed
immediately to occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise or deemed
exercise, such Transaction shall be deemed immediately canceled). Buyer shall
(except upon the occurrence of an Act of Insolvency) give notice to Seller and
Guarantor of the exercise of such option as promptly as practicable.

 

b. If Buyer exercises or is deemed to have exercised the option referred to in
subparagraph (a) of this Section, (i) Seller’s obligations in such Transactions
to repurchase all Purchased Mortgage Loans, at the Repurchase Price therefor on
the Repurchase Date determined in accordance with subparagraph (a) of this
Section, shall thereupon become immediately due and payable, (ii) all Income
paid after such exercise or deemed exercise shall be retained by Buyer and
applied, in Buyer’s sole discretion, to the aggregate unpaid Repurchase Prices
for all outstanding Transactions and any other amounts owing by Seller
hereunder, and (iii) Seller shall immediately deliver to Buyer the Mortgage
Files relating to any Purchased Mortgage Loans subject to such Transactions then
in Seller’s possession or control.

 

c. Buyer also shall have the right to obtain physical possession, and to
commence an action to obtain physical possession, of all Records and files of
Seller relating to the Purchased Mortgage Loans and all documents relating to
the Purchased Mortgage Loans (including, without limitation, any legal, credit
or servicing files with respect to the Purchased Mortgage Loans) which are then
or may thereafter come in to the possession of Seller or any third party acting
for Seller including the Servicers and any Underlying Repurchase Counterparty.
To obtain physical possession of any Purchased Mortgage Loans held by Custodian,
Buyer shall present to Custodian a Trust Receipt. Without limiting the rights of
Buyer hereto to pursue all other legal and equitable rights available to Buyer
for Seller’s failure to perform its obligations under this Agreement, Seller
acknowledges and agrees that the remedy at law for any failure to perform
obligations hereunder would be inadequate and Buyer shall be entitled to
specific performance, injunctive relief, or other equitable remedies in the
event of any such failure. The availability of these remedies shall not prohibit
Buyer from pursuing any other remedies for such breach, including the recovery
of monetary damages.

 

 -46- 

 

d. Buyer shall have the right to direct all servicers then servicing any
Purchased Mortgage Loans and each Underlying Repurchase Counterparty to remit
all collections thereon to Buyer, and if any such payments are received by
Seller, Seller shall not commingle the amounts received with other funds of
Seller and shall promptly pay them over to Buyer. Buyer shall also have the
right to terminate any one or all of the servicers then servicing any Purchased
Mortgage Loans with or without cause. In addition, Buyer shall have the right to
immediately sell the Purchased Mortgage Loans and liquidate all Repurchase
Assets. Such disposition of Purchased Mortgage Loans may be, at Buyer’s option,
on either a servicing-released or a servicing-retained basis. Buyer shall not be
required to give any warranties as to the Purchased Mortgage Loans with respect
to any such disposition thereof. Buyer may specifically disclaim or modify any
warranties of title or the like relating to the Purchased Mortgage Loans. The
foregoing procedure for disposition of the Purchased Mortgage Loans and
liquidation of the Repurchase Assets shall not be considered to adversely affect
the commercial reasonableness of any sale thereof. Seller agrees that it would
not be commercially unreasonable for Buyer to dispose of the Purchased Mortgage
Loans or the Repurchase Assets or any portion thereof by using Internet sites
that provide for the auction of assets similar to the Purchased Mortgage Loans
or the Repurchase Assets, or that have the reasonable capability of doing so, or
that match buyers and sellers of assets. Buyer shall be entitled to place the
Purchased Mortgage Loans in a pool for issuance of mortgage-backed securities at
the then-prevailing price for such securities and to sell such securities for
such prevailing price in the open market. Buyer shall also be entitled to sell
any or all of such Mortgage Loans individually for the prevailing price. Buyer
shall also be entitled, in its sole discretion to elect, in lieu of selling all
or a portion of such Purchased Mortgage Loans, to give the Seller credit for
such Purchased Mortgage Loans and the Repurchase Assets in an amount equal to
the Market Value of the Purchased Mortgage Loans against the aggregate unpaid
Repurchase Price and any other amounts owing by the Seller hereunder.

 

e. Upon the happening of one or more Events of Default, Buyer may apply any
proceeds from the liquidation of the Purchased Mortgage Loans and Repurchase
Assets to the Repurchase Prices hereunder and all other Obligations in the
manner Buyer deems appropriate in its sole discretion.

 

f. Seller shall be liable to Buyer for (i) the amount of all reasonable legal or
other expenses (including, without limitation, all costs and expenses of Buyer
in connection with the enforcement of this Agreement or any other agreement
evidencing a Transaction, whether in action, suit or litigation or bankruptcy,
insolvency or other similar proceeding affecting creditors’ rights generally,
further including, without limitation, the reasonable fees and expenses of
counsel (including the costs of internal counsel of Buyer) incurred in
connection with or as a result of an Event of Default, (ii) damages in an amount
equal to the cost (including all fees, expenses and commissions) of entering
into replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and
(iii) any other loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default in respect of a Transaction.

 

 -47- 

 

g. To the extent permitted by applicable law, Seller shall be liable to Buyer
for interest on any amounts owing by Seller hereunder, from the date Seller
becomes liable for such amounts hereunder until such amounts are (i) paid in
full by Seller or (ii) satisfied in full by the exercise of Buyer’s rights
hereunder. Interest on any sum payable by Seller under this Section 16(g) shall
accrue at a rate equal to the Post-Default Rate.

 

h. Reserved.

 

i. Buyer shall have, in addition to its rights hereunder, any rights otherwise
available to it under any other agreement or applicable law.

 

j. Buyer may exercise one or more of the remedies available to Buyer immediately
upon the occurrence of an Event of Default and, except to the extent provided in
subsections (a) and (d) of this Section, at any time thereafter without notice
to Seller. All rights and remedies arising under this Agreement as amended from
time to time hereunder are cumulative and not exclusive of any other rights or
remedies which Buyer may have.

 

k. Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives any defenses Seller might
otherwise have to require Buyer to enforce its rights by judicial process.
Seller also waives any defense (other than a defense of payment or performance)
Seller might otherwise have arising from the use of nonjudicial process,
enforcement and sale of all or any portion of the Repurchase Assets, or from any
other election of remedies. Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length.

 

l. Buyer shall have the right to perform reasonable due diligence with respect
to Seller and the Mortgage Loans, which review shall be at the expense of
Seller.

 

17. Reports

 

a. Default Notices. Seller or Guarantor shall furnish to Buyer (i) promptly,
copies of any material and adverse notices (including, without limitation,
notices of defaults, breaches, potential defaults or potential breaches) and any
material financial information that is not otherwise required to be provided by
Seller or Guarantor hereunder which is given to Seller’s or Guarantor’s lenders
and (ii) immediately, notice of the occurrence of any (A) Event of Default
hereunder, (B) default or breach by Seller or Servicer or Guarantor of any
obligation under any Program Agreement or any material contract or agreement of
Seller or Servicer or Guarantor or (C) event or circumstance that such party
reasonably expects has resulted in, or will, with the passage of time, result
in, a Material Adverse Effect or an Event of Default or such a default or breach
by such party.

 

b. Financial Notices. Seller or Guarantor shall furnish to Buyer:

 

 -48- 

 

(1) as soon as available and in any event within forty (40) calendar days after
the end of each calendar month, the unaudited consolidated balance sheets of
Seller and Guarantor and their consolidated Subsidiaries as at the end of such
period and the related unaudited consolidated statements of income and retained
earnings for the Seller and Guarantor and their consolidated Subsidiaries for
such period and the portion of the fiscal year through the end of such period,
accompanied by a certificate of a Responsible Officer of Seller and Guarantor,
which certificate shall state that said consolidated financial statements fairly
present in all material respects the consolidated financial condition and
results of operations of Seller and Guarantor and their consolidated
Subsidiaries in accordance with GAAP (other than solely with respect to
footnotes, year-end adjustments and cash flow statements) consistently applied,
as at the end of, and for, such period;

 

(2) to the extent not filed with the SEC on EDGAR, as soon as available and in
any event within ninety (90) days after the end of each fiscal year of Seller or
Guarantor, the consolidated balance sheets of Seller, Guarantor and their
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
the Seller or Guarantor and their consolidated Subsidiaries for such year, and
in the case of Guarantor, setting forth in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion and the scope of
audit shall be acceptable to Buyer in its sole discretion, shall have no “going
concern” qualification and shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of Guarantor and its consolidated Subsidiaries as at the end of, and
for, such fiscal year in accordance with GAAP;

 

(3) at the time the Seller and Guarantor furnish each set of financial
statements pursuant to Section 17(b)(1) or (2) above, an Officer’s Compliance
Certificate or, with respect to 17(b)(2) above, (at the time filed with the SEC
on EDGAR), a certificate of a Responsible Officer of Seller and Guarantor in the
form attached as Exhibit A to the Pricing Side Letter;

 

(4) if applicable, notice of any 10-K or 10-Q filings with the SEC on EDGAR by
Seller or Guarantor, within five (5) Business Days of such filing with the SEC;
and

 

(5) as soon as available and in any event within thirty (30) days of receipt
thereof:

 

(a) reserved;

 

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

 

 -49- 

 

(c) such other information regarding the financial condition, operations, or
business of the Seller, Guarantor or any Underlying Repurchase Counterparty as
Buyer may reasonably request; and

 

(d) the particulars of any Event of Termination in reasonable detail.

 

c. Notices of Certain Events. As soon as possible and in any event within five
(5) Business Days of knowledge thereof, Seller shall furnish to Buyer notice of
the following events:

 

(1) a change in the insurance coverage required of Seller, Servicer or any other
Person pursuant to any Program Agreement, or any Underlying Repurchase
Counterparty with a copy of evidence of same attached;

 

(2) any material dispute, litigation, investigation, proceeding or suspension
between Seller, Servicer or any Underlying Repurchase Counterparty, on the one
hand, and any Governmental Authority or any Person;

 

(3) any material change in accounting policies or financial reporting practices
of Seller or Servicer;

 

(4) with respect to any Purchased Mortgage Loan, that the underlying Mortgaged
Property has been damaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, or otherwise damaged so as to
affect adversely the value of such Mortgaged Loan;

 

(5) any material issues raised upon examination of Seller, any Underlying
Repurchase Counterparty or Seller’s or any Underlying Repurchase Counterparty’s
facilities by any Governmental Authority;

 

(6) any material change in the Indebtedness of the Seller, including, without
limitation, any default, non-renewal, termination, increase in available amount
or decrease in available amount related thereto;

 

(7) any default related to any Repurchase Asset, including without limitation
any default under any Underlying Repurchase Documents, or any lien or security
interest (other than security interests created hereby or by the other Program
Agreements) on, or claim asserted against, any of the Purchased Mortgage Loans;

 

 

 

 -50- 

 

(8) any Underlying Repurchase Counterparty for any reason ceases to possess all
applicable Agency approvals, or an event has occurred or Underlying Repurchase
Counterparty has a reason to believe or suspect that an event will occur prior
to the issuance of the Agency Security or the consummation of the Take-Out
Commitment, that will require notification to an Agency or the Department of
Housing and Urban Development, FHA or VA;

 

(9) any other event, circumstance or condition that has resulted, or has a
possibility of resulting, in a Material Adverse Effect with respect to Seller or
any Servicer;

 

(10) the occurrence of any material employment dispute and a description of the
strategy for resolving it that has the possibility of resulting in a Material
Adverse Effect with respect to Seller, Guarantor or any Affiliate;

 

(11) without limiting any of the other reporting obligations of Seller
hereunder, Seller shall promptly notify Buyer of any Governmental Event relating
to Seller, Guarantor, any Affiliate or any Underlying Repurchase Counterparty or
update thereto, and shall include the particulars of each update with sufficient
detail as is satisfactory to Buyer; and

 

(12) any notice Seller receives from an Underlying Repurchase Counterparty in
accordance with the terms of the Underlying Repurchase Documents relating to a
material event, circumstance or condition affecting the Underlying Repurchase
Counterparty or Servicer.

