PFSI 8-K
PennyMac Financial Services, Inc. (PFSI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported):
(formerly known as New PennyMac Financial Services, Inc.)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01 Entry into a Material Definitive Agreement.
On July 30, 2021, PennyMac Financial Services, Inc. (the “Company”), through two of its indirect, wholly owned subsidiaries, PNMAC GMSR ISSUER TRUST (“Issuer Trust”) and PennyMac Loan Services, LLC (“PLS”), and its direct wholly owned subsidiary, Private National Mortgage Acceptance Company, LLC (“PNMAC”), entered into agreements to syndicate two existing variable funding note repurchase agreements, as part of the structured finance transaction that PLS uses to finance Ginnie Mae mortgage servicing rights and related excess servicing spread and servicing advance receivables. The Company entered into (i) an Amended and Restated Series 2016-MSRVF1 Master Repurchase Agreement by and among PLS, as seller, Credit Suisse First Boston Mortgage Capital LLC, as administrative agent to the buyers (“CSFB”), Credit Suisse AG, Cayman Islands Branch (“CSCIB”), as a buyer, Citibank, N.A. (“Citibank,” as a buyer and, collectively with CSCIB, the “Spread VFN Buyers”), and PNMAC, as a guarantor (the “Syndicated GMSR Servicing Spread Agreement”), related to the servicing spread, and (ii) an Amended and Restated Series 2020-MSRVF1 Master Repurchase Agreement by and among PLS, as seller, CSFB, as administrative agent to the buyers, CSCIB, as a buyer, Citibank, as a buyer (and, collectively with CSCIB, the “SAR VFN Buyers”), and PNMAC, as a guarantor (the “Syndicated GMSR SAR Agreement”), related to the servicing advance receivables. The initial terms of the Syndicated GMSR Servicing Spread Agreement and Syndicated GMSR SAR Agreement are each set to expire on March 31, 2023.
Syndicated GMSR Servicing Spread Agreement and Syndicated GMSR SAR Agreement
The Syndicated GMSR Servicing Spread Agreement amends and restates the terms of that certain master repurchase agreement, dated as of December 19, 2016, by and among PLS, CSFB, CSCIB and PNMAC (the “CSCIB GMSR Servicing Spread Agreement”). The primary purposes of the amendment and restatement are to: (1) add Citibank as a syndicated buyer of a new Series 2016-MSRVF1 Note No. 2, dated July 30, 2021, known as the “PNMAC GMSR ISSUER TRUST MSR Collateralized Notes, Series 2016-MSRVF1”, and (2) increase the maximum purchase price from $400 to $500 million, all of which is committed on a 50-50 pro rata basis between CSCIB and Citibank, subject to certain limitations described below.
The Syndicated GMSR SAR Agreement amends and restates the terms of that certain master repurchase agreement, dated as of April 20, 2020, by and among PLS, CSFB, CSCIB and PNMAC (the “CSCIB GMSR SAR Agreement”). The primary purposes of the amendment and restatement are to: (1) add Citibank as a syndicated buyer, and (2) provide that the maximum purchase price of $600 million, which remained unchanged, is now fully committed on a 50-50 pro rata basis between CSCIB and Citibank, subject to certain limitations described below.
In addition to the Syndicated GMSR Servicing Spread Agreement and Syndicated GMSR SAR Agreement, CSFB, CSCIB and, in one case, another CSFB affiliate, Alpine Securitization LTD (“Alpine”), provide two additional interwoven CS repurchase agreements to PLS: (i) a Third Amended and Restated Master Repurchase Agreement, dated as of April 28, 2017, with CSFB, acting as administrative agent for CSCIB, as a buyer, and Alpine, as a buyer (the “CS Loan Repurchase Agreement”) that PLS uses primarily to finance newly originated mortgage loans and Ginnie Mae early buyout loans; and (ii) a Master Repurchase Agreement, dated as of September 11, 2019, among CSFB, CSCIB, PLS and PNMAC that PLS uses to finance Fannie Mae mortgage servicing rights (the “Fannie Mae MSR PC Agreement”), (collectively, these four interwoven credit facilities are referred to as the “CS Credit Facilities”).
The pro rata portion available from CSCIB under the Syndicated GMSR Servicing Spread Agreement or Syndicated GMSR SAR Agreement, as applicable, may be reduced to the extent that the combined borrowed and/or purchased amounts outstanding under the CS Credit Facilities exceed (i) a maximum combined purchase price of $5 billion, or (ii) a maximum combined committed purchase price of $2 billion. PLS is now generally required to maintain a minimum of $100 million outstanding with the Spread VFN Buyers in connection with the Syndicated GMSR Servicing Spread Agreement.
