Document:

Exhibit 10.13

 

EXECUTION VERSION

	
   

  	
   

  

 

 

MASTER REPURCHASE AGREEMENT

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as buyer 

(“Buyer”), and

 

PENNYMAC CORP., as seller (“Seller”), and

 

PENNYMAC MORTGAGE INVESTMENT TRUST and PENNYMAC OPERATING PARTNERSHIP, L.P.,
each a guarantor (collectively, the “Guarantors”)

 

 

Dated November 2, 2010

 

	
   

  	
   

  

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Applicability

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Program;
  Initiation of Transactions

  	
  17

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Repurchase

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Price
  Differential

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Margin
  Maintenance

  	
  20

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Income
  Payments

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Security
  Interest

  	
  22

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Payment
  and Transfer

  	
  23

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Conditions
  Precedent

  	
  23

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Program;
  Costs

  	
  26

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Servicing

  	
  27

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Representations
  and Warranties

  	
  28

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Covenants

  	
  35

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Events
  of Default

  	
  41

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Remedies
  Upon Default

  	
  45

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Reports

  	
  48

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Repurchase
  Transactions

  	
  51

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Single
  Agreement

  	
  51

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Notices
  and Other Communications

  	
  52

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Entire
  Agreement; Severability

  	
  53

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Non
  assignability

  	
  53

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Set-off

  	
  54

  

 

i

 

	
  24.

  	
  Binding
  Effect; Governing Law; Jurisdiction

  	
  54

  
	
   

  	
   

  	
   

  
	
  25.

  	
  No
  Waivers, Etc.

  	
  55

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Intent

  	
  55

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Disclosure
  Relating to Certain Federal Protections

  	
  55

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Power
  of Attorney

  	
  56

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Buyer
  May Act Through Affiliates

  	
  56

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Indemnification;
  Obligations

  	
  56

  
	
   

  	
   

  	
   

  
	
  31.

  	
  Counterparts

  	
  57

  
	
   

  	
   

  	
   

  
	
  32.

  	
  Confidentiality

  	
  57

  
	
   

  	
   

  	
   

  
	
  33.

  	
  Recording
  of Communications

  	
  59

  
	
   

  	
   

  	
   

  
	
  34.

  	
  Commitment
  Fee

  	
  59

  
	
   

  	
   

  	
   

  
	
  35.

  	
  Reserved

  	
  59

  
	
   

  	
   

  	
   

  
	
  36.

  	
  Periodic
  Due Diligence Review

  	
  59

  
	
   

  	
   

  	
   

  
	
  37.

  	
  Authorizations

  	
  60

  
	
   

  	
   

  	
   

  
	
  38.

  	
  Acknowledgement
  Of Anti-Predatory Lending Policies

  	
  60

  
	
   

  	
   

  	
   

  
	
  39.

  	
  Documents
  Mutually Drafted

  	
  60

  
	
   

  	
   

  	
   

  
	
  40.

  	
  General
  Interpretive Principles

  	
  60

  

 

SCHEDULES

 

Schedule 1 - Representations
and Warranties with Respect to Purchased Mortgage Loans

 

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

 

ii

 

Exhibit E – Form of
Opinion of Seller’s and Guarantors’ Counsel

 

Exhibit F – Officer’s
Certificate

 

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

 

Exhibit H – Existing
Indebtedness

 

Exhibit I – Escrow
Instruction Letter

 

Exhibit J – Form of
Servicer Notice and Pledge

 

iii

 

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 to exceed the Maximum Committed
Purchase Price.  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.

 

“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.

 

 

“Additional
Collateral” has the meaning set forth in Section 8 hereof.

 

“Adjusted
Tangible Net Worth” means (a) the sum of (i) Net Worth and (ii) Subordinated
Debt, minus (b) intangibles, goodwill and receivables from Affiliates.

 

“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 any
Guarantor shall not be deemed an “Affiliate” for the purposes of this
definition.

 

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

 

“Aged
90 Day Loan” means a Mortgage Loan which has been subject to a Transaction
hereunder for a period of greater than 60 days but not greater than 90 days.

 

“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.

 

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

 

“Agency
Approvals” has the meaning set forth in Section 14w hereof.

 

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

 

“Agreement”
means this 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.

 

“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 to Buyer.

 

“AUS”
means a proprietary automated underwriting system used by an Agency in connection
with its approval of eligible Mortgage Loans and includes Fannie Mae’s Desktop
Underwriter and Freddie Mac’s Loan Prospector.

 

“AUS
Refi Plus Loans” means a Conforming Mortgage Loan originated in accordance
with Fannie Mae’s DU Refi PlusTM program or other related programs, including
any similar program offered by Freddie Mac.

 

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

 

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

 

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

 

2

 

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

 

“Buydown
Amount” has the meaning set forth in Section 5(c) hereof.

 

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

 

“Buyer’s
Margin Amount” means with respect to any Transaction as of any date of determination,
an amount equal to the product of (a) Buyer’s Margin Percentage and (b) the
Purchase Price for such Transaction.

 

“Buyer’s
Margin Percentage” means, with respect to any Transaction as of any date, a
percentage equal to the percentage obtained by dividing the (a) Market
Value of the Purchased Mortgage Loans  on
the Purchase Date for such Transaction by (b) the Purchase Price on the
Purchase Date for such Transaction; provided, that, with respect to any
Mortgage Loan which was not an Exception Mortgage Loan on the related Purchase
Date and which, as of the date of determination, is an Exception Mortgage Loan,
Buyer’s Margin Percentage as of such date of determination shall be equal to
the percentage obtained by dividing (a) the Market Value of such Mortgage
Loan on the related Purchase Date by (b) the amount the Purchase Price
would have been on the Purchase Date if such Mortgage Loan had been categorized
as the type of Mortgage Loan (e.g., Exception Mortgage Loan, etc.) that it
is categorized on the date of determination.

 

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

 

“Cash
Equivalents” means 
(a) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of 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 

 

3

 

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 PennyMac Operating Partnership, L.P.
ceases to own, beneficially or of record, 100% of the stock of Seller;

 

(b)           any
transaction or event as a result of which PennyMac Mortgage Investment Trust
ceases to own, beneficially or of record, 100% of the stock of PennyMac
Operating Partnership, L.P.;

 

(c)           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 PennyMac Mortgage Investment Trust on a fully diluted basis at any time;

 

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

 

(e)           the
consummation of a merger or consolidation of Seller or Guarantors 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 Guarantors immediately
prior to such merger, consolidation or other reorganization.

 

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

 

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

 

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

 

“Compare
Ratio” has the meaning set forth in Compare Report.

 

“Compare
Report” means the “Early Warnings — Single Lender” report found at
https://entp.hud.gov/sfnw/public/.

 

“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.