 

d. Portfolio Performance Data. On the first Reporting Date of each calendar
month, Seller will furnish to Buyer (i) in the event the Mortgage Loans are
serviced on a “retained” basis, an electronic Mortgage Loan performance data,
including, without limitation, delinquency reports and volume information,
broken down by product (i.e., delinquency, foreclosure and net charge-off
reports) and (ii) electronically, in a format mutually acceptable to Buyer and
Seller, servicing information, including, without limitation, those fields
reasonably requested by Buyer from time to time, on a loan-by-loan basis and in
the aggregate, with respect to the Purchased Mortgage Loans serviced by Seller
or any Servicer for the month (or any portion thereof) prior to the Reporting
Date. In addition to the foregoing information on each Reporting Date, Seller
will furnish to Buyer such information upon (i) the occurrence and continuation
of an Event of Default and (ii) upon any Purchased Mortgage Loan becoming an
Aged Loan.

 

e. Monthly Summary Reports. Within thirty (30) days following receipt by Buyer
of the Officer’s Compliance Certificate, a Monthly Summary Report; and

 

 

 -51- 

 

f. Pending/Completed Repurchase Requests. Within forty (40) days following the
end of each calendar month, a summary of the portfolio performance of Mortgage
Loans owned or financed by Underlying Repurchase Counterparty including
representation breaches, missing document breaches, repurchases due to fraud,
early payment default requests, and Mortgage Loans owned or financed by
Underlying Repurchase Counterparty subject to other warehouse lines in excess of
sixty (60) days summarized on the basis of (a) pending repurchase demands
(including weighted average duration of outstanding request), (b) satisfied
repurchase demands and (c) total repurchase demands.

 

g. Reserved.

 

h. Other Reports. Seller shall deliver to Buyer any other reports or information
reasonably requested by Buyer or as otherwise required pursuant to this
Agreement including without limitation any reports or information received from
any Underlying Repurchase Counterparty.

 

18. Repurchase Transactions

 

Buyer may, in its sole election, engage in repurchase transactions with the
Purchased Mortgage Loans or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Purchased Mortgage Loans with a counterparty of Buyer’s
choice. Unless an Event of Default shall have occurred, no such transaction
shall relieve Buyer of its obligations to transfer Purchased Mortgage Loans to
Seller pursuant to Section 4 hereof, or of Buyer’s obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Section 7
hereof. In the event Buyer engages in a repurchase transaction with any of the
Purchased Mortgage Loans or otherwise pledges or hypothecates any of the
Purchased Mortgage Loans, Buyer shall have the right to assign to Buyer’s
counterparty any of the applicable representations or warranties herein and the
remedies for breach thereof, as they relate to the Purchased Mortgage Loans that
are subject to such repurchase transaction.

 

19. Single Agreement

 

Buyer and Seller acknowledge they have and will enter into each Transaction
hereunder, in consideration of and in reliance upon the fact that, all
Transactions hereunder constitute a single business and contractual relationship
and have been made in consideration of each other. Accordingly, each of Buyer
and Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set-off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

 

 -52- 

 

20. Notices and Other Communications

 

Any and all notices (with the exception of Transaction Requests or Purchase
Confirmations, which shall be delivered via electronic mail or other electronic
medium agreed to by the Buyer and Seller), statements, demands or other
communications hereunder may be given by a party to the other by mail, email,
facsimile, messenger or otherwise to the address specified below, or so sent to
such party at any other place specified in a notice of change of address
hereafter received by the other. All notices, demands and requests hereunder may
be made orally, to be confirmed promptly in writing, or by other communication
as specified in the preceding sentence. In all cases, to the extent that the
related individual set forth in the respective “Attention” line is no longer
employed by the respective Person, such notice may be given to the attention of
a Responsible Officer of the respective Person or to the attention of such
individual or individuals as subsequently notified in writing by a Responsible
Officer of the respective Person.

 

If to Seller:

 

PennyMac Operating Partnership, L.P.

3043 Townsgate Road

Westlake Village, California 91361

Attention: Anne D. McCallion

Phone Number: (818) 224-7434

E-mail: anne.mccallion@pnmac.com

 

If to Guarantor:

 

PennyMac Mortgage Investment Trust

3043 Townsgate Road

Westlake Village, California 91361

Attention: Anne D. McCallion

Phone Number: (818) 224-7434

E-mail: anne.mccallion@pnmac.com

 

If to Buyer:

 

For Transaction Requests and Purchase Confirmations:

 

CSFBMC LLC

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 2nd floor

New York, New York 10010

Attention: Christopher Bergs, Resi Mortgage Warehouse Ops

Phone: 212-538-5087

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

 

 

 -53- 

 

 

 

with a copy to:

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, NY 10010

Attention: Margaret Dellafera

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

 

 

For all other Notices:

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, New York 10010

Attention:   Margaret Dellafera

Phone Number: 212-325-6471

Fax Number: 212-743-4810

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

 

with a copy to:

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 9th Floor

New York, NY 10010

Attention: Legal Department—RMBS Warehouse Lending

Fax Number: (212) 322-2376

 

21. Entire Agreement; Severability

 

This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.

 

22. Non assignability

 

The Program Agreements are not assignable by Seller or Guarantor. Buyer may from
time to time assign all or a portion of its rights and obligations under this
Agreement and the Program Agreements; provided, however that Buyer shall
maintain as agent of Seller, for review by Seller upon written request, a
register of assignees and a copy of an executed assignment and acceptance by
Buyer and assignee (“Assignment and Acceptance”), specifying the percentage or
portion of such rights and obligations assigned. Upon such assignment, (a) such
assignee shall be a party hereto and to each Program Agreement to the extent of
the percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and
(b) Buyer shall, to the extent that such rights and obligations have been so
assigned by it to either (i) an Affiliate of Buyer which assumes the obligations
of Buyer or (ii)  another Person approved by Seller (such approval not to be
unreasonably withheld) which assumes the obligations of Buyer, be released from
its obligations hereunder and under the Program Agreements. Unless otherwise
stated in the Assignment and Acceptance, Seller shall continue to take
directions solely from Buyer unless otherwise notified by Buyer in writing.
Buyer may distribute to any prospective assignee any document or other
information delivered to Buyer by Seller.

 

 

 -54- 

 

23. Set-off

 

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

 

24. Binding Effect; Governing Law; Jurisdiction

 

a. This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Seller
acknowledges that the obligations of Buyer hereunder or otherwise are not the
subject of any guaranty by, or recourse to, any direct or indirect parent or
other Affiliate of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).

 

b. SELLER AND GUARANTOR HEREBY WAIVE TRIAL BY JURY. SELLER AND GUARANTOR HEREBY
IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF
NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS IN ANY ACTION OR
PROCEEDING. SELLER AND GUARANTOR HEREBY SUBMIT TO, AND WAIVE ANY OBJECTION THEY
MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE
PROGRAM AGREEMENTS.

 

 

 -55- 

 

25. No Waivers, Etc.

 

No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Section 6(a), 16(a) or otherwise, will not constitute a
waiver of any right to do so at a later date.

 

26. Intent

 

a. The parties intend that: (i) each Transaction is a “repurchase agreement” as
that term is defined in section 101(47) of the Bankruptcy Code, and, therefore,
are subject to the protections of certain sections of the Bankruptcy Code
including, without limitation, section 559 with respect to the exercise by Buyer
of its rights hereunder to cause the liquidation, termination, or acceleration
of such Transactions upon Seller becoming the subject of a proceeding under the
Bankruptcy Code, (ii) each Transaction is a “securities contract” as that term
is defined in Section 741 of the Bankruptcy Code, and, therefore, are subject to
the protections of certain sections of the Bankruptcy Code including, without
limitation, section 555 with respect to the exercise by Buyer of its rights
hereunder to cause the liquidation, termination, or acceleration of such
Transactions upon Seller becoming the subject of a proceeding under the
Bankruptcy Code, and (iii) this Agreement is a “master netting agreement,” as
that term is defined in section 101(38A) of the Bankruptcy Code and, therefore,
is subject to the protections of certain sections of the Bankruptcy Code
including without limitation, section 561 with respect to Buyer’s rights to
offset or net termination values, payment amounts, or other transfer obligations
arising under or in connection with the termination, liquidation, or
acceleration of Transactions hereunder.

 

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

 

 

 -56- 

 

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

 

d. For U.S. federal tax purposes, the Seller, the Guarantor, the Buyer, and each
Buyer assignee by acquiring an interest in any Transaction agree to treat and
report each Transaction as indebtedness issued by Guarantor or Seller as the
case may be, which indebtedness, in the case of each obligor, shall have but a
single maturity for purposes of Code section 7701(i)(2)(A)(ii) and U.S. Treasury
Regulation section 301.7701(i)-1(e).

 

e. Each party agrees that this Agreement is intended to create mutuality of
obligations among the parties, and as such, the Agreement constitutes a contract
which (i) is between all of the parties and (ii) places each party in the same
“right” and “capacity”.

 

27. Disclosure Relating to Certain Federal Protections

 

The parties acknowledge that they have been advised that:

 

a. in the case of Transactions in which one of the parties is a broker or dealer
registered with the SEC under Section 15 of the 1934 Act, the Securities
Investor Protection Corporation has taken the position that the provisions of
the SIPA do not protect the other party with respect to any Transaction
hereunder;

 

b. in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the SEC
under Section 15C of the 1934 Act, SIPA will not provide protection to the other
party with respect to any Transaction hereunder; and

 

c. in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable.

 

28. Power of Attorney

 

Seller hereby authorizes Buyer to file such financing statement or statements
relating to the Repurchase Assets as Buyer, at its option, may deem appropriate.
Seller hereby appoints Buyer as Seller’s agent and attorney-in-fact to file any
such financing statement or statements in Seller’s name and to perform all other
acts which Buyer deems appropriate to perfect and continue its ownership
interest in and/or the security interest granted hereby, if applicable, and to
protect, preserve and realize upon the Repurchase Assets, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of Seller as its agent and
attorney-in-fact and exercise all rights and remedies of Seller thereunder and
to act as attorney-in-fact for Underlying Repurchase Counterparty. This agency
and power of attorney is coupled with an interest and is irrevocable without
Buyer’s consent. Notwithstanding the foregoing, the power of attorney hereby
granted may be exercised only during the occurrence and continuance of any
Default hereunder. Seller shall pay the filing costs for any financing statement
or statements prepared pursuant to this Section 28. In addition the foregoing,
the Seller agrees to execute a power of attorney, the form of Exhibit D hereto
(the “Power of Attorney”), to be delivered on the date hereof.

 

 

 -57- 

 

29. Buyer May Act Through Affiliates

 

Buyer may, from time to time, designate one or more Affiliates for the purpose
of performing any action hereunder.