The pro rata portion available from Citibank under the Syndicated GMSR Servicing Spread Agreement or Syndicated GMSR SAR Agreement, as applicable, may be reduced to the extent that the combined purchased amounts outstanding under all of the credit agreements provided to the Company by Citibank (“Citi Repurchase Agreements”) exceed (i) a maximum combined purchase price of $1 billion, increased from $900 million, or (ii) a maximum combined committed purchase price of $650 million.
If one Spread VFN Buyer’s or SAR VFN Buyer’s available pro rata portion of the committed amount and/or maximum purchase price under the Syndicated GMSR Servicing Spread Agreement or Syndicated GMSR SAR Agreement, respectively, is reduced as described above, the other Spread VFN Buyer’s or SAR VFN Buyer’s committed amount and/or maximum purchase price shall be adjusted by a corresponding amount to maintain equal pro rata shares between the two Spread VFN Buyers or SAR VFN Buyers, as applicable. All transactions are executed by the two Spread VFN Buyers or SAR VFN Buyers, as applicable, simultaneously and proportionately to maintain their respective 50% pro rata shares, provided that if one Spread VFN Buyer or SAR VFN Buyer, as applicable, fails to remit its committed amount of a requested transaction (a “Defaulting Buyer’), the other Spread VFN Buyer or SAR VFN Buyer, as applicable, shall advance its committed amount and has the option of funding the Defaulting Buyer’s committed amount. For any repurchase transaction requested on an uncommitted basis under the Syndicated GMSR Servicing Spread Agreement or Syndicated GMSR SAR Agreement, such transaction shall only be entered to the extent both Spread VFN Buyers or SAR VFN Buyers, as applicable, agree to proportionately fund such transaction, subject to the maximum purchase price at the time.
The applicable VFNs as pledged under the Syndicated GMSR Servicing Spread Agreement and the Syndicated GMSR SAR Agreement, as applicable, also serve as cross-collateral for PLS’s obligations under the CS Credit Facilities and the Citi Repurchase Agreements.
The principal amount paid by the Spread VFN Buyers or SAR VFN Buyers for the applicable VFN is based upon a percentage of the market value of the applicable VFN. Upon PLS’s repurchase of the applicable VFN, PLS is required to repay the Spread VFN Buyers or SAR VFN Buyers, as applicable, the principal amount relating thereto plus accrued interest (at a rate reflective of the current market based on a spread above LIBOR with index replacement provisions related to the transition from LIBOR) to the date of such repurchase.
The Syndicated GMSR Servicing Spread Agreement and Syndicated GMSR SAR Agreement also contain an additional margin call provision that requires PLS to maintain a ratio equal to or greater than 2.33:1 between its borrowings under the CS Loan Repurchase Agreement and its borrowings under the other CS Credit Facilities, and it provides CSCIB with certain rights in the event of PLS’ failure to maintain such ratio. Under these provisions, CSCIB may require PLS to transfer cash or additional eligible assets to CSCIB with an aggregate asset value in an amount sufficient to eliminate any margin deficit resulting from such failure.
The other material provisions of the Syndicated GMSR Servicing Spread Agreement and the Syndicated GMSR SAR Agreement, respectively, remain the same as those in the CSCIB GMSR Servicing Spread and CSCIB GMSR SAR Agreement, respectively.
Indenture Supplements
In connection with adding Citibank as a Spread VFN Buyer and a SAR VFN Buyer, the parties to the Syndicated GMSR Servicing Spread Agreement and the Syndicated GMSR SAR Agreement along with Citibank, in its capacity as indenture trustee, also entered into: (i) an Amendment No. 5, dated as of July 30, 2021 (the “Amended 2016-MSRVF1 Supplement”) to that certain Series 2016-MSRVF1 Indenture Supplement, dated as of December 19, 2016, and (ii) an Amendment No. 3, dated as of July 30, 2021 (the “Amended 2020-SPIADVF1 Supplement”) to that certain Series 2020-SPIADVF1 Indenture Supplement, dated as of April 1, 2020.
Second Amended and Restated Guaranty
The obligations of PLS under the Syndicated GMSR Servicing Spread Agreement and the Syndicated GMSR SAR Agreement are guaranteed in full by PNMAC (the “Second Amended Syndicated VFNs Guaranty”).
