Document:

exv10w12

EXHIBIT 10.12

Master Repurchase Agreement
 

September 1996 Version

	 	 	 

	Dated as of:

	 	April 22, 2011
	 
	 	 
	Between:

	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES
	 
	 	 
	and

	 	DEUTSCHE BANK SECURITIES INC.

1. Applicability

From time to time the parties hereto may enter into transactions in which one party (“Seller”)
agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Securities 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
Annex I hereto and in any other annexes identified herein or therein as applicable hereunder.

2. Definitions

	(a)	 	“Act of Insolvency”, with respect to any party, (i) the commencement by such party as
debtor of any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian or similar official for
such party or any substantial part of its property, or the convening of any meeting of
creditors for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding against such
party, or another seeking such an appointment, or election, or the filing against a party of
an application for a protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B)
results in the entry of an order for relief, such an appointment, or election, the issuance of
such a protective decree or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days, (iii) the making by such party of a general assignment for the
benefit of creditors, or (iv) the admission in writing by such party of such party’s
inability to pay such party’s debts as they become due;

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	(b)	 	“Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to
Paragraph 4(a) hereof;
	 
	(c)	 	“Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained
by application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction
as of such date;
	 
	(d)	 	“Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage
(which may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in
the absence of any such agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction;
	 
	(e)	 	“Confirmation”, the meaning specified in Paragraph 3(b) hereof;
	 
	(f)	 	“Income”, with respect to any Security at any time, any principal thereof and all
interest, dividends or other distributions thereon;
	 
	(g)	 	“Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; 
	 
	 (h)	 	
“Margin Excess”, the meaning specified in Paragraph 4(b) hereof;
	 
	(i)	 	“Margin Notice Deadline”, the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof (or, in
the absence of any such agreement, the deadline for such purposes established in accordance
with market practice);
	 
	(j)	 	“Market Value”, with respect to any Securities as of any date, the price for such
Securities on such date obtained from a generally recognized source agreed to by the parties
or the most recent closing bid quotation from such a source, plus accrued Income to the extent
not included therein (other than any Income credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
	 
	(k)	 	“Price Differential”, with respect to any Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase
Price for such Transaction on a 360-day-per-year basis for the actual number of days during
the period commencing on (and including) the Purchase Date for such Transaction and ending on
(but excluding) the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
	 
	(l)	 	“Pricing Rate”, the per annum percentage rate for determination of the Price
Differential;
	 
	(m)	 	“Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street
journal (or, if more than one such rate is published, the average of such rates);
	 
	(n)	 	“Purchase Date”, the date on which Purchased Securities are to be transferred by Seller
to Buyer;
	 
	(o)	 	“Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree
otherwise, such price increased by the amount of any cash transferred by Buyer to Seller

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	 	 	pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by
Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations
under clause (ii) of Paragraph 5 hereof;
	 
	(p)	 	“Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The
term “Purchased Securities” with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude
Securities returned pursuant to Paragraph 4(b) hereof;
	 
	(q)	 	“Repurchase Date”, the date on which Seller is to repurchase the Purchased  Securities
from Buyer, including any date determined by application of the provisions of Paragraph 3(c)
or 11 hereof;
	 
	(r)	 	“Repurchase Price”, the price at which Purchased Securities 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 Price
Differential as of the date of such determination;
	 
	(s)	 	“Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Seller’s Margin Percentage to the Repurchase Price for
such Transaction as of such date;
	 
	(t)	 	“Seller’s Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and
Seller or, in the absence of any such agreement, the percentage obtained by dividing the
Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction.

3. Initiation; Confirmation; Termination

	(a)	 	An agreement to enter into a Transaction may be made orally or in writing at the initiation
of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased
Securities shall be transferred to Buyer or its agent against the transfer of the Purchase
Price to an account of Seller.
	 
	(b)	 	Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be
agreed, shall promptly deliver to the other party a written confirmation of each Transaction
(a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP
number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the
Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent with this Agreement. The
Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is made promptly after
receipt thereof. In the event of any conflict between the terms of such Confirmation and this
Agreement, this Agreement shall prevail.

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	(c)	 	In the case of Transactions terminable upon demand, such demand shall be made by Buyer
or Seller, no later than such time as is customary in accordance with market practice, by
telephone or otherwise on or prior to the business day on which such termination will be
effective. On the date specified in such demand, or on the date fixed for termination in the
case of Transactions having a fixed term, termination of the Transaction will be effected by
transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof
received by Buyer (and not previously credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase
Price to an account of Buyer.

4. Margin Maintenance

	(a)	 	If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Buyer is less than the aggregate
Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice
to Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash
or additional Securities reasonably acceptable to Buyer (“Additional Purchased Securities”),
so that the cash and aggregate Market Value of the Purchased Securities, including any such
Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer’s Margin
Amount (decreased by the amount of any Margin Deficit as of such date arising from any
Transactions in which such Buyer is acting as Seller).
	 
	(b)	 	If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Seller exceeds the aggregate
Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller
may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer
cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased
Securities, after deduction of any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller’s Margin Amount (increased by the amount of any
Margin Excess as of such date arising from any Transactions in which such Seller is acting as
Buyer).
	 
	(c)	 	If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at
or before the Margin Notice Deadline on any business day, the party receiving such notice
shall transfer cash or Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day. If any such notice is
given after the Margin Notice Deadline, the party receiving such notice shall transfer such
cash or Securities no later than the close of business in the relevant market on the next
business day following such notice.
	 
	(d)	 	Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as
shall be agreed upon by Buyer and Seller.
	 
	(e)	 	Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this
Paragraph may be exercised only where a Margin Deficit or a Margin Excess, as the case may be,
exceeds a specified dollar amount or a specified percentage of the Repurchase

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	 	 	Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and
Seller prior to entering into any such Transactions).
	 
	(f)	 	Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to
require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be
exercised whenever such a Margin Deficit or a Margin Excess exists with respect to any single
Transaction hereunder (calculated without regard to any other Transaction outstanding under
this Agreement).

5. Income Payments

Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in
respect of the Securities that is not otherwise received by Seller, to the full extent it would be
so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree
with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall
reasonably determine in its discretion), on the date such Income is paid or distributed either (i)
transfer to or credit to the account of Seller such Income with respect to any Purchased
Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the
Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the
preceding sentence (A) to the extent that such action would result in the creation of a Margin
Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or
Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of
Default with respect to Seller has occurred and is then continuing at the time such Income is paid
or distributed.

6. Security Interest

Although the parties intend that all Transactions hereunder be sales and purchases and not loans,
in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged
to Buyer as security for the performance by Seller of its obligations under each such
Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the
Purchased Securities with respect to all Transactions hereunder and all Income thereon and other
proceeds thereof.

7. Payment and Transfer

Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately
available funds. All Securities transferred by one party hereto to the other party (i) shall be
in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii)
shall be transferred by any other method mutually acceptable to Seller and Buyer.

8. Segregation of Purchased Securities

To the extent required by applicable law, all Purchased Securities in the possession of Seller
shall be segregated from other securities in its possession and shall be identified as subject to
this Agreement. Segregation may be accomplished by appropriate identification on the books and
records of the holder, including a financial or securities intermediary or a clearing corporation.
All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and,

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unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Securities or otherwise selling,
transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall
relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph
3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Paragraph 5 hereof.

Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased
Securities

Seller is not permitted to substitute other securities for those subject to this Agreement
and therefore must keep Buyer’s securities segregated at all times, unless in this Agreement
Buyer grants Seller the right to substitute other securities. If Buyer grants the right to
substitute, this means that Buyer’s securities will likely be commingled with Seller’s own
securities during the trading day. Buyer is advised that, during any trading day that Buyer’s
securities are commingled with Seller’s securities, they [will]* [may]** be subject to
liens granted by Seller to [its clearing bank]* [third parties]** and may be used by Seller
for deliveries on other securities transactions. Whenever the securities are commingled,
Seller’s ability to resegregate substitute securities for Buyer will be subject to Seller’s
ability to satisfy [the clearing]* [any]** lien or to obtain substitute securities.

 

*Language to be used under 17 C.F.R. §403.4(e) if Seller is a government securities broker
or dealer other than a financial institution.

**Language to be used under 17 C.F.R. §403.5(d) if Seller is a financial
institution.

9. Substitution

	(a)	 	Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities
for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such
other Securities and transfer to Seller of such Purchased Securities. After substitution, the
substituted Securities shall be deemed to be Purchased Securities.
	 
	(b)	 	In Transactions in which Seller retains custody of Purchased Securities, the parties expressly
agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have
agreed to and accepted in this Agreement substitution by  Seller of other Securities for
Purchased Securities; provided, however, that such other Securities shall have a Market Value
at least equal to the Market Value of the Purchased Securities for which they are substituted.