 

30. Indemnification; Obligations

 

a. Each of Seller and Guarantor agrees to hold Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and advisors (each,
an “Indemnified Party”) harmless from and indemnify each Indemnified Party (and
will reimburse each Indemnified Party as the same is incurred) against all
liabilities, losses, damages, judgments, costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) of any kind which may be
imposed on, incurred by, or asserted against any Indemnified Party relating to
or arising out of this Agreement, any Transaction Request, Purchase
Confirmation, any Program Agreement, any Underlying Repurchase Document, or any
transaction contemplated hereby or thereby resulting from anything other than
the Indemnified Party’s gross negligence or willful misconduct. Each of Seller
and Guarantor also agrees to reimburse each Indemnified Party for all reasonable
expenses in connection with the enforcement of this Agreement and the exercise
of any right or remedy provided for herein, any Transaction Request, Purchase
Confirmation and any Program Agreement, including, without limitation, the
reasonable fees and disbursements of counsel. Seller’s and Guarantor’s
agreements in this Section 30 shall survive the payment in full of the
Repurchase Price and the expiration or termination of this Agreement. Each of
Seller and Guarantor hereby acknowledges that its obligations hereunder are
recourse obligations of Seller and such Guarantor and are not limited to
recoveries each Indemnified Party may have with respect to the Purchased
Mortgage Loans. Each of Seller and Guarantor also agrees not to assert any claim
against Buyer or any of its Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the facility established hereunder, the actual or proposed use of
the proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS
EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

 

b. Without limitation to the provisions of Section 4, if any payment of the
Repurchase Price of any Transaction is made by Seller other than on the then
scheduled Repurchase Date thereto as a result of an acceleration of the
Repurchase Date pursuant to Section 16 or for any other reason, Seller shall,
upon demand by Buyer, pay to Buyer an amount sufficient to compensate Buyer for
any losses, costs or expenses that it may reasonably incur as of a result of
such payment.

 

 

 -58- 

 

c. Without limiting the provisions of Section 30(a) hereof, if Seller fails to
pay when due any costs, expenses or other amounts payable by it under this
Agreement, including, without limitation, fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Seller by Buyer, in its sole
discretion.

 

31. Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.

 

32. Confidentiality

 

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

 

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

 

 

 -59- 

 

33. Recording of Communications

 

Buyer, Seller and Guarantor shall have the right (but not the obligation) from
time to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to Transactions.
Buyer, Seller and Guarantor consent to the admissibility of such tape recordings
in any court, arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties’ agreement.

 

34. Commitment Fee

 

Seller shall pay to Buyer in immediately available funds a non-refundable
Commitment Fee. The Commitment Fee shall be paid in accordance with the payment
schedule set forth in the Pricing Side Letter. All payments of the Commitment
Fee shall be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to Buyer at such account designated by Buyer.

 

35. Condition Subsequent

 

Within ten (10) Business Days following the date hereof, Seller shall deliver to
Buyer the opinions of Seller’s and Guarantor’s counsel, in form and substance
acceptable to Buyer, as referred to in Section 10(a)(7) hereof. Buyer reserves
the right not to fund any Transactions if Seller fails to deliver such items as
described in this Section. Seller’s failure to deliver these items shall be a
breach of a material covenant under this Agreement.

 

 

 -60- 

 

36. Periodic Due Diligence Review

 

Seller acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Seller, Underlying Repurchase Counterparty, Servicer
and the Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, for the purpose
of performing quality control review of the Mortgage Loans or otherwise, and
upon reasonable (but no less than one (1) Business Day’s) prior notice unless an
Event of Default shall have occurred, in which case no notice is required, to
Seller, Seller agrees to permit or shall cause Underlying Repurchase
Counterparty to permit Buyer or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Mortgage Files and any and all documents, data, records, agreements,
instruments or information relating to such Mortgage Loans (including, without
limitation, quality control review) in the possession or under the control of
Seller, Underlying Repurchase Counterparty, Servicer and/or the Custodian.
Seller also shall make available or cause Underlying Repurchase Counterparty to
make available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Mortgage Files and the Mortgage
Loans. Without limiting the generality of the foregoing, Seller acknowledges
that Buyer may purchase Mortgage Loans from Seller based solely upon the
information provided by Seller to Buyer in the Mortgage Loan Schedule and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Mortgage Loans purchased in a
Transaction, including, without limitation, ordering Broker’s price opinions,
new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Mortgage Loan.
Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Seller agrees to cooperate
or cause Underlying Repurchase Counterparty to cooperate with Buyer and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession, or under the control, of Seller. Seller
further agrees that Seller shall pay all out-of-pocket costs and expenses
incurred by Buyer in connection with Buyer’s activities pursuant to this Section
36 (“Due Diligence Costs”).

 

37. Approval of Underlying Repurchase Counterparties and Servicers

 

a. Seller shall provide Buyer with (a) a written list of proposed Underlying
Repurchase Counterparties and (b) any reasonably requested information with
respect to such proposed Underlying Repurchase Counterparties, in each case,
prior to Buyer’s purchase of any Mortgage Loan subject to the respective
Underlying Repurchase Documents. Buyer in its sole and absolute discretion may
reject any proposed Underlying Repurchase Counterparty by providing written
notice in accordance with Section 20 hereof to Seller within ten (10) Business
Days after Seller provides such written list of proposed Underlying Repurchase
Counterparties. If Buyer does not approve an Underlying Repurchase Counterparty
by providing a written notice to Seller within ten (10) Business Days after
Seller provides the written list of proposed Underlying Repurchase
Counterparties, then such Underlying Repurchase Counterparties shall be deemed
rejected by Buyer for the purposes of this Agreement. After an Underlying
Repurchase Counterparty is approved by Buyer as an Underlying Repurchase
Counterparty for the purposes of this Agreement, Buyer may in its sole and
absolute discretion reject any previously approved Underlying Repurchase
Counterparty by providing to Seller written notice in accordance with Section 20
hereof. Following any such rejection of a previously approved Underlying
Repurchase Counterparty, Seller shall not sell to Buyer hereunder any Mortgage
Loans purchased by Seller from such previously approved Underlying Repurchase
Counterparty and any such Mortgage Loans may be assigned a Market Value of zero
in Buyer’s good faith discretion.

 

 

 -61- 

 

b. Seller shall provide Buyer with (a) a written list of proposed Servicers and
(b) any reasonably requested information with respect to such proposed
Servicers, in each case, prior to any Servicer being engaged with respect to a
prospective Purchased Mortgage Loan. Buyer in its sole and absolute discretion
may reject any proposed Servicer by providing written notice in accordance with
Section 20 hereof to Seller within ten (10) Business Days after Seller provides
such written list of proposed Servicers. If Buyer does not approve a Servicer by
providing a written notice to Seller within ten (10) Business Days after Seller
provides the written list of proposed Servicers, then such Servicers shall be
deemed rejected by Buyer for the purposes of this Agreement. After a Servicer is
approved by Buyer as a Servicer for the purposes of this Agreement, Buyer may in
its sole good faith discretion reject any previously approved Servicer by
providing to Seller written notice in accordance with Section 20 hereof.

 

c. Buyer, with or without cause, may instruct Seller to remove and discharge (i)
MERS and MERSCORP Holdings, Inc., as Electronic Agent (as defined in the
Underlying Electronic Tracking Agreement) from the performance of their duties
under the Underlying Electronic Tracking Agreement with respect to some or all
of the Purchased Mortgage Loans or (ii) the Custodian from the performance of
its duties under the Underlying Custodial Agreement with respect to some or all
of the Purchased Mortgage Loans. If Buyer delivers such instruction to Seller,
Seller shall promptly exercise its rights to terminate MERS, MERSCORP Holdings,
Inc. or the Custodian, as applicable, in accordance with the related Underlying
Repurchase Document.

 

38. Authorizations

 

Any of the persons whose signatures and titles appear on Schedule 2 are
authorized, acting singly, to act for Seller or Buyer to the extent set forth
therein, as the case may be, under this Agreement. The Seller may amend Schedule
2 from time to time by delivering a revised Schedule 2 to Buyer and expressly
stating that such revised Schedule 2 shall replace the existing Schedule 2.

 

 

 -62- 

 

39. Acknowledgement Of Anti-Predatory Lending Policies

 

Buyer has in place internal policies and procedures that expressly prohibit its
purchase of any High Cost Mortgage Loan.

 

40. Documents Mutually Drafted

 

The Seller and the Buyer agree that this Agreement and each other Program
Agreement prepared in connection with the Transactions set forth herein have
been mutually drafted and negotiated by each party, and consequently such
documents shall not be construed against either party as the drafter thereof.

 

41. Conflicts

 

In the event of any conflict between the terms of this Agreement and any other
Program Agreement, the documents shall control in the following order of
priority: first, the terms of the Pricing Side Letter shall prevail, then the
terms of this Agreement shall prevail, and then the terms of the other Program
Agreements shall prevail.

 

42. 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 GAAP;

 

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;

 

f. the term “include” or “including” shall mean without limitation by reason of
enumeration;

 

 

 -63- 

 

g. all times specified herein or in any other Program Agreement (unless
expressly specified otherwise) are local times in New York, New York unless
otherwise stated; and

 

h. all references herein or in any Program Agreement to "good faith" means good
faith as defined in Section 1-201(19) of the UCC as in effect in the State of
New York.

 

43. Agency and Allocation Agreement

 

Buyer intends to assign the Transactions to one or more affiliates of Buyer and
to enter into an agency and allocation agreement allocating current and future
Transactions to such affiliates and setting forth certain agency related
provisions and amending the Repurchase Agreement to conform thereto, as
applicable. Seller shall agree to and acknowledge such agency and allocation
agreement in writing in a form reasonably acceptable to Seller (the “Allocation
Agreement”). In the event that the Seller fails to execute the Allocation
Agreement described herein for any reason within sixty (60) days following
receipt thereof from Buyer or its counsel, then the obligations of the Buyer
under the Repurchase Agreement will be deemed uncommitted and Buyer shall have
no obligations to enter into Transactions under the Repurchase Agreement.

 

44. Reaffirmation of Guaranty

 

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

 

45. Amendment and Restatement

 

The terms and provisions of the Existing Master Repurchase Agreement are hereby
amended and restated in their entirety by the terms and provisions of this
Agreement. From and after the date hereof, all references made to the Existing
Master Repurchase Agreement in any Program Agreement or in any other instrument
or document shall, without more, be deemed to refer to this Agreement.

 

 

 

[Signature Page Follows]

 

 -64- 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date first above written.

 

Credit Suisse First Boston Mortgage Capital LLC, as Buyer

 

 

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

 

 

PennyMac Operating Partnership, L.P., as Seller

       By: PennyMac GP OP, Inc., its General Partner

 

 

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

 

 

PennyMac Mortgage Investment Trust, as Guarantor

 

 

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

 

 

 

 

 -65- 

 

SCHEDULE 1

 

PART 1

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASED MORTGAGE LOANS

 

(a) Payments Current. All payments required to be made up to the Purchase Date
for the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. No payment required under the Mortgage Loan is delinquent nor has any
payment under the Mortgage Loan been delinquent at any time since the
origination of the Mortgage Loan. The first Monthly Payment shall be made, or
shall have been made, with respect to the Mortgage Loan on its Due Date or
within the grace period, all in accordance with the terms of the related
Mortgage Note.