The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to the other descriptions and the full text of the agreements and amendments in the following: (i)(a) the Syndicated GMSR Servicing Spread Agreement, (b) the Syndicated GMSR SAR Agreement, (c) the Amended 2016-MSRVF1 Supplement, (d) the Amended 2020-SPIADVF1 Supplement, and (e) the Second Amended Syndicated VFNs Guaranty, which have been filed with this Current Report on Form 8-K as Exhibit 10.1 through Exhibit 10.5, respectively, (ii) the description of the CSCIB GMSR Servicing Spread Agreement in the Company’s Current Report on Form 8-K as filed with the SEC on December 21, 2016, including the full text of the Master Repurchase Agreement and the related guaranty attached thereto as Exhibit 10.3 and Exhibit 10.4, respectively; (iii) the description of the CSCIB GMSR SAR Agreement in the Company’s Current Report on Form 8-K as filed with the SEC on April 7, 2020, including the full text of the Master Repurchase Agreement and the related guaranty attached thereto as Exhibit 10.1 and Exhibit 10.2, respectively; (iv) the full text of the Third Amended and Restated Base Indenture, dated as of April 1, 2020, which has been filed with the Company’s Current Report on Form 8-K as filed with the SEC on April 7, 2020 as Exhibit 10.5; (v) the full text of the Issuer Trust PC Repurchase Agreement, which has been filed with the Company’s Current Report on Form 8-K as filed with the SEC on April 7, 2020 as Exhibit 10.6; and (vi) the full text of all other amendments to the foregoing filed thereafter with the SEC.
Item 2.02 Results of Operations and Financial Condition.
On August 5, 2021, the Company issued a press release announcing its financial results for the fiscal quarter ended June 30, 2021. A copy of the press release and the slide presentation used in connection with the Company’s recorded presentation of financial results were made available on August 5, 2021 and are furnished as Exhibits 99.1 and Exhibit 99.2, respectively.
The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this report is incorporated herein by reference.
Item 8.01 Other Events.
On August 4, 2021, the Company’s Board of Directors approved an increase to the Company’s common stock repurchase authorization from $1.0 billion to $2.0 billion. The stock repurchase authorization does not require the Company to purchase a specific number of shares, and the timing and amount of any shares repurchased are based on market conditions and other factors, including price, regulatory requirements and capital availability. Stock repurchases may be effected through privately negotiated transactions or open market purchases in accordance with applicable rules and regulations. The stock repurchase authorization does not have an expiration date but may be suspended, modified or discontinued at any time without prior notice.
A copy of the press release discussing the stock repurchase authorization is further attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNYMAC FINANCIAL SERVICES, INC. | |
| Dated: August 5, 2021 | /s/ Daniel S. Perotti |
|
Daniel S. Perotti Senior Managing Director and Chief Financial Officer |
Exhibit 10.1
EXECUTION VERSION
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
among
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent
(“Administrative Agent”)
and
THE BUYERS FROM TIME TO TIME PARTY HERETO, as buyers (“Buyers”)
and
PENNYMAC LOAN SERVICES, LLC, as seller (“Seller”)
Dated as of July 30, 2021
PNMAC GMSR ISSUER TRUST
MSR COLLATERALIZED NOTES, SERIES 2016-MSRVF1
| TABLE OF CONTENTS | |||
| Page | |||
| ARTICLE I | |||
| DEFINITIONS | |||
| Section 1.01 | Certain Defined Terms | 2 | |
| Section 1.02 | Other Defined Terms | 15 | |
| ARTICLE II | |||
| GENERAL TERMS | |||
| Section 2.01 | Transactions | 15 | |
| Section 2.02 | Procedure for Entering into Transactions | 16 | |
| Section 2.03 | Repurchase; Payment of Repurchase Price | 17 | |
| Section 2.04 | Price Differential | 17 | |
| Section 2.05 | Margin Maintenance | 17 | |
| Section 2.06 | Payment Procedure | 18 | |
| Section 2.07 | Application of Payments | 18 | |
| Section 2.08 | Use of Purchase Price and Transaction Requests | 19 | |
| Section 2.09 | Recourse | 20 | |
| Section 2.10 | Requirements of Law | 20 | |
| Section 2.11 | Taxes | 21 | |
| Section 2.12 | Indemnity | 22 | |
| Section 2.13 | Additional Balance and Additional Funding | 22 | |
| Section 2.14 | Commitment Fee | 22 | |
| Section 2.15 | Termination | 23 | |
| ARTICLE III | |||
| REPRESENTATIONS AND WARRANTIES | |||
| Section 3.01 | Seller Existence | 23 | |
| Section 3.02 | Licenses | 23 | |
| Section 3.03 | Power | 23 | |
| Section 3.04 | Due Authorization | 24 | |
| Section 3.05 | Financial Statements | 24 | |
| Section 3.06 | No Event of Default | 25 | |
| Section 3.07 | Solvency | 25 | |
| Section 3.08 | No Conflicts | 25 | |
| Section 3.09 | True and Complete Disclosure | 25 | |
| Section 3.10 | