Document:

EX-1073

		

			EXECUTION

		

		
			MASTER SPREAD PARTICIPATION AGREEMENT
		

		
			 
		

		
			Dated as of March 27, 2015
		

		
			 
		

		
			by and among
		

		
			 
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			 
		

		
			and
		

		
			 
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			as the Initial Participant
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		THIS MASTER SPREAD PARTICIPATION AGREEMENT, dated as of March 27, 2015 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), is by and between PENNYMAC LOAN SERVICES, LLC (“Company”) and PENNYMAC LOAN SERVICES, LLC (the “Initial Participant”).
		

		
			 
		

		
			W I T N E S S E T H:
		

		
			WHEREAS, Company is a party to that certain Third Amended and Restated Loan and Security Agreement dated as of March 27, 2015 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan and Security Agreement”), by and between Company and Credit Suisse First Boston Mortgage Capital LLC (the “Lender”);
		

		
			WHEREAS,  the Company owns and may from time to time originate, or acquire from third parties, Servicing Rights (as defined below);
		

		
			WHEREAS,  in order to obtain greater liquidity, the Company desires to create a Portfolio Excess Spread (as defined herein);
		

		
			WHEREAS, the Company  desires to create a Participation Interest (as defined herein) in the Portfolio Excess Spread pursuant to which such Participant will be entitled to receive Portfolio Collections (as defined herein) and Portfolio Termination Payments (as defined herein) with respect to such Portfolio Excess Spread; and
		

		
			WHEREAS, Company and Initial Participant desire to enter into this Agreement to memorialize the terms and conditions under which each Participant is purchasing a Participation Interest (as hereinafter defined) in the Portfolio Excess Spread.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto mutually agree as follows:
		

			
	
			
				 1.
			Definitions.  References to a “Section” or the “recitals” are, unless otherwise specified, to a Section or the recitals of this Agreement.  Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Loan and Security Agreement.  Whenever used in this Agreement, the following terms shall have the respective meanings set forth below.  In addition, any capitalized terms defined in the body of this Agreement but not listed below shall have the meaning ascribed to such capitalized terms in the body of this Agreement.

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

		
			“Agency Guide” means with respect to any Mortgage Loan serviced for Fannie Mae, Freddie Mac or Ginnie Mae, the applicable guide issued by the applicable Agency, as amended from time to time.
		

		
			“Agreement” shall have the meaning assigned to such term in the recitals.
		

		
			“Ancillary Income” means all income derived from a Mortgage Loan (other than payments or collections in respect of principal, interest, escrow payments and prepayment penalties attributable to such Mortgage Loan) and to which the Seller, as the servicer of the Mortgage Loan, is entitled to in accordance with the Agency Guide.
		

		

		

		 

		

			 

		

 

		“Base Servicing Fee” means, with respect to each Portfolio and each Collection Period, an amount equal to the product of (A) the aggregate outstanding principal balance of the Portfolio Mortgage Loans as of the first day of such Collection Period and (B) one-twelfth of 0.125%;  provided, however, that (1) with respect to all Portfolio Mortgage Loans in such Portfolio, if the initial Collection Period is less than a full month, such fee for each such Portfolio Mortgage Loan shall be an amount equal to the product of the fee otherwise described above and a fraction, the numerator of which is the number of days in such initial Collection Period and the denominator of which is 360; (2) if any Portfolio Mortgage Loan ceases to be part of the Portfolio during such Collection Period as a result of a termination of the Company’s duties as servicer under the applicable Servicing Agreement or Agency Guide, the portion of such amount that is attributable to such Portfolio Mortgage Loan shall be adjusted to an amount equal to the product of such portion and a fraction, the numerator of which is the number of days in such Collection Period during which such Portfolio Mortgage Loan was included in the Portfolio and denominator of which is 360; and (3) if the Portfolio Collections for such Portfolio and such Collection Period were used to cover prepayment interest shortfalls on the Portfolio Mortgage Loans the fee otherwise described above shall be reduced by the amount of such reduction.
		

		
			“Business Day” shall mean any day other than (i) a Saturday or Sunday and (ii) a day on which commercial banks are authorized or required by applicable law, regulation or executive order to close in New York.
		

		
			“Collection Period” means, with respect to each Transaction Remittance Date, the calendar month preceding the month in which such Transaction Remittance Date occurs.
		

		
			“Creation Date” shall mean the date on which Company issues a Participation Certificate with respect to certain Servicing Rights identified therein.
		

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

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

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

		
			“Loan and Security Agreement” shall have the meaning assigned to such term in the recitals.
		

		
			“Mortgage Loan Documents” means the mortgages, notes, assignments and an electronic record or copy of a mortgage loan application. 
		

		
			“Participant” shall mean each Participant or any subsequent holder of a Participation Interest in accordance with the terms hereof.
		

		
			“Participation Certificate” shall mean each participation certificate in the form of Exhibit A attached hereto, which evidences the related Participation Interest. 
		

