Document:

Exhibit 10.8

 

EXECUTION VERSION

	
 
    

 

SUBORDINATION, ACKNOWLEDGMENT AND PLEDGE AGREEMENT

 

between

 

PNMAC GMSR ISSUER TRUST, as Buyer (“Buyer”)

 

and

 

PENNYMAC HOLDINGS, LLC, as Pledgor (“Pledgor”)

 

Dated as of December 19, 2016

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
ARTICLE I
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    
	
Section 1.01
    	
Certain Defined Terms
    	
2
    
	
Section 1.02
    	
Other Defined Terms
    	
5
    
	
 
    	
 
    
	
ARTICLE II
    	
Collateral Security
    	
6
    
	
 
    	
 
    
	
Section 2.01
    	
Collateral; Security   Interest
    	
6
    
	
Section 2.02
    	
Further Documentation
    	
7
    
	
Section 2.03
    	
Participation   Certificate
    	
7
    
	
Section 2.04
    	
Limited Pledge of   Ginnie Mae Servicing
    	
7
    
	
Section 2.05
    	
Changes in Locations,   Name, etc.
    	
8
    
	
Section 2.06
    	
Buyer’s Appointment as Attorney-in-Fact
    	
8
    
	
Section 2.07
    	
Proceeds
    	
10
    
	
Section 2.08
    	
Remedies
    	
11
    
	
Section 2.09
    	
Limitation on Duties   Regarding Preservation of Collateral
    	
13
    
	
Section 2.10
    	
Powers Coupled with an   Interest
    	
13
    
	
Section 2.11
    	
Release of Security   Interest
    	
13
    
	
Section 2.12
    	
Reinstatement
    	
13
    
	
Section 2.13
    	
Use of Collateral
    	
13
    
	
Section 2.14
    	
Intent
    	
13
    
	
 
    	
 
    
	
ARTICLE III
    	
RECOURSE; SUBORDINATION
    	
14
    
	
 
    	
 
    
	
Section 3.01
    	
Recourse
    	
14
    
	
Section 3.02
    	
Subordination in   Connection with Financing
    	
14
    
	
Section 3.03
    	
Rights under PMH   Repurchase Agreement
    	
15
    
	
 
    	
 
    
	
ARTICLE IV
    	
REPRESENTATIONS AND   WARRANTIES
    	
15
    
	
 
    	
 
    
	
Section 4.01
    	
Pledgor Existence
    	
15
    
	
Section 4.02
    	
Licenses
    	
16
    
	
Section 4.03
    	
Power
    	
16
    
	
Section 4.04
    	
Due Authorization
    	
16
    
	
Section 4.05
    	
Financial Statements
    	
16
    
	
Section 4.06
    	
Solvency
    	
16
    
	
Section 4.07
    	
No Conflicts
    	
17
    
	
Section 4.08
    	
True and Complete   Disclosure
    	
17
    
	
Section 4.09
    	
Approvals
    	
17
    
	
Section 4.10
    	
No Trigger Event
    	
17
    
	
Section 4.11
    	
[Reserved]
    	
17
    
	
Section 4.12
    	
Ownership
    	
17
    
	
Section 4.13
    	
[Reserved]
    	
18
    
	
Section 4.14
    	
Investment Company
    	
18
    
	
Section 4.15
    	
Chief Executive Office;   Jurisdiction of Organization
    	
18
    
				

 

i

 

	
Section 4.16
    	
Location of Books and   Records
    	
18
    
	
Section 4.17
    	
Adjusted Tangible Net   Worth
    	
18
    
	
Section 4.18
    	
ERISA
    	
18
    
	
Section 4.19
    	
[Reserved]
    	
18
    
	
Section 4.20
    	
No Reliance
    	
19
    
	
Section 4.21
    	
Plan Assets
    	
19
    
	
Section 4.22
    	
No Prohibited Persons
    	
19
    
	
 
    	
 
    
	
ARTICLE V
    	
COVENANTS
    	
19
    
	
 
    	
 
    
	
Section 5.01
    	
Insurance
    	
19
    
	
Section 5.02
    	
No Adverse Claims
    	
19
    
	
Section 5.03
    	
Assignment
    	
19
    
	
Section 5.04
    	
Security Interest
    	
20
    
	
Section 5.05
    	
Records
    	
20
    
	
Section 5.06
    	
Books
    	
20
    
	
Section 5.07
    	
Approvals
    	
20
    
	
Section 5.08
    	
Applicable Law
    	
20
    
	
Section 5.09
    	
Existence
    	
20
    
	
Section 5.10
    	
Chief Executive Office;   Jurisdiction of Organization
    	
20
    
	
Section 5.11
    	
Taxes
    	
21
    
	
Section 5.12
    	
True and Correct   Information
    	
21
    
	
Section 5.13
    	
Purchased MSR Excess   Spread Not To Be Evidenced by Promissory Notes
    	
21
    
	
Section 5.14
    	
No Pledge; Other Liens;   Creditors
    	
21
    
	
Section 5.15
    	
Plan Assets
    	
21
    
	
Section 5.16
    	
Sharing of Information
    	
21
    
	
Section 5.17
    	
No Modification of the   Master Spread Acquisition Agreement; Intended Third Party Beneficiary
    	
21
    
	
 
    	
 
    
	
ARTICLE VI
    	
TRIGGER EVENTS / RIGHTS   AND REMEDIES OF BUYER UPON TRIGGER EVENT OR EVENT OF DEFAULT
    	
22
    
	
 
    	
 
    
	
Section 6.01
    	
Trigger Events
    	
22
    
	
Section 6.02
    	
No Waiver
    	
23
    
	
Section 6.03
    	
Liquidation of   Collateral
    	
23
    
	
 
    	
 
    
	
ARTICLE VII
    	
ENTIRE AGREEMENT;   AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER
    	
23
    
	
 
    	
 
    
	
Section 7.01
    	
Entire Agreement
    	
23
    
	
Section 7.02
    	
Waivers, Separate   Actions by Buyer
    	
23
    
	
Section 7.03
    	
Amendment
    	
24
    
	
 
    	
 
    
	
ARTICLE VIII
    	
SUCCESSORS AND ASSIGNS
    	
24
    
	
 
    	
 
    
	
Section 8.01
    	
Successors and Assigns
    	
24
    
				

 

ii

 

	
ARTICLE IX
    	
MISCELLANEOUS
    	
24
    
	
 
    	
 
    
	
Section 9.01
    	
Survival
    	
24
    
	
Section 9.02
    	
Indemnification
    	
24
    
	
Section 9.03
    	
Nonliability of Buyer
    	
24
    
	
Section 9.04
    	
Governing Law;   Jurisdiction, Waiver of Jury Trial: Waiver of Damages
    	
25
    
	
Section 9.05
    	
Notices
    	
26
    
	
Section 9.06
    	
Severability
    	
27
    
	
Section 9.07
    	
Section Headings
    	
27
    
	
Section 9.08
    	
Counterparts
    	
27
    
	
Section 9.09
    	
Hypothecation or Pledge   of Collateral
    	
27
    
	
Section 9.10
    	
Non-Confidentiality of   Tax Treatment
    	
27
    
	
Section 9.11
    	
Set-off
    	
28
    
	
Section 9.12
    	
Actions and Discretion   of Buyer
    	
29
    
	
Section 9.13
    	
No Recourse
    	
29
    
	
Section 9.14
    	
Limitation of Liability   of Owner Trustee
    	
29
    
	
Section 9.15
    	
Third-Party   Beneficiaries
    	
30
    
				

 

SCHEDULES

 

Schedule 1 — Responsible Officers of Pledgor

 

EXHIBITS

 

Exhibit A — Form of Power of Attorney (Buyer)

 

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SUBORDINATION, ACKNOWLEDGMENT AND PLEDGE AGREEMENT

 

This Subordination, Acknowledgment and Pledge Agreement (as the same may be amended, modified, restated or supplemented from time to time, this “Agreement”) is made as of December 19, 2016, between PNMAC GMSR ISSUER TRUST (the “Buyer”), and PENNYMAC HOLDINGS, LLC, as Pledgor (the “Pledgor”).

 

W I T N E S S E T H:

 

WHEREAS, PennyMac Loan Services, LLC (“PLS”) is the servicer under the Servicing Contracts (as defined in the PC Repurchase Agreement (as defined below)) related to certain MSRs (as defined in the PC Repurchase Agreement) and has sold and desires, subject to the consent of the Buyer, to sell from time to time to Pledgor all of PLS’s right, title and interest in and to the Purchased MSR Excess Spread, as evidenced by a participation certificate (the “Purchased MSR Excess Spread PC”) created pursuant to the Master Spread Acquisition Agreement (as defined below);

 

WHEREAS, pursuant to that certain master repurchase agreement, dated as of December 19, 2016, among the Pledgor, as seller, PLS, as buyer, and PennyMac Mortgage Investment Trust, as guarantor (the “PMT Guarantor”) (as amended, restated, supplemented or otherwise modified from time to time, the “PMH Repurchase Agreement”), the Pledgor sold the Purchased MSR Excess Spread PC to PLS, subject to its right to repurchase such Purchased MSR Excess Spread PC;

 

WHEREAS, PLS has entered into that certain master repurchase agreement, dated as of December 19, 2016, among PLS, as seller, Private National Mortgage Acceptance Company, LLC, as guarantor (the “Guarantor”), and the Buyer, as buyer (as amended, restated, supplemented or otherwise modified from time to time, the “PC Repurchase Agreement”);

 

WHEREAS, pursuant to the PC Repurchase Agreement, PLS has sold to the Buyer all of its right, title and interest in, to and under Purchased MSR Excess Spread PC;

 

WHEREAS, in part, to finance its purchase of the Purchased MSR Excess Spread PC pursuant to the PMH Repurchase Agreement, PLS has entered into that certain Indenture, dated as of December 19, 2016, among Buyer, as issuer, Citibank, N.A. (“Citibank”), as indenture trustee, calculation agent, paying agent and securities intermediary (in all such capacities, the “Indenture Trustee”), PLS, as servicer and as administrator, Credit Suisse First Boston Mortgage Capital LLC, as administrative agent (the “Administrative Agent”), and Pentalpha Surveillance LLC, as credit manager (the “Credit Manager”) (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”);

 

WHEREAS, pursuant to the terms of the Indenture, subject to the interests of Ginnie Mae (as defined below) as set forth in the Acknowledgment Agreement (as defined in the PC Repurchase Agreement), the Buyer has granted to the Indenture Trustee for the benefit and security of the Noteholders (as defined in the Indenture) and the Indenture Trustee, in its individual capacity (each, a “Secured Party” and collectively, the “Secured Parties”), a security interest in all its right, title and interest in certain MSRs (as defined in the PC Repurchase Agreement), including the Purchased MSR Excess Spread, evidenced by the Purchased MSR Excess Spread PC;

 

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WHEREAS, the sale of any Purchased MSR Excess Spread is subject to and subordinate to the Issuer’s rights under the PC Repurchase Agreement and the Issuer’s security interest in the Purchased MSR Excess Spread and the Purchased MSR Excess Spread PC; and

 

WHEREAS, Buyer has agreed to consent to the sale of the Purchased MSR Excess Spread by PLS to the Pledgor and the creation of the Purchased MSR Excess Spread PC in consideration of such sale being made subject and subordinate to the Buyer’s Lien on the MSRs including the Purchased MSR Excess Spread and its ownership of the Purchased MSR Excess Spread PC.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Pledgor hereby agree as follows.

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                             Certain Defined Terms.  Capitalized terms used herein shall have the indicated meanings set forth in this Section 1.01.  Any capitalized terms used and not defined herein shall have the meaning set forth in the PC Repurchase Agreement.

 

“Act” has the meaning set forth in Section 9.10(b) hereof.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person; provided, however, that in respect of PLS or PNMAC, the term “Affiliate” shall include only PNMAC and its wholly owned subsidiaries, and in respect of PMH or PMIT, the term “Affiliate” shall include only PMIT and its wholly owned subsidiaries

 

“Agreement” means this Subordination, Acknowledgment and Pledge Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.

 

“Asset” means the Purchased MSR Excess Spread PC and any Purchased MSR Excess Spread related thereto.

 

“Bank” has the meaning set forth in Section 9.14 hereof.

 

“Buyer” means PNMAC GMSR ISSUER TRUST, together with its successors, and any assignee of and Participant or Transferee under the PC Repurchase Agreement.

 

“Collateral” has the meaning assigned to such term in Section 2.01 hereof.

 

“Confidential Information” has the meaning set forth in Section 9.10(b) hereof.

 

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“EO13224” has the meaning set forth in Section 4.22 hereof.

 

“ERISA Event of Termination” means with respect to Pledgor (i) 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 thirty (30) days of the occurrence of such event, or (ii) the withdrawal of Pledgor 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 (iii) the failure by Pledgor 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 (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by Pledgor or any ERISA Affiliate thereof to terminate any plan, or (v) 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 (vi) 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 (vii) the receipt by Pledgor or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for Pledgor 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.

 

“Fidelity Insurance” means 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 Pledgor’s regulators.

 

“Financial Statement Date” has the meaning set forth in Section 4.05 hereof.

 

“GAAP” means U.S. generally accepted accounting principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its successors, as in effect from time to time, and (ii) applied consistently with principles applied to past financial statements of Seller and its subsidiaries; provided, that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) that such principles have been properly applied in preparing such financial statements.

 

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

 

“Ginnie Mae Acquisition Date” means any date on which the Pledgor acquires portfolio excess spread on account of MSRs.

 

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“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide, Handbook 5500.3, Rev. 1, as amended from time to time, and any related announcements, directives and correspondence issued by Ginnie Mae.

 

“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 Pledgor, Servicer or Buyer, as applicable.

 

“Master Spread Acquisition Agreement” means the Second Amended and Restated Acquisition and MSR Servicing Agreement, dated as of December 19, 2016, between PLS and Pledgor, as amended, restated, supplemented or otherwise modified from time to time and the Participation Certificates issued thereunder from time to time

 

“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 Pledgor; (b) a material impairment of the ability of Pledgor to perform under this Agreement and to avoid any Trigger Event; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of this Agreement against Pledgor.

 

“MBS” means collateralized mortgage obligations and other mortgage-backed securities.

 

“Obligations” means all obligations and liabilities of PLS 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 PC Repurchase Agreement and any other related documents or agreement made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise.

 

“OFAC” has the meaning set forth in Section 4.22 hereof.

 

“Participation Certificate” means the Purchased MSR Excess Spread PC and any other participation certificate issued and delivered in connection with the Master Spread Acquisition Agreement.

 

“PC Repurchase Agreement” has the meaning assigned to such term in the recitals to this Agreement.

 

“PC Repurchase Documents” means the “Program Agreements” as such term is defined in the PC Repurchase Agreement.

 

“Pledgor” means PennyMac Holdings, LLC or its permitted successors and assigns.

 

“Pledgor Guarantor” means PennyMac Mortgage Investment Trust or its permitted successors and assigns.

 

4

 

“Pledgor Guaranty Agreement” means that certain Guaranty, dated as of December 19, 2016, made by Pledgor Guarantor for the benefit of the Buyer, as amended, supplemented and restated from time to time.

 

“PMH Repurchase Agreement” has the meaning assigned to such term in the recitals to this Agreement.

 

“PMIT” means PennyMac Mortgage Investment Trust.

 

“PNMAC” means Private National Mortgage Acceptance Company, LLC.

 

“Potential Trigger Event” means an event, condition or default that, with the giving of notice, the passage of time, or both, would constitute a Trigger Event.

 

“Power of Attorney” has the meaning set forth in Section 2.06(e) hereof.

 

“Prohibited Person” has the meaning set forth in Section 4.22 hereof.

 

“Property” has the meaning assigned to such term in the PC Repurchase Agreement.

 

“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Pledgor, Servicer, or any other person or entity with respect to the Assets or any other Collateral.

 

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

 

“Responsible Officer” means as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer or treasurer of such Person.  The Responsible Officers of Pledgor as of the date hereof are listed on Schedule 1 hereto.

 

“Servicer” means PennyMac Loan Services, LLC.

 

“Subordinated Lender” means PennyMac Loan Services, LLC, in its capacity as buyer under the PMH Repurchase Agreement.

 

“Trigger Event” has the meaning assigned to such term in Section 6.01 hereof.

 

Section 1.02                             Other Defined Terms.  (a) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting.  All references to Sections, subsections, Articles and Exhibits shall be to Sections, subsections, and Articles of, and Exhibits to, this Agreement unless otherwise specifically provided.

 

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(b)                                 In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein the words “commencing on” mean “commencing on and including,” the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

 

ARTICLE II

 

COLLATERAL SECURITY

 

Section 2.01                             Collateral; Security Interest.  (a)  All of Pledgor’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Collateral”:

 

(i)                                     all Purchased MSR Excess Spread arising under or related to the Purchased MSR Excess Spread PC;

 

(ii)                                  all rights to payment of amounts due under the Master Spread Acquisition Agreement on account of, or related to, the Purchased MSR Excess Spread PC;

 

(iii)                               all Assets, including the related Participation Certificates, arising under or relating to the Master Spread Acquisition Agreement and all rights thereunder;

 

(iv)                              all rights to reimbursement of Assets and/or amounts due in respect thereof under the related Servicing Contract;

 

(v)                                 any rights in the Dedicated Account, and to amounts on deposit therein;

 

(vi)                              any rights in the Portfolio Spread Custodial Account, and to the amounts on deposit therein;

 

(vii)                           all records, instruments or other documentation evidencing any of the foregoing;

 

(viii)                        all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including, without limitation, all of Pledgor’s rights, title and interest in and under the Purchased MSR Excess Spread and Servicing Contracts); and

 

(ix)                              any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.

 

(b)                                 In consideration of the agreements described in the Recitals hereto, Pledgor hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Collateral to Buyer to secure the Obligations.  Pledgor agrees to mark its computer records and tapes to evidence the interests granted to Buyer hereunder.

 

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(c)                                  Pledgor acknowledges and agrees that it has purchased the Collateral from the Servicer, subject to the first priority Lien of the Buyer, and that its rights with respect to the Collateral are and shall continue to be at all times junior and subordinate to the rights of Buyer under the Repurchase Documents.

 

Section 2.02                             Further Documentation.  At any time and from time to time, upon the written request of Buyer, and at the sole expense of Pledgor, Pledgor will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as Buyer may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any applicable jurisdiction with respect to the Liens created hereby.  Pledgor also hereby authorizes Buyer to file any such financing or continuation statement to the extent permitted by applicable law.

 

Section 2.03                             Participation Certificate.  With respect to any Collateral that constitutes a Participation Certificate, Buyer shall have received the original Participation Certificate registered into the name of the Buyer or its designee or pledgee.

 

Section 2.04                             Limited Pledge of Ginnie Mae Servicing.  To the extent that the pledge of the Pledgor’s right, title and interest in the Purchased MSR Excess Spread shall at any time be included within the MSRs, the Pledgor and Buyer each acknowledges and agrees that prior to the occurrence of an Event of Default, (x) PLS is entitled to servicing income with respect to a given mortgage pool only so long as PLS is a Ginnie Mae approved issuer; (y) upon PLS’s loss of such approved issuer status, PLS’s rights to any servicing income related to a given mortgage pool also terminate; and (z) the pledge of the Pledgor’s rights to servicing income conveys no rights (such as a right to become a substitute servicer or issuer) that are not otherwise specifically provided for in the Ginnie Mae Contract, provided, that this sentence shall automatically be deemed amended or modified if and to the extent Ginnie Mae amends the Ginnie Mae Contract, the applicable Acknowledgment Agreement, if any, or published announcements and, provided, further, that the security interest created hereby is subject to the following provision to be included in each financing statement filed in respect hereof (defined terms used below shall have the meaning set forth in the applicable Acknowledgment Agreement):

 

(1) The property subject to the security interest reflected in this instrument includes all of the right, title and interest of PennyMac Loan Services, LLC (“Debtor”) in certain mortgages and/or participation interests related to such mortgages (“Pooled Mortgages”) and all right, title and interest of PennyMac Holdings, LLC in such Pooled Mortgages, and pooled under the mortgage-backed securities program of the Government National Mortgage Association (“Ginnie Mae”), pursuant to section 306(g) of the National Housing Act, 12 U.S.C. § 1721(g);

 

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(2) To the extent that the security interest reflected in this instrument relates in any way to the Pooled Mortgages, such security interest is subject and subordinate to all rights, powers and prerogatives of Ginnie Mae, whether now existing or hereafter arising, under and in connection with: (i) 12 U.S.C. § 1721(g) and any implementing regulations; (ii) the terms and conditions of that certain Acknowledgment Agreement, dated as of December 19, 2016, with respect to the Security Interest, by and among Ginnie Mae, Debtor and Indenture Trustee; (iii) applicable Guaranty Agreements and contractual agreements between Ginnie Mae and Debtor; and (iv) the Ginnie Mae Contract and other applicable guides;

 

(3) Such rights, powers and prerogatives of Ginnie Mae include, but are not limited to, Ginnie Mae’s right, by issuing a letter of extinguishment to Debtor, to effect and complete the extinguishment of all redemption, equitable, legal or other right, title or interest of Debtor in the Pooled Mortgages, in which event the security interest as it relates in any way to the Pooled Mortgages shall instantly and automatically be extinguished as well; and

 

(4) For purposes of clarification, “subject and subordinate” in clause (2) above means, among other things, that any cash held by the Indenture Trustee as collateral and any cash proceeds received by the Indenture Trustee in respect of any sale or other disposition of, collection from, or other realization upon, all or any part of the collateral may only be applied by the Indenture Trustee to the extent that such proceeds have been received by, or for the account of, the Debtor free and clear of all Ginnie Mae rights and other restrictions on transfer under applicable Ginnie Mae guidelines; provided that this clause (4) shall not be interpreted as establishing rights in favor of Ginnie Mae except to the extent that such rights are reflected in, or arise under, the Ginnie Mae Contract.