 

(b) No Outstanding Charges. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
Neither Seller nor the Qualified Originator from which Seller acquired the
Mortgage Loan has advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the
day which precedes by one month the Due Date of the first installment of
principal and/or interest thereunder.

 

(c) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage have
not been impaired, waived, altered or modified in any respect, from the date of
origination; except by a written instrument which has been recorded, if
necessary to protect the interests of Buyer, and which has been delivered to the
Custodian and the terms of which are reflected in the Custodial Mortgage Loan
Schedule. The substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required, and its terms are
reflected on the Custodial Mortgage Loan Schedule. No Mortgagor in respect of
the Mortgage Loan has been released, in whole or in part, except in connection
with an assumption agreement approved by the title insurer, to the extent
required by such policy, and which assumption agreement is part of the Mortgage
File delivered to the Custodian and the terms of which are reflected in the
Custodial Mortgage Loan Schedule.

 

(d) No Defenses. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including, without limitation, the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor in any
state or Federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated. Seller has no knowledge nor has it received any notice that
any Mortgagor in respect of the Mortgage Loan is a debtor in any state or
federal bankruptcy or insolvency proceeding.

 

 

 

 Schedule 1 Part 1 - 1 

 

(e) Hazard Insurance. The Mortgaged Property is insured by a fire and extended
perils insurance policy, issued by a Qualified Insurer, and such other hazards
as are customary in the area where the Mortgaged Property is located, and to the
extent required by Seller as of the date of origination consistent with the
Underwriting Guidelines, against earthquake and other risks insured against by
Persons operating like properties in the locality of the Mortgaged Property, in
an amount not less than the greatest of (i) 100% of the replacement cost of all
improvements to the Mortgaged Property, (ii) the outstanding principal balance
of the Mortgage Loan, or (iii) the amount necessary to avoid the operation of
any co-insurance provisions with respect to the Mortgaged Property, and
consistent with the amount that would have been required as of the date of
origination in accordance with the Underwriting Guidelines. If any portion of
the Mortgaged Property is in an area identified by any federal Governmental
Authority as having special flood hazards, and flood insurance is available, a
flood insurance policy meeting the current guidelines of the Federal Emergency
Management Agency is in effect with a generally acceptable insurance carrier, in
an amount representing coverage not less than the least of (1) the outstanding
principal balance of the Mortgage Loan (2) the full insurable value of the
Mortgaged Property, and (3) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended by the Flood Disaster
Protection Act of 1974. All such insurance policies (collectively, the “hazard
insurance policy”) contain a standard mortgagee clause naming Seller, its
successors and assigns (including, without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled
without 30 days’ prior written notice to the mortgagee. No such notice has been
received by Seller. All premiums on such insurance policy have been paid. The
related Mortgage obligates the Mortgagor to maintain all such insurance and, at
such Mortgagor’s failure to do so, authorizes the mortgagee to maintain such
insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor
from such Mortgagor. Where required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a “master” or “blanket” hazard insurance
policy covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer and is in full force and effect.
Seller has not engaged in, and has no knowledge of the Mortgagor’s having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
Person, and no such unlawful items have been received, retained or realized by
Seller.

 

(f) Compliance with Applicable Laws. Any and all requirements of any federal,
state or local law including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and Seller shall maintain
or shall cause its agent to maintain in its possession, available for the
inspection of Buyer, and shall deliver to Buyer, upon demand, evidence of
compliance with all such requirements.

 

 

 

 Schedule 1 Part 1 - 2 

 

(g) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such release, cancellation,
subordination or rescission. Seller has not waived the performance by the
Mortgagor of any action, if the Mortgagor’s failure to perform such action would
cause the Mortgage Loan to be in default, nor has Seller waived any default
resulting from any action or inaction by the Mortgagor.

 

(h) Location and Type of Mortgaged Property. The Mortgaged Property is located
in an Acceptable State as identified in the Custodial Mortgage Loan Schedule and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
condominium unit in a condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development; provided, however,
that any condominium unit or planned unit development shall conform with the
applicable Fannie Mae and Freddie Mac requirements regarding such dwellings or
shall conform to underwriting guidelines acceptable to Buyer in its sole
discretion and that no residence or dwelling is a mobile home. No portion of the
Mortgaged Property is used for commercial purposes; provided, that, the
Mortgaged Property may be a mixed use property if such Mortgaged Property
conforms to underwriting guidelines acceptable to Buyer in its sole discretion.

 

(i) Valid First Lien. The Mortgage is a valid, subsisting, enforceable and
perfected first priority lien and first priority security interest on the real
property included in the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:

 

a. the lien of current real property taxes and assessments not yet due and
payable;

 

b. covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to prudent
mortgage lending institutions generally and specifically referred to in Buyer’s
title insurance policy delivered to the originator of the Mortgage Loan and
(a) referred to or otherwise considered in the appraisal made for the originator
of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of
the Mortgaged Property set forth in such appraisal;

 

c. other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property.

 

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein and Seller has full right to pledge and assign
the same to Buyer. The Mortgaged Property was not, as of the date of origination
of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt
or other security instrument creating a lien subordinate to the lien of the
Mortgage.

 

 

 

 Schedule 1 Part 1 - 3 

 

(j) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any
other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, in connection with a Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan. Seller has
reviewed all of the documents constituting the Mortgage File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein. To the best of Seller’s knowledge, except as
disclosed to Buyer in writing, all tax identifications and property descriptions
are legally sufficient; and tax segregation, where required, has been completed.

 

(k) Full Disbursement of Proceeds. There is no further requirement for future
advances under the Mortgage Loan, and any and all requirements as to completion
of any on-site or off-site improvement and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage.

 

(l) Ownership. Seller has full right to sell the Mortgage Loan to Buyer free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to sell each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security interest
except any such security interest created pursuant to the terms of this
Agreement.

 

(m) Doing Business. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (i) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (ii) either (A) organized under
the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (D) not doing business in such state.

 

 

 

 Schedule 1 Part 1 - 4 

 

(n) Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s
opinion of title and abstract of title, the form and substance of which is
acceptable to prudent mortgage lending institutions making mortgage loans in the
area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title
insurance policy or other generally acceptable form of policy or insurance
acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is
issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring Seller, its successors and assigns, as to the first priority lien of
the Mortgage, as applicable, in the original principal amount of the Mortgage
Loan, with respect to a Mortgage Loan (or to the extent a Mortgage Note provides
for negative amortization, the maximum amount of negative amortization in
accordance with the Mortgage), subject only to the exceptions contained in
clauses (a), (b) and (c) of paragraph (i) of this Schedule 1. Seller, its
successors and assigns, are the sole insureds of such lender’s title insurance
policy, and such lender’s title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
lender’s title insurance policy, and no prior holder or servicer of the related
Mortgage, including Seller, has done, by act or omission, anything which would
impair the coverage of such lender’s title insurance policy, including without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by Seller.

 

(o) No Defaults. There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event has occurred
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and neither Seller nor its predecessors have waived any default,
breach, violation or event of acceleration.

 

(p) No Mechanics’ Liens. There are no mechanics’ or similar liens or claims
which have been filed for work, labor or material (and no rights are outstanding
that under the law could give rise to such liens) affecting the Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the Mortgage.

 

(q) Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.

 

(r) Origination; Payment Terms. The Mortgage Loan was originated by or in
conjunction with a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal and/or interest payments on
the Mortgage Loan commenced no more than 60 days after funds were disbursed in
connection with the Mortgage Loan. With respect to adjustable rate Mortgage
Loans, the Mortgage Interest Rate is adjusted on each Interest Rate Adjustment
Date to equal the Index plus the Gross Margin (rounded up or down to the nearest
.125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable
on the first day of each month in equal monthly installments of principal and/or
interest (subject to an “interest only” period in the case of Interest Only
Loans), which installments of interest (a) with respect to adjustable rate
Mortgage Loans are subject to change on the Interest Rate Adjustment Date due to
adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date
and (b) with respect to Interest Only Loans are subject to change on the
Interest Only Adjustment Date due to adjustments to the Mortgage Interest Rate
on each Interest Only Adjustment Date, in both cases with interest calculated
and payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than 30 years from
commencement of amortization.

 

 

 

 Schedule 1 Part 1 - 5 

 

(s) Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage
contains customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby, including,
(i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale,
and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property
pursuant to the proper procedures, the holder of the Mortgage Loan will be able
to deliver good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption or other right available to the Mortgagor or any
other person, or restriction on the Seller or any other person, including
without limitation, any federal, state or local, law, ordinance, decree,
regulation, guidance, attorney general action, or other pronouncement, whether
temporary or permanent in nature, that would interfere with, restrict or delay,
either (y) the ability of the Seller, Buyer or any servicer or any successor
servicer to sell the related Mortgaged Property at a trustee's sale or
otherwise, or (z) the ability of the Seller, Buyer or any servicer or any
successor servicer to foreclose on the related Mortgage. The Mortgage Note and
Mortgage are on forms acceptable to Freddie Mac or Fannie Mae.

 

(t) Occupancy of the Mortgaged Property. As of the Purchase Date the Mortgaged
Property is lawfully occupied under applicable law. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities. Seller has not received notification from any Governmental
Authority that the Mortgaged Property is in material non-compliance with such
laws or regulations, is being used, operated or occupied unlawfully or has
failed to have or obtain such inspection, licenses or certificates, as the case
may be. Seller has not received notice of any violation or failure to conform
with any such law, ordinance, regulation, standard, license or certificate. With
respect to any Mortgage Loan originated with an “owner-occupied” Mortgaged
Property, the Mortgagor represented at the time of origination of the Mortgage
Loan that the Mortgagor would occupy the Mortgaged Property as the Mortgagor’s
primary residence.

 

(u) No Additional Collateral. The Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
clause (i) above.

 

(v) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
Buyer to the trustee under the deed of trust, except in connection with a
trustee’s sale after default by the Mortgagor.

 

 

 

 Schedule 1 Part 1 - 6 

 

(w) Transfer of Mortgage Loans. Except with respect to Mortgage Loans intended
for purchase by GNMA and for Mortgage Loans registered with MERS, the Assignment
of Mortgage is in recordable form and is acceptable for recording under the laws
of the jurisdiction in which the Mortgaged Property is located.

 

(x) Due-On-Sale. Except with respect to Mortgage Loans intended for purchase by
GNMA, the Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event that
the Mortgaged Property is sold or transferred without the prior written consent
of the mortgagee thereunder.

 

(y) No Buydown Provisions; No Graduated Payments or Contingent Interests. Except
with respect to Agency Mortgage Loans, the Mortgage Loan does not contain
provisions pursuant to which Monthly Payments are paid or partially paid with
funds deposited in any separate account established by Seller, the Mortgagor, or
anyone on behalf of the Mortgagor, or paid by any source other than the
Mortgagor nor does it contain any other similar provisions which may constitute
a “buydown” provision. The Mortgage Loan is not a graduated payment mortgage
loan and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature.

 

(z) Consolidation of Future Advances. Any future advances made to the Mortgagor
prior to the Purchase Date have been consolidated with the outstanding principal
amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee’s consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan.

 

(aa) No Condemnation Proceeding. There have not been any condemnation
proceedings with respect to the Mortgaged Property and Seller has no knowledge
of any such proceedings.