		
			“Participation Certificate Register” shall have the meaning assigned to such term in Section 20.
		

		

		

		 

		

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		“Participation Certificate Registrar” shall have the meaning assigned to such term in Section 20.
		

		
			 “Participation Interest” shall mean each participating beneficial ownership interest (of the type and nature contemplated by 11 U.S.C. § 541(d) of the United States Bankruptcy Code) in Portfolio Excess Spread with respect to a Portfolio, and proceeds thereof together with the other rights and privileges specified in this Agreement as evidenced by the issuance of a Participation Certificate.  
		

		
			“Person” shall have the meaning assigned such term in the Loan and Security Agreement.
		

		
			“Portfolio” means the assets more particularly set forth on a schedule to a Participation Certificate.  
		

		
			“Portfolio Collections” means, with respect to each Portfolio, the funds collected on the related Portfolio Mortgage Loans and allocated as the servicing compensation payable to the Company as servicer of such Portfolio Mortgage Loans pursuant to one or more Servicing Agreements and Agency Guides, and, for the avoidance of doubt, other than Ancillary Income or reimbursements received by the Company from a loan owner for advances and other out-of-pocket expenditures pursuant to such Servicing Agreements and Agency Guides.
		

		
			 “Portfolio Excess Spread” means, with respect to each Portfolio, the rights of the Company, severable from any and all other rights and obligations under the applicable Servicing Agreements and Agency Guides, to the Portfolio Total Spread minus the Base Servicing Fee on such Portfolio.
		

		
			 
		

		
			“Portfolio Mortgage Loan” means a Mortgage Loan that is included in the Portfolio.
		

		
			“Portfolio Termination Payment” means, with respect to each Portfolio, any payment made by a loan owner or master servicer in connection with an exercise of any right that such Person may have to terminate the Company as the servicer of any Portfolio Mortgage Loan; provided,  however, that, if such a payment is made with respect to a group of mortgage loans and fewer than all such mortgage loans are Portfolio Mortgage Loans, then the “Portfolio Termination Payment” shall mean the portion of such termination payment that is reasonably attributable to the Portfolio Mortgage Loans in such group based upon the methodology set forth in the applicable Servicing Agreement for the calculation of termination payments thereunder.
		

		
			“Portfolio Total Spread” means, with respect to each Portfolio, for each Collection Period, the sum of the following:  (a) the Portfolio Collections received during such Collection Period, net of the Base Servicing Fee; and (b) all other amounts payable by a loan owner or master servicer to the Company with respect to the Servicing Rights for the Portfolio Mortgage Loans, including any Portfolio Termination Payments, but for the avoidance of doubt, excluding all reimbursements for advances and other out-of-pocket expenditures received by the Company from a loan owner in accordance with the applicable Servicing Agreements and Agency Guides.
		

		
			 “Servicing Agreement” means, with respect to each Mortgage Loan, any servicing agreement, including, with respect to any Mortgage Loan serviced for an Agency, the applicable Agency Guide, as amended from time to time, and any waivers, consent letters, acknowledgments and other agreements under which such Mortgage Loan is serviced and administered.
		

		
			“Servicing Rights” means, with respect to each Mortgage Loan, the right to do any and all of the following:  (a) service and administer such Mortgage Loan; (b) collect any payments or monies 
		

		 

		

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

		
			“Transaction Remittance Date” means with respect to each Portfolio, the date denominated as such and set forth in the Participation Certificate, or, if no date is set forth in the Participation Certificate, the last Business day of each calendar week, or if such day is not a Business Day, the prior Business Day, or such other day as may be agreed upon by the Company and the Participant.  
		

		
			“Transfer” shall have the meaning assigned to such term in Section 11.
		

			
	
			
				 2.
			Intent; Creation of Participation Interests; Termination of Participation Interests.  

			
	
			
				 (a)
			In order to obtain greater liquidity, Company desires to create the Portfolio Excess Spread.  

			
	
			
				 (b)
			On each Creation Date, Company will issue in the name of the Initial Participant, the related Participation Certificate, as further described in the schedule attached thereto.  Thereafter, Participant shall be deemed the owner of the applicable Participation Interest described therein.  The Participation Interest shall be evidenced by a Participation Certificate.  During the term of the Loan and Security Agreement, there shall only be one Participation Certificate issued hereunder unless otherwise consented to in writing by the Lender.

			
	
			
				 (c)
			Administration of the Portfolio Excess Spread shall be governed by the terms of this Agreement and any applicable Servicing Agreement, and the servicing and administration of the underlying mortgage loans and/or real estate owned properties that support the Portfolio Excess Spread shall be subject in all respects to the provisions of this Agreement and any applicable Servicing Agreement.  Company shall retain record legal title to any payments, distributions and other collections on the Portfolio Excess Spread, in its capacity as the nominal owner of the Servicing Rights, but subject to the Participation Interests, and each Participant shall only be deemed to be in privity with Company and in no event whatsoever shall any Participant be construed to be in privity with any underlying investor or owner of the Mortgage Loans.