 

Section 2.05                             Changes in Locations, Name, etc.  Pledgor shall not (a) change the location of its chief executive office/chief place of business from that specified in Section 4.15 or (b) change its name or identity, unless it shall have given Buyer at least thirty (30) days’ prior written notice thereof and shall have delivered to Buyer all Uniform Commercial Code financing statements and amendments thereto as Buyer shall request and taken all other actions deemed necessary by Buyer to continue its perfected status in the Collateral with the same or better priority.

 

Section 2.06                             Buyer’s Appointment as Attorney-in-Fact.  (a)  Pledgor hereby irrevocably constitutes and appoints Buyer and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in its own name, from time to time in Buyer’s discretion if an Event of Default or Trigger Event shall have occurred and be continuing, for the purpose of carrying out the terms of this Agreement, to take any and all

 

8

 

appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, Pledgor hereby gives Buyer the power and right, on behalf of Pledgor, without assent by, but with notice to, Pledgor to do the following:

 

(i)                                     in the name of Pledgor or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Buyer for the purpose of collecting any and all such moneys due with respect to any Collateral whenever payable;

 

(ii)                                  to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral;

 

(iii)                               to the extent permitted under the Master Spread Acquisition Agreement, and under the Servicing Contracts and the Acknowledgment Agreement, to request that MSRs be transferred to another servicer approved by Ginnie Mae and perform (without assuming or being deemed to have assumed any of the obligations of Servicer thereunder) all aspects of each Servicing Contract to which the Purchased MSR Excess Spread relates;

 

(iv)                              to request distribution to Buyer of sale proceeds or any applicable contract termination fees arising from the sale or termination of such MSRs to the extent of the Purchased MSR Excess Spread and remaining after satisfaction of Servicer’s relevant obligations to Ginnie Mae (but only to the extent that such funds are payable to Seller free and clear of Ginnie Mae’s rights or other restrictions on transfer set forth in such Servicing Contract), including costs and expenses related to any such sale or transfer of such MSRs and other amounts due for unmet obligations of Servicer to Ginnie Mae under the Ginnie Mae Contract;

 

(v)                                 to deal with third parties, including, without limitation, investors, guarantors and any and all subservicers and master servicers in respect of any of the Collateral in the same manner and with the same effect as if done by Pledgor;

 

(vi)                              to direct any party liable for any payment under any Collateral to make payment of any and all moneys due or to become due thereunder directly to Buyer or as Buyer shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against Pledgor with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as Buyer may deem appropriate;

 

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and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Buyer were the absolute owner thereof for all purposes, and to do, at Buyer’s option and Pledgor’s expense, at any time, and from time to time, all acts and things which Buyer deems necessary to protect, preserve or realize upon the Collateral and Buyer’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as Pledgor might do.

 

(b)                                 Pledgor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  This power of attorney is a power coupled with an interest and shall be irrevocable until such time as all Obligations have been paid in full and this Agreement is terminated.

 

(c)                                  Pledgor also authorizes Buyer, at any time and from time to time, to execute, in connection with any sale provided for in Section 2.08 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

 

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

 

(e)                                  In addition to the foregoing, Pledgor agrees to execute a power of attorney (the “Power of Attorney”) in favor of Buyer in the form of Exhibit A hereto to be delivered on the date hereof.

 

(f)                                   Notwithstanding anything to the contrary herein or in any of the other Program Agreements, any appointment set forth in this Section 2.06, as well as Buyer’s exercise (or purported exercise) of any right, power or authority given by Pledgor hereunder, shall be subject to the Ginnie Mae Contract and the Acknowledgment Agreement.

 

Section 2.07                             Proceeds.

 

(a)                                 If an Event of Default under the PC Repurchase Agreement shall occur and be continuing, (i) all proceeds of Collateral received by Pledgor consisting of cash, checks and other liquid assets readily convertible to cash items shall be held by Pledgor in trust for Buyer, segregated from other funds of Pledgor, and shall forthwith upon receipt by Pledgor be remitted to the Dedicated Account in the exact form received by Pledgor (duly endorsed by Pledgor to Buyer, if required) and (ii) any and all such proceeds received by Buyer (whether from Pledgor or otherwise) may, in the sole discretion of Buyer, be held by Buyer as collateral security for, and/or then or at any time thereafter may be applied by Buyer against, the Obligations (whether matured or unmatured), such application to be in such order as Buyer shall elect.  Any balance of such proceeds remaining after the Obligations shall have been paid in full and this Agreement shall have been terminated shall be remitted in accordance with Repurchase Documents.  For the avoidance of doubt, the Servicer shall be solely responsible for remitting to the Pledgor any amounts owed the Pledgor.  In no event shall the Buyer be accountable to the Pledgor for any excess proceeds, which the Pledgor acknowledges, may be remitted by the Buyer in accordance with the Repurchase Documents.

 

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(b)                                 Each of Pledgor and Servicer acknowledges and agrees that all amounts with respect to Purchased MSR Excess Spread and related MSRs shall be remitted by Servicer to the Dedicated Account to be applied by Buyer in accordance with the terms of the PC Repurchase Agreement.

 

Section 2.08                             Remedies.  If an Event of Default shall occur and be continuing, Buyer shall have the right to exercise any or all of the following rights and remedies:

 

(a)                                 Buyer may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, any rights otherwise available to it under applicable federal, state, foreign and local laws, whether existing at law, in equity or by statute, including, without limitation, all rights and remedies available to a purchaser/secured party under the Uniform Commercial Code.

 

(b)                                 Without limiting the generality of the foregoing, Buyer may seek the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of any of the Collateral.

 

(c)                                  Without limiting the generality of the foregoing, Buyer without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required under this Agreement or by law referred to below) to or upon Pledgor or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of Buyer or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  Buyer shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in Pledgor, which right or equity is hereby waived or released.

 

(d)                                 Buyer may demand that Pledgor assemble the Collateral and make it available to Buyer at places which Buyer shall reasonably select, whether at Pledgor’s premises or elsewhere.

 

(e)                                  Buyer shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable (under the circumstances) out-of-pocket costs and expenses of every kind actually incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of Buyer hereunder, including without limitation reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as Buyer may elect, and only after such application and after the payment by Buyer of any other amount required or permitted by any provision of law, including without limitation Section 9-615 of the Uniform Commercial Code, need Buyer account for the surplus, if any, to the Servicer as agent for the Pledgor.

 

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(f)                                   To the extent that there are any excess proceeds resulting from any collection, recovery, receipt, appropriation, realization or sale of the Collateral by Buyer after satisfaction of all Obligations, Buyer shall remit such excess to the Servicer.

 

(g)                                  To the extent permitted by applicable law, Pledgor waives all claims, damages and demands it may acquire against Buyer arising out of the exercise by Buyer of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of Buyer.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

 

(h)                                 Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Pledgor hereby expressly waives, to the extent permitted by law, any right Pledgor might otherwise have to require Buyer to enforce its rights by judicial process.  Buyer also waives, to the extent permitted by law, any defense Pledgor might otherwise have to the Obligations, or any guaranty thereof, arising from use of nonjudicial process, enforcement and sale of all or any portion of the Collateral or from any other election of remedies.  Pledgor 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.

 

(i)                                     Pledgor shall not be liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations, it being understood that the sole recourse of the Buyer to the Pledgor hereunder for the Obligations (other than for Pledgor’s gross negligence or willful misconduct) shall be to the Collateral pledged by the Pledgor hereunder.

 

(j)                                    Notwithstanding anything to the contrary herein or in any of the other Repurchase Documents, the remedies set forth in this Section 2.08 shall be subject to the Ginnie Mae Contract and the Acknowledgment Agreement.

 

(k)                                 No failure on the part of Buyer to exercise, and no delay by Buyer in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Buyer of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All rights and remedies of Buyer provided for herein are cumulative and in addition to any and all other rights and remedies provided by law, the Repurchase Documents and the other instruments and agreements contemplated hereby and thereby, and are not conditional or contingent on any attempt by Buyer to exercise any of its rights under any other related document.  Buyer may exercise at any time after the occurrence of an Event of Default that is continuing one or more remedies permitted hereunder, as it so desires, and may thereafter at any time and from time to time exercise any other remedy or remedies permitted hereunder.

 

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Section 2.09                             Limitation on Duties Regarding Preservation of Collateral.  Buyer’s duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to require the Indenture Trustee to deal with it in the same manner as the Indenture Trustee deals with similar property for its own account.  Neither Buyer nor any of its directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Pledgor or otherwise.

 

Section 2.10                             Powers Coupled with an Interest.  All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest.

 

Section 2.11                             Release of Security Interest.  Upon the latest to occur of (a) the repayment to Buyer of all Obligations and the performance of all obligations under the PC Repurchase Documents, and (b) the occurrence of the Termination Date, Buyer shall release its security interest in any remaining Collateral hereunder and shall promptly execute and deliver to the Subordinated Lender such documents or instruments as the Subordinated Lender shall reasonably request to evidence such release; provided that, such release shall not be required until such time as the Acknowledgment Agreement is terminated.

 

Section 2.12                             Reinstatement.  All security interests created by this Article II shall continue to be effective, or be reinstated, as the case may be, if at any time any payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored or returned by the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Pledgor or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Pledgor or any substantial part of its property, or otherwise, all as if such release had not been made.

 

Section 2.13                             Use of Collateral.  Buyer and Pledgor hereby acknowledge and agree that should any Collateral be liquidated or foreclosed upon by Buyer, Buyer shall apply the Proceeds of such Collateral to the Obligations.

 

Section 2.14                             Intent.

 

(a)                                 The parties hereto recognize that this Agreement constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” the Repurchase Agreement and transactions thereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and/or 741(7)(A)(xi) of the Bankruptcy Code.

 

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

 

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ARTICLE III

 

RECOURSE; SUBORDINATION

 

Section 3.01                             Recourse.  Notwithstanding anything else to the contrary contained or implied herein or in any other Repurchase Document, Buyer’s recourse against Pledgor in order to satisfy the Obligations shall be limited to the Collateral that is the subject of this Agreement and its recourse as against the Pledgor Guarantor shall be as more particularly described in the Pledgor Guaranty Agreement; provided, that such limitation shall not extend to the gross negligence or willful misconduct of the Pledgor.

 

Section 3.02                             Subordination in Connection with Financing.

 

(a)                                 It is anticipated that in connection with the transactions contemplated by the PC Repurchase Documents, that (x) the Pledgor has purchased the Collateral from the Servicer subject to the first priority Lien of the Buyer and (y) Pledgor hereby reaffirms such lien and pledges its interest in such Collateral hereunder to the Buyer.  In connection with the foregoing Pledgor acknowledges and agrees that its rights with respect to the Collateral (including without limitation its security interest in the Purchased MSR Excess Spread and pursuant to the Master Spread Acquisition Agreement and any other collateral purchased by Pledgor thereunder and in which a security interest is granted to Buyer pursuant to Section 2.01) are and shall continue to be at all times junior and subordinate to the rights of Buyer under the PC Repurchase Documents.  In furtherance of the foregoing, notwithstanding any rights or remedies available to Pledgor thereunder or under the Master Spread Acquisition Agreement, applicable law or otherwise, Pledgor shall not, directly or indirectly, exercise any remedies available to it under the Master Spread Acquisition Agreement or at law or equity for ninety-one (91) days following the date that all Obligations are paid in full under the Repurchase Documents; provided, that nothing in the foregoing shall prohibit Pledgor from receiving, payments with respect to the obligations under the Master Spread Acquisition Agreement as, and in the manner, contemplated therein, but subject to the prior rights of the Buyer hereunder and under the Repurchase Documents.  For the avoidance of doubt, in no instance shall the Buyer succeed to any liabilities or obligations of Pledgor under the Master Spread Acquisition Agreement.

 

(b)                                 In furtherance of the foregoing, Pledgor agrees to not assert any objection to, and shall be deemed to have otherwise consented to, a disposition of any assets subject to the Master Spread Acquisition Agreement and subject to the Repurchase Documents during an Act of Insolvency of Pledgor or the Servicer, free and clear of any lien, encumbrance, pledge or other claims under Section 363 of the Bankruptcy Code (or any similar bankruptcy law) if Buyer has consented to such disposition.

 

(c)                                  If an Act of Insolvency of Pledgor or the Servicer occurs, the Pledgor agrees not to contest (or support any other Person contesting) any request by Buyer for adequate protection, or any objection by Buyer to any motion, relief, action or proceeding based on Buyer claiming a lack of adequate protection.

 

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(d)                                 Until the obligations under the Repurchase Documents are paid in full, the Pledgor shall not oppose any request by Buyer for relief from the automatic stay or any other stay in any Act of Insolvency of Pledgor or the Servicer.

 

(e)                                  Pledgor shall not oppose or seek to challenge any claim by Buyer for allowance and payment in any Act of Insolvency of Pledgor or the Servicer, of obligations under the Repurchase Documents consisting of post-petition interest, fees, costs or other charges to the extent of the value of Buyer’s lien, encumbrance, pledge or other claims on the assets that are the subject of this Agreement or the PC Repurchase Agreement, without regard to the existence of a lien, encumbrance, pledge or other claims of Pledgor applicable to the obligations of the other parties to the Repurchase Documents.

 

(f)                                   Pledgor shall not seek in any Act of Insolvency of Pledgor or the Servicer, to be treated as part of the same class of creditors as Buyer and shall not oppose any pleading or motion by Buyer advocating that Buyer and Pledgor and the Servicer should be treated as separate classes of creditors.  Pledgor acknowledges and agrees that its rights with respect to the Collateral are and shall continue to be at all times junior and subordinate to the rights of Buyer under the PC Repurchase Agreement and under this Agreement.

 

Section 3.03                             Rights under PMH Repurchase Agreement.

 

(a)                                 Pledgor acknowledges and agrees notwithstanding any right to repurchase the Purchased MSR Excess Spread PC from PLS granted pursuant to the PMH Repurchase Agreement, Pledgor may not exercise such repurchase right as long as the Purchased MSR Excess Spread PC is registered in the name of the Buyer or otherwise subject to the PC Repurchase Agreement.

 

(b)                                 In the event that PLS repurchases the Purchased MSR Excess Spread PC from Buyer, Pledgor may repurchase the Purchased MSR Excess Spread PC from PLS pursuant to the PMH Repurchase Agreement; however, until the Obligations have been paid in full and the PC Repurchase Agreement terminated, the rights of Pledgor in the related Purchased MSR Excess Spread shall be subordinate to the rights of the Buyer in the related MSRs and accordingly, Pledgor acknowledges and agrees that its rights to the Purchased MSR Excess Spread may be completely eliminated upon the exercise of remedies by Buyer under the PC Repurchase Agreement or the exercise of remedies by the Indenture Trustee under the Acknowledgment Agreement or the Indenture, and Pledgor shall have no rights, remedies or recourse against the Buyer for such actions.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Pledgor represents and warrants to Buyer as of the date hereof and as of each Ginnie Mae Acquisition Date that:

 

Section 4.01                             Pledgor Existence.  Pledgor has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware.

 

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Section 4.02                             Licenses.  Pledgor 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 and is not in default of such state’s applicable laws, rules and regulations.  Pledgor has the requisite power and authority and legal right to own, sell and grant a lien on all of its right, title and interest in and to the Collateral.  Pledgor has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement and each Repurchase Document to which it is a party.

 

Section 4.03                             Power.  Pledgor 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.

 

Section 4.04                             Due Authorization.  Pledgor has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Repurchase Documents, as applicable.  This Agreement, and the Repurchase Documents to which it is a party have been duly authorized, executed and delivered by Pledgor, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against Pledgor in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.

 

Section 4.05                             Financial Statements.  Pledgor has heretofore furnished to Buyer a copy of (a) its balance sheet for the fiscal year of Pledgor ended December 31, 2015, and the related statements of income for Pledgor for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of Pledgor ended September 30, 2016, and the related statements of income for Pledgor for such quarterly fiscal period.  All such financial statements are complete and correct and fairly present, in all material respects, the financial condition of Pledgor and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis.  Since December 31, 2015, there has been no material adverse change in the consolidated business, operations or financial condition of Pledgor from that set forth in said financial statements nor is Pledgor aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change.  Pledgor has, on the Financial 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 Pledgor except as heretofore disclosed to Buyer in writing.

 

Section 4.06                             Solvency.  Pledgor is solvent and will not be rendered insolvent by the acquisition of the Purchased MSR Excess Spread PC or by this Agreement and, after giving effect to such acquisition and this Agreement, will not be left with an unreasonably small amount of capital with which to engage in its business.  Pledgor does not intend to incur, nor does it

 

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believe that it has incurred, debts beyond its ability to pay such debts as they mature and is 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.  Pledgor is not pledging any Collateral with any intent to hinder, delay or defraud any of its creditors.

 

Section 4.07                             No Conflicts.  The execution, delivery and performance by Pledgor of this Agreement, and the Repurchase Documents to which it is a party do not conflict with any term or provision of the organizational documents of Pledgor or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to Pledgor of any court, regulatory body, administrative agency or governmental body having jurisdiction over Pledgor, which conflict would have a Material Adverse Effect, and will not result in any violation of any such mortgage, instrument, agreement, obligation to which Pledgor is a party.

 

Section 4.08                             True and Complete Disclosure.  All information, reports, exhibits, schedules, financial statements or certificates of Pledgor or any Affiliate thereof or any of their officers furnished or to be furnished to Buyer in connection with the initial or any ongoing due diligence of Pledgor or any Affiliate or officer thereof, negotiation, preparation, or delivery of the Repurchase Documents to which it is a party are true and complete in all material respects 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).

 

Section 4.09                             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 Pledgor of this Agreement, and the Repurchase Documents to which it is a party.

 

Section 4.10                             No Trigger Event.  There exists no Trigger Event under Section 6.01 hereof.

 

Section 4.11                             [Reserved].

 

Section 4.12                             Ownership.  (a) Pledgor has good title to all of the Collateral, free and clear of all mortgages, security interests, restrictions, Liens and encumbrances of any kind other than the Liens created hereby and the Liens created pursuant to the PC Repurchase Agreement and the Liens created pursuant to the PMH Repurchase Agreement; provided, that, for the avoidance of doubt, the Pledgor has purchased the Collateral subject hereto from the Servicer, subject and subordinate to, the Lien of the Buyer originally created under the PC Repurchase Agreement, and further perfected hereby.

 

(b)                                 Each item of Collateral was acquired by Pledgor in the ordinary course of its business, in good faith, for value and without notice of any defense against or claim to it on the part of any Person other than the Buyer.

 

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(c)                                  Except as set forth herein, there are no agreements or understandings between Pledgor and any other party which would modify, release, terminate or delay the attachment of the security interests granted to Buyer under this Agreement.

 

(d)                                 The provisions of this Agreement are effective to create in favor of Buyer a valid security interest in all right, title and interest of Pledgor in, to and under the Collateral.