 

(bb) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination and collection practices used by the originator, each servicer of
the Mortgage Loan and Seller with respect to the Mortgage Loan have been in all
respects in compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, Seller and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. All Escrow Payments have been collected in full compliance with state and
federal law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due Seller have been capitalized
under the Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments
have been made in strict compliance with state and federal law and the terms of
the related Mortgage Note. Any interest required to be paid pursuant to state,
federal and local law has been properly paid and credited.

 

 

 

 Schedule 1 Part 1 - 7 

 

(cc) Conversion to Fixed Interest Rate. Except as allowed by Fannie Mae or
Freddie Mac or otherwise as expressly approved in writing by Buyer, with respect
to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a
fixed interest rate Mortgage Loan.

 

(dd) Other Insurance Policies. No action, inaction or event has occurred and no
state of facts exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable special
hazard insurance policy, PMI Policy or bankruptcy bond, irrespective of the
cause of such failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will be
received by Seller or by any officer, director, or employee of Seller or any
designee of Seller or any corporation in which Seller or any officer, director,
or employee had a financial interest at the time of placement of such insurance.

 

(ee) Servicemembers Civil Relief Act. The Mortgagor has not notified Seller, and
Seller has no knowledge, of any relief requested or allowed to the Mortgagor
under the Servicemembers Civil Relief Act of 2003.

 

(ff) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the funding of the Mortgage Loan by a qualified
appraiser, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not affected
by the approval or disapproval of the Mortgage Loan, and the appraisal and
appraiser both satisfy the requirements of Fannie Mae or Freddie Mac and Title
XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 as
amended and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.

 

(gg) Disclosure Materials. The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of adjustable rate mortgage loans, and Seller
maintains such statement in the Mortgage File.

 

(hh) Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was
made in connection with the construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of a Mortgaged Property.

 

(ii) No Defense to Insurance Coverage. No action has been taken or failed to be
taken, no event has occurred and no state of facts exists or has existed on or
prior to the Purchase Date (whether or not known to Seller on or prior to such
date) which has resulted or will result in an exclusion from, denial of, or
defense to coverage under any private mortgage insurance (including, without
limitation, any exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss otherwise due
thereunder to the insured) whether arising out of actions, representations,
errors, omissions, negligence, or fraud of Seller, the related Mortgagor or any
party involved in the application for such coverage, including the appraisal,
plans and specifications and other exhibits or documents submitted therewith to
the insurer under such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay by reason of such
insurer’s breach of such insurance policy or such insurer’s financial inability
to pay.

 

 

 

 Schedule 1 Part 1 - 8 

 

(jj) Capitalization of Interest. The Mortgage Note does not by its terms provide
for the capitalization or forbearance of interest.

 

(kk) No Equity Participation. No document relating to the Mortgage Loan provides
for any contingent or additional interest in the form of participation in the
cash flow of the Mortgaged Property or a sharing in the appreciation of the
value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note
is not convertible to an ownership interest in the Mortgaged Property or the
Mortgagor and Seller has not financed nor does it own directly or indirectly,
any equity of any form in the Mortgaged Property or the Mortgagor.

 

(ll) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been
and shall not be used to satisfy, in whole or in part, any debt owed or owing by
the Mortgagor to Seller or any Affiliate or correspondent of Seller, except in
connection with a refinanced Mortgage Loan.

 

(mm) Origination Date. The Purchase Date for a Mortgage Loan other than a
correspondent Mortgage Loan is no more than thirty (30) days following the
origination date and the Purchase Date for a correspondent Mortgage Loan is no
more than one hundred eighty (180) days following the origination date.

 

(nn) No Exception. The Custodian has not noted any material exceptions on a
Custodial Mortgage Loan Schedule with respect to the Mortgage Loan which would
materially adversely affect the Mortgage Loan or Buyer’s interest in the
Mortgage Loan.

 

(oo) Mortgage Submitted for Recordation. The Mortgage either has been or will
promptly be submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.

 

(pp) Documents Genuine. Such Purchased Mortgage Loan and all accompanying
collateral documents are complete and authentic and all signatures thereon are
genuine. Such Purchased Mortgage Loan is a “closed” loan.

 

(qq) Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona fide loan,
complying with all applicable State and Federal laws and regulations, to persons
having legal capacity to contract and is not subject to any defense, set-off or
counterclaim.

 

(rr) Other Encumbrances. To the best of Seller’s knowledge, any property subject
to any security interest given in connection with such Purchased Mortgage Loan
is not subject to any other encumbrances other than a stated first mortgage, if
applicable, and encumbrances which may be allowed under the Underwriting
Guidelines.

 

 

 

 Schedule 1 Part 1 - 9 

 

(ss) Description. Each Purchased Mortgage Loan conforms to the description
thereof as set forth on the related Custodial Mortgage Loan Schedule delivered
to the Custodian and Buyer.

 

(tt) Located in U.S. No collateral (including, without limitation, the related
real property and the dwellings thereon and otherwise) relating to a Purchased
Mortgage Loan is located in any jurisdiction other than in one of the fifty (50)
states of the United States of America or the District of Columbia.

 

(uu) Underwriting Guidelines. Each Purchased Mortgage Loan has been originated
in accordance with the Underwriting Guidelines (including all supplements or
amendments thereto).

 

(vv) Aging. Such Purchased Mortgage Loan has not been subject to a Transaction
hereunder for more than the applicable Aging Limit.

 

(ww) Reserved.

 

(xx) Primary Mortgage Guaranty Insurance. Each Conforming Mortgage Loan with a
Loan to Value Ratio of 80% or higher is insured as to payment defaults by
primary mortgage guaranty insurance. Each other Mortgage Loan is insured as to
payment defaults by a policy of primary mortgage guaranty insurance where
applicable. Each Purchased Mortgage Loan is insured in the amount required, and
by an insurer approved, by the applicable Take-out Investor, if applicable, and
all provisions of such primary mortgage guaranty insurance have been and are
being complied with, such policy is in full force and effect, and all premiums
due thereunder have been paid. Each Mortgage Loan which is represented to Buyer
to have, or to be eligible for, FHA insurance is insured, or eligible to be
insured, pursuant to the National Housing Act. Each Mortgage Loan which is
represented by Seller to be guaranteed, or to be eligible for guaranty, by the
VA is guaranteed, or eligible to be guaranteed, under the provisions of Chapter
37 of Title 38 of the United States Code. As to each FHA insurance certificate
or each VA guaranty certificate, Seller has complied with applicable provisions
of the insurance for guaranty contract and federal statutes and regulations, all
premiums or other charges due in connection with such insurance or guarantee
have been paid, there has been no act or omission which would or may invalidate
any such insurance or guaranty, and the insurance or guaranty is, or when
issued, will be, in full force and effect with respect to each Mortgage Loan.
There are no defenses, counterclaims, or rights of setoff affecting the Mortgage
Loans or affecting the validity or enforceability of any private mortgage
insurance or FHA insurance applicable to the Mortgage Loans or any VA guaranty
with respect to the Mortgage Loans.

 

(yy) Predatory Lending Regulations; High Cost Loans. None of the Mortgage Loans
are classified as High Cost Mortgage Loans.

 

(zz) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan that is a
Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing by
Seller to hold the related Mortgage Loan Documents as agent and bailee for Buyer
or Buyer agent and to promptly forward such Mortgage Loan Documents in
accordance with the provisions of the applicable Custodial Agreement and the
Escrow Instruction Letter.

 

 

 

 Schedule 1 Part 1 - 10 

 

(aaa) FHA Mortgage Insurance; VA Loan Guaranty. With respect to the FHA Loans,
the FHA Mortgage Insurance Contract is or is eligible to be in full force and
effect and there exists no impairment to full recovery without indemnity to the
Department of Housing and Urban Development or the FHA under FHA Mortgage
Insurance. With respect to the VA Loans, the VA Loan Guaranty Agreement is in
full force and effect to the maximum extent stated therein. All necessary steps
have been taken to keep such guaranty or insurance valid, binding and
enforceable and each of such is the binding, valid and enforceable obligation of
the FHA and the VA, respectively, to the full extent thereof, without surcharge,
set-off or defense. Each FHA Loan and VA Loan was originated in accordance with
the criteria of an Agency for purchase of such Mortgage Loans.

 

(bbb) Second Lien. None of the Mortgage Loans are second lien Mortgage Loans.

 

(ccc) Qualified Mortgage. Notwithstanding anything to the contrary set forth in
this Agreement, on and after January 10, 2014 (or such later date as set forth
in the relevant regulations), (i) prior to the origination of each Mortgage
Loan, the originator made a reasonable and good faith determination that the
Mortgagor had a reasonable ability to repay the loan according to its terms, in
accordance with, at a minimum, the eight underwriting factors set forth in 12
CFR 1026.43(c) and (ii) each Mortgage Loan is a “Qualified Mortgage” as defined
in 12 CFR 1026.43(e).

 

 

 

 

 

 

 

 Schedule 1 Part 1 - 11 

 

SCHEDULE 1

 

PART 2

 

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

UNDERLYING REPURCHASE TRANSACTIONS

 

 

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

 

(b) Original Terms Unmodified. Except to the extent approved in writing by
Buyer, the terms of the Underlying Repurchase Documents have not been impaired,
altered or modified in any material respect.

 

(c) No Defenses. The Underlying Repurchase Transaction is not subject to any
right of rescission, set-off, counterclaim or defense nor will the operation of
any of the terms of any Underlying Repurchase Documents, or the exercise of any
right thereunder, render any Underlying Repurchase Document unenforceable in
whole or in part and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto.

 

(d) No Bankruptcy. The Underlying Repurchase Counterparty is not subject to an
Act of Insolvency. The Underlying Repurchase Counterparty has not threatened
and, to Seller’s knowledge, is not contemplating either the filing of a petition
by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of the Underlying Repurchase
Counterparty’s assets or any of the Mortgage Loans.

 

(e) Compliance with Applicable Laws; Consents. Any and all requirements of any
federal, state or local law including, without limitation, usury, consumer
credit protection, or disclosure laws applicable to the Underlying Repurchase
Transaction have been complied with in all material respects, the consummation
of the transactions contemplated hereby will not involve the violation of any
such laws or regulations, and Seller shall maintain in its possession, available
for the inspection by Buyer, and shall deliver to Buyer, upon demand, evidence
of compliance with all such requirements. All consents of and all filings with
any federal or state Governmental Authority necessary in connection with the
execution, delivery or performance of the Underlying Repurchase Transaction have
been obtained or made and are in full force and effect.

 

 

 

 Schedule 1 Part 2 - 1 

 

(f) [reserved].

 

(g) [reserved].

 

(h) Delivery of Underlying Repurchase Documents. True and correct fully executed
copies of the Underlying Repurchase Documents have been delivered to Buyer.

 

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

 

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

 

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

 

(l) Underlying Repurchase Transaction Not Assigned. No Underlying Repurchase
Transaction Document is assigned to any third party. No Underlying Repurchase
Counterparty has sold, assigned, transferred or otherwise disposed of, or
granted any option with respect to, or pledged, hypothecated or granted a
security interest in or lien on or otherwise encumbered (except pursuant to the
Underlying Repurchase Documents), any of the Purchased Mortgage Loans or any
interest therein. The Underlying Repurchase Documents permit Seller to sell,
assign, pledge, transfer or rehypothecate the Mortgage Loans and all other
collateral purchased by Seller pursuant to the Underlying Repurchase Documents.