			
	
			
				 (d)
			The Company may from time to time desire to cause additional Portfolios to be subject to this Agreement.  In such instance, the Company shall obtain the consent of the applicable Participant(s) thereof and shall deliver to such Participant(s) an updated schedule reflecting the additional Portfolio to be attached to such Participation Certificate, and the Company hereby authorizes the Participant(s) to so attach such schedule.

			
	
			
				 (e)
			During the term of the Loan and Security Agreement, including following a default thereunder, the Participant may, in its sole discretion, terminate the Participation Interest created hereby by delivery of written notice to the Company; provided that, such termination shall be subject to the 
		

		 

		

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			Lender’s continuing lien under the Loan and Security Agreement on the Servicing Rights and such other rights afforded the Lender with respect thereto, following such termination.

			
	
			
				 3.
			Reserved.

			
	
			
				 4.
			Portfolio Collections and Portfolio Termination Payments.  In the event that Company receives any amounts on account of Portfolio Excess Spread, Company shall or shall cause its designee to remit such amounts on the Transaction Remittance Date as directed by the Participant in writing on or prior to the date such distribution is made; provided that, during the term of the Loan and Security Agreement, any remittances shall be made in accordance with the deposit and remittance requirements as set forth in Section 2.14 of the Loan and Security Agreement.    

			
	
			
				 5.
			Representations and Warranties of Each Participant.    Each Participant represents and warrants to Company, as of the date of any Transfer, and it is specifically understood and agreed, that:

			
	
			
				 (a)
			Such Participant is duly organized and validly existing under the laws of the jurisdiction of its formation.

			
	
			
				 (b)
			The execution and delivery of this Agreement by such Participant, and the performance of, and compliance with, the terms of this Agreement by such Participant, will not violate such Participant’s organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which it is a party or which is applicable to it or any of its assets.

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

			
	
			
				 (d)
			Such Participant has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in connection with the sale of the Participation Interest or the consummation of any of the transactions contemplated herein.

			
	
			
				 (e)
			Such Participant is either (a) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and is acquiring the related Participation Interest for its own account or for the account of one or more qualified institutional buyers for whom it is authorized to act or (B) an “accredited investor” within the meaning of Rule 501 under the Securities Act (an “Accredited Investor”) that is acquiring such Participation Interest for its own account or for the account of one or more Accredited Investors, for investment purposes and not with a view to, or for offer or sale in connection with any distribution in violation of the Securities Act.

		
			The representations and warranties of each Participant contained in this Section 5 are personal to such Participant and no successor or assign of such Participant shall have any liability therefrom.
		

			
	
			
				 6.
			Representations and Warranties of Company.  Company, as of the related Creation Date, hereby represents and warrants to, and covenants with, each Participant that:

			
	
			
				 (a)
			Company is a  limited liability company duly organized, existing and in good standing under the laws of the State of Delaware and will remain the same.

		 

		

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				 (b)
			The execution and delivery of this Agreement by Company, and the performance of, and compliance with, the terms of this Agreement by Company, will not violate Company’s organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which it is a party or which is applicable to it or any of its assets, in each case which materially and adversely affect the ability of Company to carry out the transactions contemplated by this Agreement.

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

			
	
			
				 (d)
			Company has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in connection with the sale of each Participation Interest or the consummation of any of the other transactions contemplated hereby.

			
	
			
				 (e)
			Company is, and will remain, in compliance with all federal, state and local laws, regulations and orders applicable to Company and its assets to the extent material to this Agreement.

			
	
			
				 (f)
			Neither Company nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Participation Certificates, any interest in the Participation Certificates or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Participation Certificates, any interest in the Participation Certificates or any other similar security from, or otherwise approached or negotiated with respect to the Participation Certificates, any interest in the Participation Certificates or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Participation Certificates under the Securities Act or which would render the disposition of the Participation Certificates a  violation of Section 5 of the Securities Act or require registration pursuant thereto.    The foregoing representations, and warranties of Company shall survive the (i) delivery and Transfer of the applicable Participation Interest and Participation Certificate to each Participant and (ii) any transfer by Company of its rights hereunder.

			
	
			
				 7.
			Servicing and Other Matters.  

			
	
			
				 (a)
			Company’s Duties With Respect to Servicing.  

			
	
			
				 (i)
			The Company agrees for the benefit of the Participant to service the related Portfolio Mortgage Loans at all times substantially in accordance in all material respects with the related Servicing Agreement.  In connection with the Portfolio Mortgage Loans related to each Participation Certificate, the Company shall not, without the express written consent of Participant (which consent may be withheld in its absolute discretion), (a) terminate or amend any Servicing Rights, or (b) enter into any termination, modification, waiver or amendment of any applicable Servicing Agreement or its rights and duties thereunder.  

			
	
			
				 (ii)
			Under no circumstances shall the Participant be responsible for the servicing acts and omissions of the Company or any other servicer or any originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer under the Servicing Agreements or any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of the Company.  