10. Representations

Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to
execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to
perform its obligations hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in
writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other
party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its
behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal),
(iv)

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it has obtained all authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the Transactions hereunder will
not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which
it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

11. Events of Default

In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities
upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply
with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with
Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in any material respect
when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall
admit to the other its inability to, or its intention not to, perform any of its obligations
hereunder (each an “Event of Default”):

	(a)	 	The nondefaulting party may, at its option (which option shall be deemed to have been
exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of
Default to have occurred hereunder and, upon the exercise or deemed exercise of such option,
the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be
deemed immediately to occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting party shall (except upon
the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of
such option as promptly as practicable.
	 
	(b)	 	In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting
party exercises or is deemed to have exercised the option referred to in subparagraph (a) of
this Paragraph, (i) the defaulting party’s obligations in such Transactions to repurchase all
Purchased Securities, at the Repurchase Price therefor on the Repurchase Date determined in
accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due
and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by
the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall
immediately deliver to the nondefaulting party any Purchased Securities subject to such
Transactions then in the defaulting party’s possession or control.
	 
	(c)	 	In all Transactions in which the defaulting party is acting as Buyer, upon tender by the
nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions,
all right, title and interest in and entitlement to all Purchased Securities subject to such
Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party
shall deliver all such Purchased Securities to the nondefaulting party.

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	(d)	 	If the nondefaulting party exercises or is deemed to have exercised the option referred to
in subparagraph (a) of this Paragraph, the nondefaulting party, without prior notice to the
defaulting party, may:

	 	(i)	 	as to Transactions in which the defaulting party is acting as Seller, (A)
immediately sell, in a recognized market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such Transactions and apply
the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Securities, to give the defaulting party
credit for such Purchased Securities in an amount equal to the price therefor on such
date, obtained from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid Repurchase Prices and any
other amounts owing by the defaulting party hereunder; and
	 
	 	(ii)	 	as to Transactions in which the defaulting party is acting as Buyer, (A)
immediately purchase, in a recognized market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting party may reasonably deem
satisfactory, securities (“Replacement Securities”) of the same class and amount as
any Purchased Securities that are not delivered by the defaulting party to the
nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have purchased Replacement
Securities at the price therefor on such date, obtained from a generally recognized
source or the most recent closing offer quotation from such a source.

	 	 	Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Securities subject to any Transaction hereunder are instruments traded in a recognized
market, (2) in the absence of a generally recognized source for prices or bid or offer
quotations for any Security, the nondefaulting party may establish the source therefor in
its sole discretion and (3) all prices, bids and offers shall be determined together with
accrued Income (except to the extent contrary to market practice with respect to the
relevant Securities).
	 
	(e)	 	As to Transactions in which the defaulting party is acting as Buyer, the defaulting party
shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid)
by the nondefaulting party for Replacement Securities over the Repurchase Price for the
Purchased Securities replaced thereby and for any amounts payable by the defaulting party
under Paragraph 5 hereof or otherwise hereunder.
	 
	(f)	 	For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in
respect of which the defaulting party is acting as Buyer shall not increase above the amount
of such Repurchase Price for such Transaction determined as of the date of the exercise or
deemed exercise by the nondefaulting party of the option referred to in subparagraph (a) of
this Paragraph.

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	(g)	 	The defaulting party shall be liable to the nondefaulting party for (i) the amount of all
reasonable legal or other expenses incurred by the nondefaulting party in connection with
or as a result of an Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a result of an
Event of Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a Transaction.
	 
	(h)	 	To the extent permitted by applicable law, the defaulting party shall be liable to the
nondefaulting party for interest on any amounts owing by the defaulting party hereunder,
from the date the defaulting party becomes liable for such amounts hereunder until such
amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the
exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable by the
defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at a rate
equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.
	 
	(i)	 	The nondefaulting party shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable law.

	12.	 	Single Agreement

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

	13.	 	Notices and Other Communications

Any and all notices, statements, demands or other communications hereunder may be given by a party
to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in
Annex II hereto, 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.

	14.	 	Entire Agreement; Severability

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

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	15.	 	Non-assignability; Termination

	(a)	 	The rights and obligations of the parties under this Agreement and under any Transaction
shall not be assigned by either party without the prior written consent of the other party,
and any such assignment without the prior written consent of the other party shall be null and
void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and
shall inure to the benefit of the parties and their respective successors and assigns. This
Agreement may be terminated by either party upon giving written notice to the other, except
that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions
then outstanding.

	(b)	 	Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charging or
otherwise dealing with all or any part of its interest in any sum payable to it under
Paragraph 11 hereof.

	16.	 	Governing Law

This Agreement shall be governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof.

	17.	 	No Waivers, Etc.

No express or implied waiver of any Event of Default by either party shall constitute a waiver of
any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a
waiver of its right to exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the parties hereto. Without
limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b)
hereof will not constitute a waiver of any right to do so at a later date.

	18.	 	Use of Employee Plan Assets

	(a)	 	If assets of an employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the
“Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other party that the Transaction
does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and
the other party may proceed in reliance thereon but shall not be required so to proceed.

	(b)	 	Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction
shall proceed only if Seller furnishes or has furnished to Buyer its most recent available
audited statement of its financial condition and its most recent subsequent unaudited
statement of its financial condition.

	(c)	 	By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to
represent to Buyer that since the date of Seller’s latest such financial statements, there has
been no material adverse change in Seller’s financial condition which Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a Seller in any
outstanding Transaction involving a Plan Party.

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	19.	 	Intent

	(a)	 	The parties recognize that each Transaction is a “repurchase agreement” as that  term is
defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as
the type of Securities subject to such Transaction or the term of such Transaction would
render such definition inapplicable), and a “securities contract” as that term is defined in
Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of
assets subject to such Transaction would render such definition inapplicable).

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

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

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

	20.	 	Disclosure Relating to Certain Federal Protections

The parties acknowledge that they have been advised that:

	(a)	 	in the case of Transactions in which one of the parties is a broker or dealer registered with
the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act
of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position
that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect
the other party with respect to any Transaction hereunder;

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

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

[signature page follows]

11

 

[signature page to Master Repurchase Agreement]

	 	 	 	 	 	 	 	 	 	 	 

	DEUTSCHE BANK SECURITIES INC.	 	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Title:

	 	/s/ John Cipriani
 

Director
	 	 
	 	By:

Title:
	 	/s/ Mark E. Lefanowicz
 

Chief Financial Officer
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Title:

	 	/s/ Elizabeth Grossman
 

Director
	 	 	 	 	 	 	 	 

12

 

Annex I 

Supplemental Terms and Conditions

This Annex I forms a part of the Master Repurchase Agreement dated as of April 22, 2011 (the
“Agreement”) between PROVIDENT MORTGAGE CAPITAL
ASSOCIATES (“Counterparty”) and DEUTSCHE BANK
SECURITIES INC. (“DBSI”). Capitalized terms used but not defined in this Annex I shall have the
meanings ascribed to them in the Agreement.

	1.	 	Other Applicable Annexes. In addition to this Annex I and Annex II, the following Annexes and
any Schedules thereto shall form a part of the Agreement and shall be applicable thereunder:
none.

	2.	 	Definitions.

	(a)	 	The definition of Market Value in Paragraph 2(j) shall be amended by adding at the end
thereof: “provided that if there is no generally recognized source agreed to by the parties
for determining the price of any Securities, the price for such Securities shall be determined
by DBSI (using the bid price for such Securities) in its sole discretion.”

	(b)	 	The following terms shall be added as defined terms with the meaning ascribed to them below:

	 	(i)	 	“Business Day” or “business day”, with respect to any Transaction (other than
an International Transaction) hereunder, a day on which regular trading occurs in the
principal market for the Purchased Securities subject to such Transaction; provided,
however, that for purposes of calculating Market Value, such term shall mean a day on
which regular trading occurs in the principal market for the assets the value of which
is being determined. Notwithstanding the foregoing, (i) for purposes of Paragraph 4,
“business day” shall mean any day on which regular trading occurs in the principal
market for any Purchased Securities or for any assets constituting Additional Purchased
Securities under any outstanding Transaction hereunder and “next business day” shall
mean the next day on which a transfer of Additional Purchased Securities may be
effected in accordance with Paragraph 7, and (ii) in no event shall a Saturday or
Sunday be considered a business day;
	 
	 	(ii)	 	“Margin Notice Deadline”, 11:00 a.m. (New York City time);
	 
	 	(iii)	 	“Specified Agreement” means any ISDA Master Agreement (as published by the
International Swaps & Derivatives Association, Inc.) or other master agreement for
financial transactions between Deutsche Bank AG or any of its affiliates and
Counterparty whether executed now or at any time in the future which governs the terms
of transactions entered into between the parties pursuant to any such master agreement
regardless of whether any one or more of any such transactions was or were entered into
before or after the execution of any such master agreement;

13

 

3. Additional Event of Default. In the event that Counterparty fails or is unable to maintain its
status as a real estate investment trust under Sections 856-860 of the U.S. Internal Revenue Code
of 1986, as amended, then such event shall constitute an Event of Default under the Agreement. Upon
DBSI declaring an Event of Default to have occurred, the provisions of Paragraph 11 of the
Agreement shall be applicable.