 

4

 

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

 

“Custodial
Agreement” means the custodial agreement dated as of the date hereof, among
Seller, Buyer and Custodian as the same may be amended from time to time.

 

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

 

“Custodian”
means Deutsche Bank Trust Company Americas or such other party specified by
Buyer and agreed to by Seller, 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”
mean 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.

 

“Electronic
Tracking Agreement” means an Electronic Tracking Agreement among Buyer,
Seller, MERS and MERSCORP, Inc., to the extent applicable as the same may
be amended from time to time.

 

“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 Guarantors 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.

 

“Escrow
Instruction Letter” means the Escrow Instruction Letter from Seller 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 

 

5

 

any
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other document.

 

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

 

“Event
of Termination” means with respect to Seller or Guarantors (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 Seller, Guarantors 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 Seller, Guarantors 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 Seller,
Guarantors 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 Seller, Guarantors 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 Seller, Guarantors 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; provided,
that upon 30 days’ notice to the Seller, Buyer may change such Exception
Mortgage Loan approval fee.  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 Buyer’s Margin Percentage 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.

 

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

 

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

 

6

 

“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.

 

“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 Seller, Guarantors or Buyer, as
applicable.

 

“Governmental
Event” means Seller’s failure to obtain licensing from any Governmental
Authority, the imposition of sanctions on Seller from any Governmental 

 

7

 

Authority,
or any dispute, litigation, investigation, proceeding or suspension between
Seller 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 and PennyMac Operating Partnership,
L.P., each in its capacity as guarantor under the Guaranty.

 

“Guaranty”
means the guaranty of the Guarantors dated as of the date hereof as the same
may be amended from time to time, pursuant to which each 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).

 

“High
LTV Loan” means a Mortgage Loan having a Loan to Value Ratio in excess of (a) with
respect to FHA Loans or VA Loans, 97.75%; (b) with respect to all other
Mortgage Loans, 95% (other than AUS Refi Plus Loans and Refi Plus Loans which
may have Loan to Value Ratios up to 125%); or (c) such lower percentage as
may be set forth in the Underwriting Guidelines.

 

“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 

 

8

 

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.

 

“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
Take-out Commitment, 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 Seller and an
Affiliate of Buyer or such other party acceptable to Buyer in its sole
discretion, which agreement is acceptable to Buyer in its sole discretion.

 

“Jumbo
Mortgage Loan” means a Mortgage Loan with an outstanding principal balance
in an amount in excess of the conventional conforming limits which is also
eligible for purchase by Buyer, Buyer’s Affiliates or any other national
residential mortgage lender acceptable to Buyer in its sole discretion.

 

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

 

9

 

“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.

 

“Low
Percentage Margin Call” has the meaning specified in Section 6(b) hereof.

 

“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 (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of Seller, any 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, any 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; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Program Agreement against Seller, any
Guarantor or any Affiliate that is a party to any Program Agreement, in each case
as determined by the Buyer in its sole good faith discretion.

 

“Maximum
Committed Purchase Price” means SEVENTY-FIVE MILLION DOLLARS ($75,000,000).

 

“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
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.

 

“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.

 

“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 Custodial
Agreement.

 

10

 

“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 first lien closed Conforming Mortgage Loan, FHA Loan, VA
Loan or Jumbo 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.

 

“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).

 

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

 

“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.

 

11

 

“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.

 

“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.

 

“PMIT”
means Pennymac Mortgage Investment Trust, or its permitted successors or
assigns.

 

“PMIT
Group” means PMIT and its Subsidiaries.

 

“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 

 

12

 

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 letter agreement dated as of the date hereof, among
Buyer, Seller and the Guarantors as the same may be amended from time to time.

 

“Program
Agreements” means, collectively, this Agreement, the Pricing Side Letter,
the Guaranty, the Custodial Agreement, the Electronic Tracking Agreement, the
Power of Attorney, the Servicing Agreement, if any, the Servicer Notice and
Pledge 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;

 

(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 attached to the related Transaction Request, which such Mortgage Loans
the Custodian has been instructed to hold pursuant to the 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.

 

13

 

“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, any Guarantor 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.

 

“Refi
Plus Loans” means a Conforming Mortgage Loan originated in accordance with
Fannie Mae’s Refi PlusTM program or other related programs, including any
similar program offered by Freddie Mac.

 

“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.

 

“Repo
Rights” has the meaning set forth in Section 8 hereof.

 

“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 or (c) the date determined by application of Section 16
hereof.

 

“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 and
Guarantor as of the date hereof are listed on Schedule 2 hereto.

 

14

 

“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 Corp. or its permitted successors and assigns.

 

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

 

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

 

“Servicing
Agreement” means that certain Flow Servicing Agreement, dated as of August 4,
2009, by and between PennyMac Operating Partnership, L.P. and Servicer, as the
same may be amended from time to time.

 

“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.

 

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

 

“Streamlined
Mortgage Loan”  means an FHA Loan
originated in accordance with FHA’s streamlined mortgage loan refinance program
as set forth in FHA’s Underwriting Guidelines.

 

“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 

 

15

 

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 Seller 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 Seller to effectuate any of the foregoing, as applicable.
With respect to any Take-out Commitment with an Agency, the applicable agency
documents list Seller as the subscriber to the Agency Security; provided that,
such Agency Security is delivered to an account specified by Buyer.

 

“Take-out
Investor”  means (a) an Agency, (b) PennyMac
Loan Services, LLC 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) November 1, 2011, and (b) the
date of the occurrence of an Event of Default.

 

“Test
Period” means any rolling three month period.

 

“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.

 

“Trust
Receipt” means, with respect to any Transaction as of any date, a receipt
in the form attached as an exhibit to the Custodial Agreement.

 

“Underwriting
Guidelines” means the standards, procedures and guidelines of Seller for
underwriting Mortgage Loans, as set forth in the written policies and
procedures of Seller, copies of which have been provided to Buyer, and, 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.

 

“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.

 

16

 

“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.  This Agreement is a
commitment by Buyer to enter into Transactions with Seller for 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 Seller or Servicer,
as applicable.  The aggregate Purchase
Price of Purchased Mortgage Loans subject to outstanding Transactions shall not
exceed the Maximum Committed Purchase Price.

 

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 Custodial Agreement. In
the event the Mortgage Loan Schedule provided by Seller contains erroneous
computer data, is not formatted 

 

17

 

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 Custodial Agreement
record title in the name of Seller to each Mortgage shall be retained by Seller
in trust, for the benefit of Buyer, for the sole purpose of facilitating the
servicing and the supervision of the servicing of the Mortgage Loans.

 

f.     With respect to each Wet-Ink Mortgage Loan, by no later than the
seventh (7th) calendar 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 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 

 

18

 

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.

 

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 

 

19

 

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.