 

 

 

 Schedule 1 Part 2 - 2 

 

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

 

(n) Ownership. Underlying Repurchase Counterparty has sold the Underlying
Mortgage Loan on a servicing-released basis to the Seller under the Underlying
Repurchase Transaction. Underlying Repurchase Counterparty has good,
indefeasible and marketable title to the Mortgage Loans, and has full right to
transfer, pledge and assign the Mortgage Loans to Seller free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge the Mortgage Loans pursuant to the Underlying Repurchase Documents, and
following the transfer and pledge of the Mortgage Loans, Seller will hold such
Mortgage Loans free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest except any such
security interest created other than those created under this Agreement.

 

(o) Agency Approvals. In the event the applicable Underlying Repurchase
Counterparty becomes an FHA Approved Mortgagee, a VA Approved Lender and a GNMA
Approved Lender, such Underlying Repurchase Counterparty shall remain an FHA
Approved Mortgagee, a VA Approved Lender and a GNMA Approved Lender, as
applicable. In the event the applicable Underlying Repurchase Counterparty is
also approved by Fannie Mae as an approved lender and Freddie Mac as an approved
seller/servicer, and, to the extent necessary, approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act, such Underlying Repurchase Counterparty shall remain so approved.
In each such case, the applicable Underlying Repurchase Counterparty is in good
standing, with no event having occurred or such Underlying Repurchase
Counterparty having any reason whatsoever to believe or suspect will occur prior
to the issuance of the Agency Security or the consummation of the Take-out
Commitment, as the case may be, including, without limitation, a change in
insurance coverage which would either make such Underlying Repurchase
Counterparty unable to comply with the eligibility requirements for maintaining
all such applicable approvals or require notification to the relevant Agency or
to the Department of Housing and Urban Development, FHA or VA.

 

 

 

 Schedule 1 Part 2 - 3 

 

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

 

(q) No Prohibited Persons. Neither the related Underlying Repurchase
Counterparty nor any of its affiliates, officers, directors, partners or
members, is an entity or person (or to Seller’s knowledge after due inquiry,
owned or controlled by an entity or person): (i) that is listed in the Annex to,
or is otherwise subject to the provisions of Executive Order 13224 issued on
September 24, 2001 (“EO13224”); (ii) whose name appears on the United States
Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current
list of “Specifically Designated National and Blocked Persons” (which list may
be published from time to time in various mediums including, but not limited to,
the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits,
threatens to commit or supports “terrorism”, as that term is defined in EO13224;
or (iv) who is otherwise affiliated with any entity or person listed above.

 

(r) [reserved].

 

(s) Mortgage Loans Assignable; Buyer’s Security Interest. The Underlying
Mortgage Loan Documents and Underlying Repurchase Documents have been delivered
to Buyer and the UCC-1 Financing Statement naming the Underlying Repurchase
Counterparty as debtor and Seller as secured party and identifying the Mortgage
Loans as collateral has been filed in the applicable filing office.

 

(t) Reserved.

 

(u) Reserved.

 

(v) Underlying Repurchase Counterparty Diligence. Seller has delivered to Buyer
all information regarding the applicable Underlying Repurchase Counterparty as
Buyer has requested and such information is satisfactory to Buyer in all
material respects.

 

(w) Lender Insurance Authority. In the event that the related Underlying
Repurchase Counterparty has on the date hereof or subsequently receives Lender
Insurance Authority, such authority shall not be revoked or suspended.

 

(x) Underlying Repurchase Documents. The Underlying Repurchase Documents are
“repurchase agreements” within the meaning of Section 559 of the Bankruptcy
Code.

 

(y) Reserved.

 

(z) True and Complete Disclosure. All information, reports, exhibits, schedules,
financial statements or certificates of each Underlying Repurchase Counterparty
or any of its officers furnished or to be furnished to Buyer in connection with
the initial or any ongoing due diligence of any Underlying Repurchase
Counterparty or officer thereof, negotiation, preparation, or delivery of the
Program Agreements are true and complete and do not omit to disclose any
material facts necessary to make the statements herein or therein, in light of
the circumstances in which they are made, not misleading. All financial
statements have been prepared in accordance with GAAP (other than monthly
financial statements solely with respect to footnotes, year-end adjustments and
cash flow statements).

 

 

 

 Schedule 1 Part 2 - 4 

 

(aa) Material Adverse Change. There has been no material adverse change in the
business, operations, financial condition, properties or prospects of any
Underlying Repurchase Counterparty since the date set forth in the most recent
financial statements supplied to Buyer as determined by Buyer in its sole good
faith discretion and there is no other condition which, in Buyer’s sole good
faith discretion, constitutes a material impairment of any Underlying Repurchase
Counterparty’s ability to perform its obligations under the Underlying
Repurchase Documents.

 

(bb) Insurance. The Underlying Repurchase Counterparty maintains, for itself and
its Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to
$300,000. Each Underlying Repurchase Counterparty maintains, for itself and its
Subsidiaries, Fidelity Insurance in respect of its officers, employees and
agents, with respect to any claims made in connection with all or any portion of
the Mortgage Loans it originates. The Underlying Repurchase Counterparty will
notify the Buyer of any material change in the terms of any such Fidelity
Insurance.

 

(cc) Government Action. No Governmental Authority or any person, agency or
entity acting or purporting to act under governmental authority has taken any
action, which has not been discontinued or stayed within thirty (30) days: (i)
to condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of the Underlying Repurchase Counterparty or
any Affiliate thereof, (ii) to displace the management of the Underlying
Repurchase Counterparty or any Affiliate thereof, (iii) to curtail its authority
in the conduct of the business of the Underlying Repurchase Counterparty or any
Affiliate thereof, or (iv) in the nature of enforcement, to remove, limit or
restrict the approval of such Underlying Repurchase Counterparty or Affiliate as
an issuer, buyer or a seller/servicer of Mortgage Loans or securities backed
thereby.

 

(dd) Financial Statements. The Underlying Repurchase Counterparty’s audited
annual financial statements or the notes thereto or other opinions or
conclusions stated therein are not qualified or limited by reference to the
status of such Underlying Repurchase Counterparty as a “going concern” or a
reference of similar import.

 

(ee) Governmental Event. In Buyer’s sole discretion, no Governmental Event
individually or collectively, and whether unforeseen or arising out of the
Underlying Repurchase Counterparty’s existing applications, communications and
correspondence with any Governmental Authority or Person, has had a Material
Adverse Effect with respect to the Underlying Repurchase Counterparty, or an
adverse effect upon such Underlying Repurchase Counterparty’s ability to perform
such Underlying Repurchase Counterparty’s obligations under the Underlying
Repurchase Documents or any other material agreement to which it is a party or
would otherwise materially impair, limit or restrict such Underlying Repurchase
Counterparty’s ability to conduct its business or its operations.

 

 

 

 Schedule 1 Part 2 - 5 

 

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

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 2 - 6 

 

SCHEDULE 2

 

AUTHORIZED REPRESENTATIVES

 

 

 

SELLER AUTHORIZATIONS

 

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

 

Authorized Representatives for execution of Program Agreements and amendments

 

Name   Title   Signature

 

 

 

 

 

 

 

 

 

 

Authorized Representatives for execution of Transaction Requests and day-to-day
operational functions

 

Name   Title   Signature

 

 

 

 

 Schedule 2 - 1 

 

BUYER AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below, including any other
authorized officers, are authorized, acting singly, to act for Buyer under this
Agreement:

 

Name

 

Title

 

Signature

 

Margaret Dellafera

 

Adam Loskove

 

Vice President

 

Vice President

 

  Elie Chau Vice President         Patrick Gallagher Vice President        
Deirdre Harrington Vice President        

Robert Durden

 

Vice President   Ron Tarantino Vice President         Michael Marra Vice
President  

 

 

 

 

 Schedule 2 - 2 

 

EXHIBIT A

 

FORM OF PURCHASE CONFIRMATION

 

[Date]

 

[Name]
__________
__________

Attention:

 

Credit Suisse First Boston Mortgage Capital LLC (“CSFBMCL”) is pleased to
confirm your sale and our purchase of the Mortgage Loans described below and on
the attached Custodial Mortgage Loan Schedule pursuant to the Amended and
Restated Master Repurchase Agreement dated as of March 31, 2016 (as amended from
time to time, the “Master Repurchase Agreement”) by and among PennyMac Operating
Partnership, L.P., PennyMac Mortgage Investment Trust and Credit Suisse First
Boston Mortgage Capital LLC under the following terms and conditions:

 

Market Value: $ Current Principal Amount of Mortgage Loans: $ Aggregate Purchase
Price: $ Purchase Date:   Repurchase Date:   Pricing Rate:   ADDITIONAL
INFORMATION:   Aggregate Purchase Price (date): $ Less Previous Aggregate
Purchase Price: $ Less Price Differential due on (date): $ Net funds due
[CSFBMCL]/[Name] on (date): $

 

The Master Repurchase Agreement is incorporated by reference into this Purchase
Confirmation, is made a part hereof as if it were fully set forth herein and is
extended hereby until all amounts due in connection with this Transaction are
paid in full.

 

 Exhibit A-1 

 

All capitalized terms used herein but not defined herein shall have the meanings
specified in the Master Repurchase Agreement.

 

 

   

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

 

By:__________________________________
Name:
Title:

 

 

[Name]

 

 

By:____________________________________
Name:
Title:

 

 

 

 

 

 Exhibit A-2 

 

EXHIBIT B

 

MORTGAGE LOAN SCHEDULE

MORTGAGE LOAN CHARACTERISTICS

 

 

1. Customer Name 2. Collateral Number 3. Primary Borrower Last Name 4. Primary
Borrower First Name 5. Co-Borrower Last Name * 6. Co-Borrower First Name * 7.
Property Address 8. City 9. State 10. Zip Code 11. County 12. SS Number 13. SS #
Co-borrower * 14. Product Type/Code 15. Underlying Repurchase Counterparty 16.
Servicer/REO Manager 17. Loan Amount 18. Original monthly principal and interest
19. Original interest rate 20. Original date of Mortgage Note 21. Closing Date
22. First Payment Date 23. Maturity Date 24. Loan Type (adjustable, fixed, etc)
25. Purchase Date 26. Funding Method Code (wire disbursement, etc.) 27. Closing
Agent 28. Address 29. City 30. State 31. Zip Code 32. Account Number 33. ABA
Number 34. Closing Schedule 35. Instructions 36. Name of Bank 37. Address of
Bank 38. City of Bank 39. State of Bank

 

 Exhibit B-1 

 

 

40. Zip of Bank 41. Other Account Bank * 42. Further Instructions * 43. Investor
* 44. Investor Commitment Number * 45. Price * 46. Commitment Date * 47.
Commitment Expiration Date * 48. Property Type 49. Lien Position 50. LTV 51.
CLTV 52. FICO 53. Amortization Term 54. Purpose 55. No. of Units 56. Original
Appraised Value 57. Name of appraiser 58. Certificate Number for each loan with
primary mortgage insurance* 59. Margin* 60. Life floor* 61. Index type* 62.
Initial rate floor* 63. Periodic rate cap* 64. Life cap* 65. First interest rate
adjustment date* 66. Underlying Repurchase Counterparty

 

 

* If applicable.

 

 Exhibit B-2 

 

EXHIBIT C

 

FORM OF SERVICING RENEWAL LETTER

 

[Date]

 

[__________], as Servicer
[ADDRESS]
Attention: ___________

 

Re:Amended and Restated Master Repurchase Agreement, dated as of March 31, 2016
(the “Repurchase Agreement”), by and among PennyMac Operating Partnership, L.P.
(the “Seller”), PennyMac Mortgage Investment Trust (the “Guarantor”) and Credit
Suisse First Boston Mortgage Capital LLC (the “Buyer”).

 

Ladies and Gentlemen:

 

The Buyer hereby renews the servicing term with respect to the Purchased
Mortgage Loans listed on the attached schedule for an additional period of
ninety (90) days. The servicing term will automatically terminate at the end of
such additional period unless renewed by Buyer in accordance with the Repurchase
Agreement.

 

 

   

Credit Suisse First Boston Mortgage Capital LLC, as Buyer

 

 

 

By:  ____________________________________
       Name:
       Title:

 

 

 

 

 Exhibit C-1 

 

EXHIBIT D

 

FORM OF POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that PennyMac Operating Partnership, L.P.
(“Seller”) hereby irrevocably constitutes and appoints Credit Suisse First
Boston Mortgage Capital LLC (“Buyer”) and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Seller and in the name
of Seller or in its own name, from time to time in Buyer’s discretion:

 

a.in the name of Seller, or in its own name, or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any assets purchased
by Buyer under the Amended and Restated Master Repurchase Agreement (as amended,
restated or modified) dated March 31, 2016, by and among PennyMac Operating
Partnership, L.P., PennyMac Mortgage Investment Trust and Credit Suisse First
Boston Mortgage Capital LLC (the “Assets”) from Seller and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Buyer for the purpose of collecting any and all
such moneys due with respect to the Obligations;

 

b.to pay or discharge taxes and liens levied or placed on or threatened against
the Assets;

 

c.(i) to direct any party liable for any payment under any Assets, including
without limitation, any Underlying Repurchase Counterparty under any Underlying
Repurchase Document, to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (ii) to ask or demand
for, collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Assets including without limitation, from any Underlying Repurchase
Counterparty under any Underlying Repurchase Document; (iii) to sign and endorse
any invoices, assignments, verifications, notices and other documents in
connection with any Assets including without limitation, with respect to any
Underlying Repurchase Counterparty under any Underlying Repurchase Document;
(iv) to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Assets or any
proceeds thereof and to enforce any other right in respect of any Assets
including without limitation, any Underlying Repurchase Document; (v) to defend
any suit, action or proceeding brought against Seller with respect to any
Assets, (vi) to settle, compromise or adjust any suit, action or proceeding
described in clause (vii) above and, in connection therewith, to give such
discharges or releases as Buyer may deem appropriate; and (viii) generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any Assets as fully and completely as though Buyer were the absolute owner
thereof for all purposes, and to do, at Buyer’s option and Seller’s expense, at
any time, and from time to time, all acts and things which Buyer deems necessary
to protect, preserve or realize upon the Assets and Buyer’s Liens thereon and to
effect the intent of this Agreement, all as fully and effectively as Seller
might do, including without limitation, in each case, with respect to any
Underlying Repurchase Counterparty and any Underlying Repurchase Document;

 

 

 

 Exhibit D-1 

 

d.for the purpose of carrying out the transfer of servicing with respect to the
Assets including without limitation, directing any Underlying Repurchase
Counterparty under any Underlying Repurchase Document, from Seller or any third
party to a successor servicer appointed by Buyer in its sole discretion and to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish such transfer of
servicing, and, without limiting the generality of the foregoing, Seller hereby
gives Buyer the power and right, on behalf of Seller, without assent by Seller,
to, in the name of Seller or its own name, or otherwise, prepare and send or
cause to be sent “good-bye” letters to all mortgagors under the Assets,
transferring the servicing of the Assets to a successor servicer appointed by
Buyer in its sole discretion;

 

e.for the purpose of delivering any notices of sale including without
limitation, on behalf of any Underlying Repurchase Counterparty under any
Underlying Repurchase Document, to mortgagors or other third parties, including
without limitation, those required by law.

 

f.For the purpose of acting as attorney-in-fact for any Underlying Repurchase
Counterparty pursuant to any power of attorney granted to Seller by such
Underlying Repurchase Counterparty.

 

Seller hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

 

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

 

Seller also authorizes Buyer, from time to time, to execute, in connection with
any sale, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Assets.

 

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

 

 

 Exhibit D-2 

 

 

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

 

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

 

 

 

 

 

 

 

 Exhibit D-3 

 

 

 

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed and
Seller’s seal to be affixed this ____ day of _________, 2016.

 

 

   

PennyMac Operating Partnership, L.P., as Seller

 

By: PennyMac GP OP, Inc., its General Partner

 

By:________________________________

       Name:

       Title:

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Power of Attorney

   

 

 

STATE OF ____________ )     ) ss.: COUNTY OF __________ )  

 

On the _______ day of _________, 2016 before me, a Notary Public in and for said
State, personally appeared            , known to me to be ______________________
of PennyMac Operating Partnership, L.P., the institution that executed the
within instrument and also known to me to be the person who executed it on
behalf of said limited partnership, and acknowledged to me that such limited
partnership executed the within instrument.

 

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

 

_____________________________
Notary Public

 

My Commission expires          

 

 

 

 

Signature Page to Power of Attorney

   

 

EXHIBIT E

 

LITIGATION

 

 

 

[None]

 

 

 

 

 

 Exhibit E-1 

 

EXHIBIT F

 

Officer’s Certificate

 

The undersigned, ____________ of [PennyMac Operating Partnership, L.P.]
[PennyMac Mortgage Investment Trust] [PennyMac GP OP, Inc.], a [STATE]
[corporation] (the “Company”), hereby certifies as follows:

 

1. Attached hereto as Exhibit A is a copy of the formation documents of the
Company, as certified by the Secretary of State of the State of [STATE].

 

2. Neither any amendment to the formation documents of the Company nor any other
organizational document with respect to the Company has been filed, recorded or
executed since _______ __, ____, and no authorization for the filing, recording
or execution of any such amendment or other organizational document is
outstanding.

 

3. Attached hereto as Exhibit B is a true, correct and complete copy of the
By-laws of the Company as in effect as of the date hereof and at all times since
________ ___, ____.

 

4. Attached hereto as Exhibit C is a true, correct and complete copy of
resolutions adopted by the Board of Directors of the Company by unanimous
written consent on _________ __, 20__ (the “Resolutions”). The Resolutions have
not been further amended, modified or rescinded and are in full force and effect
in the form adopted, and they are the only resolutions adopted by the Board of
Directors of the Company or by any committee of or designated by such Board of
Directors relating to the execution and delivery of, and performance of the
transactions contemplated by the Amended and Restated Master Repurchase
Agreement dated as of March 31, 2016 (the “Repurchase Agreement”), among the
Seller, the Guarantor and Credit Suisse First Boston Mortgage Capital LLC (the
“Buyer”).

 

5. The Repurchase Agreement [and the Guarantee] are substantially in the form
approved by the Resolutions or pursuant to authority duly granted by the
Resolutions.

 

6. The undersigned, as a officers of the Company or as attorney-in-fact, are
authorized to and have signed manually the Repurchase Agreement, [the Guarantee]
or any other document delivered in connection with the transactions contemplated
thereby, were duly elected or appointed, were qualified and acting as such
officer or attorney-in-fact at the respective times of the signing and delivery
thereof, and were duly authorized to sign such document on behalf of the
Company, and the signature of each such person appearing on any such document is
the genuine signature of each such person.

 

Name Title Signature

 

 

 

 Exhibit F-1 

 

 

 

IN WITNESS WHEREOF, the undersigned has hereunto executed this Certificate as of
the _____ day of __________, 2016.

 

[PennyMac Operating Partnership, L.P.] [PennyMac Mortgage Investment Trust]
[PennyMac GP OP, Inc.], as [Seller] [Guarantor]

By: ___________________________________
Name:
Title:

 

 

 

 

 

 Exhibit F-2 

 

 

 

EXHIBIT G

 

SELLER’S AND GUARANTOR’S TAX IDENTIFICATION NUMBERS

 

 

 

PennyMac Operating Partnership, L.P. 27-0214441 PennyMac Mortgage Investment
Trust 27-0186273

 

 

 

 

 

 

 Exhibit G-1 

 

EXHIBIT H

 

EXISTING INDEBTEDNESS

 

See attached.

 

 

 

 Exhibit H-1 

 

EXHIBIT I

 

 

 

form of ESCROW INSTRUCTION letter TO BE PROVIDED BY SELLER bEFORE CLOSING

 

 

The escrow instruction letter (the “Escrow Instruction Letter”) shall also
include the following instruction to the Settlement Agent (the “Escrow Agent”):

 

Credit Suisse First Boston Mortgage Capital LLC (the “Buyer”), has agreed to
provide funds (“Escrow Funds”) on behalf of PennyMac Operating Partnership, L.P.
to [UNDERLYING REPURCHASE COUNTERPARTY] to finance certain mortgage loans (the
“Mortgage Loans”) for which you are acting as Escrow Agent.

 

You hereby agree that (a) you shall receive such Escrow Funds from Buyer to be
disbursed in connection with this Escrow Instruction Letter, (b) you will hold
such Escrow Funds in trust, without deduction, set-off or counterclaim for the
sole and exclusive benefit of Buyer until such Escrow Funds are fully disbursed
on behalf of Buyer in accordance with the instructions set forth herein, and (c)
you will disburse such Escrow Funds on the date specified for closing (the
“Closing Date”) only after you have followed the Escrow Instruction Letter’s
requirements with respect to the Mortgage Loans. In the event that the Escrow
Funds cannot be disbursed on the Closing Date in accordance with the Escrow
Instruction Letter, you agree to promptly remit the Escrow Funds to the Buyer by
re-routing via wire transfer the Escrow Funds in immediately available funds,
without deduction, set-off or counterclaim, back to the account specified in
Buyer’s incoming wire transfers.

 

You further agree that, upon disbursement of the Escrow Funds, you will hold all
Mortgage Loan Documents specified in the Escrow Instruction Letter in escrow as
agent and bailee for Buyer, and will forward or cause to be forwarded the
Mortgage Loan Documents and original Escrow Instruction Letter in connection
with such Mortgage Loans by overnight courier to the Custodian within five (5)
Business Days following the date of origination.

 

You agree that all fees, charges and expenses regarding your services to be
performed pursuant to the Escrow Instruction Letter are to be paid by Seller or
its borrowers, and Buyer shall have no liability with respect thereto.

 

You represent, warrant and covenant that you are not an affiliate of or
otherwise controlled by Seller, and that you are acting as an independent
contractor and not as an agent of Seller.

 

The provisions of this Escrow Instruction Letter may not be modified, amended or
altered, except by written instrument, executed by the parties hereto and Buyer.
You understand that Buyer shall act in reliance upon the provisions set forth in
this Escrow Instruction Letter, and that Buyer is an intended third party
beneficiary hereof.