 

(e)                                  Upon the filing of financing statements on Form UCC-1 naming Buyer as “Secured Party” and Pledgor as “Debtor”, and describing the Collateral, in the recording offices of the Secretary of State of Delaware the security interests granted hereunder in the Collateral will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of Pledgor in, to and under such Collateral which can be perfected by filing under the Uniform Commercial Code.

 

Section 4.13                             [Reserved].

 

Section 4.14                             Investment Company.  Neither Pledgor nor any of its 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 Pledgor shall not be deemed a “Subsidiary” for the purposes of this Section 4.14.

 

Section 4.15                             Chief Executive Office; Jurisdiction of Organization.  On the date hereof, Pledgor’s chief executive office, is, and has been, located at 3043 Townsgate Road, Westlake Village, CA 91361.  On the date hereof, Pledgor’s jurisdiction of organization is the State of Delaware.  Pledgor shall provide Buyer with thirty days advance notice of any change in Pledgor’s principal office or place of business or jurisdiction.  Pledgor has no trade name.  During the preceding five years, Pledgor 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.

 

Section 4.16                             Location of Books and Records.  The location where Pledgor keeps its books and records, including all computer tapes and records relating to the Collateral is its chief executive office.

 

Section 4.17                             Adjusted Tangible Net Worth.  On the date hereof, Pledgor’s Adjusted Tangible Net Worth is not less than $250,000,000.

 

Section 4.18                             ERISA.  Each Plan to which Pledgor or its Subsidiaries make direct contributions, and, to the knowledge of Pledgor, 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.

 

Section 4.19                             [Reserved].

 

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Section 4.20                             No Reliance.  Pledgor has made its own independent decisions to enter into the Repurchase Documents to which it is a party. Pledgor is not relying upon any advice from Buyer as to any aspect of the Repurchase Documents, including without limitation, the legal, accounting or tax treatment of such Repurchase Documents.

 

Section 4.21                             Plan Assets.  Pledgor is not 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 Collateral are not “plan assets” within the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of ERISA, in Pledgor’s hands, and transactions by or with Pledgor are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

 

Section 4.22                             No Prohibited Persons.  Neither Pledgor nor any of its Affiliates, officers, directors, partners or members, is an entity or person (or to the Pledgor’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”).

 

ARTICLE V

 

COVENANTS

 

Pledgor covenants and agrees that until the payment and satisfaction in full of all Obligations, whether now existing or arising hereafter, shall have occurred and termination of the PC Repurchase Agreement:

 

Section 5.01                             Insurance.  Pledgor shall continue to maintain, for Pledgor and its Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to $300,000.  Pledgor shall maintain, for Pledgor 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 Assets.  Pledgor shall notify Buyer of any material change in the terms of any such Fidelity Insurance.

 

Section 5.02                             No Adverse Claims.  Pledgor warrants and will defend, and shall cause Servicer to defend, the right, title and interest of Buyer in and to all Collateral against all adverse claims and demands.

 

Section 5.03                             Assignment.  Except as permitted herein, neither Pledgor nor 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 as permitted by the Repurchase Documents), any of the Collateral or any interest therein, provided

 

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that this Section 5.03 shall not prevent any transfer of Collateral in accordance with the Repurchase Documents.

 

Section 5.04                             Security Interest.  Pledgor shall do all things necessary to preserve the Collateral so that they remain subject to a first priority perfected security interest hereunder.  Without limiting the foregoing, Pledgor will comply with all rules, regulations and other laws of any Governmental Authority and cause the Collateral to comply with all applicable rules, regulations and other laws.

 

Section 5.05                             Records.  (a) Pledgor shall collect and maintain or cause to be collected and maintained all Records relating to the Collateral in accordance with industry custom and practice for assets similar to the Collateral and all such Records shall be in Pledgor’s possession unless Buyer otherwise approves.  Pledgor will not allow any such papers, records or files that are an original or an only copy to leave Pledgor’s possession.  Pledgor or Servicer will maintain all such Records in good and complete condition in accordance with industry practices for assets similar to the Collateral and preserve them against loss.

 

(b)                                 For so long as Buyer has an interest in or lien on any Collateral, Pledgor will hold or cause to be held all related Records in trust for Buyer.  Pledgor 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.

 

(c)                                  Upon reasonable advance notice from Buyer, Pledgor shall (x) make any and all such Records available to 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 Pledgor with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Pledgor with its independent certified public accountants.

 

Section 5.06                             Books.  Pledgor 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 pledge of Collateral to Buyer.

 

Section 5.07                             Approvals.  Pledgor shall maintain all licenses, permits or other approvals necessary for Pledgor to conduct its business and to perform its obligations under the Repurchase Documents, and Pledgor shall conduct its business strictly in accordance with applicable law.

 

Section 5.08                             Applicable Law.  Pledgor shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority.

 

Section 5.09                             Existence.  Pledgor shall preserve and maintain its legal existence and all of its material rights, privileges, material licenses and franchises.

 

Section 5.10                             Chief Executive Office; Jurisdiction of Organization.  Pledgor shall not move its chief executive office from the address referred to in Section 4.15 or change its jurisdiction of organization from the jurisdiction referred to in Section 4.15 unless it shall have provided Buyer thirty (30) days’ prior written notice of such change.

 

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Section 5.11                             Taxes.  Pledgor shall timely file all tax returns that are required to be filed by it 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.

 

Section 5.12                             True and Correct Information.  All information, reports, exhibits, schedules, financial statements or certificates of Pledgor, any Affiliate thereof or any of their officers furnished to Buyer hereunder and during Buyer’s diligence of Pledgor are and will be true and complete in all material respects 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 Pledgor 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.

 

Section 5.13                             Purchased MSR Excess Spread Not To Be Evidenced by Promissory Notes.  Pledgor shall not take any action, or permit any other Person to take any action, to cause any of the Purchased MSR Excess Spread to be evidenced by any “instrument” (as such term is defined in the Uniform Commercial Code), except in connection with the enforcement or collection of the Purchased MSR Excess Spread; provided, that each Participation Certificate pledged hereunder shall be a security (as such term is defined in the Uniform Commercial Code).

 

Section 5.14                             No Pledge; Other Liens; Creditors.  Pledgor shall not (other than with respect to the Liens created pursuant to the PMH Repurchase Agreement) (a) pledge, grant a security interest or assign any existing or future rights to the Collateral, or pledge or grant to any other Person any security interest in any Assets or Servicing Contracts; or (b) pledge, transfer or convey any security interest or suffer to exist, any Lien on any interest of any kind (whether in whole or in part) in any Purchased MSR Excess Spread or Servicing Contract, unless such parties enter into an intercreditor agreement with the recipient of such security interest or Lien, in form and substance acceptable to the Buyer.

 

Section 5.15                             Plan Assets.  Pledgor shall not 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 Pledgor 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.

 

Section 5.16                             Sharing of Information.  Pledgor shall allow Buyer to exchange information related to Pledgor and the Collateral hereunder with third party lenders and Pledgor shall permit each third party lender to share such information with Buyer.

 

Section 5.17                             No Modification of the Master Spread Acquisition Agreement; Intended Third Party Beneficiary.  Pledgor shall not consent, with respect to the Master Spread Acquisition Agreement related to any Collateral, to (i) the material modification or amendment or the termination of such Master Spread Acquisition Agreement, (ii) the waiver of any provision of such Master Spread Acquisition Agreement to the extent such waiver adversely affects the

 

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Buyer or the Pledgor or (iii) the resignation of Servicer as servicer, or the assignment, transfer, or material delegation of any of its rights or obligations, under Master Spread Acquisition Agreement, without the prior written consent of Buyer exercised in Buyer’s sole discretion.  Notwithstanding anything to the contrary set forth in the Master Spread Acquisition Agreement, the Buyer is hereby appointed and is an intended third party beneficiary thereof, with full enforcement rights as if a party thereto.

 

ARTICLE VI

 

TRIGGER EVENTS / RIGHTS AND REMEDIES OF BUYER UPON TRIGGER EVENT OR EVENT OF DEFAULT

 

Section 6.01                             Trigger Events.  Each of the following events or circumstances shall constitute a “Trigger Event”:

 

(a)                                 Assignment.  Assignment or attempted assignment by Pledgor of this Agreement or any rights hereunder without first obtaining the specific written consent of Buyer, or the granting by Pledgor of any security interest, lien or other encumbrances on any Collateral to any person other than Buyer, except for the second priority Lien of the Subordinated Lender.

 

(b)                                 Insolvency.  An Act of Insolvency shall have occurred with respect to Pledgor or any Affiliate thereof or the Pledgor Guarantor.

 

(c)                                  Breach of Material Representation or Covenant or Obligation.  A breach by Pledgor of any of the representations, warranties or covenants or obligations set forth in Sections 4.01, 4.06, 4.17, 5.09, 5.14 or 5.15 of this Agreement.

 

(d)                                 Breach of Other Representation or Covenant.  A material breach by Pledgor of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 6.01(c) above), if such breach is not cured within five (5) Business Days.

 

(e)                                  Inability to Perform.  A Responsible Officer of (i) Pledgor shall admit its inability to, or its intention not to, perform any of their respective obligations under the applicable Repurchase Documents or (ii) the Pledgor Guarantor shall admit its inability to, or its intention not to, perform any of their respective obligations under the Pledgor Guaranty Agreement.

 

(f)                                   Security Interest.  This Agreement shall for any reason cease to create a valid security interest in any material portion of the Collateral purported to be covered hereby.

 

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

 

(h)                                 Default.  The occurrence of (i) a default or termination event under the PC Repurchase Agreement, (ii) as of any MRA Payment Date, the amounts on deposit in the Dedicated Account are insufficient to satisfy the Obligations for such date, or (iii) a default or termination event under the Series 2016-MSRVF1 Repurchase Agreement.

 

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(i)                                     Early Amortization Event.  The occurrence of an Early Amortization Event under the Base Indenture.

 

Section 6.02                             No Waiver.  A Trigger Event shall be deemed to be continuing unless expressly waived by Buyer in writing.

 

Section 6.03                             Liquidation of Collateral.  Pledgor hereby acknowledges and agrees that on the occurrence of an Event of Default under the PC Repurchase Agreement, Buyer shall have the right to liquidate the Purchased MSR Excess Spread, the MSRs and any other Assets constituting Collateral and apply any proceeds as provided under the PC Repurchase Agreement. Pledgor hereby authorizes Buyer to liquidate the Collateral should an Event of Default occur and apply the Proceeds of such liquidation to the Obligations existing under the PC Repurchase Agreement.

 

ARTICLE VII

 

ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER

 

Section 7.01                             Entire Agreement.  This Agreement (including the Schedules and Exhibits hereto) and the related Repurchase Documents constitute the entire agreement of the parties hereto and supersedes any and all prior or contemporaneous agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or of the Repurchase Documents, nor consent to the departure by Pledgor therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which it is given.

 

Section 7.02                             Waivers, Separate Actions by Buyer.  Any amendment or waiver effected in accordance with this Article VII shall be binding upon Buyer and Pledgor; and Buyer’s failure to insist upon the strict performance of any term, condition or other provision of this Agreement, or any of the Repurchase Documents, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by Buyer of any such term, condition or other provision or Trigger Event, Potential Trigger Event or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term, condition or other provision or of any such Trigger Event, Potential Trigger Event or Event of Default shall not affect or alter this Agreement, or any of the Repurchase Documents, and each and every term, condition and other provision of this Agreement, and the Repurchase Documents shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent Trigger Event, Potential Trigger Event or Event of Default in connection therewith.  A Trigger Event or an Event of Default hereunder and under any of the Repurchase Documents shall be deemed to be continuing unless and until waived pursuant to the terms of the Repurchase Documents.

 

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Section 7.03                             Amendment.  Any amendment of this Agreement which affects the rights, duties, immunities, obligations or liabilities of the Owner Trustee in its capacity as owner trustee under the Trust Agreement shall require the written consent of the Owner Trustee.

 

ARTICLE VIII

 

SUCCESSORS AND ASSIGNS

 

Section 8.01                             Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Pledgor shall not have the right to assign all or any part of this Agreement or any interest herein without the prior written consent of Buyer.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01                             Survival.  This Agreement and the other Repurchase Documents and all covenants, agreements, representations and warranties herein and therein and in the certificates delivered pursuant hereto and thereto, shall survive the entering by Buyer into any Transaction and the execution and delivery to Buyer of this Agreement and the Repurchase Documents and shall continue in full force and effect so long as the Obligations are outstanding and unpaid and the Repurchase Documents have not been terminated.

 

Section 9.02                             Indemnification.  Pledgor shall, and hereby agrees to, indemnify, defend and hold harmless Buyer, any Affiliate of Buyer and their respective directors, officers, agents, employees and counsel from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them as a consequence of, or arising out of or by reason of any litigation, investigations, claims or proceedings which arise out of or are in any way related to the enforcement of this Agreement or Pledgor’s gross negligence or willful misconduct in connection with, (i) this Agreement or any other Repurchase Document or any Servicing Contract, or the transactions contemplated hereby or thereby, (ii) Pledgor’s practices or procedures; and (iii) any Trigger Event, Potential Trigger Event, or any other breach by Pledgor of any of the provisions of this Agreement or any other Repurchase Document, including, without limitation, amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing.  In addition to the foregoing, the Pledgor shall also indemnify and hold harmless Buyer, any Affiliate of Buyer and their respective directors, officers, agents, employees and counsel from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them as a consequence of, or any claims arising from or relating to the Purchased MSR Excess Spread or the Master Spread Acquisition Agreement.

 

Section 9.03                             Nonliability of Buyer.  The parties hereto agree that, notwithstanding any affiliation that may exist between Pledgor and Buyer, the relationship between Pledgor and Buyer shall be solely that of a Pledgor and a lender.  Buyer shall not have any fiduciary responsibilities to Pledgor.  Pledgor (i) agrees that Buyer shall not have any

 

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liability to Pledgor (whether sounding in tort, contract or otherwise) for losses suffered by Pledgor in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by this agreement, the other loan documents or any other agreement entered into in connection herewith or any act, omission or event occurring in connection therewith, unless it is determined by a judgment of a court that is binding on Buyer (which judgment shall be final and not subject to review on appeal), that such losses were the result of acts or omissions on the part of Buyer constituting gross negligence or willful misconduct and (ii) waives, releases and agrees not to sue upon any claim against Buyer (whether sounding in tort, contract or otherwise), except a claim based upon gross negligence or willful misconduct.  Whether or not such damages are related to a claim that is subject to such waiver and whether or not such waiver is effective, Buyer shall not have any liability with respect to, and Pledgor hereby waives, releases and agrees not to sue upon any claim for, any special, indirect, consequential or punitive damages suffered by Pledgor in connection with, arising out of, or in any way related to the transactions contemplated or the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or therewith or any act, omission or event occurring in connection herewith or therewith, unless it is determined by a judgment of a court that is binding on Buyer (which judgment shall be final and not subject to review on appeal), that such damages were the result of acts or omissions on the part of Buyer, as applicable, constituting willful misconduct or gross negligence.

 

Section 9.04                             Governing Law; Jurisdiction, Waiver of Jury Trial:  Waiver of Damages.  (a) This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Pledgor 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.

 

(b)                                 PLEDGOR HEREBY WAIVES TRIAL BY JURY.  PLEDGOR 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 REPURCHASE DOCUMENTS IN ANY ACTION OR PROCEEDING.  PLEDGOR 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 REPURCHASE DOCUMENTS.

 

(c)                                  Pledgor further irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to Pledgor at the address set forth in Section 9.05 hereof.

 

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(d)                                 Nothing herein shall affect the right of Buyer to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Pledgor in any other jurisdiction.

 

(e)                                  Pledgor waives the posting of any bond otherwise required of Buyer in connection with any judicial process or proceeding to enforce any judgment or other court order entered in favor of Buyer, or to enforce by specific performance, temporary restraining order or preliminary or permanent injunction this Agreement or any of the other Repurchase Documents.

 

Section 9.05                             Notices.  Any and all notices 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.

 

(a) If to Pledgor:

 

Penny Mac Holdings, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Pamela Marsh/Kevin Chamberlain

Phone Number:  (805) 330-6059/ (818) 746-2877

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

kevin.chamberlain@pnmac.com

 

with a copy to:

 

PennyMac Holdings, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Jeff Grogin

Phone Number:  (818) 224-7050

E-mail:  jeff.grogin@pnmac.com

 

(b) If to Buyer:

 

PennyMac Loan Services, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Pamela Marsh/Kevin Chamberlain

Phone Number:  (805) 330-6059/ (818) 746-2877

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

kevin.chamberlain@pnmac.com;

contract.finance@pnmac.com

 

with a copy to:

 

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Wilmington Savings Fund Society, FSB,

d/b/a Christiana Trust, as Owner Trustee

c/o Corporate Trust Office

500 Delaware Avenue, 11th Floor,

Wilmington, Delaware 19801,

Attention: Corporate Trust Administration

Phone Number: (302) 888-7437

Facsimile Number: (302) 421-9137

Email:  jeverhart@christiana.com

 

with a copy to the Administrative Agent:

 

Credit Suisse First Boston Mortgage Capital LLC

Eleven Madison Avenue

New York, New York 10010

Attention: Dominic Obaditch

Phone Number:  (212) 325-3003

Fax Number:  (646) 935-7470

E-mail: dominic.obaditch@credit-suisse.com

 

Section 9.06                             Severability.  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. In case any provision in or obligation under this Agreement, or any other Repurchase Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

Section 9.07                             Section Headings.  The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or construction of any provision of this Agreement.

 

Section 9.08                             Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  This Agreement may be executed by signature(s) transmitted by facsimile.

 

Section 9.09                             Hypothecation or Pledge of Collateral.  Buyer shall have free and unrestricted use of all Collateral and nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with all or a portion of the Collateral or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating all or a portion of the Collateral, so long as such pledge, re-pledge, transfer, hypothecation or re-hypothecation is not in violation of the Acknowledgment Agreement.

 

Section 9.10                             Non-Confidentiality of Tax Treatment.  (a) This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyer and Pledgor and shall be held by each party hereto, as applicable in strict confidence and shall

 

27

 

not be disclosed to any third party without the written consent of Buyer or Pledgor, except for (i) disclosure to Buyer’s, Pledgor’s direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court, other regulatory body or in connection with enforcement of rights and remedies hereunder.  Notwithstanding the foregoing or anything to the contrary contained herein or in any other Repurchase Documents, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transaction, any fact relevant to understanding the federal, state and local tax treatment of the Transaction, 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 Pledgor may not disclose the name of or identifying information with respect to Buyer or any pricing terms 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 Transaction and is not relevant to understanding the federal, state and local tax treatment of the Transaction, without the prior written consent of Buyer.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, Pledgor 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 Collateral and/or any applicable terms of this Agreement (the “Confidential Information”).  Pledgor 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 Pledgor agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the Act and other applicable federal and state privacy laws.  Pledgor 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 Pledgor 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. Pledgor 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, Pledgor 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 Pledgor.  Pledgor 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 Pledgor by Buyer or such Affiliate.  Pledgor 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.

 

Section 9.11                             Set-off.  In addition to any rights and remedies of Buyer hereunder and by law, Buyer shall have the right, without prior notice to Pledgor, any such notice being expressly waived by Pledgor to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Pledgor or any Affiliate thereof to Buyer or any of its

 

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Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return funds to Pledgor), 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 Buyer or any Affiliate thereof to or for the credit or the account of Pledgor or any Affiliate thereof.  Buyer agrees promptly to notify Pledgor after any such set off and application made by Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.

 

Section 9.12                             Actions and Discretion of Buyer.  Any provision providing for the exercise of any action or discretion by Buyer shall be exercised by the Indenture Trustee at the written direction of either 100% of the VFN Noteholders or the Majority Noteholders of all Outstanding Notes (as such terms are defined in the Indenture).  In addition, and notwithstanding any other provision in this Agreement to the contrary, any approvals, consents, votes or other rights exercisable by Buyer under this Agreement shall be exercised by the Indenture Trustee on behalf of Noteholders (as defined in the Indenture).