 

c.     Seller may remit to Buyer funds in an amount up to the
outstanding Purchase Price of the Purchased Mortgage Loans, to be held as
unsegregated cash margin and collateral for all Obligations under this
Agreement (such amount, to the extent not applied to Obligations under this
Agreement, the “Buydown Amount”). 
The Buydown Amount shall be used by Buyer in order to calculate the
aggregate Price Differential, which will accrue on the aggregate Purchase Price
then outstanding minus the Buydown Amount, applied to Transactions involving
the lowest Pricing Rate.  The Seller
shall be entitled to request a drawdown of the Buydown Amount or remit
additional funds to be added to the Buydown Amount no more than one time per
week.  Without limiting the generality of
the foregoing, in the event that a Margin Call or other Default exists, the
Buyer shall be entitled to use any or all of the Buydown Amount to cure such
circumstance or otherwise exercise remedies available to the Buyer without
prior notice to, or consent from, the Seller. 
Within two (2) Business Days’ receipt of written request from
Seller, and provided no Margin Call or other Default exists, Buyer shall remit
any portion of such Buydown Amount back to Seller.

 

6.     Margin Maintenance

 

a.     If at any time the Market Value of any Purchased Mortgage Loan
subject to a Transaction is less than Buyer’s Margin Amount for such
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 a Margin Call in the amount of less than 5% of  the Purchase Price for all Transactions (a “Low
Percentage Margin Call”), any notice given before 5:00 p.m. (New York
City time) on a Business Day shall be met, and the related Margin Call
satisfied, no later than 5:00 p.m. (New York City time) on the following
Business Day; notice given after 5:00 p.m. (New York City time) on a
Business Day shall be met, and the related Margin Call satisfied, no later than
5:00 p.m. (New York City time) on the second Business Day following the
date of such notice. With respect to all Margin Calls other than Low Percentage
Margin Calls, any notice given before 10:00 a.m. (New York City 

 

20

 

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.

 

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 and shall cause Servicer 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 the 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;

 

21

 

(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 of any
prepayment of principal in full, with respect to a Purchased Mortgage Loan,
Seller shall remit 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.

 

8.     Security Interest

 

a.     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, the
Buydown Amount and any account to which such amount is deposited, Interest
Rate Protection Agreements to the extent of the Purchased Mortgage Loans
protected thereby, accounts (including any interest of Seller in escrow
accounts) 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, 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.

 

22

 

c.     The Seller and Guarantors each acknowledge that neither has
rights to service the Purchased Mortgage Loans but only has rights as a party
to the current Servicing Agreement. 
Without limiting the generality of the foregoing and in the event that
the Seller or Guarantors are deemed to retain any residual Servicing Rights,
and for the avoidance of doubt, each of Seller and Guarantors 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.

 

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.

 

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. 30809505, for the account of  CSFB Buyer/PennyMac Corp.-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.     Initial Transaction. 
As conditions precedent to the initial Transaction, 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,
Guarantors and each other party thereto:

 

(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.

 

23

 

(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, each Guarantor
and PennyMac OP GP, Inc. substantially in the form of Exhibit F
hereto, attaching certified copies of Seller’s certificate of incorporation and
by-laws, PennyMac Mortgage Investment Trust’s declaration of trust and PennyMac
Operating Partnership, L.P.’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 Guarantors, 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 Guarantors, 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 Guarantors’ counsel, in form and substance
substantially as set forth in Exhibit E attached hereto.

 

(8)   Underwriting Guidelines. 
A true and correct copy of the Underwriting Guidelines certified by an
officer of the Seller.

 

(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.

 

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 Seller, Guarantors and the Servicer.

 

24

 

(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 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 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 CSCOF.

 

(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).

 

(7)   Electronic Tracking Agreement. To the extent Seller is
selling Mortgage Loans which are registered on the MERS® System, an Electronic
Tracking Agreement entered into, duly executed and delivered by the parties
thereto and being in full force and effect, free of any modification, breach or
waiver.

 

25

 

(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.

 

11.  Program; Costs

 

a.     Seller shall pay the fees and expenses of Buyer’s counsel in an
amount not exceeding $35,000 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 as further described below and in Section 36,
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 the 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 

 

26

 

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 CSCOF.

 

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.

 

e.     Any payments made by Seller or any 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.

 

27

 

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
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.

 

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 Loan 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 Guarantors represents and warrants to Buyer as of the date hereof and as of
each Purchase Date for any Transaction that:

 

(1)           Seller and Guarantors Existence.  Seller has been duly organized and is validly
existing as a corporation  in good
standing under the laws of the State of Delaware.  PennyMac Mortgage Investment Trust 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.  PennyMac Operating Partnership, L.P. 

 

28

 

has been duly organized and
is validly existing as a limited partnership in good standing under the laws of
the State of Delaware.

 

(2)           Licenses. 
Each of Seller and Guarantors 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.  The Seller has the
requisite power and authority, legal right and necessary licenses (including
from VA and FHA) 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. 
Seller is an FHA Approved Mortgagee and VA Approved Lender as of the
Purchase Date for the initial Transaction involving an FHA Loan or VA Loan,
respectively, and as of each Purchase Date thereafter.

 

(3)           Power.  Each
of Seller and Guarantors 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.

 

(4)           Due Authorization. 
Each of Seller and Guarantors 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 Guarantors, all requisite or other corporate action
having been taken, and each is valid, binding and enforceable against Seller
and Guarantors 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.  Each of PennyMac Mortgage Investment Trust
and Seller have heretofore furnished to Buyer a copy of (a) its
consolidated balance sheets and the consolidated balance sheets of its
consolidated Subsidiaries for the fiscal year ended December 31, 2009 and
the related consolidated statements of income and retained earnings and of cash
flows for it and its consolidated Subsidiaries for such fiscal year, with the
opinion thereon of Deloitte & Touche LLP and (b) its consolidated
balance sheets and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal periods ended March 31, 2010 and June 30,
2010 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 

 

29

 

consolidated financial
condition of PennyMac Mortgage Investment Trust, Seller and their 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.  Each of Seller and each 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 Guarantors 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 Guarantors 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.

 

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

 

(9)           True and Complete Disclosure.  All information, reports, exhibits,
schedules, financial statements or certificates of Seller, Guarantors, or any
Affiliate thereof or any of their officers furnished or to be furnished to
Buyer 

 

30

 

in connection with the
initial or any ongoing due diligence of Seller, Guarantors, 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 any
Guarantor of each Program Agreement.

 

(11)         Litigation. 
There is no action, proceeding or investigation pending with respect to
which either Seller or either Guarantor has received service of process or, to
the best of Seller’s or either 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) makes
a claim individually in an amount greater than $1,000,000 or in an aggregate
amount greater than $5,000,000, (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.

 

(12)         Material Adverse Change.  There has been no material adverse change in
the business, operations, financial condition, properties or prospects of
Seller, Guarantors 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.

 

(14)         Underwriting Guidelines.  The Underwriting Guidelines provided to Buyer
are the true and correct Underwriting Guidelines of the Seller.

 

(15)         Taxes. Seller, Guarantors 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

 

31

 

books of Seller, Guarantors
and their Subsidiaries in respect of taxes and other governmental charges are,
in the opinion of Seller or Guarantors, as applicable, adequate.

 

(16)         Investment Company. 
None of Seller, any 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 27001 Agoura Road, Third Floor,
Calabasas, California 91301.  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.

 

(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, (A) Seller’s
Adjusted Tangible Net Worth is not less than the sum of (x) $65,000,000
and (y) 50% of Seller’s positive quarterly Net Income for the previous
calendar quarter and (B) PennyMac Mortgage Investment Trust’s Adjusted
Tangible Net Worth is not less than $300,000,000.

 

(20)         ERISA.  Each
Plan to which Seller, Guarantors 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 

 

32

 

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)         Agency Approvals.  With respect to each Agency Security and to
the extent necessary, Seller is an FHA Approved Mortgagee, a VA Approved Lender
and/or a GNMA Approved Lender.  On and
after approval by the Agencies, Seller will be, to the extent necessary,
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.  On and after approval by
the Agencies, Seller is in good standing, with no event having occurred or
Seller 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 Seller 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.  If, on and
after approval by the Agencies, Seller for any reason ceases to possess all such
applicable approvals, or should notification to the relevant Agency or to the
Department of Housing and Urban Development, FHA or VA be required, Seller or
Guarantors shall so notify Buyer immediately in writing.

 

(25)         No Reliance.  Each of
Seller and each 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 any 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.

 

(26)         Plan Assets. Neither Seller nor Guarantors are 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 Guarantors are not
subject to any state or local statute regulating investments or fiduciary 

 

33

 

obligations
with respect to governmental plans within the meaning of Section 3(32) of
ERISA.

 

(27)         No Prohibited Persons. Neither the Seller nor any of
its Affiliates, officers, directors, partners or members, is an entity or
person (or to the  Seller’s knowledge,
owned or controlled by an entity or person): (i) that is listed in the
Annex to, or is otherwise subject to the provisions of 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. 
Seller has adequate financial standing and, through the Servicing
Agreement with Servicer, access to 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.  PennyMac Mortgage Investment Trust is a REIT
and has not engaged in any material “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) of
the Code. PennyMac Mortgage Investment Trust for its current taxable year is
entitled to a dividends paid deduction under the requirements of Section 857
of the Code with respect to any dividends paid by it with respect to each
taxable year for which it claims a deduction in its Form 1120-REIT filed
with the United States Internal Revenue Service.

 

b.     With respect to every Purchased Mortgage Loan, each of Seller
and each Guarantor jointly and severally 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 Schedule 1 is true and
correct.

 

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 

 

34

 

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.

 

14.  Covenants

 

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

 

a.     Litigation. Seller and each 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, Guarantors 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 in an amount greater than $1,000,000 or in an aggregate amount
greater than $5,000,000, or (iii) which, individually or in the aggregate,
if adversely determined, could be reasonably likely to have a Material Adverse
Effect.  Seller and each 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 cause the Mortgage Loans to be serviced by any servicer other than a
servicer expressly approved in writing by Buyer, which approval shall be deemed
granted by Buyer with respect to Servicer with the execution of this Agreement.

 

d.     Insurance.  The
Seller or Guarantors shall continue to maintain, for Seller and its
Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to
$300,000.  The Seller or Guarantors 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 Guarantors shall notify the
Buyer of any material change in the terms of any such Fidelity Insurance.

 

35

 

e.     No Adverse Claims. 
Seller warrants and will defend, and shall cause any Servicer 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.

 

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 or 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 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
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.

 

(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.

 

36

 

(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 strictly in accordance with
applicable law.

 

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

 

l.      Underwriting Guidelines. 
Without the prior written consent of Buyer, Seller shall not amend or
otherwise modify the Underwriting Guidelines in any material respect.  Without limiting the foregoing, in the event
that Seller makes any amendment or modification to the Underwriting Guidelines,
Seller shall promptly deliver to Buyer a complete copy of the amended or
modified Underwriting Guidelines, specifying in detail the amendments and
modifications set forth therein from the previous copy delivered.

 

m.   Distributions. If an Event of Default has occurred and is
continuing, neither Seller nor Guarantors 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 Guarantors.

 

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

 

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

 

37

 

q.     Taxes.  Seller and
each 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 and (ii) to
the extent the aggregate Guarantees of Seller do not exceed $250,000.

 

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

 

u.     Hedging. Seller has entered into Interest Rate Protection
Agreements with respect to the Purchased Mortgage Loans, having terms with
respect to protection against fluctuations in interest rates acceptable to
Buyer in its sole discretion.  In the
event that Seller intends to make any change to its policy regarding Interest
Rate Protection Agreements, Seller shall notify Buyer in writing 30 days prior
to implementing any such change.

 

v.     True and Correct Information.  All information, reports, exhibits,
schedules, financial statements or certificates of Seller, each Guarantor, any
Affiliate thereof or any of their officers furnished to Buyer hereunder and
during Buyer’s diligence of Seller and Guarantors 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.

 

38

 

w.    Agency Approvals. 
On and after approval by the Agencies, Seller shall maintain its status
with Fannie Mae as an approved lender and Freddie Mac as an approved
seller/servicer, in each case in good standing (“Agency Approvals”).  Seller shall service all Purchased Mortgage
Loans which are Committed Mortgage Loans in accordance with the applicable
Agency guide.  On and after approval by
the Agencies, if Seller, for any reason, cease to possess all such applicable
Agency Approvals, or should notification to the relevant Agency or to the
Department of Housing and Urban Development, FHA or VA be required, Seller
shall so notify Buyer immediately in writing. 
Notwithstanding the preceding sentence, Seller shall take all necessary
action to maintain all of its applicable Agency Approvals at all times during
the term of this Agreement and each outstanding Transaction.

 

x.     Take-out Payments. With respect to each Committed
Mortgage Loan, Seller shall arrange 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 Guarantors 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
Guarantors 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 shall allow the Buyer to exchange information related to the
Seller and the Transaction hereunder with third party lenders and the Seller
shall permit each third party lender to share such information with the Buyer.

 

39

 

bb.  Compare Report.  At
all such times during which Seller is an FHA Approved Mortgagee and/or VA
Approved Lender, Seller’s (i) Compare Ratio (A) for each of the three
default choices shall not deviate by more than 25% from its Compare Ratio as of
the date hereof and (B) shall not exceed 150% and (ii) Compare Report
by Branch (as such term is defined in the Compare Report) based upon current
defaults, defaults within the first year, and defaults within the first two
years, shall not exceed 150%.

 

cc.   Quality Control.  Seller
shall maintain an internal quality control program that verifies, on a regular
basis, the existence and accuracy of all legal documents, credit documents,
property appraisals, and underwriting decisions related to Mortgage Loans.  Such program shall be capable of evaluating
and monitoring the overall quality of Seller’s loan production and servicing
activities.  Such program shall (i) ensure
that the Mortgage Loans are originated and serviced in accordance with prudent
mortgage banking practices and accounting principles; (ii) guard against
dishonest, fraudulent, or negligent acts; and (iii) guard against errors
and omissions by officers, employees, or other authorized persons.

 

dd.  Financial Covenants. 
Seller and PennyMac Mortgage Investment Trust, as applicable, shall at
all times comply with any and all financial covenants and/or financial ratios
set forth in this Section dd and in Section 2 of the Pricing Side
Letter.

 

(1)   Adjusted Tangible Net Worth.  (A) Seller shall maintain an Adjusted
Tangible Net Worth of at least the sum of (x) $65,000,000, and
(y) 50% of Seller’s positive quarterly Net Income for the previous quarter
and (B) PennyMac Mortgage Investment Trust shall maintain an Adjusted
Tangible Net Worth of at least $300,000,000.

 

(2)   Indebtedness to Adjusted Tangible Net Worth Ratio.  Seller’s ratio of Indebtedness (on and off
balance sheet) to Adjusted Tangible Net Worth shall not exceed 10:1.

 

(3)   Maintenance of Liquidity. 
The Seller and PennyMac Mortgage Investment Trust shall ensure that, as
of the end of each calendar month, they have unrestricted cash and Cash
Equivalents in amounts not less than (i) with respect to the Seller,
$7,500,000, and (ii) with respect to the PMIT Group, $10,000,000.

 

(4)   Maintenance of Profitability.  Seller shall not permit, for any Test Period,
Net Income for such Test Period, before income taxes for such Test Period and
distributions made during such Test Period, to be less than $1.00.

 

ee.   Most Favored Status. 
Seller, Guarantors 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 14dd hereof (a 

 

40

 

“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 Guarantors, 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.

 

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, any Guarantor or any Affiliates thereof shall be in default
under (i) any Indebtedness, in the aggregate, in excess of $1.5 million of
Seller, any 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, any 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 any 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, any Guarantor or any
Affiliate.

 

41

 

e.     Material Adverse Change. 
Any material adverse change in the Property, business, financial
condition or operations of Seller, any 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 Financial Representation or Covenant or Obligation.
A breach by Seller or either Guarantor of any of the representations,
warranties or covenants or obligations set forth in Sections 13(a)(1),
13(a)(7), 13(a)(12), 13(a)(19), 13(a)(23), 14b, 14o, 14s, 14t, 14z, 14dd or
14ee of this Agreement.

 

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

 

h.     Breach of Non-Financial Representation or Covenant.  A breach by Seller or any Guarantor of any
other material representation, warranty or covenant set forth in this Agreement
(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 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 $1,000,000 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.

 

42

 

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, Guarantors or any Affiliate
thereof, or shall have taken any action to displace the management of Seller,
Guarantors or any Affiliate thereof or to curtail its authority in the conduct
of the business of Seller, Guarantors or any Affiliate thereof, or takes any
action in the nature of enforcement to remove, limit or restrict the approval
of Seller, Guarantors 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.

 

m.   Inability to Perform. 
A Responsible Officer of Seller or any Guarantor shall admit its
inability to, or its intention not to, perform any of the Obligations hereunder
or any 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 Guarantors’ 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 Guarantors as a “going concern”
or a reference of similar import.

 

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

 

q.     REIT Asset and Income Tests.  The failure of PennyMac Mortgage Investment
Trust to satisfy any of the following asset or income tests and Buyer has
delivered notice of an Event of Default to the Sellers with respect thereto:

 

(1)   At the close of each of PennyMac Mortgage Investment Trust’s
taxable years, at least 75 percent of PennyMac Mortgage Investment Trust’s
gross income (excluding gross income from “prohibited transactions” as defined
in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of
the Code) consists of (a) “rents from real property” within the meaning of
Section 856(c)(3)(A) of the Code, (b) interest on obligations
secured by mortgages on real property or on interests in real property, within
the meaning of Section 856(c)(3)(B) of the Code, (c) gain from
the sale or other disposition of real property (including interests in real
property and interests in mortgages on real property) which is not property
described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of
the Code, (d) dividends or other distributions on, and gain (other than
gain from prohibited transactions) from the 

 

43

 

sale or other disposition
of, transferable shares (or transferable certificates of beneficial interest)
in other REITs, within the meaning of Section 856(c)(3)(D) of the
Code, and (e) amounts described in Sections 856(c)(3)(E) through
856(c)(3)(I) of the Code.

 

(2)   At the close of each of PennyMac Mortgage Investment Trust’s
taxable years, at least 95 percent of PennyMac Mortgage Investment Trust’s
gross income (excluding gross income from “prohibited transactions” as defined
in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of
the Code) consists of (a) the items of income described in paragraph (i) hereof
(other than those described in Section 856(c)(3)(I) of the Code or
the requirements in any successor or replacement provision in the Code), (b) gain
realized from the sale or other disposition of stock or securities which are
not property described in Section 1221(a)(1) of the Code or the
requirements in any successor or replacement provision in the Code, if any, (c) interest
and (d) dividends, in each case within the meaning of Section 856(c)(2) of
the Code or the requirements in any successor or replacement provision thereto.

 

(3)   At the close of each quarter of each of PennyMac Mortgage
Investment Trust’s taxable years, at least 75 percent of the value of PennyMac
Mortgage Investment Trust’s total assets (as determined in accordance with
Treasury Regulations Section 1.856-2(d)) consists of “real estate assets” within
the meaning of Section 856(c)(5)(B) of the Code, cash and cash items
(including receivables which arise in the ordinary course of PennyMac Mortgage
Investment Trust’s operations, but not including receivables purchased from
another person), and Government Securities; unless (a) the test described
in this paragraph (iii) has been satisfied as of the end of the
immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable
year, (b) the failure of such test is the result of the acquisition of a
security or property during the quarter of PennyMac Mortgage Investment Trust’s
taxable year to which such failure relates, (c) PennyMac Mortgage
Investment Trust delivers to Buyer prompt, but in no event more than 30 days
after the end of the quarter of PennyMac Mortgage Investment Trust’s taxable
year to which such failure relates, notice that such test is not satisfied, (d) such
test is satisfied within the 30 day period prescribed by the last sentence of Section 856(c)(4) of
the Code for such satisfaction, and (e) an officer of PennyMac Mortgage
Investment Trust certifies as to such satisfaction within such 30 day period,
and provides documentation reasonably satisfactory to Buyer evidencing such
satisfaction.

 

(4)   At the close of each quarter of each of PennyMac Mortgage
Investment Trust’s taxable years, (a) not more than 25 percent of the
value of PennyMac Mortgage Investment Trust’s total assets is represented by
securities (other than those described in paragraph (iii)), (b) not more
than 25 percent of the value of PennyMac Mortgage Investment Trust’s total
assets is represented by securities of one or more “taxable REIT subsidiaries”
(as defined in Section 856(1) of the Code), and (c) (1) not
more than 5 percent of the value of PennyMac Mortgage Investment Trust’s total
assets is represented by securities of any one 

 

44

 

issuer (other than
Government Securities and securities of taxable REIT subsidiaries), and (2) PennyMac
Mortgage Investment Trust does not hold securities possessing more than 10
percent of the total voting power or value of the outstanding securities of any
one issuer (other than Government Securities and securities of taxable REIT
subsidiaries); unless (aa) the tests described in this paragraph (iv) have
been satisfied as of the end of the immediately preceding quarter of PennyMac
Mortgage Investment Trust’s taxable year, (bb) the failure of any such test is
the result of the acquisition of a security or property during the quarter of
PennyMac Mortgage Investment Trust’s taxable year to which such failure
relates, (cc) PennyMac Mortgage Investment Trust delivers to Buyer, within 10
days of the end of the quarter of PennyMac Mortgage Investment Trust’s taxable
year to which such failure relates, notice that such test is not satisfied,
(dd) such test is satisfied within the 30 day period prescribed by the last
sentence of Section 856(c)(4) of the Code for such satisfaction, and
(ee) an officer of PennyMac Mortgage Investment Trust certifies as to such
satisfaction within such 30 day period, and provides documentation reasonably
satisfactory to Buyer evidencing such satisfaction.

 

r.      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, 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.

 

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 Guarantors 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 

 

45

 

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.  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.

 

d.     Buyer shall have the right to direct all servicers then
servicing any Purchased Mortgage Loans 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 

 

46

 

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.

 

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

 

i.      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.

 

47

 

j.      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.

 

k.     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 Guarantors 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 hereunder which is given to
Seller’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
Guarantors of any obligation under any Program Agreement or any material
contract or agreement of Seller or Servicer or Guarantors 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 PennyMac Mortgage Investment Trust shall furnish to Buyer:

 

(1)   as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the unaudited consolidated balance
sheets of Seller or PennyMac Mortgage Investment Trust and their consolidated
Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash flows for
the Seller or PennyMac Mortgage Investment Trust 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
or PennyMac Mortgage Investment Trust, 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 or
PennyMac Mortgage Investment Trust 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 

 

48

 

of Seller or PennyMac
Mortgage Investment Trust, the consolidated balance sheets of Seller, PennyMac
Mortgage Investment Trust 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 PennyMac Mortgage Investment Trust
and their consolidated Subsidiaries for such year, setting forth in each case
in comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion and the scope of audit shall be acceptable to
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 Seller or
PennyMac Mortgage Investment Trust and their respective consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP

 

(3)   at the time the Seller or PennyMac Mortgage Investment Trust
furnish each set of financial statements pursuant to Section 17(b)(1) or
(2) above (or, with respect to (2) above, at the time filed with the
SEC on EDGAR), a certificate of a Responsible Officer of Seller in the form of 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 PennyMac Mortgage Investment Trust, 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
operations;

 

(c)           such other information regarding the financial condition,
operations, or business of the Seller or Guarantors as Buyer may reasonably
request; and

 

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

 

49

 

c.     Notices of Certain Events.  As soon 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, with a copy of evidence of
same attached;

 

(2)   any material dispute, litigation, investigation, proceeding or
suspension between Seller or Servicer, 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 or Seller’s
facilities by any Governmental Authority;

 

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

 

(7)   any default related to any Repurchase Asset 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;

 

(8)   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 Servicer;

 

(9)   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; and

 

(10) without limiting any of the other reporting obligations of Seller
hereunder, Seller shall promptly notify Buyer of any Governmental Event or
update thereto, and shall include the particulars of each update with
sufficient detail as is satisfactory to Buyer.

 

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, 

 

50

 

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.     Other Reports. Seller shall deliver to Buyer any other
reports or information reasonably requested by Buyer or as otherwise required
pursuant to this Agreement.

 

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.

 

51

 

20.  Notices and Other Communications

 

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

 

PennyMac
Corp.

27001 Agoura Road

Calabasas, CA 91301

Attention: David M. Walker/Michael Wong

Phone Number: (818) 224-7053/(818) 224-7055

E-mail: david.walker@pnmac.com; michael.wong@pnmac.com

 

with a copy to:

 

PennyMac
Corp.

27001 Agoura Road

Calabasas, CA 91301

Attention: Jeff Grogin

Phone Number: (818) 224-7050

E-mail: jeff.grogin@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

 

with
a copy to:

 

Credit
Suisse First Boston Mortgage Capital LLC

 

52

 

c/o
Credit Suisse Securities (USA) LLC

Eleven
Madison Avenue, 4th Floor

New
York, NY 10010

Attention:
Bruce Kaiserman

E-mail: bruce.kaiserman@credit-suisse.com

 

For all other Notices:

 

Credit
Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven
Madison Avenue, 4th Floor

Attention:       Margaret
Dellafera

Phone
Number: 212-325-6471

Fax
Number:  212-743-4810

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

 

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 either 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

 

53

 

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.

 

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 Guarantors,
any such notice being expressly waived by the Seller and Guarantors to the
extent permitted by applicable law to set-off and appropriate and apply against
any Obligation from Seller, any 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, any Guarantor or any
Affiliate thereof.  The Buyer agrees
promptly to notify the Seller or Guarantors 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 EACH GUARANTOR HEREBY WAIVE TRIAL BY JURY.  SELLER AND EACH 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 EACH 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.

 

54

 

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

 

b.     It is understood that either party’s right to liquidate
Purchased Mortgage Loans delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Section 16 hereof
is a contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as
amended.

 

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

 

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

 

e.     This Agreement is intended to be a “repurchase agreement” and a “securities
contract,” within the meaning of Section 555 and Section 559 under
the Bankruptcy Code.

 

27.  Disclosure Relating to Certain Federal Protections

 

The
parties acknowledge that they have been advised that:

 

55

 

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 without Seller’s signature thereon as Buyer, at its
option, may deem appropriate.  Seller
hereby appoints Buyer as Seller’s agent and attorney-in-fact to execute 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.  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.

 

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 each 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 or any
transaction contemplated hereby or thereby 

 

56

 

resulting from anything
other than the Indemnified Party’s gross negligence or willful misconduct.  Each of Seller and each 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
each 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 each
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 each 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.

 

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 each 

 

57

 

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 Guarantors’ 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, Commitment Fee,
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 

 

58

 

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.

 

33.  Recording of Communications

 

Buyer,
Seller and Guarantors 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 Guarantors 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, due and owing on the date
hereof, a non-refundable Commitment Fee. 
The Commitment Fee shall be paid in four equal installments as set forth
in the Pricing Side Letter, which shall be paid on the date hereof and on the
Price Differential Payment Date every third (3rd) month thereafter. 
All such payments shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to Buyer at such account
designated by Buyer.

 

35.  Reserved

 

36.  Periodic Due Diligence Review

 

Seller
acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Seller 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 Seller agrees that 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, 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 and/or the
Custodian.  Seller also shall 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 

 

59

 

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.  Authorizations

 

Any
of the persons whose signatures and titles appear on Schedule 2 are authorized,
acting singly, to act for Seller or Buyer, as the case may be, under this
Agreement.

 

38.  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.

 

39.  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.

 

40.  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;

 

60

 

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

 

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.

 

[Signature Page Follows]

 

61

 

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:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PennyMac Corp., as Seller

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PennyMac
  Mortgage Investment Trust, as Guarantor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PennyMac
  Operating Partnership, L.P., as Guarantor

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Signature Page to the
Master Repurchase AgreementExhibit 10.14

 

EXECUTION VERSION

 

GUARANTY

 

GUARANTY,
dated as of November 2, 2010 (as amended, supplemented, or otherwise
modified from time to time, this “Guaranty”), made by PennyMac Mortgage
Investment Trust and PennyMac Operating Partnership, L.P. each a “Guarantor”
and collectively the “Guarantors”, in favor of Credit Suisse First
Boston Mortgage Capital, LLC (“Buyer”).

 

RECITALS

 

Pursuant
to the Master Repurchase Agreement, dated as of November 2, 2010 (as
amended, supplemented or otherwise modified from time to time, the “Repurchase
Agreement”), among PennyMac Corp. (“Seller”), Guarantors and Buyer,
Buyer has agreed from time to time to enter into transactions in which Seller
agrees to transfer to Buyer Mortgage Loans against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Mortgage Loans at a date certain or on demand, against the transfer of funds by
Seller.  Each such transaction shall be
referred to herein as a “Transaction”. 
It is a condition precedent to the obligation of Buyer to enter into
Transactions under the Repurchase Agreement that Guarantors shall have executed
and delivered this Guaranty to Buyer.

 

NOW,
THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter
into the Repurchase Agreement and to enter into Transactions thereunder,
Guarantors hereby agree with Buyer, as follows:

 

1.     Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Repurchase Agreement and used herein are so used
as so defined.

 

(b)   For purposes of this Guaranty, “Obligations” shall mean all
obligations and liabilities of Seller to Buyer, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, or out of or in connection with the Repurchase
Agreement and any other Program Agreements and any other document made,
delivered or given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to Buyer that are required to be paid by Seller pursuant to the terms of the
Program Agreements and costs of enforcement of this Guaranty) or otherwise.

 

2.     Guaranty. (a) Guarantors hereby unconditionally and
irrevocably guarantee to Buyer the prompt and complete payment and performance
by Seller when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.

 

(b)   Guarantors further agree to pay any and all expenses (including,
without limitation, all fees and disbursements of counsel) which may be paid or
incurred by Buyer in enforcing, or obtaining advice of counsel in respect of,
any rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, Guarantors under
this Guaranty.  This Guaranty shall
remain in full force and effect until the 

 

 

later of (i) the termination of the Repurchase
Agreement or (ii) the Obligations are paid in full, notwithstanding that
from time to time prior thereto Seller may be free from any Obligations.

 

(c)   No payment or payments made by Seller or any other Person or
received or collected by Buyer from Seller or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application, at any
time or from time to time, in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
Guarantors hereunder which shall, notwithstanding any such payment or payments,
remain liable for the amount of the outstanding Obligations until the
outstanding Obligations are paid in full.

 

(d)   Each Guarantor agrees that whenever, at any time, or from time to
time, a Guarantor shall make any payment to Buyer on account of such Guarantor’s
liability hereunder, such Guarantor will notify Buyer in writing that such
payment is made under this Guaranty for such purpose.

 

3.     Right of Set-off. 
Buyer is hereby irrevocably authorized at any time and from time to time
without notice to Guarantors, any such notice being hereby waived by
Guarantors, to set off and appropriate and apply any and all monies and other
property of Guarantors, deposits (general or special, time or demand,
provisional or final), in any currency, and any other 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 Buyer of any
affiliate thereof to or for the credit or the account of any Guarantor, or any
part thereof in such amounts as Buyer may elect, on account of the Obligations
and liabilities of Guarantors hereunder and claims of every nature and
description of Buyer against either Guarantor, in any currency, whether arising
hereunder, under the Repurchase Agreement or otherwise, as Buyer may elect,
whether or not Buyer has made any demand for payment and although such
Obligations and liabilities and claims may be contingent or unmatured. Buyer
shall notify Guarantors promptly of any such set-off and the application made
by Buyer, provided that the failure to give such notice shall not affect the
validity of such set-off and application. 
The rights of Buyer under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
Buyer may have.

 

4.     Subrogation. 
Notwithstanding any payment or payments made by either Guarantor
hereunder or any set-off or application of funds of either Guarantor by Buyer,
either Guarantor shall not be entitled to be subrograted to any of the rights
of Buyer against Seller or any other guarantor or any collateral security or
guarantee or right of offset held by Buyer for the payment of the Obligations,
nor shall either Guarantor seek or be entitled to seek any contribution or
reimbursement from Seller or any other guarantor in respect of payments made by
either Guarantor hereunder, until all amounts owing to Buyer by Seller on
account of the Obligations are paid in full and the Repurchase Agreement is
terminated.  If any amount shall be paid
to either Guarantor on account of such subrogation rights at any time when all
of the Obligations shall not have been paid in full, such amounts shall be held
by such Guarantor for the benefit of Buyer, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to Buyer in the exact form received by such Guarantor 

 

2

 

(duly indorsed by such Guarantor to Buyer, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as Buyer may determine.