		 

		

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				 (iii)
			Upon the termination of the Company as servicer under any Servicing Agreement, the Company shall remain liable to the Participant and the applicable loan owner or master servicer for all liabilities and obligations incurred by the Company while the Company was acting as the servicer thereunder.

			
	
			
				 (b)
			Base Servicing Fees.  The Company agrees that, notwithstanding the provisions of the applicable Servicing Agreements, as between the parties hereto, the Company shall be entitled to servicing fees on the Portfolio only to the extent of the applicable Base Servicing Fee and only to the extent that funds available for the payment of such Base Servicing Fee are available.  Under no circumstances shall the Participant be liable to the Company for the payment of any Base Servicing Fee.  

			
	
			
				 8.
			Independent Analysis of Each Participant.  Each Participant acknowledges that it has, independently and without reliance upon Company and based on such documents and information as such Participant has deemed appropriate, made the Participant’s own credit analysis and decision to purchase the applicable Participation Interest.  Each Participant hereby acknowledges that (except as set forth hereinabove) Company has made no representations or warranties with respect to the Portfolio Excess Spread or the Participation Interest, and that the Participant assumes all risk of loss in connection with its Participation Interest.

			
	
			
				 9.
			No Creation of a Partnership.  Nothing contained in this Agreement, and no action taken pursuant hereto shall be deemed to constitute Company with any Participant, a partnership, association, joint venture or other entity.

			
	
			
				 10.
			Article 8 Opt-In.  The Company hereby irrevocably elects that each Participation Certificate shall constitute and shall remain a “security” for purposes of Article 8 of the Uniform Commercial Code.

			
	
			
				 11.
			Sale of Each Participant’s Interest.  Each Participant agrees that it will not sell, assign, transfer, pledge, syndicate, hypothecate, contribute, encumber or otherwise dispose of all or any portion of its applicable Participation Interest (a “Transfer”) without the prior written consent of Company; provided that the Initial Participant hereby intends to effectuate a Transfer to the Lender pursuant to the Loan and Security Agreement, and both the foregoing Transfer and any subsequent Transfer shall not require such consent.  No transfer of any Participation Certificate shall be made unless (A) such transfer is to a Person that (i) the transferor believes is a qualified institutional buyer (a “QIB”) as defined in Rule 144A (“Rule 144A”) under the Securities Act and is aware that the transferor of such Participation Certificate may be relying on the exemption from the registration requirements of the Securities Act provided by Rule 144A and is acquiring such Participation Certificate for its own account or for the account of one or more QIBs for whom it is authorized to act and (ii) is also a “qualified purchaser” as defined in Section 2(a)(51) of the Investment Company Act and (B) and a fully-executed Assignment and Assumption, in the form attached to the Agreement is delivered to the Participation Certificate Registrar.  The registered Participant shall have the right to inspect the Participation Certificate Register, subject to such reasonable regulations as the Participation Certificate Registrar shall prescribe.  The person listed as the owner of a Participation Certificate on the Participation Certificate Register shall be treated as the Participant for purposes of this Agreement and otherwise.  Upon surrender for registration of transfer of any Participation Certificate to the Participation Certificate Registrar, the Company shall execute and deliver, in the name of the designated transferee or transferees, one or more new Participation Certificates.

			
	
			
				 12.
			No Pledge or Loan.  This Agreement is intended to effect the creation of a Participation Interest and shall not be deemed to represent a pledge of any interest of the Company to any Participant, or a loan from any Participant to Company.  

		 

		

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				 13.
			GOVERNING LAW; WAIVER OF JURY TRIAL.  THIS AGREEMENT AND THE RESPECTIVE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN).  EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

			
	
			
				 14.
			SUBMISSION TO JURISDICTION; WAIVERS.  EACH PARTY HERETO HEREBY IRREVOCABLY (I) SUBMITS, FOR ITSELF IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY WITH RESPECT TO MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT; (II) AGREES THAT ALL CLAIMS WITH RESPECT TO ANY ACTION OR PROCEEDING REGARDING SUCH MATTERS MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURTS; (III) WAIVES, TO THE FULLEST POSSIBLE EXTENT, WITH RESPECT TO SUCH COURTS, THE DEFENSE OF AN INCONVENIENT FORUM; AND (IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

			
	
			
				 15.
			Modifications.  Except as expressly provided herein, this Agreement shall not be modified, cancelled or terminated except by an instrument in writing signed by the parties hereto.

			
	
			
				 16.
			Successors and Assigns; Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.  Except for transferees of Transfers permitted pursuant to the terms hereof, none of the provisions of this Agreement shall be for the benefit of or enforceable by any Person not a party hereto.

			
	
			
				 17.
			Counterparts; Facsimile Execution.  This Agreement may be executed in any number of counterparts and all of such counterparts shall together constitute one and the same instrument.  This Agreement may be executed by signature(s) transmitted by facsimile.

			
	
			
				 18.
			Captions.  The titles and headings of the paragraphs of this Agreement have been inserted for convenience of reference only and are not intended to summarize or otherwise describe the subject matter of the paragraphs and shall not be given any consideration in the construction of this Agreement.

			
	
			
				 19.
			Notices.  All notices required hereunder shall be given by telephone (confirmed in writing) or shall be in writing and personally delivered or sent by facsimile transmission, reputable overnight delivery service or certified United States mail, postage prepaid, and addressed to the respective parties at their addresses set forth on Exhibit A or otherwise as informed to the other parties by written 
		

		 

		

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			notice given as aforesaid.  All written notices so given shall be deemed effective upon receipt or, if mailed, upon the earlier to occur of receipt or the expiration of the fourth day following the date of mailing.  

			
	
			
				 20.
			Participant Register.  The ownership of each Participation Interest shall be registered on a record of ownership (the “Participation Certificate Register”)  maintained by Lender, during the term of the Loan and Security Agreement, and, thereafter,  by Company (the “Participation Certificate Registrar”).  Notwithstanding anything else in this Agreement to the contrary, the right to receive payments with respect to a Participation Interest hereunder may be transferred only if the Transfer is registered on such record of ownership and the transferee is identified as the owner of an interest in the obligation.  The Participants shall be entitled to treat the registered holder of each Participation Interest (as recorded on such record of ownership) as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in a Participation Interest or hereunder on the part of any other person or entity.

			
	
			
				 21.
			Third Party Costs.  The Company agrees to pay the reasonable out of pocket costs of Participant related to (i) the negotiation, execution, and closing of the transactions contemplated by this Agreement, and (ii) the ongoing administrative costs of the Participant related to the tracking, reporting, and administration of the investments made pursuant to this Agreement.

			
	
			
				 22.
			Tax Information.  To facilitate Participant’s annual tax reporting, Company shall provide to Participant the relevant IRS Form 1065 K-1s and other necessary tax information, provided to the Company, which corresponds to all of Participant’s Portfolio Collections and Portfolio Termination Payments arising from or related to applicable Participation Interests.  

			
	
			
				 23.
			Conflicts.  In the event of any conflict between the terms of this Agreement and the Loan and Security Agreement, the terms of the Loan and Security Agreement shall prevail.

		
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		IN WITNESS WHEREOF, Company and the Initial Participant have caused this Agreement to be duly executed as of the day and year first above written.
		

		
			PENNYMAC LOAN SERVICES, LLC  as Company
		

		
			 
		

		
			 
		

		
			By:/s/ Pamela Marsh
		

		
			Name:Pamela Marsh
		

		
			Title:Executive Vice President, Treasurer
		

		
			 
		

		
			 
		

		
			 
		

		
			PENNYMAC LOAN SERVICES, LLC,  as the Initial Participant 
		

		
			 
		

		
			 
		

		
			By:/s/ Pamela Marsh
		

		
			Name:Pamela Marsh
		

		
			Title:Executive Vice President, Treasurer
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

			Signature Page to Master Spread Participation Agreement

		

 

		

			 

		

		EXHIBIT A
		

		
			NOTICES
		

		
			Company:
		

		
			 
		

		
			PENNYMAC LOAN SERVICES, LLC
6101 Condor Drive
		

		
			Moorpark, California 93021
		

		
			
Attention: Treasurer
Phone Number: 805 330-6059; 818 746-2877
E-mail: pamela.marsh@pnmac.com;  kevin.chamberlain@pnmac.com 
		

		
			With a copy to:
		

		
			 
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			6101 Condor Drive 
		

		
			Moorpark, California 93021
		

		
			Attention: General Counsel
		

		
			 
		

		
			Participants:
		

		
			 
		

		
			As set forth in the Participation Certificate.
		

		

		

		 

		

			Exhibit A-1

		

		

			 

		

 

		

			 

		

		EXHIBIT B

FORM OF PARTICIPATION CERTIFICATE
		

		
			This is a participation interest certificate (“Participation Certificate”)  evidencing a participation interest granted to the Participant (as defined herein) in the Portfolio Excess Spread, Collections and Portfolio Termination Payments related to the Portfolio Excess Spread in the assets identified on Schedule I attached hereto, and as more particularly described in the Master Spread Participation Agreement, dated as of March 27, 2015 (as amended, restated, supplement or otherwise modified from time to time, the “Participation Agreement”), by and among PENNYMAC LOAN SERVICES, LLC  (“Company”) and [___________] (“Participant”).  Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Participation Agreement. 
		

		
			Pursuant to the terms of the Participation Agreement, Company hereby grants a Participation Interest in the Portfolio Excess Spread to Participant:
		

		
			 
		

			
					
						Certificate No. 1

					
					
						Percentage Interest:  100%

				

		
			THIS PARTICIPATION CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE.  ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS PARTICIPATION CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 11 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN).
		

		
			The Company hereby irrevocably elects that this Participation Certificate shall constitute and shall remain a “security” for purposes of Article 8 of the Uniform Commercial Code.
		

		
			This Participation Certificate is subject to the terms, provisions and conditions of the Participation Agreement, as to each of which the holder of this Participation Certificate, by virtue of the acceptance hereof, assents and by which such holder is bound. 
		

		
			This Participation Certificate shall be construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in said State, without regard to conflicts of law principles (other than Section 5-1401 of the New York General Obligations Law, which shall govern), and the obligations, rights and remedies of the holder hereof shall be determined in accordance with such laws.
		

		
			 
		

		
			[SIGNATURE FOLLOWS]
		

		 

		

			Exhibit B-1

		

		

			 

		

 

		IN WITNESS WHEREOF, the Company has caused this Participation Certificate to be duly executed.
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			By:_____________________________________
Authorized Officer/Authorized Signer
		

		
			 
		

		
			Address for Notices:
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			6101 Condor Drive
		

		
			Moorpark, California 93021
		

		
			Attention: Treasurer
		

		
			Phone Number: 805 330-6059; 818 746-2877
		

		
			E-mail: pamela.marsh@pnmac.com;
		

		
			kevin.chamberlain@pnmac.com
		

		
			 
		

		
			With a copy to:
		

		
			PENNYMAC LOAN SERVICES, LLC
		

		
			6101 Condor Drive
		

		
			Moorpark, California 93021
		

		
			Attention: General Counsel
		

		

		

		 

		

			Exhibit B-2

		

		

			 

		

 

		ASSIGNMENT AND ASSUMPTION
		

		
			 
		

		
			FOR VALUE RECEIVED,  the undersigned Assignor hereby sell(s), assign(s) and transfer(s) unto 
		

		
			
		

		
			
		

		
			(please print or typewrite name and address including postal zip code of Assignee)
		

		
			the Participation Interest evidenced by the within Participation Certificate and hereby authorize(s) the registration of transfer of such Participation Interest to the above named assignee on the participation register of the Company.    The Participation Certificate is subject to the terms, provisions and conditions of the Participation Agreement.
		

		
			I (we) further direct the issuance of a new certificate of a like percentage interest and class to the above named assignee and delivery of such certificate to the following address:
		

		
			
		

		
			
		

		
			 
		

		
			Dated:______________________
		

		
			 
		

		
			_________________________________________
		

		
			Signature by or on behalf of Assignor
		

		
			 
		

		
			 
		

		
			 
		

		
			ACCEPTANCE:
		

		
			The undersigned Assignee hereby accepts and assumes all of the rights, interests and obligations of the Participation Interest holder under the Participation Agreement pursuant to which the participation interest transferred hereby was created.  The undersigned Assignee hereby makes the representations and warranties contained in Section 5 of the Participation Agreement to Company and to the Assignor.
		

		
			Dated: ______________________
		

		
			 
		

		
			 
		

		
			_________________________________________
		

		
			Signature by or on behalf of Assignee 
		

		
			 
		

		

		

		 

		

			Exhibit B-3

		

		

			 

		

 

		DISTRIBUTION INSTRUCTIONS
		

		
			Assignee should include the following for purposes of distribution of any proceeds of a Participation Interest:
		

		
			Distributions shall, if permitted, be made by wire transfer or otherwise, in immediately available funds, to ______________________________________________________________ _______________________________________________________________ for the account of _____________________________________________________________________________.
		

		
			Distributions made by check (such check to be made payable to )
		

		
			and all applicable statements and notices should be mailed to 
		

		
			.
		

		
			 
		

		
			 
		

		
			This information is provided by , the assignee named above, or , as its agent.
		

		
			 
		

		
			 
		

		

		

		 

		

			Exhibit B-4

		

		

			 

		

 

		

			 

		

		SCHEDULE I
		

		
			TO PARTICIPATION CERTIFICATE
		

		
			 
		

		
			ELIGIBLE SECURITIZATION TRANSACTIONS
		

		
			 
		

			
					
						Description of Eligible Securitization Transaction

					
					
						Related Servicing Cut-off Date

					
					
						Related Advance Date

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			SERVICING CONTRACTS
		

		 

		

			Exhibit B-1EX-109

		

			 

		

		
			PennyMac Financial Services, Inc.
2013 EQUITY INCENTIVE PLAN
		

		
			Restricted Stock Unit
		

		
			Award Agreement
		

		
			This Agreement is dated as of                          , 2013, between PennyMac Financial Services, Inc., a corporation organized under the laws of the State of Delaware (the “Company”), and the individual identified in the table below (the “Recipient”).  
		