 

Section 9.13                             No Recourse.  No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or Owner Trustee in their individual capacities, (ii) any owner of a beneficial ownership interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director, employee or “control person” within the meaning of the 1933 Act and the 1934 Act of the Indenture Trustee or Owner Trustee in its individual capacity, any holder of a beneficial ownership interest in the Issuer or the Indenture Trustee or Owner Trustee or of any successor or assign of the Indenture Trustee or Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

 

Section 9.14                             Limitation of Liability of Owner Trustee.  The Issuer is a Delaware common law trust and not a separate legal entity under Delaware law. In furtherance thereof, all parties hereto are put on notice and hereby acknowledge and agree that (a) this Agreement is executed and delivered by Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust (“Bank”), not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the governing instrument of the Issuer, (b) each of the representations, covenants, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, covenants, undertakings and agreements by Bank but is made and intended for the purpose of binding only the Issuer and its assets (which are separate and distinct from the individual assets of Bank), (c) nothing herein contained shall be construed as creating any liability on Bank, individually or personally, to perform any agreement, undertaking or covenant, either expressed or implied, contained herein of the Issuer Subsidiary, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Bank has not verified or made any investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Agreement and such representations and warranties are thus solely a means of allocating risk among the parties and (e) under no circumstances shall Bank be personally liable for the payment of any indebtedness or expenses of the Issuer or be

 

29

 

liable for the breach or failure of any obligation, representation, undertaking, warranty or covenant made or undertaken by Issuer under this Agreement or any other related documents.  All recourse of the parties shall be limited to the Trust Estate, if any, of the Issuer.

 

Section 9.15                             Third-Party Beneficiaries.  The Indenture Trustee shall be an express third party beneficiary of this Agreement.

 

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IN WITNESS WHEREOF, Pledgor and Buyer have caused this Subordination, Acknowledgment and Pledge Agreement to be executed and delivered by their duly authorized officers or trustees as of the date first above written.

 

 

	
 
    	
PNMAC   GMSR ISSUER TRUST,   as Buyer
    
	
 
    	
 
    
	
 
    	
By:   Wilmington Savings Fund Society, FSB, d/b/a   Christiana Trust, not in its individual capacity but solely as   Owner Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeffrey R. Everhart
    
	
 
    	
 
    	
Name:
    	
Jeffrey   R. Everhart, AVP
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Subordination, Acknowledgment and Pledge Agreement]

 

 

	
 
    	
PENNYMAC   HOLDINGS, LLC, as   Pledgor
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pamela Marsh
    
	
 
    	
 
    	
Name:
    	
Pamela   Marsh
    
	
 
    	
 
    	
Title:
    	
Managing   Director, Treasurer
    

 

[Signature Page to Subordination, Acknowledgment and Pledge Agreement]

 

 

SCHEDULE 1

 

RESPONSIBLE OFFICERS — PLEDGOR

 

PLEDGOR AUTHORIZATIONS

 

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

 

Responsible Officers for execution of Repurchase Documents and amendments

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Responsible Officers for execution of day-to-day operational functions

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Schedule 1-1

 

EXHIBIT A

 

FORM OF POWER OF ATTORNEY

 

Reference is made to the Subordination, Acknowledgment and Pledge Agreement, dated as of December 19, 2016 (as amended from time to time, the “Agreement”), between PENNYMAC HOLDINGS, LLC (“Pledgor”) and PNMAC GMSR ISSUER TRUST (“Buyer”).

 

KNOW ALL MEN BY THESE PRESENTS, Pledgor hereby irrevocably constitutes and appoints Buyer and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in its own name, from time to time in Buyer’s discretion, in accordance with the terms of the Agreement, for the purpose of carrying out the terms of the Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of the Agreement, and, without limiting the generality of the foregoing, Pledgor hereby gives Buyer the power and right, on behalf of Pledgor, without assent by, but with notice to, Pledgor, if permitted under the terms of the Agreement, to do the following:

 

(i)                                     in the name of Pledgor or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to (i) all Purchased MSR Excess Spread arising under or related to any Servicing Contract; (ii) all rights to payment of amounts due under the Master Spread Acquisition Agreement on account of, or related to, the Purchased MSR Excess Spread; (iii) all Assets arising under or relating to the Master Spread Acquisition Agreement and all rights thereunder; (iv) all rights to reimbursement of Assets and/or amounts due in respect thereof under the related Servicing Contract; (v) the Dedicated Account; (vi) all records, instruments or other documentation evidencing any of the foregoing; (vii) all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including, without limitation, all of Pledgor’s rights, title and interest in and under the Purchased MSR Excess Spread and Servicing Contracts); and (viii) any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing (any and all property listed in clauses (i) through (viii), collectively, the “Collateral”) and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Buyer for the purpose of collecting any and all such moneys due with respect to any Collateral whenever payable;

 

(ii)                                  to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral;

 

(iii)                               to the extent permitted under the Master Spread Acquisition Agreement, to request that MSRs in respect of Mortgage Loans owned by any other investor or guarantor be transferred to Buyer or to another servicer approved by Ginnie Mae or such other investor or guarantor (as the case may be) and perform (without assuming or being

 

Exhibit A-1

 

deemed to have assumed any of the obligations of Servicer thereunder) all aspects of each servicing contract for which the Purchased MSR Excess Spread is Collateral;

 

(iv)                              to request distribution to Buyer of sale proceeds or any applicable contract termination fees arising from the sale or termination of such MSRs to the extent of the Purchased MSR Excess Spread and remaining after satisfaction of Servicer’s relevant obligations to Ginnie Mae or such other investor (as the case may be), including costs and expenses related to any such sale or transfer of such MSRs and other amounts due for unmet obligations of Servicer to Ginnie Mae or such other investor (as the case may be) under applicable Ginnie Mae Contracts or such other investor’s or guarantor’s contract;

 

(v)                                 to deal with third parties, including, without limitation, investors, guarantors and any and all subservicers and master servicers in respect of any of the Collateral in the same manner and with the same effect as if done by Pledgor;

 

(vi)                              (A) to direct any party liable for any payment under any Collateral to make payment of any and all moneys due or to become due thereunder directly to Buyer or as Buyer shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against Pledgor with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Buyer were the absolute owner thereof for all purposes, and to do, at Buyer’s option and Pledgor’s expense, at any time, and from time to time, all acts and things which Buyer deems necessary to protect, preserve or realize upon the Collateral and Buyer’s Liens thereon and to effect the intent of the Agreement, all as fully and effectively as Pledgor might do.

 

This power of attorney is a power coupled with an interest and shall be irrevocable until such time as all Obligations have been paid in full and the Agreement is terminated.

 

Pledgor also authorizes Buyer, at any time and from time to time, to execute, in connection with any sale provided for in the Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

 

The powers conferred on Buyer are solely to protect Buyer’s interests in the Collateral and shall not impose any duty upon Buyer to exercise any such powers.  Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither Buyer nor any of its officers, directors, or employees shall be responsible to

 

Exhibit A-2

 

Pledgor for any act or failure to act hereunder, except for Buyer’s own gross negligence or willful misconduct.

 

Notwithstanding anything to the contrary herein or in any of the other Program Agreements, any appointment set forth in this power of attorney, as well as Buyer’s exercise (or purported exercise) of any right, power or authority given by Pledgor hereunder, shall be subject to the Ginnie Mae Contract and the Acknowledgment Agreement.

 

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

 

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

 

Exhibit A-3

 

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

 

	
 
    	
PENNYMAC   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Exhibit A-4

 

	
STATE OF
    	
)
    	
 
    
	
 
    	
)
    	
ss.:
    
	
COUNTY OF
    	
)
    	
 
    

 

On the              day of       , 2016 before me, a Notary Public in and for said State, personally appeared                                      , known to me to be                                                of Pledgor, the institution that executed the within instrument and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument.

 

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

 

 

	
 
    	
 
    
	
Notary   Public
    	
 
    
	
 
    
	
My   Commission expires
    	
 
    	
 
    
				

 

Exhibit A-5Exhibit 10.9

 

EXECUTION VERSION

 

	
 
    

 

MASTER REPURCHASE AGREEMENT

 

among

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent (“Administrative Agent”)

 

and

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as buyer (“Buyer”)

 

and

 

PENNYMAC LOAN SERVICES, LLC, as seller (“Seller”)

 

Dated as of December 19, 2016

 

PNMAC GMSR ISSUER TRUST

MSR COLLATERALIZED NOTES,

SERIES 2016-MSRVF1

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Certain Defined Terms
    	
1
    
	
Section 1.02
    	
Other Defined Terms
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
GENERAL TERMS
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Transactions
    	
13
    
	
Section 2.02
    	
Procedure for Entering   into Transactions
    	
13
    
	
Section 2.03
    	
Repurchase; Payment of   Repurchase Price
    	
14
    
	
Section 2.04
    	
Price Differential
    	
14
    
	
Section 2.05
    	
Margin Maintenance
    	
14
    
	
Section 2.06
    	
Payment Procedure
    	
15
    
	
Section 2.07
    	
Application of Payments
    	
15
    
	
Section 2.08
    	
Use of Purchase Price   and Transaction Requests
    	
16
    
	
Section 2.09
    	
Recourse
    	
16
    
	
Section 2.10
    	
Requirements of Law
    	
16
    
	
Section 2.11
    	
Taxes
    	
17
    
	
Section 2.12
    	
Indemnity
    	
18
    
	
Section 2.13
    	
Additional Balance
    	
19
    
	
Section 2.14
    	
Commitment Fee
    	
19
    
	
Section 2.15
    	
Termination
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
REPRESENTATIONS AND   WARRANTIES
    	
19
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Seller Existence
    	
19
    
	
Section 3.02
    	
Licenses
    	
19
    
	
Section 3.03
    	
Power
    	
20
    
	
Section 3.04
    	
Due Authorization
    	
20
    
	
Section 3.05
    	
Financial Statements
    	
20
    
	
Section 3.06
    	
No Event of Default
    	
21
    
	
Section 3.07
    	
Solvency
    	
21
    
	
Section 3.08
    	
No Conflicts
    	
21
    
	
Section 3.09
    	
True and Complete   Disclosure
    	
21
    
	
Section 3.10
    	
Approvals
    	
22
    
	
Section 3.11
    	
Litigation
    	
22
    
	
Section 3.12
    	
Material Adverse Change
    	
22
    
	
Section 3.13
    	
Ownership
    	
22
    
	
Section 3.14
    	
The Note
    	
23
    
	
Section 3.15
    	
Taxes
    	
23
    

 

 

	
Section 3.16
    	
Investment Company
    	
23
    
	
Section 3.17
    	
Chief Executive Office;   Jurisdiction of Organization
    	
23
    
	
Section 3.18
    	
Location of Books and   Records
    	
23
    
	
Section 3.19
    	
ERISA
    	
23
    
	
Section 3.20
    	
Financing of Note and   Additional Balances
    	
24
    
	
Section 3.21
    	
Agreements
    	
24
    
	
Section 3.22
    	
Other Indebtedness
    	
24
    
	
Section 3.23
    	
No Reliance
    	
24
    
	
Section 3.24
    	
Plan Assets
    	
24
    
	
Section 3.25
    	
No Prohibited Persons
    	
24
    
	
Section 3.26
    	
Compliance with 1933   Act
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
CONVEYANCE; REPURCHASE   ASSETS; SECURITY INTEREST
    	
25
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Ownership
    	
25
    
	
Section 4.02
    	
Security Interest
    	
25
    
	
Section 4.03
    	
Further Documentation
    	
26
    
	
Section 4.04
    	
Changes in Locations,   Name, etc.
    	
26
    
	
Section 4.05
    	
Performance by Buyer of   Seller’s Obligations
    	
27
    
	
Section 4.06
    	
Proceeds
    	
27
    
	
Section 4.07
    	
Remedies
    	
27
    
	
Section 4.08
    	
Limitation on Duties   Regarding Preservation of Repurchase Assets
    	
28
    
	
Section 4.09
    	
Powers Coupled with an   Interest
    	
28
    
	
Section 4.10
    	
Release of Security   Interest
    	
28
    
	
Section 4.11
    	
Reinstatement
    	
28
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
CONDITIONS PRECEDENT
    	
29
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Initial Transaction
    	
29
    
	
Section 5.02
    	
All Transactions
    	
29
    
	
Section 5.03
    	
Closing Subject to   Conditions Precedent
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
COVENANTS
    	
33
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Litigation
    	
33
    
	
Section 6.02
    	
Prohibition of   Fundamental Changes
    	
33
    
	
Section 6.03
    	
Weekly Reporting
    	
34
    
	
Section 6.04
    	
No Adverse Claims
    	
34
    
	
Section 6.05
    	
Assignment
    	
34
    
	
Section 6.06
    	
Security Interest
    	
34
    
	
Section 6.07
    	
Records
    	
34
    
	
Section 6.08
    	
Books
    	
35
    
	
Section 6.09
    	
Approvals
    	
35
    

 

ii

 

	
Section 6.10
    	
Material Change in   Business
    	
35
    
	
Section 6.11
    	
Distributions
    	
35
    
	
Section 6.12
    	
Applicable Law
    	
35
    
	
Section 6.13
    	
Existence
    	
35
    
	
Section 6.14
    	
Chief Executive Office;   Jurisdiction of Organization
    	
35
    
	
Section 6.15
    	
Taxes
    	
35
    
	
Section 6.16
    	
Transactions with   Affiliates
    	
35
    
	
Section 6.17
    	
Guarantees
    	
36
    
	
Section 6.18
    	
Indebtedness
    	
36
    
	
Section 6.19
    	
True and Correct   Information
    	
36
    
	
Section 6.20
    	
No Pledge
    	
36
    
	
Section 6.21
    	
Plan Assets
    	
36
    
	
Section 6.22
    	
Sharing of Information
    	
36
    
	
Section 6.23
    	
Modification of the   Base Indenture and Series 2016-MSRVF1 Indenture Supplement
    	
36
    
	
Section 6.24
    	
Reporting Requirements
    	
37
    
	
Section 6.25
    	
Liens on Substantially   All Assets
    	
39
    
	
Section 6.26
    	
Litigation Summary
    	
39
    
	
Section 6.27
    	
Hedging
    	
39
    
	
Section 6.28
    	
MSR Valuation
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
DEFAULTS/RIGHTS AND   REMEDIES OF BUYER UPON DEFAULT
    	
40
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Events of Default
    	
40
    
	
Section 7.02
    	
No Waiver
    	
42
    
	
Section 7.03
    	
Due and Payable
    	
42
    
	
Section 7.04
    	
Fees
    	
43
    
	
Section 7.05
    	
Default Rate
    	
43
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
ENTIRE AGREEMENT;   AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER
    	
43
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Entire Agreement
    	
43
    
	
Section 8.02
    	
Waivers, Separate   Actions by Buyer
    	
43
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
SUCCESSORS AND ASSIGNS
    	
44
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Successors and Assigns
    	
44
    
	
Section 9.02
    	
Participations and   Transfers
    	
44
    
	
Section 9.03
    	
Buyer and Participant   Register
    	
45
    

 

iii

 

	
ARTICLE X
    	
MISCELLANEOUS
    	
45
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Survival
    	
45
    
	
Section 10.02
    	
Indemnification
    	
45
    
	
Section 10.03
    	
Nonliability of Buyer
    	
46
    
	
Section 10.04
    	
Governing Law;   Submission to Jurisdiction; Waivers
    	
47
    
	
Section 10.05
    	
Notices
    	
48
    
	
Section 10.06
    	
Severability
    	
49
    
	
Section 10.07
    	
Section Headings
    	
49
    
	
Section 10.08
    	
Counterparts
    	
49
    
	
Section 10.09
    	
Periodic Due Diligence   Review
    	
49
    
	
Section 10.10
    	
Hypothecation or Pledge   of Repurchase Assets
    	
50
    
	
Section 10.11
    	
Non-Confidentiality of   Tax Treatment
    	
50
    
	
Section 10.12
    	
Set-off
    	
51
    
	
Section 10.13
    	
Intent
    	
52
    

 

	
Schedule   1
    	
—
    	
Responsible   Officers of Seller
    
	
 
    	
 
    	
 
    
	
Schedule   2
    	
—
    	
Asset   Schedule
    
	
 
    	
 
    	
 
    
	
Schedule   3
    	
—
    	
Buyer   Account
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
—
    	
Form of   Transaction Notice
    
	
 
    	
 
    	
 
    
	
Exhibit B
    	
—
    	
Existing Indebtedness
    

 

iv

 

MASTER REPURCHASE AGREEMENT

 

This Master Repurchase Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is made as of December 19, 2016, among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (“CSFB”), as administrative agent (the “Administrative Agent”), CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“CSCIB”), as buyer (“Buyer”), and PENNYMAC LOAN SERVICES, LLC, as seller (“Seller” or “PLS”).

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, from time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Buyer a certain Note (as defined below) against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Note 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” 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;

 

WHEREAS, pursuant to the Base Indenture (as defined below) and the Series 2016-MSRVF1 Indenture Supplement (as defined below), PNMAC GMSR ISSUER TRUST (the “Issuer”) has duly authorized the issuance of a Series of Notes, as a single Class of Variable Funding Note, known as the “PNMAC GMSR ISSUER TRUST MSR Collateralized Notes, Series 2016-MSRVF1” (the “Note”);

 

WHEREAS, Seller is the owner of the Note; and

 

WHEREAS, Seller wishes to sell the Note to Buyer pursuant to the terms of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows.

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                                      Certain Defined Terms.  Capitalized terms used herein shall have the indicated meanings:

 

“1933 Act” means the Securities Act of 1933, as amended from time to time.

 

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

 

1

 

“Acknowledgment and Subordination Agreement” means the Subordination, Acknowledgment and Pledge Agreement, dated as of December 19, 2016, by and between the Issuer and PMH, as amended, restated, supplemented or otherwise modified from time to time.

 

“Act of Insolvency” means, with respect to any Person or its Affiliates, (i) 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; (ii) 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; (iii) 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; (iv) 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; (v) 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 (vi) 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 Balance” has the meaning set forth in Section 2.13.

 

“Additional Repurchase Assets” has the meaning set forth in Section 4.02(c).

 

“Administrative Agent” has the meaning given to such term in the preamble to this Agreement.

 

“Affiliate” means, with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code; provided, however, that in respect of Seller the term “Affiliate” shall include only PNMAC and its wholly owned subsidiaries.

 

“Agreement” has the meaning given to such term in the preamble to this Agreement.

 

“Applicable Lending Office” means the “lending office” of Buyer (or of an Affiliate of Buyer) designated on the signature page hereof or such other office of Buyer (or of an Affiliate of Buyer) as Buyer may from time to time specify to Seller in writing as the office by which the Transactions are to be made and/or maintained.

 

“Asset Schedule” means Schedule 2 attached hereto, which lists the Note and the terms thereof, as such schedule shall be updated from time to time in accordance with Section 2.02 hereof, including without limitation, in connection with Buyer’s approval of any Additional Balances pursuant to Section 2.13.

 

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

 

2

 

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

 

“Base Indenture” means the Base Indenture, dated as of December 19, 2016, among Buyer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, Seller, as administrator and as servicer, CSFB, as administrative agent, and the Credit Manager, including the schedules and exhibits thereto, as amended, restated, supplemented or otherwise modified from time to time.

 

“Base Rate” means the “CS Base Rate” as identified in Buyer’s warehouse system from time to time, and available to Seller upon request.

 

“Business Day” means any day other than (i) a Saturday or Sunday or (ii) any other day on which national banking associations or state banking institutions in New York, New York, the State of California, the city and state where the Corporate Trust Office is located or the Federal Reserve Bank of New York, are authorized or obligated by law, executive order or governmental decree to be closed.

 

“Buyer” means CSCIB, together with its successors, and any assignee of and Participant or Transferee in the Transaction.

 

“Buyer Account”  means the account identified on Schedule 3 hereto.

 

“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.

 

“Change in Control” occurs if any of the following occur:

 

(A)                               any transaction or event as a result of which PNMAC ceases to own, beneficially or of record, 100% of the stock of Seller, except with respect to an initial public offering of Seller’s common stock on a U.S. national securities exchange;

 

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

 

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

 

3

 

“Closing Date” means December 19, 2016.

 

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

 

“Commitment” means the obligation of Buyer to enter into Transactions with Seller with an aggregate outstanding Purchase Price at any one time not to exceed the Maximum Purchase Price.

 

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

 

“Commitment Period” means the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitment shall have terminated pursuant to this Agreement.

 

“Confidential Information” has the meaning set forth in Section 10.11(b).

 

“Control”, “Controlling” or “Controlled” means the possession of the power to direct or cause the direction of the management or policies of a Person through the right to exercise voting power or by contract, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

 

“Credit Manager” means Pentalpha Surveillance LLC and any successor thereto in such capacity.