 

5.     Amendments, etc. with Respect to the Obligations.  Each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against
either Guarantor, and without notice to or further assent by Guarantors, any
demand for payment of any of the Obligations made by Buyer may be rescinded by
Buyer, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by Buyer,
and the Repurchase Agreement, and the other Program Agreements and any other
document in connection therewith may be amended, modified, supplemented or terminated,
in whole or in part, pursuant to its terms and as Buyer may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by Buyer for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released.  Buyer
shall have no obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Guaranty or any
property subject thereto.  When making
any demand hereunder against any Guarantor, Buyer may, but shall be under no
obligation to, make a similar demand on Seller and any failure by Buyer to make
any such demand or to collect any payments from Seller or any release of Seller
shall not relieve any Guarantor of its obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of Buyer against any Guarantor.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

 

6.     Guaranty Absolute and Unconditional. (a)  Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by Buyer
upon this Guaranty or acceptance of this Guaranty; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived in reliance upon this
Guaranty; and all dealings between Seller or Guarantors, on the one hand, and Buyer,
on the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guaranty. 
Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon Seller or the Guaranty
with respect to the Obligations.  This
Guaranty shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (i) the validity or enforceability
of the Repurchase Agreement, the other Program Agreements, any of the
Obligations or any collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by Buyer, (ii) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by Seller
against Buyer, or (iii) any other circumstance whatsoever (with or without
notice to or knowledge of Seller or Guarantors) which constitutes, or might be
construed to constitute, an equitable or legal discharge of Seller for the
Obligations, or of any Guarantor under this Guaranty, in bankruptcy or in any
other instance.  When pursuing its rights
and remedies hereunder against either Guarantor, Buyer may, but shall be under
no obligation, to pursue such rights and remedies that they may have against
Seller or any other Person or against any collateral security or guarantee for
the Obligations or any right of offset with respect thereto, 

 

3

 

and any failure by Buyer to pursue such other rights
or remedies or to collect any payments from Seller or any such other Person or
to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of Seller or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of Buyer
against either Guarantor.  This Guaranty
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon Guarantors and their successors and assigns
thereof, and shall inure to the benefit of Buyer, and successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of
Guarantors under this Guaranty shall have been satisfied by payment in full,
notwithstanding that from time to time during the term of the Repurchase
Agreement, Seller may be free from any Obligations.

 

(b)  Without limiting the generality of the
foregoing, each Guarantor hereby agrees, acknowledges, and represents and
warrants to Buyer as follows:

 

(i)       Such Guarantor hereby waives any defense arising by reason of,
and any and all right to assert against Buyer any claim or defense based upon,
an election of remedies by Buyer which in any manner impairs, affects, reduces,
releases, destroys and/or extinguishes such Guarantor’s subrogation rights,
rights to proceed against Seller or any other guarantor for reimbursement or
contribution, and/or any other rights of Guarantors to proceed against Seller,
against any other guarantor, or against any other person or security.

 

(ii)      Such Guarantor is presently informed of the financial condition
of Seller and of all other circumstances which diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations.  Such Guarantor hereby covenants that it will
make its own investigation and will continue to keep itself informed of Seller’s
financial condition, the status of other guarantors, if any, of all other
circumstances which bear upon the risk of nonpayment and that it will continue
to rely upon sources other than Buyer for such information and will not rely
upon Buyer for any such information. 
Absent a written request for such information by such Guarantor to
Buyer, such Guarantor hereby waives its right, if any, to require Buyer to
disclose to such Guarantor any information which Buyer may now or hereafter
acquire concerning such condition or circumstances including, but not limited
to, the release of or revocation by any other guarantor.

 

(iii)     Such Guarantor has independently reviewed the Repurchase
Agreement and related agreements and has made an independent determination as
to the validity and enforceability thereof, and in executing and delivering
this Guaranty to Buyer, such Guarantor is not in any manner relying upon the
validity, and/or enforceability, and/or attachment, and/or perfection of any Liens
or security interests of any kind or nature granted by Seller or any other
guarantor to Buyer, now or at any time and from time to time in the future.

 

4

 

7.     Reinstatement. 
This Guaranty shall continue to be effective, or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by Buyer
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Seller or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Seller or any substantial
part of its property, or otherwise, all as though such payments had not been
made.

 

8.     Payments.  Each
Guarantor hereby agrees that the Obligations will be paid to Buyer without
set-off or counterclaim in U.S. Dollars.

 

9.     Event of Default. 
If an Event of Default under the Repurchase Agreement shall have
occurred and be continuing, each Guarantor agrees that, as between such
Guarantor and Buyer, the Obligations may be declared to be due in accordance
with the terms of the Repurchase Agreement for purposes of this Guaranty
notwithstanding any stay, injunction or other prohibition which may prevent,
delay or vitiate any such declaration as against a Seller and that, in the
event of any such declaration (or attempted declaration), such Obligations
shall forthwith become due by each Guarantor for purposes of this Guaranty.

 

10.   Severability.  Any provision
of this Guaranty which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

11.   Headings.  The
paragraph headings used in this Guaranty are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.

 

12.   No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a
written instrument pursuant to paragraph 13 hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any
of the terms and conditions hereof.  No
failure to exercise, nor any delay in exercising, on the part of Buyer, any
right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A waiver by Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Buyer would otherwise have on any future occasion.  The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.

 

13.   Waivers and Amendments; Successors and Assigns; Governing Law.  None of the terms or provisions of this
Guaranty may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by Guarantors and Buyer, provided that any
provision of this Guaranty may be waived by Buyer in a letter or agreement
executed by Buyer or by facsimile or electronic transmission from Buyer to
Guarantors.  This Guaranty shall be 

 

5

 

binding upon the personal representatives,
successors and assigns of Guarantors and shall inure to the benefit of Buyer
and its successors and assigns.  .

 

14.   Notices.  Notices
delivered in connection with this Guaranty shall be given in accordance with Section 20
of the Repurchase Agreement.

 

15.   Jurisdiction.

 

(a)   THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

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

 

16.   Integration.  This
Guaranty represents the agreement of Guarantors with respect to the subject
matter hereof and there are no promises or representations by Buyer relative to
the subject matter hereof not reflected herein.

 

17.   Acknowledgments. 
Each Guarantor hereby acknowledges that:

 

(a)           such Guarantor has been advised by
counsel in the negotiation, execution and delivery of this Guaranty and the
other Program Agreements;

 

(b)           Buyer does not have any fiduciary
relationship to such Guarantor, such Guarantor does not have any fiduciary
relationship to Buyer and the relationship between Buyer and such Guarantor is
solely that of surety and creditor; and

 

(c)           no joint venture exists between Buyer
and such Guarantor or among Buyer, Seller and such Guarantor.

 

18.   Joint and Several Liability.  Each Guarantor hereby acknowledges and agrees
that such Guarantor shall be jointly and severally liable for all
representations, warranties, covenants, obligations and indemnities of the
Guarantors hereunder.

 

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

 

6

 

IN
WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed
and delivered as of the date first above written.

 

 

	
   

  	
  PennyMac
  Mortgage Investment Trust, as a

  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PennyMac
  Operating Partnership, L.P., as a

  Guarantor

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  Anne McCallion

  
	
   

  	
   

  	
   

  	
  Title:
  Chief Financial Officer and Treasurer

  

 

GUARANTY

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