4. Set-Off. Paragraph 11 shall further be amended by adding at the end thereof the following
two subparagraphs:

“(j) Without affecting the provisions of the Agreement and in addition to and not in
limitation of any other right or remedy (including any right to set off,
counterclaim, or otherwise withhold payment or any recourse to any  credit support
document) under applicable law the non-defaulting party (“X”) may without prior
notice to any person set off any sum or obligation (whether or not arising under
this Agreement and whether matured or unmatured, whether or not contingent and
irrespective of the currency, place of payment or booking office of the sum or
obligation) owed by the defaulting party (“Y”) to X or any affiliate of X, against
any sum or obligation (whether or not arising under this Agreement, whether matured
or unmatured, whether or not contingent and irrespective of the currency, place of
payment or booking office of the sum or obligation) owed by X or any affiliate to Y
and, for this purpose, may convert one currency into another at a market rate
determined by X. If any sum or obligation is unascertained, X may in good faith
estimate that sum or obligation and set-off in respect of that estimate, subject to
X or Y, as the case may be, accounting to the other party when such sum or
obligation is ascertained. Nothing in this Agreement shall create or be deemed to
create any charge or other security interest.

(k) Except to the extent provided in this Paragraph 11, neither party may claim any
sum by way of consequential loss or damage in the event of failure by the other
party to perform any of its obligations under this Agreement.”

	5.	 	The following Paragraphs shall be added to the Agreement: 

“9 (c) and (d). Substitution.

	 	 	(c) In the case of any Transaction for which the Repurchase Date is other than the business
day immediately following the Purchase Date and with respect to which Seller does not have
any existing right to substitute substantially the same Securities for the Purchased
Securities, Seller shall have the right, subject to the proviso to this sentence, upon
notice to Buyer, which notice shall be given at or prior to 10 am (New York time) on such
business day, to substitute substantially the same Securities for any Purchased Securities;
provided, however, that Buyer may elect, by the close of business on the business day notice
is received, or by the close of the next business day if notice is given after 10 am (New
York time) on such day, not to accept such substitution. In the event such substitution is
accepted by Buyer, such substitution shall be made by Seller’s transfer to Buyer of such
other Securities and Buyer’s transfer to Seller of such Purchased Securities, and after
substitution, the substituted Securities shall be deemed to be

14

 

	 	 	Purchased Securities. In the event Buyer elects not to accept such substitution, Buyer shall offer
Seller the right to terminate the Transaction.

	 	 	(d) In the event Seller exercises its right to substitute of terminate under sub-paragraph (c),
Seller shall be obligated to pay to Buyer (by the close of the business day of such substitution or
termination) an amount equal to: (A) Buyer’s actual cost (including all fees, expenses and
commissions) of (i) entering into replacement transactions; (ii) entering into or terminating hedge
transactions; and/or (iii) terminating transactions or substituting securities in like transactions
with third parties in connection with or as a result of such substitution or termination, and (B)
to the extent Buyer determines not to enter into replacement transactions, any loss incurred by
Buyer directly arising or resulting from such termination. The foregoing amounts (resulting from
substitution or termination), shall be solely determined and calculated by Buyer in good faith.

	 	10.A	 	Early Termination. If:

(a) as a result of sovereign action or inaction (directly or indirectly), Buyer or Seller
becomes unable to perform any absolute or contingent obligation to make a payment or
transfer or to receive a payment or transfer in respect of any Transaction hereunder or to
comply with any other material provision of this Agreement relating to such Transaction; or
(b) there occurs an event which would constitute a default, event of default or other
similar condition or event (however described, including, without limitation, an Additional
Termination Event as defined in any ISDA Master Agreement between Counterparty and Deutsche
Bank AG) in respect of Counterparty under any Specified Agreement such as to cause an
early termination of or close-out of or acceleration of any obligation under that Specified
Agreement in accordance with its terms, regardless of whether a transaction under the
Specified Agreement is in effect on the date of such occurrence,

DBSI may, at its option, declare an early termination of or close-out of or acceleration of
Counterparty’s obligations to have occurred hereunder and, upon the exercise of such
option, take all steps and exercise all rights granted to the nondefaulting party in
Paragraph 11 of the Agreement (whether the nondefaulting party is acting as Buyer or Seller
and with all references to the “defaulting party” changed to “Counterparty” and all
references to the “nondefaulting party” changed to “DBSI”).

	 	21.	 	No Reliance

Each of Counterparty and DBSI hereby represents and warrants to the other that in
connection with the negotiation of, the entering into, and the performance under the
Agreement and each Transaction:

(a) It is not relying (for purposes of making any investment decision or otherwise) upon any
advice, counsel or representations (whether written or oral) of the other party to the
Agreement, other than the representations expressly set forth in the Agreement;

15

 

(b) It has consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent it has deemed necessary, and it has made its own
investment, hedging and trading decisions (including decisions regarding the suitability of
any Transaction) based upon its own judgment and upon any advice from such advisors as it
has deemed necessary and not upon any view expressed by the other party to the Agreement;

(c) It is a sophisticated and informed institution that has a full understanding of all the
terms, conditions and risks (economic and otherwise) of the Agreement and each Transaction
and is capable of assuming and willing to assume (financially and otherwise) those risks;
and

(d) It is not acting as a fiduciary or financial, investment or commodity trading advisor
for the other party to the Agreement, and has not given to the other party to the
Agreement (directly or indirectly through any other person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax, business,
investment, financial, accounting or otherwise) of the Agreement or any Transaction, and
the other party to the Agreement has not given any such assurance, guaranty or
representation to it.

	 	22.	 	Purchase Price Maintenance

(a) The parties agree that in any Transaction hereunder whose term extends over an
Income payment date for the Securities subject to such Transaction, Buyer shall on the date
such Income is paid transfer to or credit to the account of Seller an amount equal to such
Income payment or payments pursuant to Paragraph 5(i) and shall not apply the Income
payment or payments to reduce the amount to be transferred to Buyer or Seller upon
termination of the Transaction pursuant to Paragraph 5(ii) of the Agreement.

(b) Notwithstanding the definition of Purchase Price in Paragraph 2 of the Agreement and
the provisions of Paragraph 4 of the Agreement, the parties agree (i) that the Purchase
Price will not be increased or decreased by the amount of any cash transferred by one party
to the other pursuant to Paragraph 4 of the Agreement and (ii) that transfer of such cash
shall be treated as if it constituted a transfer of Securities (with a Market Value
equal to the U.S. dollar amount of such cash) pursuant to Paragraph 4(a) or (b), as the
case may be  (including for purposes of the definition of “Additional Purchased
Securities”).

	 	23.	 	Submission to Jurisdiction and Waiver of Immunity

(a) Each party irrevocably and unconditionally (i) submits to the non-exclusive
jurisdiction of any United States Federal or New York State court sitting in Manhattan, and
any appellate court from any such court, solely for the purpose of any suit, action or
proceeding brought to enforce its obligations under the Agreement or relating in any way to
the Agreement or any Transaction under the Agreement and (ii) waives, to the fullest extent
it may effectively do so, any defense of an inconvenient forum to the maintenance of such
action or proceeding.

16

 

in any such court and any right of jurisdiction on account of its place of residence or
domicile.

(b) To the extent that either party has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or
from set off or any legal process (whether service or notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) with
respect to itself or any of its property, such party hereby irrevocably waives and agrees
not to plead or claim such immunity in respect of any action brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any Transaction
 under the Agreement

	24.      WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY PROCEEDINGS IN CONNECTION WITH THE AGREEMENT.”

	 	 	 	 	 	 	 	 	 	 	 

	DEUTSCHE BANK SECURITIES INC.	 	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Title:

	 	/s/ John Cipriani
 

Director
	 	 
	 	By:

Title:
	 	/s/ Mark E. Lefanowicz
 

Chief Financial Officer
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Title:

	 	/s/ Elizabeth Grossman
 

Director
	 	 	 	 	 	 	 	 

17

 

ANNEX II 

Names and Addresses for Communications Between Parties

DEUTSCHE BANK SECURITIES INC.

60 Wall Street 
New
York, NY 10005

For Sales and Trading Matters:

Attention: Repo Desk, 3rd Floor

Telephone: (212) 250-6730

Facsimile: (212) 797-4449

For Margin Maintenance Matters:

Attention: Collateral Management

34th Floor

Telephone: (212) 250-6200

Facsimile: (212) 797-5925

For Legal Matters:

Attention: Legal-Repo Practice Group, 36th Floor

Telephone: (212) 250-2419

Facsimile: (212) 797-4561

PROVIDENT MORTGAGE CAPITAL ASSOCIATES

1633 Bayshore Highway, Suite 155

Burlingame, CA 94010

Attention: Michelle Blake

Telephone: 650-652-1300

Facsimile: 650-652-2984

Email: mblake@provident.com

18exv10w13

EXHIBIT 10.13

Master Repurchase
Agreement

September 1996 Version

Dated as of May 4, 2011

Between:

J.P. Morgan Securities LLC

and

Provident Mortgage Capital Associates, Inc.

1. Applicability

From time to time the parties hereto may enter into transactions in which one party (“Seller”)
agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Securities 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 Annex I hereto and in any other annexes identified herein or therein as applicable
hereunder.