 

“CSCIB” has the meaning given to such term in the preamble to this Agreement.

 

“CSFB” has the meaning given to such term in the preamble to this Agreement.

 

“Default” means an event, condition or default that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

 

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

 

“EO13224” has the meaning set forth in Section 3.25.

 

“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 PNMAC 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.

 

“ERISA Event of Termination” means with respect to Seller or PNMAC (i) 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

 

4

 

notified with thirty (30) days of the occurrence of such event, or (ii) the withdrawal of Seller, PNMAC 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 (iii) the failure by Seller, PNMAC 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 (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by Seller, PNMAC or any ERISA Affiliate thereof to terminate any plan, or (v) 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 (vi) 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 (vii) the receipt by Seller, PNMAC or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for Seller, PNMAC 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.

 

“Event of Default” has the meaning assigned to such term in Section 7.01.

 

“Existing Indebtedness” has the meaning specified in Section 3.22.

 

“Expenses” means all present and future expenses reasonably incurred by or on behalf of Buyer in connection with the negotiation, execution or enforcement of this Agreement or any of the other Program Agreements and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the reasonable and documented cost of title, lien, judgment and other record searches; reasonable and documented attorneys’ fees; any ongoing audits or due diligence costs in connection with valuation, entering into Transactions or determining whether a Margin Deficit may exist; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.

 

“FATCA” Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or regulatory legislation, guidance, notes, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code.

 

“Fidelity Insurance” means 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.

 

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“Financial Statements” means the consolidated financial statements of Seller prepared in accordance with GAAP for the year or other period then ended.

 

“GAAP” means U.S. generally accepted accounting principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its successors, as in effect from time to time, and (ii) applied consistently with principles applied to past financial statements of Seller and its subsidiaries; provided, that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) that such principles have been properly applied in preparing such financial statements.

 

“GLB Act” has the meaning set forth in Section 10.11(b).

 

“Governmental Actions” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.

 

“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 or Buyer, as applicable.

 

“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

 

“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 (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a mortgaged property.  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.

 

“Indebtedness” means, for any Person:  (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts

 

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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 ninety (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.

 

“Indenture” means the Base Indenture, together with the Series 2016-MSRVF1 Indenture Supplement thereto.

 

“Indenture Trustee” means Citibank, N.A., its permitted successors and assigns.

 

“Issuer” has the meaning given to such term in the recitals to this Agreement.

 

“Laws” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Governmental Authority.

 

“Lien” means, with respect to any property or asset of any Person (a) any mortgage, lien, pledge, charge or other security interest or encumbrance of any kind in respect of such property or asset or (b) the interest of a vendor or lessor arising out of the acquisition of or agreement to acquire such property or asset under any conditional sale agreement, lease purchase agreement or other title retention agreement.

 

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

 

“Margin Amount” means, with respect to any Transaction as of any date, the amount obtained by multiplying the Purchase Price Percentage by the unpaid principal balance of the Note as of such date.

 

“Margin Call” has the meaning set forth in Section 2.05(a).

 

“Margin Deadlines” has the meaning set forth in Section 2.05(b).

 

“Margin Deficit” has the meaning set forth in Section 2.05(a).

 

“Market Value” means, with respect to the Note as of any date of determination, and without duplication, the fair market value of the Note on such date as reasonably determined by Buyer (or an Affiliate thereof).

 

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“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 or any Affiliate that is a party to any Program Agreement taken as a whole; (b) a material impairment of the ability of Seller 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 or any Affiliate that is a party to any Program Agreement.

 

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

 

“MLRA Pricing Side Letter” means that certain Amended and Restated Pricing Side Letter, dated as of March 31, 2016, by and among CSFB, as buyer and as agent, Seller, and PNMAC, as guarantor, as amended, restated, supplemented or otherwise modified from time to time.

 

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

 

“Mortgage Loan Repurchase Agreement” means that certain Second Amended and Restated Master Repurchase Agreement, dated as of March 31, 2016, among CSFB, as buyer and as agent, Seller and PNMAC, as guarantor, as amended, restated, supplemented or otherwise modified from time to time.

 

“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.

 

“Non-Excluded Taxes” has the meaning set forth in Section 2.11(a).

 

“Note” has the meaning given to such term in the recitals to this Agreement.

 

“Notice” or “Notices” means all requests, demands and other communications, in writing (including facsimile transmissions and e-mails), sent by overnight delivery service, facsimile transmission, electronic transmission or hand-delivery to the intended recipient at the address specified in Section 10.05 or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

 

“Obligations” means (a) all of Seller’s indebtedness, obligations to pay the outstanding principal balance of the Purchase Price, together with interest thereon on the Termination Date, outstanding interest due on each Price Differential Payment Date, and other obligations and liabilities, to Buyer or its Affiliates arising under, or in connection with, the Program Agreements, whether now existing or hereafter arising; (b) any and all sums reasonably incurred and paid by Buyer or on behalf of Buyer in order to preserve any Repurchase Asset 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 this definition, the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Repurchase Asset, or of any exercise by Buyer of its rights under the Program Agreements, including, without limitation, reasonable attorneys’ fees and disbursements and court costs; (d) all of Seller’s indemnity obligations to Buyer pursuant to the Program Agreements; and (e) all of Seller’s and PNMAC’s, as guarantor, obligations under the Mortgage Loan Repurchase Agreement and other Repurchase Documents.

 

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“OFAC” has the meaning set forth in Section 3.25.

 

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

 

“Other Taxes” has the meaning set forth in Section 2.11(b).

 

“Participant” has the meaning set forth in Section 9.02(a).

 

“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, as amended from time to time.

 

“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 any Seller or any ERISA Affiliate and covered by Title IV of ERISA, other than a Multiemployer Plan.

 

“PLS” has the meaning given to such term in the preamble to this Agreement.

 

“PMH” means PennyMac Holdings, LLC, a limited liability company organized under the laws of the State of Delaware.

 

“PMH Documents” means the PMH Repurchase Agreement, PMT Guaranty, Acknowledgment and Subordination Agreement, pricing letter, side letter, confirmations and all documents ancillary thereto that evidence a PMH Transaction in the form approved by the Issuer in writing in its sole discretion with any material modifications approved by the Issuer in writing in its sole discretion (excluding provisions related to the advance rate or interest rate of such PMH Transactions, which shall not be subject to Issuer’s review or approval).

 

“PMH Transaction” means a transaction between PLS and PMH whereby PMH pledges the Purchased MSR Excess Spread and the corresponding Purchased MSR Excess Spread PC to PLS against the transfer of funds by PLS, which Purchased MSR Excess Spread is concurrently or consecutively pledged to the Issuer under the PC Repurchase Agreement.

 

“PNMAC” means Private National Mortgage Acceptance Company, LLC, its permitted successors and assigns.

 

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“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 Price Differential Period.

 

“Price Differential Payment Date” means, for as long as any Obligations shall remain owing by Seller to Buyer, each Payment Date (as defined in the Indenture).

 

“Price Differential Period” means, the period from and including a Price Differential Payment Date, up to but excluding the next Price Differential Payment Date.

 

“Price Differential Statement Date” has the meaning set forth in Section 2.04.

 

“Pricing Rate” means Base Rate plus the applicable Margin.

 

“Pricing Side Letter” means the letter agreement dated as of the Closing Date, between Buyer and Seller as amended, restated, supplemented or otherwise modified from time to time.

 

“Primary Repurchase Assets” has the meaning set forth in Section 4.02(a).

 

“Proceeds” means “proceeds” as defined in Section 9-102(a)(64) of the UCC.

 

“Program Agreements” means this Agreement, the Pricing Side Letter, the VFN Guaranty, the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, as each of the same may hereafter be amended, restated, supplemented or otherwise modified from time to time.

 

“Prohibited Person” has the meaning set forth in Section 3.25.

 

“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 Date” means, subject to the satisfaction of the conditions precedent set forth in Article V hereof, each Funding Date (as defined in the Indenture) on which a Transaction is entered into by Buyer pursuant to Section 2.02 or such other mutually agreed upon date as more particularly set forth on Exhibit A hereto.

 

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“Purchase Price” means the price at which each Purchased Asset (or portion thereof) is transferred by Seller to Buyer, which shall equal on each Purchase Date, the applicable Asset Value of the Note or Additional Balance being purchased on such Purchase Date.  On any day after the related Purchase Date, except where Buyer and the Seller agree otherwise, the aggregate “Purchase Price” for such date shall refer to the aggregate Purchase Price for the Purchased Asset (as determined on the related Purchase Dates under the immediately preceding sentence) decreased by the amount of any cash transferred by the Seller to Buyer pursuant to Section 2.05 hereof prior to such date.

 

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

 

“Purchased Assets” means, collectively, the Note and all outstanding Additional Balances together with the Repurchase Assets related to such Note and Additional Balances transferred by Seller to Buyer in a Transaction hereunder, as listed on the related Asset Schedule attached to the related Transaction Notice.

 

“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, or any other person or entity with respect to the Purchased Assets.

 

“Register” has the meaning set forth in Section 9.02(b).

 

“Repurchase Assets” has the meaning set forth in Section 4.02(c).

 

“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date requested by Seller on which the Repurchase Price is paid pursuant to Section 2.03.

 

“Repurchase Documents” means “Program Agreements” as defined in the Mortgage Loan Repurchase Agreement.

 

“Repurchase Price” means the price at which Purchased Assets 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.

 

“Repurchase Rights” has the meaning set forth in Section 4.02(c).

 

“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 or treasurer of such Person.  The Responsible Officers of Seller as of the Closing Date are listed on Schedule 1 hereto.

 

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

 

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

 

“Seller” has the meaning assigned to such term in the preamble to this Agreement and includes PLS’ permitted successors and assigns.

 

“Seller Termination Option” means (a) (i) Buyer has or shall incur costs in connection with those matters provided for in Section 2.10 or 2.11 and (ii) Buyer requests that Seller pay to Buyer those costs in connection therewith or (b) Buyer has declared in writing that an event described in Section 5.02(h)(A) has occurred.

 

“Series 2016-MSRVF1 Indenture Supplement” means the Series 2016-MSRVF1 Indenture Supplement, dated as of December 19, 2016, among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and CSFB, as administrative agent, as amended, restated, supplemented or otherwise modified from time to time.

 

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

 

“Taxes” has the meaning assigned to such term in Section 2.11(a).

 

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

 

“Transaction” has the meaning assigned to such term in the recitals to this Agreement.

 

“Transaction Notice” has the meaning assigned to such term in Section 2.02(a).

 

“Transaction Register” has the meaning assigned to such term in Section 9.03(b).

 

“Transferee” has the meaning set forth in Section 9.02(b).

 

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.

 

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“VFN Guarantor” means Private National Mortgage Acceptance Company, LLC, in its capacity as guarantor under the VFN Guaranty.

 

“VFN Guaranty” means the Guaranty, dated as of the Closing Date, as amended, restated, supplemented or otherwise modified from time to time, pursuant to which VFN Guarantor fully and unconditionally guarantees the obligations of Seller hereunder.

 

“Weekly Report Date” has the meaning set forth in Section 6.03.

 

Section 1.02                                      Other Defined Terms.

 

(a)                                 Any capitalized terms used and not defined herein shall have the meaning set forth in the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, as applicable.

 

(b)                                 The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting.  All references to Sections, subsections, Articles and Exhibits shall be to Sections, subsections, and Articles of, and Exhibits to, this Agreement unless otherwise specifically provided.

 

(c)                                  In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein the words “commencing on” mean “commencing on and including,” the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

 

ARTICLE II

 

GENERAL TERMS

 

Section 2.01                                      Transactions.  Subject to the terms and conditions hereof, Buyer agrees to enter into Transactions with Seller for a Purchase Price outstanding at any one time not to exceed the Maximum Purchase Price.  During the Commitment Period, Seller may utilize the Commitment by requesting Transactions, Seller may pay the Repurchase Price in whole or in part at any time during such period without penalty, and additional Transactions may be entered into in accordance with the terms and conditions hereof.  Buyer’s obligation to enter into Transactions pursuant to the terms of this Agreement shall terminate on the Termination Date.  Notwithstanding the foregoing, Buyer shall have no commitment or obligation to enter into Transactions in connection with the Note to the extent the Purchase Price of such Transaction exceeds the Maximum Purchase Price.

 

Section 2.02                                      Procedure for Entering into Transactions.

 

(a)                                 Seller may enter into Transactions with Buyer under this Agreement during the Commitment Period on any Purchase Date; provided, that Seller shall have given Buyer irrevocable notice (each, a “Transaction Notice”), which notice (i) shall be substantially in the form of Exhibit A, (ii) shall be signed by a Responsible Officer of Seller and be received by

 

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Buyer prior to 1:00 p.m. (New York time) one (1) Business Day prior to the related Purchase Date, and (iii) shall specify: (A) (i) the Maximum VFN Principal Balance of the Note, (ii) with respect to the first Purchase Date, the Initial Note Balance of the Note, and, with respect to any other Purchase Date, the Additional Balance and (iii) after taking into account the Additional Balance being requested on such Purchase Date, the outstanding VFN Principal Balance of the Note; (B) the Dollar amount of the requested Purchase Price; (C) the requested Purchase Date; (D) the Repurchase Date; (E) the Pricing Rate or Repurchase Price applicable to the Transaction; and (E) any additional terms or conditions of the Transaction not inconsistent with this Agreement.  Each Transaction Notice on any Purchase Date shall be in an amount equal to at least $500,000.

 

(b)                                 If Seller shall deliver to Buyer a Transaction Notice that satisfies the requirements of Section 2.02(a), Buyer will notify Seller of its intent to remit the requested Purchase Price one (1) Business Day prior to the requested Purchase Date.  If all applicable conditions precedent set forth in Article V have been satisfied on or prior to the Purchase Date, then subject to the foregoing, on the Purchase Date, Buyer shall remit the amount of the requested Purchase Price in U.S. Dollars and in immediately available funds to the Buyer Account.

 

(c)                                  Upon entering into each Transaction hereunder, the Asset Schedule shall be automatically updated and replaced with the Asset Schedule attached to the related Transaction Notice.

 

Section 2.03                                      Repurchase; Payment of Repurchase Price.

 

(a)                                 Seller hereby promises to repurchase the Purchased Assets and pay all outstanding Obligations on the Termination Date.

 

(b)                                 By notifying Buyer in writing at least one (1) Business Day in advance, Seller shall be permitted, at its option, to prepay, subject to Section 2.12, the Purchase Price in whole or in part at any time, together with accrued and unpaid interest on the amount so prepaid.

 

Section 2.04                                      Price Differential.  On each Price Differential Payment Date, Seller hereby promises to pay to Buyer all accrued and unpaid Price Differential on the Transactions, as invoiced by Buyer to Seller three (3) Business Days prior to the related Price Differential Payment Date (the “Price Differential Statement Date”); provided, that if Buyer fails to deliver such statement on the Price Differential Statement Date, on such Price Differential Payment Date Seller shall pay the amount which Seller calculates as the Price Differential due and upon delivery of the statement, Seller shall remit to Buyer any shortfall, or Buyer shall refund to Seller any excess, in the Price Differential paid.  Price Differential shall accrue each day on the Purchase Price at a rate per annum equal to the Pricing Rate.  The Price Differential shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.

 

Section 2.05                                      Margin Maintenance.

 

(a)                                 If at any time the aggregate outstanding amount of the Purchase Price of the Note is less than the Margin Amount for the related Transaction (such excess, 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”).

 

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(b)                                 Notice delivered pursuant to Section 2.05(a) may be given by any written or electronic means.  With respect to a 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.  With respect to a Margin Call, any 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 (2nd) Business Day following the date of such notice.  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, Buyer may retain any funds received by it to which Seller would otherwise be entitled hereunder, which funds (i) may be held by Buyer against the related Margin Deficit or (ii) may be applied by Buyer against the Purchase Price.  Notwithstanding the foregoing, Buyer retains the right, in its sole discretion, to make a Margin Call in accordance with the provisions of this Section 2.05.

 

Section 2.06                                      Payment Procedure.  Seller absolutely, unconditionally, and irrevocably, shall make, or cause to be made, all payments required to be made by Seller hereunder.  Seller shall deposit or cause to be deposited all amounts constituting collection, payments and proceeds of the Note (including, without limitation, all fees and proceeds of sale) to the Buyer Account.

 

Section 2.07                                      Application of Payments.

 

(a)                                 On each Price Differential Payment Date, all amounts deposited into the Buyer Account from and after the immediately preceding Price Differential Payment Date (or the Closing Date in connection with the initial Price Differential Payment Date) shall be applied as follows:

 

(i)                                     first, to the payment of any accrued and unpaid Price Differential owing;

 

(ii)                                  second, to the payment of Purchase Price outstanding to satisfy any Margin Deficit owing;

 

(iii)                               third, to payment of all other costs and fees payable to Buyer pursuant to this Agreement; and

 

(iv)                              fourth, any remainder to Seller.

 

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(b)                                 Notwithstanding the preceding provisions, if an Event of Default shall have occurred hereunder, all funds related to the Note shall be applied as follows:

 

(i)                                     first, to the payment of any accrued and unpaid Price Differential owing;

 

(ii)                                  second, to the payment of Purchase Price until reduced to zero;

 

(iii)                               third, to payment of all other costs and fees payable to Buyer pursuant to this Agreement;

 

(iv)                              fourth, to the payment of any other Obligations; and

 

(v)                                 fifth, any remainder to Seller.

 

Section 2.08                                      Use of Purchase Price and Transaction Requests.  The Purchase Price shall be used by Seller for general corporate purposes.

 

Section 2.09                                      Recourse.  Notwithstanding anything else to the contrary contained or implied herein or in any other Program Agreement, Buyer shall have full, unlimited recourse against Seller and its assets in order to satisfy the Obligations.

 

Section 2.10                                      Requirements of Law.

 

(a)                                 If any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of trust and trust agreement or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:

 

(i)                                     shall subject Buyer to any tax of any kind whatsoever with respect to this Agreement or the Transactions (excluding income taxes, branch profits taxes, franchise taxes or similar taxes imposed on Buyer as a result of any present or former connection between Buyer and the United States, other than any such connection arising solely from Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or change the basis of taxation of payments to Buyer in respect thereof;

 

(ii)                                  shall impose, modify or hold any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of Buyer which is not otherwise included in the determination of the Price Differential hereunder; or

 

(iii)                               shall impose on Buyer any other condition;

 

and the result of any of the foregoing is to increase the cost to Buyer, by an amount which Buyer deems to be material, of entering, continuing or maintaining this Agreement or any other Program Agreement, the Transactions or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Seller shall promptly pay Buyer such additional amount or amounts as calculated by Buyer in good faith as will compensate Buyer for such increased cost or reduced amount receivable.

 

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(b)                                 If Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation Controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then from time to time, Seller shall promptly pay to Buyer such additional amount or amounts as will compensate Buyer for such reduction.

 

(c)                                  If Buyer becomes entitled to claim any additional amounts pursuant to this Section 2.10, it shall promptly notify Seller of the event by reason of which it has become so entitled.  A certificate as to any additional amounts payable pursuant to this Section 2.10 submitted by Buyer to Seller shall be conclusive in the absence of manifest error.

 

Section 2.11                                      Taxes.

 

(a)                                 Any and all payments by or on behalf of Seller under or in respect of this Agreement or any other Program Agreements to which Seller is a party shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law.  If Seller shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Program Agreements to Buyer (including for purposes of Section 2.10 and this Section 2.11, any assignee, successor or participant), (i) Seller shall make all such deductions and withholdings in respect of Taxes, (ii) Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any applicable Requirement of Law, and (iii) the sum payable by Seller shall be increased as may be necessary so that after Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 2.11) such Buyer receives an amount equal to the sum it would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes.  For purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than, in the case of Buyer, Taxes that are (i) imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which such Buyer is organized or of its Applicable Lending Office, or any political subdivision thereof, unless such Taxes are imposed as a result of Buyer having executed, delivered or performed its obligations or received payments under, or enforced, this Agreement or any of the other Program Agreements (in which case such Taxes will be treated as Non-Excluded Taxes) and (ii) imposed pursuant to FATCA.

 

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(b)                                 In addition, Seller hereby agrees to pay any present or future stamp, recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Program Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Agreement or any other Program Agreement (collectively, “Other Taxes”).