		
			Recipient     
		

		
			Grant Date     
		

		
			Vesting Commencement Date  
		

		
			Number of RSUs Subject to 
		

		
			Continued Service     
		

		
			Number of RSUs Subject to 
		

		
			Performance Components     
		

		
			Total Number of RSUs     
		

		
			Performance Period     
		

		
			1.Grant of Restricted Stock Units.  Subject to the terms and conditions of this Award Agreement and the Company’s 2013 Equity Incentive Plan, as the same may be amended, modified, supplemented or interpreted from time to time (the “Plan”),  including without limitation the vesting provisions set forth in Section 2, the Company hereby grants to the Recipient, with effect as of the Grant Date specified above, the above indicated number of restricted stock units (the “RSUs”) to obtain (i) for each RSU that is subject to vesting based on continued service, one fully paid and nonassessable share of Class A Common Stock, par value $0.0001 per share, in the Company (the “Stock”), and (ii) for each RSU that is subject to vesting based on the satisfaction of performance components, one fully paid and nonassessable share of Stock if the Variance to Target is [                                   ], all as set forth on Exhibit A attached hereto, or such greater number (up to a maximum of [        ] shares of Stock) or lesser number as is obtained by applying the sliding scale percentage factors that are to be applied to the various performance components as set forth on such Exhibit A. 
		

		
			2.Vesting and Settlement.    
		

		
			2.1The RSUs shall vest in accordance with the schedule set forth below.  
		

		
			(a)    Vesting Based on Continued Service.  One-third (1/3) of the RSUs subject to vesting based on continued service shall vest in a lump sum on each of the first, second, and third anniversaries of the Vesting Commencement Date specified above, subject to 
		

		 

		

			A/75576823.3 

		

 

		the Recipient’s continued service through each such anniversary, with any fractions rounded down except on the final installment.    The shares of Stock earned as such RSUs vest will be transferred or issued to the Recipient (or his or her estate, in the event of his or her death) promptly after the date they vest, but in any event not later than the 15th day of the third month following the end of the calendar year in which such RSUs become vested.  
		

		
			(b)    Vesting Based on Performance Components.  The RSUs subject to vesting based on satisfaction of performance components are subject to cumulative achievement of goals based on the following performance components: (1) the Company’s Earnings Per Share, (2) the Company’s Total Shareholder Return, and (3) the Recipient’s Individual Effectiveness, in the amounts and each as further described in Exhibit A attached hereto.  The RSUs subject to vesting based on satisfaction of performance components shall vest in a lump sum on the date the Committee determines that the goals based on the performance components have been satisfied,  subject to the Recipient’s continued service through such date.  The Recipient’s satisfaction of goals based on performance components shall be determined by the Committee in its sole discretion.  The shares of Stock earned as such RSUs vest will be transferred or issued to the Recipient (or his or her estate, in the event of his or her death) promptly after they vest, but in any event not later than the 15th day of the third month following the end of the calendar year in which such RSUs become vested.  Notwithstanding anything to the contrary in this Agreement, if any settlement of RSUs would otherwise result in the issuance of a fractional share to the Recipient after aggregating all shares and fractional shares to be issued to the Recipient in connection with such settlement, then any such final fractional share shall be eliminated and the Company shall pay to the Recipient, in lieu thereof, cash in an amount equal to (i) the average closing price of a share of Stock during the 10 most recent trading days prior to the date of issuance of the other shares issued in settlement of such RSU, multiplied by (ii) such fractional amount.
		

		
			2.2Until the RSUs vest and are issued pursuant to the terms of this Award Agreement, the Recipient shall have no rights as a stockholder, such as the right to vote or to receive dividends in respect of the Stock covered by this Award.  
		

		
			2.3The Recipient’s name shall be entered as the stockholder of record on the books and records of the transfer agent for the Company with respect to the Stock issuable pursuant to Section 2.1 only upon compliance to the satisfaction of the Committee with all requirements under applicable laws or regulations in connection with such issuance and with the requirements of this Agreement and of the Plan.  The determination of the Committee as to such compliance shall be final and binding on the Recipient.  Notwithstanding anything to the contrary in this Agreement, no Stock shall be issued in settlement of vested RSUs if the issuance of such shares would constitute a violation of any applicable federal or state securities law or other law or regulation.  As a condition to the issuance of Stock to the Recipient pursuant to Section 2.1, the Company may require the Recipient to make any representation or warranty to the Company at the time vested Stock becomes issuable to the Recipient as in the opinion of legal counsel for the Company may be required by any applicable law or regulation, including the execution and delivery of an appropriate representation statement.  Accordingly, the stock 
		

		 

		

			A/75576823.3 

		

 

		certificates for the Stock issued pursuant to this Award may bear appropriate legends restricting the transfer of the Stock.
		

		
			3.Effect of Termination.     Unless otherwise expressly provided herein, no RSUs shall vest following the date (the Recipient’s “Termination Date”), reasonably fixed and determined by the Committee, of the voluntary or involuntary termination of the Recipient’s employment or other association with all of the Company and its Affiliates, for any or no reason whatsoever, including death or disability and an entity ceasing to be an Affiliate of the Company; provided, however, that military or sick leave shall not be deemed a termination of employment or other association, if it does not exceed the longer of 90 days or the period during which the Recipient’s reemployment rights, if any, are guaranteed by statute or by contract.  As of the Recipient’s Termination Date, all of the then unvested RSUs shall be forfeited by the Recipient or any transferee.
		