2. Definitions

(a) “Act of Insolvency”, with respect to any party, (i) the commencement by such party as debtor of
any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party seeking the appointment or election of a
receiver, conservator, trustee, custodian or similar official for such party or any substantial
part of its property, or the convening of any meeting of creditors for purposes of commencing any
such case or proceeding or seeking such an appointment or election, (ii) the commencement of any
such case or proceeding against such party, or another seeking such an appointment or election, or
the filing against a party of an application for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by
such party, (B) results in the entry of an order for relief, such an appointment or election, the
issuance of such a protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general assignment for the
benefit of creditors, or (iv) the admission in writing by such party of such party’s inability to
pay such party’s debts as they become due;

(b) “Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to Paragraph
4(a) hereof;

1

 

(c) “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by
application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of
such date;

(d) “Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage
(which may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in the
absence of any such agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction;

(e) “Confirmation”, the meaning specified in Paragraph 3(b) hereof;

(f) “Income”, with respect to any Security at any time, any principal thereof and all interest,
dividends or other distributions thereon;

(g) “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; 

(h) “Margin
Excess”, the meaning specified in Paragraph 4(b) hereof;

(i) “Margin Notice Deadline”, the time agreed to by the parties in the relevant Confirmation,
Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of
margin maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such
agreement, the deadline for such purposes established in accordance with market practice);

(j) “Market Value”, with respect to any Securities as of any date, the price for such Securities on
such date obtained from a generally recognized source agreed to by the parties or the most recent
closing bid quotation from such a source, plus accrued Income to the extent not included therein
(other than any Income credited or transferred to, or applied to the obligations of, Seller
pursuant to Paragraph 5 hereof) as of such date (unless contrary to market practice for such
Securities);

(k) “Price Differential”, with respect to any Transaction as of any date, the aggregate amount
obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for
such Transaction on a 360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential previously paid by
Seller to Buyer with respect to such Transaction);

(l) “Pricing Rate”, the per annum percentage rate for determination of the Price Differential;

(m) “Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street Journal
(or, if more than one such rate is published, the average of such rates);

2

 

(n) “Purchase Date”, the date on which Purchased Securities are to be transferred by Seller to
Buyer;

(o) “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree
otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant
to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by Seller to Buyer
pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of
Paragraph 5 hereof;

(p) “Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction
hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term
“Purchased Securities” with respect to any Transaction at any time also shall include Additional
Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities
returned pursuant to Paragraph 4(b) hereof;

(q) “Repurchase Date”, the date on which Seller is to repurchase the Purchased Securities from
Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11
hereof;

(r) “Repurchase Price”, the price at which Purchased Securities 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 Price Differential
as of the date of such determination;

(s) “Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained
by application of the Seller’s Margin Percentage to the Repurchase Price for such Transaction as
of such date;

(t) “Seller’s Margin Percentage”, with respect to any Transaction as of any date, a percentage
(which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and Seller or, in the
absence of any such agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction.

3. Initiation; Confirmation; Termination

(a) An agreement to enter into a Transaction may be made orally or in writing at the
initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased
Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to
an account of Seller.

(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be
agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a
“Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP number,
if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price,
(iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing
Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions
of the Transaction not

3

 

inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction
to which the Confirmation relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any conflict between the terms of such
Confirmation and this Agreement, this Agreement shall prevail.

(c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or
Seller, no later than such time as is customary in accordance with market practice, by telephone
or otherwise on or prior to the business day on which such termination will be effective. On the
date specified in such demand, or on the date fixed for termination in the case of Transactions
having a fixed term, termination of the Transaction will be effected by transfer to Seller or its
agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not
previously credited or transferred to, or applied to the obligations of, Seller pursuant to
Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer.

4. Margin Maintenance

(a) If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Buyer is less than the aggregate
Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to
Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or
additional Securities reasonably acceptable to Buyer (“Additional Purchased Securities”), so that
the cash and aggregate Market Value of the Purchased Securities, including any such Additional
Purchased Securities, will thereupon equal or exceed such aggregate Buyer’s Margin Amount
(decreased by the amount of any Margin Deficit as of such date arising from any Transactions in
which such Buyer is acting as Seller).

(b) If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller’s
Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller may by notice
to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or Purchased
Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after
deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed
such aggregate Seller’s Margin Amount (increased by the amount of any Margin Excess as of such date
arising from any Transactions in which such Seller is acting as Buyer).

(c) If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or
before the Margin Notice Deadline on any business day, the party receiving such notice shall
transfer cash or Additional Purchased Securities as provided in such subparagraph no later than the
close of business in the relevant market on such day. If any such notice is given after the Margin
Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later
than the close of business in the relevant market on the next business day following such notice.

(d) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as
shall be agreed upon by Buyer and Seller.

4

 

(e) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph
may be exercised only where a Margin Deficit or Margin Excess, as the case may be, exceeds a
specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions
(which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such
Transactions).

(f) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require
the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised
whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction
hereunder (calculated without regard to any other Transaction outstanding under this Agreement).

5. Income Payments

Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in
respect of the Securities that is not otherwise received by Seller, to the full extent it would be
so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree
with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall
reasonably determine in its discretion), on the date such Income is paid or distributed either (i)
transfer to or credit to the account of Seller such Income with respect to any Purchased
Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the
Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the
preceding sentence (A) to the extent that such action would result in the creation of a Margin
Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or
Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of
Default with respect to Seller has occurred and is then continuing at the time such Income is paid
or distributed.

6. Security Interest

Although the parties intend that all Transactions hereunder be sales and purchases and not loans,
in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged
to Buyer as security for the performance by Seller of its obligations under each such Transaction,
and shall be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all Income thereon and other proceeds
thereof.

7. Payment and Transfer

Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately
available funds. All Securities transferred by one party hereto to the other party (i) shall be in
suitable form for transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii)
shall be transferred by any other method

5

 

mutually acceptable to Seller and Buyer.

8. Segregation of Purchased Securities

To the extent required by applicable law, all Purchased Securities in the possession of Seller
shall be segregated from other securities in its possession and shall be identified as subject to
this Agreement. Segregation may be accomplished by appropriate identification on the books and
records of the holder, including a financial or securities intermediary or a clearing corporation.
All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and,
unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Securities or otherwise selling,
transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall
relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph
3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Paragraph 5 hereof.

Required Disclosure for Transactions in Which the Seller Retains Custody of the

Purchased Securities

Seller is not permitted to substitute other securities for those subject to this Agreement
and therefore must keep Buyer’s securities segregated at all times, unless in this Agreement Buyer
grants Seller the right to substitute other securities. If Buyer grants the right to substitute,
this means that Buyer’s securities will likely be commingled with Seller’s own securities during
the trading day. Buyer is advised that, during any trading day that Buyer’s securities are
commingled with Seller’s securities, they [will]* [may]** be subject to liens granted by Seller to
[its clearing bank]* [third parties]** and may be used by Seller for deliveries on other
securities transactions. Whenever the securities are commingled, Seller’s ability to resegregate
substitute securities for Buyer will be subject to Seller’s ability to satisfy [the clearing]*
[any]** lien or to obtain substitute securities.

 

			
	*	 	Language to be used under 17 C.F.R. β403.4(e) if Seller is a government securities broker or
dealer other than a financial institution.
	 
	**	 	Language to be used under 17 C.F.R. β403.5(d) if Seller is a financial institution.

9. Substitution

(a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for
any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.

(b) In Transactions in which Seller retains custody of Purchased Securities, the parties expressly
agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have
agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased
Securities; provided, however, that such other Securities

6

 

shall have a Market Value at least equal to the Market Value of the Purchased Securities for which
they are substituted.

10. Representations

Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to
execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to
perform its obligations hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in
writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other
party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its
behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal),
(iv) it has obtained all authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the Transactions hereunder will
not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which
it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

11. Events of Default

In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities
upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply
with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with
Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in any material respect
when, made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall
admit to the other its inability to, or its intention not to, perform any of its obligations
hereunder (each an “Event of Default”):

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

(b) In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting
party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this
Paragraph, (i) the defaulting party’s obligations in such Transactions to repurchase all Purchased
Securities, at the Repurchase Price therefor on the Repurchase Date determined in accordance with
subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) all
Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and
applied to

7

 

the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party
hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any
Purchased Securities subject to such Transactions then in the defaulting party’s possession or
control.

(c) In all Transactions in which the defaulting party is acting as Buyer, upon tender by the
nondefaulting party of payment of the aggregate Repurchase Prices for all such
Transactions, all right, title and interest in and entitlement to all Purchased Securities
subject to such Transactions shall be deemed transferred to the nondefaulting party, and
the defaulting party shall deliver all such Purchased Securities to the nondefaulting party.

(d) If the nondefaulting party exercises or is deemed to have exercised the option referred
to in subparagraph (a) of this Paragraph, the nondefaulting party, without prior notice to
the defaulting party, may:

	 	i.	 	as to Transactions in which the defaulting party is acting as Seller, (A) immediately
sell, in a recognized market (or otherwise in a commercially reasonable manner) at such
price or prices as the nondefaulting party may reasonably deem satisfactory, any or all
Purchased Securities subject to such Transactions and apply the proceeds thereof to the
aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party
hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such
Purchased Securities, to give the defaulting party credit for such Purchased Securities in
an amount equal to the price therefor on such date, obtained from a generally recognized
source or the most recent closing bid quotation from such a source, against the aggregate
unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder;
and
	 
	 	ii.	 	as to Transactions in which the defaulting party is acting as Buyer, (A) immediately
purchase, in a recognized market (or otherwise in a commercially reasonable manner) at such
price or prices as the nondefaulting party may reasonably deem satisfactory, securities
(“Replacement Securities”) of the same class and amount as any Purchased Securities that
are not delivered by the defaulting party to the nondefaulting party as required hereunder
or (B) in its sole discretion elect, in lieu of purchasing Replacement Securities, to be
deemed to have purchased Replacement Securities at the price therefor on such date,
obtained from a generally recognized source or the most recent closing offer quotation from
such a source.

Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the Securities
subject to any Transaction hereunder are instruments traded in a recognized market, (2) in the
absence of a generally recognized source for prices or bid or offer quotations for any Security,
the nondefaulting party may establish the source therefor in its sole discretion and (3) all
prices, bids and offers shall be determined together with accrued Income (except to the extent
contrary to market practice with respect to the relevant Securities).

(e) As to Transactions in which the defaulting party is acting as Buyer, the defaulting party
shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by
the nondefaulting party for Replacement Securities over the Repurchase Price for

8

 

the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under
Paragraph 5 hereof or otherwise hereunder.

(f) For purposes of this Paragraph 11, the Repurchase Price for each Transaction
hereunder in respect of which the defaulting party is acting as Buyer shall not increase
above the amount of such Repurchase Price for such Transaction determined as of the
date of the exercise or deemed exercise by the nondefaulting party of the option referred
to in subparagraph (a) of this Paragraph.

(g) The defaulting party shall be liable to the nondefaulting party for (i) the amount of all
reasonable legal or other expenses incurred by the nondefaulting party in connection with
or as a result of an Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a result of an
Event of Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a Transaction.

(h) To the extent permitted by applicable law, the defaulting party shall be liable to the
nondefaulting party for interest on any amounts owing by the defaulting party hereunder, from the
date the defaulting party becomes liable for such amounts hereunder until such amounts are (i)
paid in full by the defaulting party or (ii) satisfied in full by the exercise of the
nondefaulting party’s rights hereunder. Interest on any sum payable by the defaulting party to the
nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.

(i) The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise
available to it under any other agreement or applicable law.

12. Single Agreement

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

13. Notices and Other Communications

Any and all notices, statements, demands or other communications hereunder may be given by a
party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified
in Annex II hereto, 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

9

 

requests hereunder may be made orally, to be confirmed promptly in writing, or by other
communication as specified in the preceding sentence.

14. Entire Agreement; Severability

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

15. Non-assignability; Termination

(a) The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written consent of the
other party, and any such assignment without the prior written consent of the other party
shall be null and void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by either party upon giving
written notice to the other, except that this Agreement shall, notwithstanding such notice,
remain applicable to any Transactions then outstanding.

(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning,
charging or otherwise dealing with all or any part of its interest in any sum payable to it
under Paragraph 11 hereof.

16. Governing Law

This Agreement shall be governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof.

17. No Waivers, Etc.

No express or implied waiver of any Event of Default by either party shall constitute a waiver of
any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a
waiver of its right to exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the parties hereto. Without
limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later date.

18. Use of Employee Plan Assets

(a) If assets of an employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan
Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction.
The Plan Party shall represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other
party may proceed in reliance thereon but shall

10

 

not be required so to proceed.

(b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such
Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most
recent available audited statement of its financial condition and its most recent
subsequent unaudited statement of its financial condition.

(c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to
represent to Buyer that since the date of Seller’s latest such financial statements, there has
been no material adverse change in Seller’s financial condition which Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a  Seller in any
outstanding Transaction involving a Plan Party.

19. Intent

(a) The parties recognize that each Transaction is a “repurchase agreement” as that term is
defined in Section 101 of Title 11 of the United States Code, as amended (except insofar
as the type of Securities subject to such Transaction or the term of such Transaction
would render such definition inapplicable), and a “securities contract” as that term is
defined in Section 741 of Title 11 of the United States Code, as amended (except insofar
as the type of assets subject to such Transaction would render such definition
inapplicable).

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

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

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

20. Disclosure Relating to Certain Federal Protections

The parties acknowledge that they have been advised that:

(a) in the case of Transactions in which one of the parties is a broker or dealer registered with
the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities

11

 

Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken
the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not
protect the other party with respect to any Transaction hereunder;

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

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

	 	 	 	 	 	 	 	 	 	 	 

	J.P. MORGAN SECURITIES LLC	 	 	 	PROVIDENT MORTGAGE CAPITAL	 	 
	 	 	 	 	 	 	ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By 

Name

	 	/s/ FRED SCHWEIZER
 

FRED SCHWEIZER
	 	 
	 	By:

Name:
	 	/s/ Mark E. Lefanowicz
 

Mark E. Lefanowicz
	 	 
	Title

	 	EXECUTIVE DIRECTOR
	 	 	 	Title:
	 	Chief Financial Officer	 	 

12

 

ANNEX I

Supplemental Terms and Conditions

This Annex I forms a part of the Master Repurchase Agreement dated as of May 4,
2011 (the “Agreement”) between J.P. Morgan Securities LLC (“Party A”) and Provident
Mortgage Capital Associates, Inc. (“Party B”). Capitalized terms used but not
defined in this Annex I shall have the meanings ascribed to them in the Agreement.

1. Other Applicable Annexes. In addition to this Annex I and Annex II, the
following Annexes and any Schedules thereto shall form a part of the Agreement and
shall be applicable thereunder:

Annex V (Margin for Forward Transactions)

Annex VI (Buy/Sell Back Transactions)

2. Confirmations in accordance with Paragraph 3(b) are in all cases to be furnished
by Party A.

3. The “Buyer’s Margin Percentage” and “Seller’s Margin Percentage”, as defined in
Section 2, shall be agreed to at time of trade.

4. The generally recognized source for the determination of Market Value under
Paragraph 2(j) shall be (i) TradeWeb for U.S. Treasury bills, bonds and notes or
(ii) determined in good faith by Party A in a manner selected by it for all other
securities.

5. With respect to all Transactions, Party B hereby represents and warrants to
Party A that it is not a “Plan Party” (as defined in Paragraph 18 of the
Agreement).

6. “Margin Notice Deadline” means 10:00 a.m. New York time.

7. Notices pursuant to Section 4 of the Agreement may be delivered orally and need
not be confirmed in writing, or by electronic mail to an address supplied by the
other party.

8. In addition to the representations and warranties contained in the Agreement,
each of Buyer and Seller represents and warrants to the other, and shall on the
Purchase Date of any Transaction be deemed to represent and warrant, as follows:

     (a) It is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written or oral) of
the other party to the Agreement, other than the representations expressly set
forth in the Agreement;

     (b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon its
own judgment and upon any advice from such advisors as it has deemed necessary and
not upon any view expressed by the other party to the Agreement or any of its
affiliates or agents;

13

 

     (c) It is a sophisticated and informed institution that has a full
understanding of all the terms, conditions and risks (economic and otherwise) of
the Agreement and each Transaction and is capable of assuming and willing to assume
(financially and otherwise) those risks;

     (d) It is not acting as a fiduciary or financial, investment or commodity
trading advisor for any other party to the Agreement, and has not given any other
party to the Agreement (directly or indirectly through any other person) any
assurance, guaranty or representation whatsoever as to the merits (either legal,
regulatory, tax, business, investment, financial accounting or otherwise) of the
Agreement or any Transaction.

9. Purchase Price Maintenance.

     (a) The parties agree that in any Transaction hereunder whose term
extends over an Income payment date for the Securities subject to such
Transaction, Buyer shall on the date such Income is paid transfer to Seller
an amount equal to such Income payment or payments pursuant to Paragraph
5(i) of the Agreement and shall not apply the Income payment or payments to
reduce the amount to be transferred to Buyer or Seller upon termination of
the Transaction pursuant to Paragraph 5(ii) of the Agreement.

     (b) Notwithstanding the definition of “Purchase Price” in Paragraph 2
of the Agreement and the provisions of Paragraph 4 of the Agreement, the
parties agree (a) that the Purchase Price will not be increased or
decreased by the amount of any cash transferred by one party to the other
pursuant to Paragraph 4 of the Agreement and (b) that transfer of such cash
shall be treated as if it constituted a transfer of Securities (with a
Market Value equal to the U.S. dollar amount of such cash) pursuant to
Paragraph 4(a) or (b) of the Agreement, as the case may be (including for
purposes of the definition of “Additional Purchased Securities”).

10. The first paragraph of Paragraph 11 of the Agreement is hereby amended to add
the following additional Events of Default solely with respect to Party B (each,
an “Event of Default”):

“(viii) Loss of REIT Status. Party B fails to maintain its status as a real
estate investment trust under Section 856 of the Internal Revenue Code of
1986, as amended,

(ix) Minimum Shareholders’ Equity. The consolidated shareholders’ equity of
Party B, as reflected on its most recent unaudited quarterly or audited
annual balance sheet, as applicable, in each case prepared in accordance
with generally accepted accounting principles in the United States of
America (‘GAAP’), (a) declines by 20% or more during any consecutive 3-month
period from the consolidated shareholder’s equity of Party B as of the
beginning of such period, or (b) declines by 40% or more during any
consecutive 12-month period from the consolidated shareholder’s equity of
Party B as of the beginning of such period, and

14

 

(x) Maximum Leverage Ratio. The ratio of consolidated total
liabilities to consolidated shareholders’ equity, as such amounts are
reflected on Party B’s most recent unaudited quarterly or audited annual
balance sheet, as applicable, in each case prepared in accordance with GAAP,
is greater than 10.0:1.00.”

11. In addition to the representations contained in Paragraph 10 of the
Agreement, Party B represents to Party A that Party B will have Paid-in Capital of
at least USD$250,000,000.00.

	 	 	 	 	 	 	 	 	 	 	 

	J.P. MORGAN SECURITIES LLC	 	 	 	PROVIDENT MORTGAGE CAPITAL	 	 
	 	 	 	 	 	 	ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By 

Name

	 	/s/ Fred Schweizer
 

FRED SCHWEIZER
	 	 
	 	By

Name:
	 	/s/ Mark E. Lefanowicz
 

Mark E. Lefanowicz
	 	 
	Title

	 	EXECUTIVE DIRECTOR
	 	 	 	Title:
	 	Chief Financial Officer	 	 

15

 

ANNEX I-a

MASTER CLOSE OUT

AND SET OFF TERMS

This Annex I-a forms a part of the Master Repurchase Agreement dated as of May
4, 2011 (the “Agreement”) between J.P. Morgan Securities LLC and Provident Mortgage
Capital Associates, Inc (“Client”). Capitalized terms used but not defined in this
Annex I-a shall have the meanings ascribed to them in the Agreement.

(1) Master Close-out and Set-off Definitions. For the purposes of this Annex
I-a, the following terms have the following definitions:

“JPM Affiliate” means J.P. Morgan Securities LLC, J.P. Morgan Futures Inc.,
JPMorgan Chase Bank, N.A., J.P. Morgan Securities Ltd., J.P. Morgan Securities
Asia Pte. Ltd., JPMorgan Securities Japan Co., Ltd., J.P. Morgan Markets Australia
Pty Ltd., J.P. Morgan Clearing Corp., J.P. Morgan Bank Dublin plc, J.P. Morgan
Markets Limited, Bear Stearns Forex Inc., Bear Steams Capital Markets Inc. and
Bear Stearns Credit Products Inc.; provided no such affiliate shall be included to
the extent that their inclusion would prejudice the enforceability of this Annex
I-a.

Client shall be deemed to have no affiliates for purposes of this Annex I-a.

“JPM Affiliate Agreement” means any Specified Agreement to which Client and any
JPM Affiliate are parties.

“Market Transaction” means (a) any transaction (including an agreement with respect
to any such transaction) which is (i) a rate swap transaction, swap option, basis
swap, forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option, credit protection transaction, credit swap, credit default swap,
credit default option, total return swap, credit spread transaction, repurchase
transaction, reverse repurchase transaction, buy/sell-back transaction, securities
lending transaction, weather index transaction, futures contract (whether exchange
traded or otherwise) or purchase or sale of a security (including without
limitation, a forward purchase or sale of a security), commodity or other financial
instrument or interest (including any option with respect to any of these
transactions) or (ii) which is a type of transaction that is similar to any
transaction referred to in clause (i) above that is currently, or in the future
becomes, recurrently entered into in the financial markets (including terms and
conditions incorporated by reference in such agreement) and which is a forward,
swap, future (whether exchange traded or otherwise), option or other derivative on
one or more rates, currencies, commodities, equity securities or other equity
instruments, debt securities or other debt instruments, economic indices or
measures of economic risk or value, or other benchmarks against which payments or
deliveries are to be made and (b) any combination of these transactions.

16

 

“Specified Agreement” means (i) an agreement or confirmation governing any Market
Transaction, (ii) any agreement in respect of credit support for obligations under
any Market Transaction or under an agreement governing any Market Transaction, and
(iii) any futures or options brokerage agreement.

(2) Master Close-out. Without limiting any provision in any JPM Affiliate
Agreement, each JPM Affiliate and the Client agree that the occurrence of any
event of default, default, termination event, event giving rise to the right to
liquidate, or similar condition or event (however described; hereinafter an
“Event”) in respect of the Client or J.P.
Morgan Securities LLC (the entity in respect of which such occurrence takes place
being the “Master Close-out Defaulting Party” and the other party being the
“Master Close-out Non-Defaulting Party”) under a JPM Affiliate Agreement on the
basis of which the other party to such JPM Affiliate Agreement either (i) has the
contractual right to terminate or liquidate transactions governed by such JPM
Affiliate Agreement (ii) has the contractual right to terminate the JPM Affiliate
Agreement, or (iii) which causes the automatic termination or liquidation of all
transactions governed by the JPM Affiliate Agreement, shall entitle but not
obligate the Master Close-out Non-Defaulting Party to terminate or liquidate all
transactions governed by such agreement or any other JPM Affiliate Agreement
between the Master Close-out Defaulting Party and any JPM Affiliate). For the
avoidance of doubt, the close-out provision in this paragraph (2) shall not apply
to any affiliate of the Client, and Client shall not apply the close-out provision
in this paragraph
(2) to any JPM Affiliate, other than J.P. Morgan Securities LLC The amount payable
in respect of the termination of transactions governed by any such JPM Affiliate
Agreement shall be determined in accordance with any applicable provisions thereof.

(3) Authorization to Transfer Funds. Notwithstanding anything to the contrary in
this Agreement, any Specified Agreement, or any other agreement between the
parties, and without limiting any rights given in any such agreement, upon the
occurrence and during the continuation of any Event in respect of the Client under
any JPM Affiliate Agreement, the Client authorizes each JPM Affiliate, in its sole
discretion and without prior notice to the Client, to transfer or cause to be
transferred any funds, securities and/or other property to, between, or among any
accounts maintained by the Client with or among any JPM Affiliates.

(4) Assignment. Notwithstanding any provision to the contrary in any JPM Affiliate
Agreement, upon the occurrence and during the continuation of any Event (however
described) in respect of the Client under any JPM Affiliate Agreement, the Client
hereby consents and agrees that the rights and obligations of any JPM Affiliate in
respect of any JPM Affiliate Agreement may be assigned to any other JPM Affiliate
without the prior written consent of the Client.

17

 

(5) Additional Set Off Rights. Any amount payable by a JPM Affiliate to the Client
in respect of the termination or liquidation of all transactions governed by a JPM
Affiliate Agreement as the result of the occurrence of any Event in respect of the
Client may, at the option of such JPM Affiliate (and without prior notice to the
Client), and after all
regulatory obligations to futures or options or other exchanges or other regulatory
requirements are satisfied, be reduced by its set-off against any Other Agreement
Amount (as hereinafter defined). As used herein, “Other Agreement Amount” shall
mean any payment obligation of any description whatsoever (whether arising at such
time or in the future or upon the occurrence of a contingency) by the Client to any
JPM Affiliate (irrespective of the currency, place of payment or booking office of
the obligation or whether the relevant party is legally or beneficially the holder
of the obligation) arising under any agreement between the Client and any JPM
Affiliate or any instrument or undertaking issued or executed or guaranteed by the
Client to, or in favor of, any JPM Affiliate or any bond, note, or other debt
instrument issued or guaranteed by the Client and owned or held beneficially by any
JPM Affiliate as a result of the purchase thereof by or on behalf of any JPM
Affiliate, whether directly from the issuer or in the secondary market; and the
Other Agreement Amount will be discharged promptly and in all respects to the
extent it is so set-off.

For this purpose, the Other Agreement Amount (or the relevant portion of such
amounts) may be converted by the JPM Affiliate effecting the set-off into the
currency in which the obligation of such JPM Affiliate is denominated at the rate
of exchange at which such JPM Affiliate would be able, acting in a reasonable
manner and in good faith, to purchase the relevant amount of such currency. If an
obligation is unascertained, a JPM Affiliate may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the relevant party
accounting to the other when the obligation is ascertained. Nothing in this clause
(5) shall be effective to create a charge or other security interest. This clause
(5) shall be without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which any entity is at any time
otherwise entitled (whether by operation of law, contract or otherwise), and shall
not be exercised in contravention of any regulatory requirement or rules or
interest of any commodities, options or futures exchange.

18

 

(6) Termination — Miscellaneous. This Annex I-a may be terminated by J.P. Morgan
Securities LLC
upon notice to the Client. A failure or delay in exercising any right, power or privilege in
respect of this Annex I-a shall not be presumed to operate as a waiver, and a single or partial
exercise of any right, power or privilege shall not be presumed to preclude any subsequent or
further exercise of that right, power or privilege. Wherever possible, each provision of this
Annex I-a shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Annex I-a shall be prohibited by or invalid or unenforceable under
such laws, such provision shall be ineffective to the extent of such prohibition, invalidity or
unenforceability without otherwise affecting the validity or enforceability of such provision or
the remaining provisions of this Annex I-a.

	 	 	 	 	 	 	 	 	 	 	 

	PROVIDENT MORTGAGE CAPITAL	 	 	 	J.P. MORGAN SECURITIES LLC	 	 
	ASSOCIATES, INC.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Mark E. Lefanowicz
 

Mark E. Lefanowicz
	 	 
	 	By:

Name:
	 	/s/ Fred Schweizer
 

Fred Schweizer
	 	 
	Title:

	 	Chief Financial Officer
	 	 	 	Title:
	 	Executive Director	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	JPMORGAN CHASE BANK, N.A.,	 	 
	 	 	 	 	 	 	For itself and as Attorney-in-Fact on behalf of:	 	 
	 	 	 	 	 	 	J.P. MORGAN FUTURES INC.	 	 
	 	 	 	 	 	 	J.P. MORGAN SECURITIES LTD.	 	 
	 	 	 	 	 	 	J.P. MORGAN SECURITIES ASIA PTE. LTD.	 	 
	 	 	 	 	 	 	JPMORGAN SECURITIES JAPAN CO., LTD.	 	 
	 	 	 	 	 	 	J.P. MORGAN MARKETS AUSTRALIA PTY LTD.	 	 
	 	 	 	 	 	 	J.P. MORGAN CLEARING CORP.	 	 
	 	 	 	 	 	 	J.P. MORGAN BANK DUBLIN PLC	 	 
	 	 	 	 	 	 	J.P. MORGAN MARKETS LIMITED	 	 
	 	 	 	 	 	 	BEAR STEARNS FOREX INC.	 	 
	 	 	 	 	 	 	BEAR STEARNS CAPITAL MARKETS INC.	 	 
	 	 	 	 	 	 	BEAR STEARNS CREDIT PRODUCTS INC.	 	 
	 	 	 	 	 	 	With respect to this Annex I-a only	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:

Name:
	 	/s/ Leo Lai
 

Leo Lai
	 	 
	 

	 	 	 	 	 	Title:
	 	Executive Director 

JPMorgan Chase	 	 

19

 

ANNEX II

Names and Addresses for Communications Between Parties

Pursuant to Section 13 (“Notices and Other Communications”), the following addresses shall be applicable:

J.P. Morgan Securities Contacts:

	 	 	 

	Finance Desk Head

	 	John Horner
	 

	 	(212) 834-3600
	 
	 	 
	Confirmations

	 	J.P. Morgan Securities LLC
	 

	 	Confirmations Processing
	 

	 	500 Stanton Christiana Road
	 

	 	Newark, Delaware 19713-2107
	 
	 	 
	Client Contacts:

	 	Mark Lefanowicz
	 

	 	Chief Financial Officer
	 

	 	Provident Mortgage Capital Associates, Inc.
	 

	 	1633 Bayshore Hwy., Ste. 155
	 

	 	Burlingame, CA 94010
	 

	 	(855) 653-4300
	 

	 	Fax: (855) 653-4301

20

 

Annex V

Margin for Forward Transactions

This Annex V forms a part of the Master Repurchase Agreement dated as of May 4,
2011 (the “Agreement”) between J.P. Morgan Securities LLC and Provident Mortgage
Capital Associates, Inc. Capitalized terms used but not defined in this Annex V
shall have the meanings ascribed to them in the Agreement.

	1.	 	Definitions. For purposes of the Agreement and
this Annex V, the following terms shall have the following meanings:
	 
	 	 	“Forward Exposure”, the amount of loss a party would incur upon canceling a
Forward Transaction and entering into a replacement transaction, determined
in accordance with market practice or as otherwise agreed by the parties;
	 
	 	 	“Forward Transaction”, any Transaction agreed to by the parties as to which
the Purchase Date has not yet occurred;
	 
	 	 	“Net Forward Exposure”, the aggregate amount of a party’s Forward Exposure to
the other party under all Forward Transactions hereunder reduced by the
aggregate amount of any Forward Exposure of the other party to such party
under all Forward Transactions hereunder;
	 
	 	 	“Net Unsecured Forward Exposure”, a party’s Net Forward Exposure reduced by
the Market Value of any Forward Collateral transferred to such party (and not
returned) pursuant to Paragraph 2 of this Annex V.
	 
	2.	 	Margin Maintenance.

	 	(a)	 	If at any time a party (the “In-the-Money Party”)
shall have a Net Unsecured Forward Exposure to the other party (the
“Out-of-the-Money Party”) under one or more Forward Transactions, the
In-the-Money Party may by notice to the Out-of-the-Money Party require
the Out-of-the-Money Party to transfer to the In-the-Money Party
Securities or cash reasonably acceptable to the In-the-Money Party
(together with any Income thereon and proceeds thereof, “Forward
Collateral”) having a Market Value sufficient to eliminate such Net
Unsecured Forward Exposure. The Out-of-the-Money Party may by notice to
the In-the-Money Party require the In-the-Money Party to transfer to the
Out-of-the-Money Party Forward Collateral having a Market Value that
exceeds the In-the-Money Party’s Net Forward Exposure (“Excess Forward
Collateral Amount”). The rights of the parties under this subparagraph
shall be in addition to their rights under subparagraphs (a) and (b) of
Paragraph 4 and any other provisions of the Agreement.
	 
	 	(b)	 	The parties may agree, with respect to any or all
Forward Transactions hereunder, that the respective rights of the parties
under subparagraph (a) of this Paragraph may be exercised only where a
Net Unsecured Forward
Exposure or Excess Forward Collateral Amount, as the case may be,
exceeds a specified dollar amount or other specified threshold for such
Forward

21

 

	 	 	 	Transactions (which amount or threshold shall be agreed to by the parties prior to entering
into any such Forward Transactions).
	 
	 	(c)	 	The parties may agree, with respect to any or all Forward Transactions hereunder, that the
respective rights of the parties under subparagraph (a) of this Paragraph to require the
elimination of a Net Unsecured Forward Exposure or Excess Forward Collateral Amount, as the
case may be, may be exercised whenever such a Net Unsecured Forward Exposure or Excess Forward
Collateral Amount exists with respect to any single Forward Transaction hereunder (calculated
without regard to any other Forward Transaction outstanding hereunder).
	 
	 	(d)	 	The parties may agree, with respect to any or all Forward Transactions hereunder, that (i)
one party shall transfer to the other party Forward Collateral having a Market Value equal to
a specified dollar amount or other specified threshold no later than the Margin Notice
Deadline on the day such Forward Transaction is entered into by the parties or (ii) one party
shall not be required to make any transfer otherwise required to be made under this Paragraph
if, after giving effect to such transfer, the Market Value of the Forward Collateral held by
such party would be less than a specified dollar amount or other specified threshold (which
amount or threshold shall be agreed to by the parties prior to entering into any such Forward
Transactions).
	 
	 	(e)	 	If any notice is given by a party to the other under subparagraph (a) of this Paragraph at or
before the Margin Notice Deadline on any business day, the party receiving such notice shall
transfer Forward Collateral as provided in such subparagraph no later than the close of
business in the relevant market on such business day. If any such notice is given after the
Margin Notice Deadline, the party receiving such notice shall transfer such Forward Collateral
no later than the close of business in the relevant market on the next business day.
	 
	 	(f)	 	Upon the occurrence of the Purchase Date for any Forward Transaction and the performance by
the parties of their respective obligations to transfer cash and Securities on such date, any
Forward Collateral in respect of such Forward Transaction, together with any Income thereon
and proceeds thereof, shall be transferred by the party holding such Forward Collateral to the
other party; provided, however, that neither party shall be required to transfer such Forward
Collateral to the other if such transfer would result in the creation of a Net Unsecured
Forward Exposure of the transferor.
	 
	 	(g)	 	The Pledgor (as defined below) of Forward Collateral may, subject to agreement with and
acceptance by the Pledgee (as defined below) thereof, substitute other Securities reasonably
acceptable to the Pledgee for any Securities Forward Collateral. Such substitution shall be
made by transfer to the Pledgee of such other Securities and transfer to the Pledgor of such
Securities Forward Collateral. After substitution, the substituted Securities shall constitute
Forward Collateral.

22

 

	3.	 	Security Interest.

	 	(a)	 	In addition to the rights granted to the parties under Paragraph 6 of the
Agreement, each party (“Pledgor”) hereby pledges to the other party (“Pledgee”) as
security for the performance of its obligations hereunder, and grants Pledgee a security
interest in and right of setoff against, any Forward Collateral and any other cash,
Securities or property, and all proceeds of any of the foregoing, transferred by or on
behalf of Pledgor to Pledgee or due from Pledgee to Pledgor in connection with the
Agreement and the Forward Transactions hereunder.
	 
	 	(b)	 	Unless otherwise agreed by the parties, a party to whom Forward Collateral has been
transferred shall have the right to engage in repurchase transactions with Forward
Collateral or otherwise sell, transfer, pledge or hypothecate Forward Collateral,
including in respect of loans or other extensions of credit to such party that may be in
amounts greater than the Forward Collateral such party is entitled to as security for
obligations hereunder, and that may extend for periods of time longer than the periods
during which such party is entitled to Forward Collateral as security for obligations
hereunder; provided, however, that no such transaction shall relieve such party of its
obligations to transfer Forward Collateral pursuant to Paragraph 2 or 4 of this Annex V
or Paragraph 11 of the Agreement.

	4.	 	Events of Default.

	 	(a)	 	In addition to the Events of Default set forth in Paragraph 11 of the Agreement, it
shall be an additional “Event of Default” if either party fails, after one business day’s
notice, to perform any covenant or obligation required to be performed by it under
Paragraph 2 or any other provision of this Annex.
	 
	 	(b)	 	In addition to the other rights of a nondefaulting party under Paragraphs 11 and 12
of the Agreement, if the nondefaulting party exercised or is deemed to have exercised the
option referred to in Paragraph 11(a) of the Agreement:

	 	(i)	 	The nondefaulting party, without prior notice to the defaulting party,
may (A) immediately sell, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, any or all Forward Collateral subject to any or all
Forward Transactions hereunder and apply the proceeds thereof to any amounts owing
by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Forward Collateral, to give the defaulting party
credit for such Forward Collateral in an amount equal to the price therefor on such
date, obtained from a generally recognized source or the most recent closing bid
quotation from such a source, against any amounts owing by the defaulting party
hereunder.
	 
	 	(ii)	 	Any Forward Collateral held by the defaulting party, together with any
Income thereon and proceeds thereof, shall be immediately transferred by

23

 

	 	 	 	the defaulting party to the nondefaulting party. The
nondefaulting party may, at its option (which option shall be deemed
to have been exercised immediately upon the occurrence of an Act of
Insolvency), and without prior notice to the defaulting party, (i)
immediately purchase, in a recognized market (or otherwise in a
commercially reasonable manner) at
such price or prices as the nondefaulting party may reasonably deem
satisfactory, securities (“Replacement Securities”) of the same
class and amount as any Securities Forward Collateral that is not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (ii) in its sole discretion elect, in lieu of
purchasing Replacement Securities, to be deemed to have purchased
Replacement Securities at the price therefor on such date, obtained
from a generally recognized source or the most recent closing offer
quotation from such a source, whereupon the defaulting party shall
be liable for the price of such Replacement Securities together with
the amount of any cash Forward Collateral not delivered by the
defaulting party to the nondefaulting party as required hereunder.

	 	 	Unless otherwise provided in Annex I, the parties acknowledge and agree that
(1) the Forward Collateral subject to any Forward Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a generally
recognized source for prices or bid quotations for any Forward Collateral, the
nondefaulting party may establish the source therefor in its sole discretion
and (3) all prices and bids shall be determined together with accrued Income
(except to the extent contrary to market practice with respect to the relevant
Forward Collateral).
	 
	5.	 	No Waivers. Etc. Without limitation of the
provisions of Paragraph 17 of the Agreement, the failure to give a notice
pursuant to subparagraph (a), (b), (c) or (d) of Paragraph 2 of this Annex V
will not constitute a waiver of any right to do so at a later date.

24

 

Annex VI

Buy/Sell Back Transactions

This Annex VI forms a part of the Master Repurchase Agreement dated as of May 4, 2011 (the
“Agreement”) between J.P. Morgan Securities LLC and Provident Mortgage Capital Associates, Inc.
Capitalized terms used but not defined in this Annex VI shall have the meanings ascribed to them in
the Agreement.

	1.	 	In the event of any conflict between the terms of this Annex VI and any other term of the
Agreement, the terms of this Annex VI shall prevail.
	 
	2.	 	Each Transaction shall be identified at the time it is entered into and in the relevant
Confirmation as either a Repurchase Transaction or a Buy/Sell Back Transaction.
	 
	3.	 	In the case of a Buy/Sell Back Transaction, the Confirmation delivered in accordance with
Paragraph 3 of the Agreement may consist of a single document in respect of both of the
transfers of funds against Securities which together form the Buy/Sell Back Transaction or
separate Confirmations may be delivered in respect of each such transfer.
	 
	4.	 	Definitions. The following definitions shall apply to Buy/Sell Back Transactions:
	 
	 	 	(a) “Accrued Interest”, with respect to any Purchased Securities subject to a Buy/Sell Back
Transaction, unpaid Income that has accrued during the period from (and including) the issue
date or the last Income payment date (whichever is later) in respect of such Purchased
Securities to (but excluding) the date of calculation. For these purposes unpaid Income shall
be deemed
to accrue on a daily basis from (and including) the issue date or the last Income payment
date (as the case may be) to (but excluding) the next Income payment date or the maturity
date (whichever is earlier);
	 
	 	 	(b) “Sell Back Differential”, with respect to any Buy/Sell Back Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such Buy/Sell Back
Transaction to the Purchase Price for such Buy/Sell Back Transaction on a 360 day per year
basis (unless otherwise agreed by the parties for the Transaction) for the actual number of
days during the period commencing on (and including) the Purchase Date for such Buy/Sell Back
Transaction and ending on (but excluding) the date of determination;
	 
	 	 	(c) “Sell Back Price”, with respect to any Buy/Sell Back Transaction:
	 
	 	 	(i) in relation to the date originally specified by the parties as the Repurchase Date
pursuant to Paragraph 2(q) of the Agreement, the price agreed by the Parties in relation to
such Buy/Sell Back Transaction, and

25

 

	 	 	(ii) in any other case (including for the purposes of the application
of Paragraph 4 or Paragraph 11 of the Agreement), the product of the formula
(P + D) - (IR + C), where—
	 
	 	 	P = the Purchase Price
	 
	 	 	D = the Sell Back Differential
	 
	 	 	IR = the amount of any Income in respect of the Purchased Securities paid
by the issuer on any date falling between the Purchase Date and the
Repurchase Date
	 
	 	 	C = the aggregate amount obtained by daily application of the Pricing Rate
for such Buy/Sell Back Transaction to any such Income from (and including)
the date of payment by the issuer to (but excluding) the date of
calculation.
	 
	5.	 	When entering into a Buy/Sell Back Transaction the parties
shall also agree on the Sell Back Price and the Pricing Rate to apply in
relation to such Buy/Sell Back Transaction on the scheduled Repurchase Date.
The parties shall record the Pricing Rate in at least one Confirmation
applicable to such Buy/Sell Back Transaction.
	 
	6.	 	Termination of a Buy/Sell Back Transaction shall be effected
on the Repurchase Date by transfer to Seller or its agent of Purchased
Securities against the payment by Seller of (i) in a case where the Repurchase
Date is the date originally agreed to by the parties pursuant to Paragraph
2(q) of the Agreement, the Sell Back Price referred to in Paragraph 4(c)(i) of
this Annex; and (ii) in any other case, the Sell Back Price referred to in
Paragraph 4(c)(ii) of this Annex.
	 
	7.	 	For the avoidance of doubt, the parties acknowledge and agree
that the Purchase Price and the Sell Back Price in Buy/Sell Back Transactions
shall include Accrued Interest (except to the extent contrary to market
practice with respect to the
Securities subject to such Buy/Sell Back Transaction, in which event (i) an
amount equal to the Purchase Price plus Accrued Interest to the Purchase Date
Shall be paid to Seller on the Purchase Date and shall be used, in lieu of
the Purchase Price, for calculating the Sell Back Differential, (ii) an
amount equal to the Sell Back Price plus the amount of Accrued Interest to
the Repurchase Date shall be paid to Buyer on the Repurchase Date, and (iii)
the formula in Paragraph 4(c)(ii) of this Annex VI shall be replaced by the
formula “(P + AI + D) - (IR + C)”, where “AI” equals Accrued Interest to the
Purchase Date).
	 
	8.	 	Unless the parties agree in Annex I to the Agreement that a
Buy/Sell Back Transaction is not to be repriced, they shall at the time of
repricing agree on the Purchase Price, the Sell Back Price and the Pricing
Rate applicable to such Transaction.

26

 

	9.	 	Paragraph 5 of the Agreement shall not apply to Buy/Sell Back Transactions. Seller
agrees, on the date such Income is received, to pay to Buyer any Income received by Seller in
respect of Purchased Securities that is paid by the issuer on any date falling between the
Purchase Date and the Repurchase Date.
	 
	10.	 	References to “Repurchase Price” throughout the Agreement shall be construed as references to
“Repurchase Price or the Sell Back Price, as the case may be.”
	 
	11.	 	In Paragraph 11 of the Agreement, references to the “Repurchase Prices” shall be construed as
references to “Repurchase Prices and Sell Back Prices.”

27

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