 

(c)                                  Seller hereby agrees to indemnify Buyer for, and to hold it harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable by Seller under this Section 2.11 imposed on or paid by such Buyer and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto.  The indemnity by Seller provided for in this Section 2.11 shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted.  Amounts payable by Seller under the indemnity set forth in this Section 2.11(c) shall be paid within ten (10) days from the date on which Buyer makes written demand therefor.

 

(d)                                 Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 2.11 shall survive the termination of this Agreement and the other Program Agreements.  Nothing contained in Section 2.10 or this Section 2.11 shall require any Buyer to make available any of its tax returns or any other information that it deems to be confidential or proprietary.

 

(e)                                  Buyer will timely furnish Seller, or any agent of Seller, any tax forms or certifications (such as an applicable IRS Form W-8, IRS Form W-9 or any successors to such IRS forms) that it is legally entitled to provide and that Seller or its agents may reasonably request (A) to permit Seller or its agents to make payments to it without, or at a reduced rate of, deduction or withholding, (B) to enable Seller or its agents to qualify for a reduced rate of withholding or deduction in any jurisdiction from or through which Seller or its agents receive payments and (C) to enable Seller or its agents to satisfy reporting and other obligations under the Code and Treasury Regulations and under any other applicable laws, and shall update or replace such tax forms or certifications as appropriate or in accordance with their terms or subsequent amendments, and acknowledges that the failure to provide, update or replace any such tax forms or certifications may result in the imposition of withholding or back-up withholding upon payments to Buyer.

 

Section 2.12                                      Indemnity.  Without limiting, and in addition to, the provisions of Section 10.02, the Seller agrees to indemnify the Buyer and to hold the Buyer harmless from any loss or expense that the Buyer may sustain or incur as a consequence of (i) a default by the Seller in payment when due of the Repurchase Price or Price Differential or (ii) a default by the Seller in making any prepayment of Repurchase Price after the Seller has given a notice thereof in accordance with Section 2.03.

 

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Section 2.13                                      Additional Balance.  In the event that Seller wishes an increase in the VFN Principal Balance, Seller shall deliver to Buyer a copy of the VFN Note Balance Adjustment Request that is delivered under the Indenture.  If all the Funding Conditions required pursuant to Section 5.02 hereof and the Indenture have been satisfied, then upon approval in writing by Buyer of such increase in the VFN Principal Balance (such increase, upon such approval, an “Additional Balance”), the outstanding VFN Principal Balance set forth in the Asset Schedule hereof shall be automatically updated as set forth in the related Transaction Notice in accordance with Section 2.02.

 

Section 2.14                                      Commitment Fee.  Seller shall pay the Commitment Fee as specified in the Pricing Side Letter.  Such payment shall be made in Dollars, in immediately available funds, without deduction, set off or counterclaim, to Buyer at such account designated in writing by Buyer.

 

Section 2.15                                      Termination.

 

(a)                                 Notwithstanding anything to the contrary set forth herein, if a Seller Termination Option occurs, Seller may, upon five (5) Business Days’ prior written notice of such event, terminate this Agreement and the Termination Date shall be deemed to have occurred (upon the expiration of such five (5) Business Day period).

 

(b)                                 In the event that a Seller Termination Option as described in clause (a) of the definition thereof has occurred and Seller has notified Buyer in writing of its option to terminate this Agreement, Buyer shall have the right to withdraw such request for payment within three (3) Business Days of Seller’s notice of its exercise of the Seller Termination Option and Seller shall no longer have the right to terminate this Agreement.

 

(c)                                  In connection with Seller’s exercise of a Seller Termination Option, Buyer shall refund to Seller an amount equal to the Commitment Fee prorated for the number of days remaining from and including the deemed Termination Date to but excluding the then scheduled Termination Date.

 

(d)                                 For the avoidance of doubt, Seller shall remain responsible for all costs actually incurred by Buyer pursuant to Sections 2.10 and 2.11.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Seller represents and warrants to Buyer as of the Closing Date and as of each Purchase Date for any Transaction that:

 

Section 3.01                                      Seller Existence.  Seller has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware.

 

Section 3.02                                      Licenses.  Seller 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

 

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failure to take such action is not reasonably likely (either individually or in the aggregate) to cause a Material Adverse Effect and is not in default of such state’s applicable laws, rules and regulations.  Seller has the requisite power and authority and legal right to own, sell and grant a lien on all of its right, title and interest in and to the Note.  Seller has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement, each Program Agreement and any Transaction Notice.

 

Section 3.03                                      Power.  Seller 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.

 

Section 3.04                                      Due Authorization.  Seller 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.  This Agreement, any Transaction Notice and the Program Agreements have been (or, in the case of Program Agreements and any Transaction Notice not yet executed, will be) duly authorized, executed and delivered by Seller, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against Seller in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.

 

Section 3.05                                      Financial Statements.  (A) Seller has heretofore furnished to Buyer a copy of (a) its balance sheet for the fiscal year of Seller ended December 31, 2015 and the related statements of income for Seller for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of Seller ended September 30, 2016 and the related statements of income for Seller for such quarterly fiscal period.  All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of Seller (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of the Seller’s knowledge, do not omit any material fact as of the date(s) thereof.  Since September 30, 2016, there has been no material adverse change in the consolidated business, operations or financial condition of Seller from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change.  Seller has 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.

 

(B)                               Seller has heretofore caused VFN Guarantor to furnish to Buyer a copy of (a) its balance sheet for the fiscal year of VFN Guarantor ended December 31, 2015 and the related statements of income for VFN Guarantor for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of VFN Guarantor ended September 30, 2016 and the related statements of income for

 

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VFN Guarantor for such quarterly fiscal period.  All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of VFN Guarantor (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of the Seller’s knowledge, do not omit any material fact as of the date(s) thereof.  Since September 30, 2016, there has been no material adverse change in the consolidated business, operations or financial condition of VFN Guarantor from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change.  VFN Guarantor has 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 VFN Guarantor except as heretofore disclosed to Buyer in writing.

 

Section 3.06                                      No Event of Default.  There exists no Event of Default under Section 7.01 hereof, which default gives rise to a right to accelerate indebtedness as referenced in Section 7.03 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.

 

Section 3.07                                      Solvency.  Seller 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.  Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature and is 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.  Seller is not selling and/or pledging any Repurchase Assets with any intent to hinder, delay or defraud any of its creditors.

 

Section 3.08                                      No Conflicts.  The execution, delivery and performance by of Seller of this Agreement, any Transaction Notice hereunder and the Program Agreements do not conflict with any term or provision of the organizational documents of Seller or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to Seller of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller, 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 is a party.

 

Section 3.09                                      True and Complete Disclosure.  All information, reports, exhibits, schedules, financial statements or certificates of Seller or any Affiliate thereof or any of their officers furnished or to be furnished to Buyer in connection with the initial or any ongoing due diligence of Seller or any Affiliate or officer thereof, negotiation, preparation, or delivery of the Program Agreements are true and complete in all material respects 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.

 

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Section 3.10                                      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 of this Agreement, any Transaction Notice and the Program Agreements.

 

Section 3.11                                      Litigation.  There is no action, proceeding or investigation pending with respect to which Seller has received service of process or, to the best of Seller’s knowledge threatened against it before any court, administrative agency or other tribunal (A) asserting the invalidity of this Agreement, any Transaction, Transaction Notice or any Program Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, any Transaction Notice or any Program Agreement, (C) makes a claim individually or in the aggregate in an amount greater than $10,000,000, (D) which requires filing with the SEC in accordance with the 1934 Act or any rules thereunder, (E) which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Seller’s business, or (F) which might materially and adversely affect the validity of the Purchased Assets or the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any Transaction Notice or any Program Agreement.

 

Section 3.12                                      Material Adverse Change.  There has been no material adverse change in the business, operations, financial condition, properties or prospects of Seller or its Affiliates since the date set forth in the most recent financial statements supplied to Buyer that is reasonably likely to have a Material Adverse Effect on Seller.

 

Section 3.13                                      Ownership.

 

(a)                                 Seller has good title to all of the Repurchase Assets, free and clear of all mortgages, security interests, restrictions, Liens and encumbrances of any kind other than the Liens created hereby or contemplated herein.

 

(b)                                 Each item of the Repurchase Assets was acquired by Seller in the ordinary course of its business, in good faith, for value and without notice of any defense against or claim to it on the part of any Person.

 

(c)                                  There are no agreements or understandings between Seller and any other party which would modify, release, terminate or delay the attachment of the security interests granted to Buyer under this Agreement.

 

(d)                                 The provisions of this Agreement are effective to create in favor of Buyer a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets.

 

(e)                                  Upon the filing of financing statements on Form UCC-1 naming Buyer as “Secured Party” and Seller as “Debtor”, and describing the Repurchase Assets, in the recording offices of the Secretary of State of Delaware the security interests granted hereunder in the Repurchase Assets will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of Seller in, to and under such Repurchase Assets which can be perfected by filing under the Uniform Commercial Code.

 

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Section 3.14                                      The Note.  Seller has (i) delivered the Note, (ii) duly endorsed the Note to Buyer or Buyer’s designee, (iii) notified the Indenture Trustee of such transfer and (iv) completed all documents required to effect such transfer in the Note Register, including, without limitation, receipt by the Note Registrar of the Rule 144A Note Transfer Certificate and such other information and documents that may be required pursuant to the terms of the Indenture.  In addition, Buyer has received all other Program Agreements (including, without limitation, all exhibits and schedules referred to therein or delivered pursuant thereto), all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof and all agreements and other material documents relating thereto, and Seller hereby certifies that the copies delivered to Buyer by Seller are true and complete.  None of such documents has been amended, supplemented or otherwise modified (including waivers) since the respective dates thereof, except by amendments, copies of which have been delivered to Buyer.  Each such document to which Seller is a party has been duly executed and delivered by Seller and is in full force and effect, and no default or material breach has occurred and is continuing thereunder.

 

Section 3.15                                      Taxes.  Seller and its Subsidiaries have timely filed all tax returns that are required to be filed by them and have paid all taxes, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided.  The charges, accruals and reserves on the books of Seller and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of Seller, adequate.

 

Section 3.16                                      Investment Company.  Neither Seller nor any of its 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 3.16.

 

Section 3.17                                      Chief Executive Office; Jurisdiction of Organization.  On the Closing Date, Seller’s chief executive office, is, and has been, located at 3043 Townsgate Road, Westlake Village, CA 91361.  On the Effective Date, Seller’s jurisdiction of organization is the State of Delaware.  Seller shall provide Buyer with thirty (30) 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 (5) 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.

 

Section 3.18                                      Location of Books and Records.  The location where Seller keeps its books and records, including all computer tapes and records relating to the Repurchase Assets is its chief executive office.

 

Section 3.19                                      ERISA.  Each Plan to which Seller or its 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.

 

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Section 3.20                                      Financing of Note and Additional Balances.  Each Transaction will be used to purchase the Note and one or more Additional Balances relating thereto, which Note will be conveyed and/or sold by Seller to Buyer.

 

Section 3.21                                      Agreements.  Neither Seller nor any Subsidiary of Seller is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 3.05 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.

 

Section 3.22                                      Other Indebtedness.  All Indebtedness (other than Indebtedness evidenced by this Agreement) of Seller existing on the Closing Date is listed on Exhibit B hereto (the “Existing Indebtedness”).

 

Section 3.23                                      No Reliance.  Seller 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.  Seller is not 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.

 

Section 3.24                                      Plan Assets.  Seller is not 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 Assets are not “plan assets” within the meaning of 29 CFR § 2510.3 101 as amended by Section 3(42) of ERISA, in Seller’s hands, and transactions by or with Seller are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

 

Section 3.25                                      No Prohibited Persons.  Neither 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”).

 

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Section 3.26                                      Compliance with 1933 Act.  Neither Seller nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Note, any interest in the Note or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Note, any interest in the Note or any other similar security from, or otherwise approached or negotiated with respect to the Note, any interest in the Note 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 Note under the 1933 Act or which would render the disposition of the Note a violation of Section 5 of the 1933 Act or require registration pursuant thereto.

 

ARTICLE IV

 

CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST

 

Section 4.01                                      Ownership.  Upon payment of the Purchase Price, Buyer shall become the sole owner of the Purchased Assets, free and clear of all liens and encumbrances.

 

Section 4.02                                      Security Interest.

 

(a)                                 Although the parties intend (other than for U.S. federal tax purposes) 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 its Obligations and hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Primary Repurchase Assets”:

 

(i)                                     the Note identified on the Asset Schedule;

 

(ii)                                  all rights to reimbursement or payment of the Note and/or amounts due in respect thereof under the Note identified on the Asset Schedule;

 

(iii)                               all records, instruments or other documentation evidencing any of the foregoing;

 

(iv)                              all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including, without limitation, all of Seller’s rights, title and interest in and under the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement); and

 

(v)                                 any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.

 

(b)                                 Seller hereby assigns, pledges, conveys and grants a security interest in all of its right, title and interest in, to and under the Repurchase Assets to Buyer to secure the Obligations.  Seller agrees to mark its computer records, tapes and other electronic medium to evidence the interests granted to Buyer hereunder.

 

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(c)                                  Buyer and Seller hereby agree that in order to further secure Seller’s Obligations hereunder, Seller hereby grants to Buyer a security interest in (i) as of the Closing Date, Seller’s rights (but not its obligations) under the Program Agreements including without limitation any rights to receive payments thereunder or any rights to collateral thereunder whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Rights”) and (ii) all collateral however defined or described under the Program Agreements to the extent not otherwise included under the definitions of Primary Repurchase Assets or Repurchase Rights (such collateral, “Additional Repurchase Assets,” and collectively with the Primary Repurchase Assets and the Repurchase Rights, the “Repurchase Assets”).

 

(d)                                 Seller hereby delivers an irrevocable instruction to the buyer under the Repurchase Documents that upon receipt of notice of an Event of Default under this Agreement, the buyer thereunder is authorized and instructed to remit to Buyer hereunder directly any amounts otherwise payable to Seller and to deliver to Buyer all collateral otherwise deliverable to Seller.  In furtherance of the foregoing, upon repayment of the outstanding purchase price under the Mortgage Loan Repurchase Agreement and termination of all obligations of the buyer thereunder or other termination of the Repurchase Documents following repayment of all obligations thereunder that the Repurchase Document buyer is hereby instructed to deliver to Buyer hereunder any collateral (as such term may be defined under the Repurchase Documents) then in its possession or control.

 

(e)                                  The foregoing provisions of this Section 4.02 are intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement and the Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

 

Section 4.03                                      Further Documentation.  At any time and from time to time, upon the written request of Buyer, and at the sole expense of Seller, Seller will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as Buyer may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any applicable jurisdiction with respect to the Liens created hereby.  Seller also hereby authorizes Buyer to file any such financing or continuation statement to the extent permitted by applicable law.

 

Section 4.04                                      Changes in Locations, Name, etc.  Seller shall not (a) change the location of its chief executive office/chief place of business from that specified in Section 3.17 or (b) change its name or identity, unless it shall have given Buyer at least thirty (30) days’ prior written notice thereof and shall have delivered to Buyer all Uniform Commercial Code financing statements and amendments thereto as Buyer shall request and taken all other actions deemed necessary by Buyer to continue its perfected status in the Repurchase Assets with the same or better priority.

 

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Section 4.05                                      Performance by Buyer of Seller’s Obligations.  If Seller fails to perform or comply with any of its agreements contained in the Program Agreements and Buyer may itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable (under the circumstances) out-of-pocket expenses of Buyer actually incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Pricing Rate shall be payable by Seller to Buyer on demand and shall constitute Obligations.  Such interest shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.

 

Section 4.06                                      Proceeds.  If an Event of Default shall occur and be continuing, (a) all proceeds of Repurchase Assets received by Seller consisting of cash, checks and other liquid assets readily convertible to cash items shall be held by Seller in trust for Buyer, segregated from other funds of Seller, and shall forthwith upon receipt by Seller be turned over to Buyer in the exact form received by Seller (duly endorsed by Seller to Buyer, if required) and (b) any and all such proceeds received by Buyer (whether from Seller or otherwise) may, in the sole discretion of Buyer, be held by Buyer as collateral security for, and/or then or at any time thereafter may be applied by Buyer against, the Obligations (whether matured or unmatured), such application to be in such order as Buyer shall elect.  Any balance of such proceeds remaining after the Obligations shall have been paid in full and this Agreement shall have been terminated shall be paid over to Seller or to whomsoever may be lawfully entitled to receive the same.

 

Section 4.07                                      Remedies.  If an Event of Default shall occur and be continuing, Buyer may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Uniform Commercial Code (including without limitation, Buyer’s rights to a strict foreclosure under Section 9-620 of the Uniform Commercial Code).  Without limiting the generality of the foregoing, Buyer may seek the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of Seller or any of Seller’s property.  Without limiting the generality of the foregoing, Buyer may terminate the Participation Interest in accordance with the Participation Agreement.  Buyer without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required under this Agreement or by law referred to below) to or upon Seller or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Repurchase Assets, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Repurchase Assets or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of Buyer or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  Buyer shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Repurchase Assets so sold, free of any right or equity of redemption in Seller, which right or equity is hereby waived or released.  Seller further agrees, at Buyer’s request, to assemble the Repurchase Assets and make it available to Buyer at places which Buyer shall reasonably select, whether at Seller’s premises or elsewhere.  Buyer shall apply the net proceeds of any such collection, recovery, receipt,

 

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appropriation, realization or sale, after deducting all reasonable (under the circumstances) out-of-pocket costs and expenses of every kind actually incurred therein or incidental to the care or safekeeping of any of the Repurchase Assets or in any way relating to the Repurchase Assets or the rights of Buyer hereunder, including without limitation reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as Buyer may elect, and only after such application and after the payment by Buyer of any other amount required or permitted by any provision of law, including without limitation Section 9-615 of the Uniform Commercial Code, need Buyer account for the surplus, if any, to Seller.  To the extent permitted by applicable law, Seller waives all claims, damages and demands it may acquire against Buyer arising out of the exercise by Buyer of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of Buyer.  If any notice of a proposed sale or other disposition of Repurchase Assets shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.  Seller shall remain liable for any deficiency (plus accrued interest thereon as contemplated herein) if the proceeds of any sale or other disposition of the Repurchase Assets are insufficient to pay the Obligations and the fees and disbursements in amounts reasonable under the circumstances, of any attorneys employed by Buyer to collect such deficiency.

 

Section 4.08                                      Limitation on Duties Regarding Preservation of Repurchase Assets.  Buyer’s duty with respect to the custody, safekeeping and physical preservation of the Repurchase Assets in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same manner as Buyer deals with similar property for its own account.  Neither Buyer nor any of its directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Repurchase Assets or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Repurchase Assets upon the request of Seller or otherwise.

 

Section 4.09                                      Powers Coupled with an Interest.  All authorizations and agencies herein contained with respect to the Repurchase Assets are irrevocable and powers coupled with an interest.

 

Section 4.10                                      Release of Security Interest.  Upon the latest to occur of (a) the repayment to Buyer of all Obligations hereunder, and (b) the occurrence of the Termination Date, Buyer shall release its security interest in any remaining Repurchase Assets hereunder and shall promptly execute and deliver to Seller such documents or instruments as Seller shall reasonably request to evidence such release.

 

Section 4.11                                      Reinstatement.  All security interests created by this Article IV shall continue to be effective, or be reinstated, as the case may be, if at any time any payment, or any part thereof, of any Obligation of Seller is rescinded or must otherwise be restored or returned by the 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 if such release had not been made.

 

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ARTICLE V

 

CONDITIONS PRECEDENT

 

Section 5.01                                      Initial Transaction.  The obligation of Buyer to enter into Transactions with the Seller hereunder is subject to the satisfaction, immediately prior to or concurrently with the entering into such Transaction, of the condition precedent that Buyer shall have received all of the following items, each of which shall be satisfactory to Buyer and its counsel in form and substance:

 

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

 

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

 

(c)                                  Organizational Documents.  A certificate of the corporate secretary of Seller in form and substance acceptable to Buyer, attaching certified copies of Seller’s certificate of formation, operating agreement and corporate 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.

 

(d)                                 Good Standing Certificate.  A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date ten (10) Business Days prior to the Closing Date.

 

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

 

(f)                                   Fees.  Buyer shall have received payment in full of all fees and Expenses (including, without limitation the Commitment Fee) which are payable hereunder to Buyer on or before such date.