		
			4.Restrictions on Transfer.  The RSUs may not be assigned or transferred (by operation of law or otherwise) except by will or the laws of descent and distribution.
		

		
			5.Miscellaneous.
		

		
			5.1No Special Service Rights.  Nothing contained in this Award Agreement shall confer upon the Recipient any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the Recipient’s employment or other association with the Company and its Affiliates.
		

		
			5.2Entire Agreement; Counterparts.  This Award Agreement, including the Plan, constitute the entire agreement of the parties with respect to the subject matter hereof.  This Award Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, taken together, shall constitute one and the same instrument.  In making proof of this Award Agreement it shall not be necessary to produce or account for more than one such counterpart.
		

		
			5.3Tax Consequences.The Company makes no representation or warranty as to the tax treatment to the Recipient of receipt of these RSUs, and does not warrant to the Recipient that all compensation paid or delivered to him or her for his or her services will be exempt from, or paid in compliance with, Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.  The Recipient should rely on his or her own tax advisors for all such advice.
		

		
			5.4Community Property.    To the extent the Recipient resides in a jurisdiction in which community property rules apply, without prejudice to the actual rights of the spouses as between each other, for all purposes of this Award Agreement, the Recipient shall be treated as agent and attorney-in-fact for that interest held or claimed by the Recipient’s spouse 
		
		
 

		

			A/75576823.3 

		

 

		with respect to these RSUs and the parties hereto shall act in all matters as if the Recipient was the sole owner of these RSUs.  This appointment is coupled with an interest and is irrevocable.    

		
		
			6.Receipt of Plan.    The RSUs were awarded under the Plan, to which this Award Agreement is subject in all respects, including without limitation the adjustment and tax withholding provisions therein.  All capitalized terms used in this Award Agreement and not otherwise defined shall have the meanings ascribed thereto in the Plan. The Recipient has reviewed and understands the Plan and this Award Agreement in their entirety, and has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement.  The Recipient hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Award Agreement.
		

		
			IN WITNESS WHEREOF,  the Recipient and the Company have entered into this Award Agreement as of the Grant Date.
		

			
					
						 

					
					
						 

				

		
			PENNYMAC FINANCIAL SERVICES, INC.
		

		
			By:__________________________________________________________
		

		
			Signature of Recipient
		

		
			Title:___________________________
		

		

		

		 

		

			A/75576823.3 

		

 

		
		

		
			 
		

			
					
						 

					
						Recipient:____________________________

					
						 

					
						 

					
						Performance Period:____________________________

					
						 

					
					
						RSUs Subject to Performance 

					
						Components (“Grant”):________________________

					
						 

					
						Total Potential Shares if Maximum 

					
						Potential Components Satisfied:________________________

				

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						PFSI Equity Incentive Plan Performance Objectives - Chiefs Only

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Award Components

					
					
						Component

					
					
						Comments

					
					
						Target

					
					
						% of Total

				
	
					
						 1.   Earnings Per Share

					
					
						Transition period performance measurement period will be 7/1/13 - 12/31/15 cumulative EPS.  1/1/14 grants and thereafter will use three year cumulative EPS performance measurement period.

					
					
						10 quarter (July 1, 2013 - Dec 31, 2015) cumulative diluted EPS of $8.76

					
					
						50%

				
	
					
						 2.  Total Shareholder Return (TSR)

					
					
						TSR is defined as: return to an investor in common stock of the company assuming any dividends are fully reinvested expressed as a percentage of the original investment.  Transition period performance measurement period will be 7/1/13 - 12/31/15 cumulative TSR.  1/1/14 grants and thereafter will use three year cumulative TSR performance measurement period.

					
					
						50% cumulative return

					
					
						50%

				
	
					
						 3.  Individual Effectiveness

					
					
						Award “modifier” based on individual overall achievement of stated goals at beginning of each of the three grant period years

					
					
						5 - Outstanding

					
					
						Multiplier

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		 

		

			A/75576823.3 

		

 

		

			PennyMac Financial Services, Inc. 2013 EQUITY INCENTIVE PLAN

		

		

			Restricted Stock Unit Award Agreement

		

		

			Exhibit A

		

			
					
						Pay-Out Scale for Component 1 

					
					
						Variance to Target

					
					
						Factor

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Pay-Out Scale for Component 2

					
					
						Variance to Target

					
					
						Factor

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Multiplier Scale for Component 3

					
					
						Rating

					
					
						Description

					
					
						Factor

				
	
					
						5

					
					
						Outstanding

					
					
						 

				
	
					
						4

					
					
						Exceeds Expectations

					
					
						 

				
	
					
						3

					
					
						Meets Expectations

					
					
						 

				
	
					
						2

					
					
						Needs Improvement

					
					
						 

				
	
					
						1

					
					
						Unsatisfactory

					
					
						 

				

		
			 
		

		 

		

			A/75576823.3

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