 

 

 Exhibit I-1 

 

Whether or not an Escrow Instruction Letter executed by you is received by the
Custodian, your acceptance of the Escrow Funds shall be deemed to constitute
your acceptance of the Escrow Instruction Letter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit I-2 

 

EXHIBIT J

 

FORM OF SERVICER NOTICE AND PLEDGE

 

(Affiliate Servicer)

 

[Date]

 

[__________], as Servicer
[ADDRESS]
Attention: ___________

 

Re:Amended and Restated Master Repurchase Agreement, dated as of March 31, 2016
(the “Repurchase Agreement”), by and among PennyMac Operating Partnership, L.P.
(the “Seller”), PennyMac Mortgage Investment Trust (the “Guarantor”) and Credit
Suisse First Boston Mortgage Capital LLC (the “Buyer”).

 

Ladies and Gentlemen:

 

[__________] (the “Servicer”) is servicing certain mortgage loans originated by
[UNDERLYING REPURCHASE COUNTERPARTY] (“URC”) and purchased by Seller, which
mortgage loans are serviced pursuant to that certain [Servicing Agreement],
dated as of [_____ __, ____], between the Servicer and URC, as amended from time
to time. Pursuant to the Repurchase Agreement between Buyer and Seller, the
Servicer is hereby notified that Seller has sold and pledged to Buyer certain
mortgage loans which are serviced by Servicer which are subject to a security
interest in favor of Buyer. Capitalized Terms used but not defined herein shall
have the meaning assigned to such term in the Repurchase Agreement.

 

Section 1. Servicing Rights and Grant of Security Interest. (a) Buyer and
Servicer hereby agree that in order to further secure the Obligations under the
Repurchase Agreement, Servicer hereby grants, assigns and pledges to Buyer a
fully perfected first priority security interest in all of its Servicing Rights
related to the Purchased Mortgage Loans and all proceeds related thereto and in
all instances, whether now owned or hereafter acquired, now existing or
hereafter created.

 

(b) The foregoing provision is intended to constitute a security agreement or
other arrangement or other credit enhancement related to the Repurchase
Agreement and Transactions thereunder as defined under Sections 101(47)(A)(v)
and 741(7)(A)(xi) of the Bankruptcy Code.

 

(c) Buyer shall have all rights and remedies hereunder as are set forth in the
Repurchase Agreement.

 

(d) In addition, Servicer hereby acknowledges that the Buyer has purchased the
Purchased Mortgage Loans on a servicing released basis and Buyer shall have the
same rights and remedies with respect to the Servicing Rights as it has with
respect to the Repurchase Assets under the Repurchase Agreement.

 

 

 Exhibit J-1 

 

(e) Servicer agrees to execute, deliver and/or file such documents and perform
such acts as may be reasonably necessary to fully perfect Buyer’s security
interest created hereby. Furthermore, the Servicer hereby authorizes Buyer to
file financing statements relating to the security interest set forth herein, as
Buyer, at its option, may deem appropriate.

 

(f) Servicer waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations under the Repurchase Agreement or security
interest hereunder and notice or proof of reliance by Buyer upon this Servicer
Notice and Pledge. Servicer hereby waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon Seller or
Servicer with respect the Obligations.

 

Section 2. Act as Servicer. (a) Upon receipt of a Notice of Event of Default
from Buyer (“Notice of Event of Default”) in which Buyer shall identify the
Purchased Mortgage Loans which are then pledged to Buyer under the Repurchase
Agreement, the Servicer shall segregate all amounts collected on account of such
Purchased Mortgage Loans, hold them in trust for the sole and exclusive benefit
of Buyer, and remit such collections in accordance with Buyer’s written
instructions. Following such Notice of Event of Default, Servicer shall follow
the instructions of Buyer with respect to the Purchased Mortgage Loans,
including, without limitation, any instructions to transfer servicing, and shall
deliver to Buyer any information with respect to the Purchased Mortgage Loans
reasonably requested by Buyer.

 

(b) Servicer further acknowledges that notwithstanding any prior owner of the
Repurchase Assets, or any other agreement between such prior owner and the
Servicer, Buyer’s rights are superior to any other claim by any party and
Servicer shall follow the directions of Buyer and no other party, including,
without limitation, the URC and the Seller.

 

(c) Notwithstanding any contrary information which may be delivered to the
Servicer by Seller, the Servicer may conclusively rely on any information or
Notice of Event of Default delivered by Buyer, and Seller shall indemnify and
hold the Servicer harmless for any and all claims asserted against it for any
actions taken in good faith by the Servicer in connection with the delivery of
such information or Notice of Event of Default.

 

Section 3. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.

 

Section 4. Entire Agreement; Severability. This Agreement shall supersede any
existing agreements between the parties containing general terms and conditions
for repurchase transactions. Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement.

 

Section 5. Governing Law; Jurisdiction; Waiver of Trial by Jury. (a) THIS
SERVICER NOTICE AND PLEDGE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

 

 

 Exhibit J-2 

 

(b) SELLER AND SERVICER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
TO THE PROGRAM AGREEMENTS IN ANY ACTION OR PROCEEDING. SERVICER HEREBY SUBMITS
TO, AND WAIVES ANY OBJECTION THEY MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION
AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES
ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS.

 

(c) SELLER AND SERVICER HEREBY WAIVES TRIAL BY JURY.

 

 

 

[remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit J-3 

 

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

 

Credit Suisse First Boston Mortgage Capital LLC, as Buyer

 

By:____________________________________
       Name:

       Title:

 

 

 

 

 

 

 

 

 

 

 

 Exhibit J-4 

 

[__________], as Servicer

 

By:____________________________________
       Name:

       Title:

 

 

PennyMac Operating Partnership, L.P., as Seller

 

 

By: PennyMac GP OP, Inc., its General Partner

 

By:____________________________________
       Name:

       Title:

 

 

 

[UNDERLYING REPURCHASE COUNTERPARTY]

 

By:____________________________________
       Name:

       Title:

 

 

 

 

 

 

 

 

 

 

 Exhibit J-5 

 

EXHIBIT K

 

 

 

FORM OF SERVICER NOTICE

 

(Third Party Servicer)

 

[Date]

 

[__________], as Servicer
[ADDRESS]
Attention: ___________

 

Re:Master Repurchase Agreement, dated as of [______ __], 201[__] (the
“Repurchase Agreement”), by and [between] [among] [UNDERLYING REPURCHASE
COUNTERPARTY]. (the “URC”)[, [ ] (the “Guarantor”)] and PennyMac Operating
Partnership, L.P. (the “Buyer”), and any related repledge of assets as permitted
thereunder.

 

Ladies and Gentlemen:

 

 

[__________] (the “Servicer”) is servicing certain mortgage loans originated by
URC, which mortgage loans are serviced pursuant to that certain [Servicing
Agreement], dated as of [_____ __, ____], between the Servicer and URC, as
amended from time to time. Pursuant to the Amended and Restated Master
Repurchase Agreement, dated as of March 31, 2016 between Buyer and Credit Suisse
First Boston Mortgage Capital LLC (the “Repledgee”), the Servicer is hereby
notified that URC has sold and pledged to Buyer certain mortgage loans which are
serviced by Servicer, and Buyer has sold and repledged and may from time to time
repledge certain of such mortgage loans to Repledgee. Capitalized terms used but
not defined herein shall have the meaning assigned to such term in the
Repurchase Agreement.

 

Section 1. Act as Servicer. (a) Upon receipt of a Notice of Event of Default
from Buyer (“Notice of Event of Default”) in which Buyer shall identify the
Purchased Mortgage Loans which are then pledged to Buyer under the Repurchase
Agreement (“Purchased Mortgage Loans”), the Servicer shall segregate all amounts
collected on account of such Purchased Mortgage Loans, hold them in trust for
the sole and exclusive benefit of Buyer, and remit such collections in
accordance with Buyer’s written instructions. Following such Notice of Event of
Default, Servicer shall follow the instructions of Buyer with respect to the
Purchased Mortgage Loans, including, without limitation, any instructions to
transfer servicing, and shall deliver to Buyer any information with respect to
the Purchased Mortgage Loans reasonably requested by Buyer.

 

(b) Upon receipt of a Notice of Event of Default from Repledgee (“Notice of
Repledge Event of Default”) in which Repledgee shall identify the mortgage loans
which are then pledged to Repledgee (the “Repledged Mortgage Loans”), the
Servicer shall segregate all amounts collected on account of such Repledged
Mortgage Loans, hold them in trust for the sole and exclusive benefit of
Repledgee, and remit such collections in accordance with Repledgee’s written
instructions. Following such Notice of Repledge Event of Default, Servicer shall
follow the instructions of Repledgee with respect to the Repledged Mortgage
Loans, and shall deliver to Repledgee any information with respect to the
Repledged Mortgage Loans reasonably requested by Repledgee.

 

 

 

 Exhibit K-1 

 

(c) Servicer further acknowledges that notwithstanding any prior owner of the
Repurchase Assets, or any other agreement between such prior owner and the
Servicer, Repledgee’s rights are superior to any other claim by any party and
Servicer shall follow the directions of Repledgee and no other party, including,
without limitation, URC and the Buyer. For the avoidance of doubt, Servicer
acknowledges that Repledgee owns the Servicing Rights and proceeds related
thereto and in all instances, whether now owned or hereafter acquired, now
existing or hereafter created.

 

(d) Notwithstanding any contrary information which may be delivered to the
Servicer by URC, the Servicer may conclusively rely on any information or Notice
of Event of Default delivered by Buyer, and URC shall indemnify and hold the
Servicer harmless for any and all claims asserted against it for any actions
taken in good faith by the Servicer in connection with the delivery of such
information or Notice of Event of Default.

 

 

(e) Notwithstanding any contrary information which may be delivered to the
Servicer by Buyer, the Servicer may conclusively rely on any information or
Notice of Repledge Event of Default delivered by Repledgee, and URC shall
indemnify and hold the Servicer harmless for any and all claims asserted against
it for any actions taken in good faith by the Servicer in connection with the
delivery of such information or Notice of Repledge Event of Default.

 

(f) In the event that the Servicer shall receive both a Notice of Event of
Default and a Notice of Repledge Event of Default, the Servicer is hereby
instructed to follow only the directions of the Repledgee, and shall disregard
any instructions of Buyer given without the consent of the Repledgee.

 

Section 2. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.

 

Section 3. Entire Agreement; Severability. This Agreement shall supersede any
existing agreements between the parties containing general terms and conditions
for repurchase transactions. Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement.

 

Section 4. Governing Law; Jurisdiction; Waiver of Trial by Jury. (a) THIS
SERVICER NOTICE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.

 

 

 

 Exhibit K-2 

 

(b) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM
AGREEMENTS IN ANY ACTION OR PROCEEDING. SERVICER HEREBY SUBMITS TO, AND WAIVES
ANY OBJECTION THEY MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR
RELATING TO THE PROGRAM AGREEMENTS.

 

(c) EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY.

 

 

 

[remainder of page intentionally left blank]

 

 

 

 Exhibit K-3 

 

Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to Buyer promptly upon
receipt. Any notices to Buyer should be delivered to the following address:
_______________, _______________, _______________, Attention: _______________.

 

Very truly yours,

 

PennyMac Operating Partnership, L.P., as Buyer

 

By: PennyMac GP OP, Inc., its General Partner

 

By:____________________________________
       Name:

       Title:

 

ACKNOWLEDGED:

 

 

[UNDERLYING REPURCHASE COUNTERPARTY]

 

By:____________________________________
       Name:

       Title:

 

[__________], as Servicer

 

By:____________________________________
       Name:

       Title:

 

 

[__________], as Repledgee

 

By:____________________________________
       Name:

       Title:

 

 

 

 

 Exhibit K-4