 

Section 5.02                                      All Transactions.  The obligation of Buyer to enter into each Transaction pursuant to this Agreement is subject to the following conditions precedent:

 

(a)                                 [Reserved].

 

(b)                                 Transaction Notice and Asset Schedule.  In accordance with Section 2.02 hereof, Buyer shall have received from Seller a Transaction Notice with an updated Asset Schedule which includes the Note and any Additional Balance, if applicable, related to a proposed Transaction hereunder on such Business Day.

 

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(c)                                  No Margin Deficit.  After giving effect to each new Transaction, the aggregate outstanding amount of the Purchase Price shall not exceed the Asset Value of the Note then in effect.

 

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

 

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

 

(f)                                   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).

 

(g)                                  Note.  Buyer shall have received the Note and evidence of the Additional Balances relating to any Purchased Assets, which is in form and substance satisfactory to Buyer in its sole discretion.

 

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

 

(A)                               Buyer’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 “lending market” for financing debt obligations secured by mortgage loans or servicing receivables or securities backed by mortgage loans or servicing receivables or an event or events shall have occurred resulting in Buyer not being able to finance the Note through the “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or

 

(C)                               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.

 

(i)                                     Fees.  Buyer shall have received payment in full of all fees and Expenses (including, without limitation the Commitment Fee) which are payable hereunder to Buyer on or before such date.

 

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Section 5.03                                      Closing Subject to Conditions Precedent.  The obligation of the Buyer to purchase the Note is subject to the satisfaction on or prior to the Closing Date of the following conditions (any or all of which may be waived by the Buyer):

 

(a)                                 Performance by the Issuer and PLS.  All the terms, covenants, agreements and conditions of the Transaction Documents to be complied with, satisfied, observed and performed by the Issuer, and PLS on or before the Closing Date shall have been complied with, satisfied, observed and performed in all material respects.

 

(b)                                 Representations and Warranties.  Each of the representations and warranties of the Issuer and PLS made in the Transaction Documents shall be true and correct in all material respects as of the Closing Date (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof and except to the extent they expressly relate to an earlier or later time).

 

(c)                                  Officer’s Certificate.  The Administrative Agent, the Buyer and the Indenture Trustee shall have received in form and substance reasonably satisfactory to the Administrative Agent an officer’s certificate from PLS and a certificate of an Authorized Officer of the Issuer, dated the Closing Date, each certifying to the satisfaction of the conditions set forth in the preceding paragraphs (a) and (b), in each case together with incumbency, by-laws, resolutions and good standing.

 

(d)                                 Opinions of Counsel to the Issuer and PLS.  Counsel to the Issuer and PLS shall have delivered to the Administrative Agent, the Buyer and the Indenture Trustee favorable opinions, dated the Closing Date and satisfactory in form and substance to the Administrative Agent and its counsel, relating to corporate matters, enforceability, true sale, non-consolidation and perfection and an opinion as to which state’s law applies to security interest and perfection matters.  In addition to the foregoing, PLS, as servicer, shall have caused its counsel to deliver to the Issuer, the Buyer, as purchaser of the Note hereunder, the Administrative Agent and the Indenture Trustee an opinion as to certain tax matters dated as of the Closing Date, satisfactory in form and substance to the Administrative Agent, the Buyer and their respective counsel.

 

(e)                                  Officer’s Certificate of Indenture Trustee.  The Administrative Agent and the Buyer shall have received in form and substance reasonably satisfactory to the Administrative Agent an Officer’s Certificate from the Indenture Trustee, dated the Closing Date, with respect to the Base Indenture, together with incumbency and good standing.

 

(f)                                   Opinions of Counsel to the Indenture Trustee.  Counsel to the Indenture Trustee shall have delivered to the Administrative Agent and the Buyer a favorable opinion dated the Closing Date and reasonably satisfactory in form and substance to the Administrative Agent and its counsel related to the enforceability of the Base Indenture.

 

(g)                                  Opinions of Counsel to the Owner Trustee.  Delaware counsel to the Owner Trustee of the Issuer shall have delivered to the Administrative Agent and the Buyer favorable opinions regarding the formation, existence and standing of the Issuer and of the Issuer’s execution, authorization and delivery of each of the Transaction Documents to which it is a party and such other matters as the Administrative Agent and the Buyer may reasonably request, dated the Closing Date and reasonably satisfactory in form and substance to the Administrative Agent and the Buyer and their respective counsel.

 

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(h)                                 Filings and Recordations.  The Administrative Agent, the Buyer and the Indenture Trustee shall have received evidence reasonably satisfactory to the Administrative Agent of (i) the completion of all recordings, registrations and filings as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect or evidence: (A) the assignment by PLS, as Seller, to the Issuer of the ownership interest in the Collateral conveyed pursuant to the PC Repurchase Agreement and the proceeds thereof and (ii) the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect or evidence the grant of a first priority perfected security interest in the Issuer’s ownership interest in the Collateral in favor of the Indenture Trustee, subject to no Liens prior to the Lien created by the Base Indenture.

 

(i)                                     Documents.  The Administrative Agent, the Buyer and the Indenture Trustee shall have received a duly executed counterpart of each of the Transaction Documents (including the Fee Letter related to the Note), in form acceptable to the Buyer, the Note and each and every document or certification delivered by any party in connection with any such Transaction Documents or the Note, and each such document shall be in full force and effect.

 

(j)                                    Actions or Proceedings.  No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by the Transaction Documents, the Note and the documents related thereto in any material respect.

 

(k)                                 Approvals and Consents.  All Governmental Actions of all Governmental Authorities required with respect to the transactions contemplated by the Transaction Documents, the Note and the documents related thereto shall have been obtained or made.

 

(l)                                     Fees, Costs and Expenses.  Buyer shall have received payment in full of all fees and Expenses (including, without limitation the Commitment Fee) which are payable hereunder to Buyer on or before the Closing Date, and the fees, costs and expenses payable by the Issuer and PLS on or prior to the Closing Date pursuant to this Agreement or any other Transaction Document shall have been paid in full.

 

(m)                             [Reserved].

 

(n)                                 Other Documents.  PLS shall have furnished to the Administrative Agent, the Buyer and the Indenture Trustee such other opinions, information, certificates and documents as the Administrative Agent may reasonably request.

 

(o)                                 MSR Valuation Agent.  PLS shall have engaged the MSR Valuation Agent pursuant to an agreement reasonably satisfactory to the Administrative Agent.

 

(p)                                 Proceedings in Contemplation of Sale of the Note.  All actions and proceedings undertaken by the Issuer and PLS in connection with the issuance and sale of the Note as herein contemplated shall be satisfactory in all respects to the Administrative Agent, the Buyer and their respective counsel.

 

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(q)                                 Advance Rate Reduction Event, Servicer Termination Events, Events of Default and Funding Interruption Events.  No Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event shall then be occurring.

 

(r)                                    [Reserved].

 

(s)                                   Satisfaction of Conditions.  Each of the Funding Conditions shall have been satisfied.

 

If any condition specified in this Section 5.03 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Buyer by notice to PLS at any time at or prior to the Closing Date, and the Buyer shall incur no liability as a result of such termination.

 

ARTICLE VI

 

COVENANTS

 

Seller covenants and agrees that until the payment and satisfaction in full of all Obligations, whether now existing or arising hereafter, shall have occurred:

 

Section 6.01                                      Litigation.  Seller 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 or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim individually or in the aggregate in an amount greater than $10,000,000, or (iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect.  On the fifth (5th) day of each calendar month (or if such day is not a Business Day, the next succeeding Business Day), Seller will provide to Buyer a litigation docket listing 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 or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority.  Seller will promptly provide notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.

 

Section 6.02                                      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 entity; and provided further, that if after giving effect thereto, no Default would exist hereunder.

 

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Section 6.03                                      Weekly Reporting.  Seller shall at all times maintain a current list (which may be stored in electronic form) of the Note and Additional Balances.  Seller shall deliver to Buyer on the third Business Day of each week (the “Weekly Report Date”) a cumulative Asset Schedule, each of which, when so delivered, shall replace the current Asset Schedule and which may be delivered in electronic form acceptable to Buyer.  Each such updated Asset Schedule shall indicate the outstanding VFN Principal Balance of the Note as of the close of the preceding week.  As of each Weekly Report Date, Seller hereby certifies, represents and warrants to Buyer that each such updated Asset Schedule is true, complete and correct in all material respects.

 

Section 6.04                                      No Adverse Claims.  Seller warrants and will defend the right, title and interest of Buyer in and to all Purchased Assets against all adverse claims and demands.

 

Section 6.05                                      Assignment.  Except as permitted herein, Seller shall not sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except pursuant to the Program Agreements), any of the Purchased Assets or any interest therein, provided that this Section 6.06 shall not prevent any transfer of Purchased Assets in accordance with the Program Agreements.

 

Section 6.06                                      Security Interest.  Seller shall do all things necessary to preserve the Purchased 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 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 Assets or any Program Agreement and Seller shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets and any Program Agreement.

 

Section 6.07                                      Records.

 

(a)                                 Seller shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Assets in accordance with industry custom and practice for assets similar to the Purchased Assets, including those maintained pursuant to Section 6.08, and all such Records shall be in Seller’s possession unless Buyer otherwise approves.  Seller will maintain all such Records in good and complete condition in accordance with industry practices for assets similar to the Purchased Assets and preserve them against loss.

 

(b)                                 For so long as Buyer has an interest in or lien on any Purchased Assets, 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.

 

(c)                                  Upon reasonable advance notice from Buyer, Seller shall (x) make any and all such Records available to 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.

 

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Section 6.08                                      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 Assets to Buyer.

 

Section 6.09                                      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.

 

Section 6.10                                      Material Change in Business.  Seller shall not make any material change in the nature of its business as carried on at the Closing Date.

 

Section 6.11                                      Distributions.  If an Event of Default has occurred and is continuing, Seller shall not 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.

 

Section 6.12                                      Applicable Law.  Seller shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority.

 

Section 6.13                                      Existence.  Seller shall preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises.

 

Section 6.14                                      Chief Executive Office; Jurisdiction of Organization.  Seller shall not move its chief executive office from the address referred to in Section 3.17 or change its jurisdiction of organization from the jurisdiction referred to in Section 3.17 unless it shall have provided Buyer at least thirty (30) days’ prior written notice of such change.

 

Section 6.15                                      Taxes.  Seller 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.

 

Section 6.16                                      Transactions with Affiliates.  Other than the purchase of the Note, 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 (a) does not result in a Default hereunder, (b) is in the ordinary course of Seller’s business and (c) is 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 6.16 to any Affiliate.

 

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Section 6.17                                      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.

 

Section 6.18                                      Indebtedness.  Seller shall not incur any additional material Indebtedness other than (i) the Existing Indebtedness specified on Exhibit B hereto; (ii) Indebtedness incurred with Buyer or its Affiliates; (iii) Indebtedness incurred in connection with new or existing secured lending facilities and (iv) usual and customary accounts payable for a mortgage company), without the prior written consent of Buyer.

 

Section 6.19                                      True and Correct Information.  All information, reports, exhibits, schedules, financial statements or certificates of Seller, any Affiliate thereof or any of their officers furnished to Buyer hereunder and during Buyer’s diligence of Seller are and will be true and complete in all material respects 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.

 

Section 6.20                                      No Pledge.  Except as contemplated herein, Seller shall not pledge, grant a security interest or assign any existing or future rights to service any of the Repurchase Assets or pledge or grant to any other Person any security interest in the Note.

 

Section 6.21                                      Plan Assets.  Seller shall not 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 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 to or with Seller 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.

 

Section 6.22                                      Sharing of Information.  Seller shall allow Buyer to exchange information related to Seller and the Transactions hereunder with third party lenders and Seller shall permit each third party lender to share such information with Buyer.

 

Section 6.23                                      Modification of the Base Indenture and Series 2016-MSRVF1 Indenture Supplement.  Seller shall not consent with respect to any of the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement related to the Purchased Assets, to (i) the modification, amendment or termination of such the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, (ii) the waiver of any provision of the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, or (iii) the resignation of PLS as servicer under the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, or the assignment, transfer, or material delegation of any of its rights or obligations, under such the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, without the prior written consent of Buyer exercised in Buyer’s sole discretion.

 

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Section 6.24                                      Reporting Requirements.

 

(a)                                 Seller 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, (ii) promptly, notice of the occurrence of (1) any Event of Default hereunder; (2) any default or material breach by Seller of any obligation under any Program Agreement or any material contract or agreement of Seller or (3) the occurrence of any 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 and (iii) the following:

 

(1)                                 as soon as available and in any event within forty (40) calendar days after the end of each calendar month, the unaudited balance sheet of Seller, as at the end of such period and the related unaudited consolidated statements of income for Seller 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, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

 

(2)                                 as soon as available and in any event within forty (40) calendar days after the end of each calendar quarter, the unaudited cash flow statements of Seller, as at the end of 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, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

 

(3)                                 as soon as available and in any event within ninety (90) days after the end of each fiscal year of Seller, the balance sheet of Seller, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for Seller for such year, setting forth in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion and the scope of audit shall be acceptable to Buyer in its sole discretion, shall have no “going concern” qualification and shall state that said consolidated financial statements or financial statements, as applicable, fairly present the consolidated financial condition or financial condition, as applicable, and results of operations of Seller as at the end of, and for, such fiscal year in accordance with GAAP;

 

(4)                                 such other prepared statements that Buyer may reasonably request;

 

(5)                                 [reserved];

 

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(6)                                 from time to time such other information regarding the financial condition, operations, or business of Seller as Buyer may reasonably request;

 

(7)                                 as soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of Seller has knowledge of the occurrence of any ERISA Event of Termination, stating the particulars of such ERISA Event of Termination in reasonable detail;

 

(8)                                 as soon as reasonably possible, notice of any of the following events:

 

a.                                      any material dispute, litigation, investigation, proceeding or suspension between Seller on the one hand, and any Governmental Authority or any Person;

 

b.                                      any material change in accounting policies or financial reporting practices of Seller;

 

c.                                       any material issues raised upon examination of Seller or Seller’s facilities by any Governmental Authority;

 

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

 

e.                                       promptly upon receipt of notice or knowledge of 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 Assets; and

 

f.                                        any other event, circumstance or condition that has resulted, or has a reasonable possibility of resulting, in a Material Adverse Effect with respect to Seller.

 

(b)                                 Officer’s Certificates.  Seller will furnish to Buyer, at the time Seller furnishes each set of financial statements pursuant to Section 6.24(a)(iii)(1), (2) or (3) above, an Officer’s Compliance Certificate of Seller in the form of Exhibit A to the MLRA Pricing Side Letter.

 

(c)                                  Other.  Seller shall deliver to Buyer any other reports or information reasonably requested by Buyer or as otherwise required pursuant to this Agreement and the Indenture (including, without limitation, all reports and information delivered by the Issuer, the Administrator or the Indenture Trustee relating to the Note).

 

(a)                                          Regulatory Reporting Compliance.  Seller shall, on or before the last Business Day of the fifth (5th) month following the end of each of Seller’s fiscal years (December 31), beginning with the fiscal year ending in 2016, deliver to Buyer a copy of the results of any

 

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Uniform Single Attestation Program for Mortgage Bankers or an Officer’s Certificate that satisfies the requirements of Item 1122(a) of Regulation AB, an independent public accountant’s report that satisfies the requirements of Item 1123 of Regulation AB, or similar review conducted on Seller by its accountants, and such other reports as Seller may prepare relating to its servicing functions as Seller.

 

Section 6.25                                      Liens on Substantially All Assets.  Seller shall not grant a security interest to any Person other than Buyer or an Affiliate of Buyer in substantially all assets of Seller unless Seller has entered into an amendment to this Agreement that grants to Buyer a pari passu security interest on such assets.

 

Section 6.26                                      Litigation Summary.  On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Buyer a true and correct summary of all material actions, notices, proceedings and investigations pending with respect to which Seller has received service of process or other form of notice or, to the best of Seller’s knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal.

 

Section 6.27                                      Hedging.  On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide a true and correct summary of all interest rate protection agreements entered into or maintained by Seller.

 

Section 6.28                                      MSR Valuation.  On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide a detailed summary of the Market Value Percentage of MSRs most recently delivered in the Market Value Report.

 

Section 6.29                                      Most Favored Status. Seller and Buyer each agree that should Seller or any Affiliate thereof enter into a repurchase agreement or credit facility with any Person other than Buyer or an Affiliate of Buyer which by its terms provides any of the following (each, a “More Favorable Agreement”):

 

(a)                                 more favorable terms with respect to any guaranties or financial covenants, including without limitation covenants covering the same or similar subject matter set forth or referred to in Section 6.11 hereof and Section 2 of the Pricing Side Letter;

 

(b)                                 a security interest to any Person other than Buyer or an Affiliate of Buyer in substantially all assets of Seller or any Affiliate thereof; or

 

(c)                                  a requirement that Seller has added or will add any Person other than Buyer or an Affiliate of Buyer as a loss payee under Seller’s Fidelity Insurance;

 

then the terms of this Agreement shall be deemed automatically amended to include such more favorable terms contained in such More Favorable Agreement, such that such terms operate in favor of Buyer or an Affiliate of Buyer; provided, that in the event that such More Favorable Agreement is terminated, upon notice by Seller to Buyer of such termination, the original terms of this Agreement shall be deemed to be automatically reinstated. Seller and Buyer further agree to execute and deliver any new guaranties, agreements or amendments to this Agreement

 

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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 or any Affiliate thereof entering into a repurchase agreement or other credit facility with any Person other than Buyer, Seller shall deliver to Buyer a true, correct and complete copy of such repurchase agreement, loan agreement, guaranty or other financing documentation.

 

ARTICLE VII

 

DEFAULTS/RIGHTS AND REMEDIES OF BUYER UPON DEFAULT

 

Section 7.01                                      Events of Default.  Each of the following events or circumstances shall constitute an “Event of Default”:

 

(a)                                 Payment Failure.  Failure of Seller to (i) make any payment (which failure continues for a period of two (2) Business Days following written notice (which may be in electronic form) from Buyer) 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, in each case 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 2.05 hereof.

 

(b)                                 Cross Default.  Seller or Affiliates thereof shall be in default under (i) any Program Agreement or any Repurchase Document; provided that any such default under the Indenture shall constitute an “Event of Default” only if it continues unremedied for a period of two (2) Business Days after a Responsible Officer of the Seller obtains actual knowledge of such failure, or receives written notice from Buyer of such default; (ii) any Indebtedness, in the aggregate, in excess of $1 million of Seller 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 (iii) any other contract or contracts, in the aggregate in excess of $1 million to which Seller 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 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 Assets to any person other than Buyer.

 

(d)                                 Insolvency.  An Act of Insolvency shall have occurred with respect to Seller or any Affiliate thereof.

 

(e)                                  Material Adverse Change.  Any material adverse change in the Property, business, financial condition or operations of Seller or any of its 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.

 

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(f)                                   Immediate Breach of Representation or Covenant or Obligation.  A breach by Seller of any of the representations, warranties or covenants or obligations set forth in Sections 3.01 (Seller Existence), 3.07 (Solvency), 3.12 (Material Adverse Change), Section 3.22 (Other Indebtedness), Section 6.02 (Prohibition of Fundamental Changes), Section 6.13 (Existence), Section 6.17 (Guarantees), Section 6.18 (Indebtedness), Section 6.20 (No Pledge) or Section 6.21 (Plan Assets) of this Agreement.

 

(g)                                  Additional Breach of Representation or Covenant.  A material breach by Seller of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 7.01(f) above), if such breach is not cured within five (5) Business Days or, in the case of a breach of Section 6.03, three (3) Business Days.

 

(h)                                 Change in Control.  The occurrence of a Change in Control.

 

(i)                                     Failure to Transfer.  Seller fails to transfer a material portion of the Purchased Assets to Buyer on the applicable Purchase Date (provided Buyer has tendered the related Purchase Price).

 

(j)                                    Judgment.  A final judgment or judgments for the payment of money in excess of $10,000,000 shall be rendered against Seller or any of their 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 thirty (30) days from the date of entry thereof.

 

(k)                                 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 or any Affiliate thereof, or shall have taken any action to displace the management of Seller or any Affiliate thereof or to curtail its authority in the conduct of the business of Seller or any Affiliate thereof, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller or Affiliate as an issuer, buyer or a seller/servicer of mortgage loans or securities backed thereby, and such action provided for in this subparagraph (l) shall not have been discontinued or stayed within thirty (30) days.

 

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

 

(m)                             Security Interest.  This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Repurchase Assets purported to be covered hereby.

 

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

 

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(o)                                 Validity of Agreement.  For any reason, this Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or Seller or any Affiliate of Seller shall seek to disaffirm, terminate, limit or reduce its obligations hereunder or VFN Guarantor’s obligations under the VFN Guaranty.

 

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

 

(q)                                 PMH Documents.

 

(i)                                     Any material provision of any PMH Document shall at any time for any reason cease to be valid and binding or in full force and effect.

 

(ii)                                  PMH shall deny that it has any or further liability or obligation under any material provision of any PMH Document.

 

(iii)                               PLS or PMH shall fail to perform or observe any material covenant, term, obligation or agreement contained in any PMH Document or defaults in the performance or observance of any of its material obligations under any PMH Document and such default shall continue after the earlier of (x) the expiration of the grace period applicable thereto under such PMH Document and (y) two (2) Business Days.

 

(iv)                              The validity or enforceability of any material provision of any PMH Document shall be contested by any party thereto.

 

(v)                                 Any representation or warranty set forth on Schedule 1-C to the PC Repurchase Agreement shall be untrue in any material respect; unless in each case of clauses (i) through (v) above, the related Purchased MSR Excess Spread subject to the PMH Document is repurchased by PMH within two (2) Business Days following notice or knowledge thereof.

 

Section 7.02                                      No Waiver.  An Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing.

 

Section 7.03                                      Due and Payable.  Upon the occurrence of any Event of Default which has not been waived in writing by Buyer, Buyer may, by notice to Seller, declare all Obligations to be immediately due and payable, and any obligation of Buyer to enter into Transactions with Seller shall thereupon immediately terminate.  Upon such declaration, the Obligations shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding, except with respect to any Event of Default set forth in

 

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Section 7.01(d), in which case all Obligations shall automatically become immediately due and payable without the necessity of any notice or other demand, and any obligation of Buyer to enter into Transactions with Seller shall immediately terminate.  Buyer may enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by Buyer, whether under this Agreement or any other Program Agreement or afforded by applicable law.

 

Section 7.04                                      Fees.  The remedies provided for herein are cumulative and are not exclusive of any other remedies provided by law.  Seller agrees to pay to Buyer reasonable attorneys’ fees and reasonable legal expenses incurred in enforcing Buyer’s rights, powers and remedies under this Agreement and each other Program Agreement.

 

Section 7.05                                      Default Rate.  Without regard to whether Buyer has exercised any other rights or remedies hereunder, if an Event of Default shall have occurred and be continuing, the applicable Margin in respect of the Pricing Rate shall be increased, to the extent permitted by law, as set forth in clause (ii) of the definition of “Margin”.

 

ARTICLE VIII

 

ENTIRE AGREEMENT; AMENDMENTS
 AND WAIVERS; SEPARATE ACTIONS BY BUYER

 

Section 8.01                                      Entire Agreement.  This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the parties hereto and supersedes any and all prior or contemporaneous agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or any of the Program Agreements, nor consent to the departure by Seller therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which it is given.

 

Section 8.02                                      Waivers, Separate Actions by Buyer.  Any amendment or waiver effected in accordance with this Article VIII shall be binding upon Buyer and Seller; and Buyer’s failure to insist upon the strict performance of any term, condition or other provision of this Agreement or any of the Program Agreements, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by Buyer of any such term, condition or other provision or Default or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term, condition or other provision or of any such Default or Event of Default shall not affect or alter this Agreement or any of the Program Agreements, and each and every term, condition and other provision of this Agreement and the Program Agreements shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent Default or Event of Default in connection therewith.  An Event of Default hereunder or under any of the Program Agreements shall be deemed to be continuing unless and until waived in writing by Buyer.

 

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ARTICLE IX

 

SUCCESSORS AND ASSIGNS

 

Section 9.01                                      Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, any portion thereof, or any interest therein.  Seller shall not have the right to assign all or any part of this Agreement or any interest herein without the prior written consent of Buyer.

 

Section 9.02                                      Participations and Transfers.

 

(a)                                 Buyer may in accordance with applicable law at any time sell to one or more banks or other entities (“Participants”) participating interests in all or a portion of Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) Seller has consented to such sale; provided, however, Seller’s consent shall not be required in the event that (A) such Participant is an Affiliate of Buyer or (B) an Event of Default has occurred; (ii) each such sale shall represent an interest in a Transaction in a Purchase Price of $1,000,000 or more and (iii) other than with respect to a participating interest consisting of a pro rata interest in all payments due to Buyer under this Agreement and prior to an Event of Default Buyer receives an opinion of a nationally recognized tax counsel experienced in such matters that such sale will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.  In the event of any such sale by Buyer of participating interests to a Participant, Buyer shall remain a party to the Transaction for all purposes under this Agreement and Seller shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under this Agreement.

 

(b)                                 Buyer may in accordance with applicable law at any time assign, pledge, hypothecate, or otherwise transfer to one or more banks, financial institutions, investment companies, investment funds or any other Person (each, a “Transferee”) all or a portion of Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) Seller has consented to such assignment, pledge, hypothecation, or other transfer; provided, however, Seller’s consent shall not be required in the event that (A) such Transferee is an Affiliate of Buyer or (B) an Event of Default has occurred; (ii) absent an Event of Default, Buyer shall give at least ten days’ prior notice thereof to Seller; and (iii) that each such sale shall represent an interest in the Transactions in an aggregate Purchase Price of $1,000,000 or more and (iv) other than with respect to an assignment, pledge, hypothecation or transfer consisting of a pro rata interest in all payments due to Buyer under this Agreement and prior to an Event of Default Buyer received an opinion of a nationally recognized tax counsel experienced in such matters that such assignment, pledge, hypothecation or transfer will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.  In the event of any such assignment, pledge, hypothecation or transfer by Buyer of Buyer’s rights under this Agreement and the other Program Agreements, Seller shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under this Agreement.  Buyer (acting as agent for Seller) shall maintain at its address referred to in Section 10.05 a register (the “Register”) for the

 

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recordation of the names and addresses of Transferees, and the Purchase Price outstanding and Price Differential in the Transactions held by each thereof.  The entries in the Register shall be prima facie conclusive and binding, and Seller may treat each Person whose name is recorded in the Register as the owner of the Transactions recorded therein for all purposes of this Agreement.  No assignment shall be effective until it is recorded in the Register.

 

(c)                                  All actions taken by Buyer pursuant to this Section 9.02 shall be at the expense of Buyer.  Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by Seller.

 

Section 9.03                                      Buyer and Participant Register.

 

(a)                                 Subject to acceptance and recording thereof pursuant to paragraph (b) of this Section 9.03, from and after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of Buyer under this Agreement.  Any assignment or transfer by Buyer of rights or obligations under this Agreement that does not comply with this Section 9.03 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 9.02.

 

(b)                                 Seller or an agent of Seller shall maintain a register (the “Transaction Register”) on which it will record the Transactions entered into hereunder, and each assignment and acceptance and participation.  The Transaction Register shall include the names and addresses of Buyers (including all assignees, successors and Participants), and the Purchase Price of the Transactions entered into by Buyer.  Failure to make any such recordation, or any error in such recordation shall not affect Seller’s obligations in respect of such Transactions.  If Buyer sells a participation in any Transaction, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.01                               Survival.  This Agreement and the other Program Agreements and all covenants, agreements, representations and warranties herein and therein and in the certificates delivered pursuant hereto and thereto, shall survive the entering into of the Transaction and shall continue in full force and effect so long as any Obligations are outstanding and unpaid.

 

Section 10.02                               Indemnification.  Seller shall, and hereby agrees to, indemnify, defend and hold harmless Buyer, any Affiliate of Buyer and their respective directors, officers, agents, employees and counsel from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it is finally judicially determined to have resulted from their own gross negligence or willful misconduct) as a consequence of, or arising out of or by reason of any litigation, investigations, claims or

 

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proceedings which arise out of or are in any way related to, (i) this Agreement or any other Program Agreement or the transactions contemplated hereby or thereby, (ii) Seller’s servicing practices or procedures; (iii) any actual or proposed use by Seller of the proceeds of the Purchase Price, and (iv) any Default, Event of Default or any other breach by Seller of any of the provisions of this Agreement or any other Program Agreement, including, without limitation, amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing.  If and to the extent that any Obligations are unenforceable for any reason, Seller hereby agrees to make the maximum contribution to the payment and satisfaction of such Obligations which is permissible under applicable law.  Seller’s obligations set forth in this Section 10.02 shall survive any termination of this Agreement and each other Program Agreement and the payment in full of the Obligations, and are in addition to, and not in substitution of, any other of its obligations set forth in this Agreement or otherwise.  In addition, Seller shall, upon demand, pay to Buyer all costs and Expenses (including the reasonable fees and disbursements of counsel) paid or incurred by Buyer in (i) enforcing or defending its rights under or in respect of this Agreement or any other Program Agreement, (ii) collecting the Purchase Price outstanding, (iii) foreclosing or otherwise collecting upon any Repurchase Assets and (iv) obtaining any legal, accounting or other advice in connection with any of the foregoing.

 

Section 10.03                               Nonliability of Buyer.  The parties hereto agree that, notwithstanding any affiliation that may exist between Seller and Buyer, the relationship between Seller and Buyer shall be solely that of arms-length participants.  Buyer shall not have any fiduciary responsibilities to Seller.  Seller (i) agrees that Buyer shall not have any liability to Seller (whether sounding in tort, contract or otherwise) for losses suffered by Seller in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by this agreement, the other loan documents or any other agreement entered into in connection herewith or any act, omission or event occurring in connection therewith, unless it is determined by a judgment of a court that is binding on Buyer (which judgment shall be final and not subject to review on appeal), that such losses were the result of acts or omissions on the part of Buyer constituting gross negligence or willful misconduct and (ii) waives, releases and agrees not to sue upon any claim against Buyer (whether sounding in tort, contract or otherwise), except a claim based upon gross negligence or willful misconduct.  Whether or not such damages are related to a claim that is subject to such waiver and whether or not such waiver is effective, Buyer shall not have any liability with respect to, and Seller hereby waives, releases and agrees not to sue upon any claim for, any special, indirect, consequential or punitive damages suffered by Seller in connection with, arising out of, or in any way related to the transactions contemplated or the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or therewith or any act, omission or event occurring in connection herewith or therewith, unless it is determined by a judgment of a court that is binding on Buyer (which judgment shall be final and not subject to review on appeal), that such damages were the result of acts or omissions on the part of Buyer, as applicable, constituting willful misconduct or gross negligence.

 

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Section 10.04                               Governing Law; Submission to Jurisdiction; Waivers.

 

(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 VFN Guaranty by, or recourse to, any direct or indirect parent or other Affiliate of Buyer.  THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

(b)                                 EACH OF THE PARTIES HERETO AND THE BUYER, BY THEIR ACCEPTANCE OF THE NOTE, HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(i)                                     SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

 

(ii)                                  CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

(iii)                               AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING;

 

(iv)                              AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

 

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(v)                                 WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY.

 

Section 10.05                               Notices.  Any and all notices (with the exception of Transaction Notices, 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.

 

If to Seller:

 

PennyMac Loan Services, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Pamela Marsh/Kevin Chamberlain

Phone Number:  (805) 330-6059/ (818) 746-2877

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

kevin.chamberlain@pnmac.com;

contract.finance@pnmac.com

 

with a copy to:

 

PennyMac Loan Services, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Jeff Grogin

Phone Number:  (818) 224-7050

E-mail:  jeff.grogin@pnmac.com

 

If to Buyer:

 

For Transaction Notice:

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 2nd floor

New York, NY  10010

Attention:  Christopher Bergs, Resi Mortgage Warehouse Ops

Phone:  212-538-5087

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

 

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with a copy to:

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, NY  10010

Attention:  Margaret Dellafera

Phone Number:  212-325-6471

Fax Number:  212-743-4810

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

 

For all other Notices:

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, NY 10010

Attention:  Margaret Dellafera

Phone Number:  212-325-6471

Fax Number:  212-743-4810

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

 

Section 10.06                               Severability.  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.  In case any provision in or obligation under this Agreement or any other Program Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

Section 10.07                               Section Headings.  The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or construction of any provision of this Agreement.

 

Section 10.08                               Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 10.09                               Periodic Due Diligence Review.  Seller acknowledges that Buyer has the right to perform continuing due diligence reviews with respect to Seller and the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agree that upon reasonable (but no less than five (5) Business Days’) prior written 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

 

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permitted during normal business hours, and in a manner that does not unreasonably interfere with the ordinary conduct of Seller’s business, to examine, inspect, and make copies and extracts of, any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Seller.  Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Assets.  Without limiting the generality of the foregoing, Seller acknowledges that Buyer may enter into a Transaction related to any Purchased Assets from Seller based solely upon the information provided by Seller to Buyer in the Asset 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 Purchased Assets related to a Transaction.  Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of Seller.

 

Section 10.10                               Hypothecation or Pledge of Repurchase Assets.  Buyer shall have free and unrestricted use of all Repurchase Assets and nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with all or a portion of the Repurchase Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating all or a portion of the Repurchase Assets; provided that prior to an Event of Default, such pledge, repledge, transfer, hypothecation or rehypothecation is treated as a financing or hedging transaction for U.S. federal income tax purposes or a pro rata interest in all payments due to Buyer under this Agreement; provided, further that other than with respect to a pro rata interest in all payments due to Buyer under this Agreement and prior to an Event of Default Buyer receives an opinion of a nationally recognized tax counsel experienced in such matters that such repurchase transaction, pledge, repledge, transfer, hypothecation or rehypothecation will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.

 

Section 10.11                               Non-Confidentiality of Tax Treatment.

 

(a)                                 This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyer or Seller, as applicable and shall be held by each party hereto, as applicable in strict confidence and shall not be disclosed to any third party without the written consent of Buyer or Seller, except for (i) disclosure to Buyer’s or Seller’s direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body.  Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreements, 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

 

50

 

(including, without limitation, the Pricing Rate, Purchase Price Percentage, Purchase Price and Commitment Fee) or other nonpublic business or financial information (including any sublimits) 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 Buyer.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, 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 Repurchase Assets and/or any applicable terms of this Agreement (the “Confidential Information”).  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 “GLB Act”), and Seller agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws.  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 GLB Act) of Buyer or any Affiliate of Buyer which 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.  Seller represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the GLB Act and of the applicable standards adopted pursuant thereto, as now or hereafter in effect.  Upon request, Seller will provide evidence reasonably satisfactory to allow Buyer to confirm that the providing party has satisfied its obligations as required under this Section 10.11.  Without limitation, this may include Buyer’s review of audits, summaries of test results, and other equivalent evaluations of Seller.  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 Seller by Buyer or such Affiliate.  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.

 

Section 10.12                               Set-off.  In addition to any rights and remedies of Buyer hereunder and by law, Buyer shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Seller 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 funds to Seller), 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 Buyer or any Affiliate thereof to or for the credit or the account of Seller or any Affiliate thereof.  Buyer agrees promptly to notify Seller after any such set off and application made by Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.

 

51

 

Section 10.13                               Intent.

 

(a)                                 The parties recognize that each Transaction is a “master netting 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 Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 7.03 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and Section 561 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 “securities contract,” within the meaning of Section 555 under the Bankruptcy Code, and a “master netting agreement,” within the meaning of Section 561 under the Bankruptcy Code.

 

(f)                                   It is the intention of the parties that, for U.S. federal income tax purposes and for accounting purposes, each Transaction constitute a financing, and that Seller be (except to the extent that Buyer shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes.  Unless prohibited by applicable law, Seller and Buyer shall treat the Transactions as described in the preceding sentence (including on any and all filings with any U.S. federal, state, or local taxing authority and agree not to take any action inconsistent with such treatment).

 

52

 

IN WITNESS WHEREOF, Seller and Buyer have caused this Master Repurchase Agreement to be executed and delivered by their duly authorized officers or trustees as of the date first above written.

 

	
 
    	
CREDIT SUISSE AG, CAYMAN   ISLANDS BRANCH, as Buyer
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick J. Hart
    
	
 
    	
 
    	
Name:
    	
Patrick J. Hart
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Erin McCutcheon
    
	
 
    	
 
    	
Name:
    	
Erin McCutcheon
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to MSRVF1 Master Repurchase Agreement]

 

 

	
 
    	
CREDIT SUISSE FIRST BOSTON   MORTGAGE CAPITAL LLC, as Administrative   Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dominic Obaditch
    
	
 
    	
 
    	
Name:
    	
Dominic Obaditch
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

[Signature Page to MSRVF1 Master Repurchase Agreement]

 

 

	
 
    	
PENNYMAC LOAN SERVICES, LLC,
    
	
 
    	
as Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pamela Marsh
    
	
 
    	
 
    	
Name:
    	
Pamela Marsh
    
	
 
    	
 
    	
Title:
    	
Managing Director,   Treasurer
    

 

[Signature Page to MSRVF1 Master Repurchase Agreement]

 

 

SCHEDULE 1

 

RESPONSIBLE OFFICERS — SELLER

 

SELLER AUTHORIZATIONS

 

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

 

Responsible Officers for execution of Program Agreements and amendments:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Responsible Officers for execution of Transaction Notices and day-to-day operational functions:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Schedule 1-1

 

SCHEDULE 2

 

ASSET SCHEDULE

 

	
Note
    	
 
    	
Initial Note
   Balance
    	
 
    	
Additional
   Balance(s)
    	
 
    	
Outstanding
   VFN Principal
   Balance
    	
 
    	
Maximum VFN
   Principal
   Balance
    
	
PNMAC GMSR ISSUER   TRUST, Class A-MSRVF1 Variable Funding Note
    	
 
    	
$
    	
741,859,396
    	
 
    	
$
    	
0
    	
 
    	
$
    	
741,859,396
    	
 
    	
$
    	
1,000,000,000
    
													

 

Schedule 2-1

 

SCHEDULE 3

 

BUYER ACCOUNT

 

Schedule 3-1

 

EXHIBIT A

 

FORM OF TRANSACTION NOTICE

 

Dated:  [         ]

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

Attention:  Dominic Obaditch

Email:  dominic.obaditch@credit-suisse.com

 

TRANSACTION NOTICE

 

Ladies and Gentlemen:

 

We refer to the Master Repurchase Agreement, dated as of December 19, 2016 (the “Agreement”), among PennyMac Loan Services, LLC (the “Seller”), Credit Suisse AG, Cayman Islands Branch (the “Buyer”) and Credit Suisse First Boston Mortgage Capital LLC (the “Administrative Agent”).  Each capitalized term used but not defined herein shall have the meaning specified in the Agreement.  This notice is being delivered by Seller pursuant to Section 2.02 of the Agreement.

 

Please be notified that Seller hereby irrevocably requests that the Buyer enter into the following Transaction(s) with the Seller as follows:

 

1.              Maximum VFN Principal Balance: [$           ]

 

2.              Initial Note Balance/Purchase Price requested: [$           ]

 

3.              Additional Balance/Purchase Price requested:  [$           ]

 

4.              Purchase Date: [         ]

 

5.              Repurchase Date: [        ]

 

6.              Pricing Rate / Repurchase Price: [$           ]

 

Seller requests that the proceeds of the Purchase Price be deposited in Seller’s account at        , ABA Number        , account number     , References:       , Attn:         .

 

Seller hereby represents and warrants that each of the representations and warranties made by Seller in each of the Program Agreements to which it is a party is true and correct in all material respects, in each case, on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date.  Attached hereto is a true and complete updated copy of the Asset Schedule.

 

Exhibit A-1

 

	
 
    	
PENNYMAC   LOAN SERVICES, LLC, as Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    

 

Exhibit A-2

 

Asset Schedule

 

	
Note
    	
 
    	
Initial Note
   Balance
    	
 
    	
Additional
   Balance(s)
    	
 
    	
Outstanding
   VFN Principal
   Balance
    	
 
    	
Maximum VFN
   Principal
   Balance
    
	
PNMAC GMSR ISSUER   TRUST, Class A-MSRVF1 Variable Funding Note
    	
 
    	
$
    	
[        ]
    	
 
    	
$
    	
[        ]
    	
 
    	
$
    	
[        ]
    	
 
    	
$
    	
[        ]
    
													

 

Exhibit A-3

 

EXHIBIT B

 

EXISTING INDEBTEDNESS

 

[See Attached]

 

Exhibit B-1

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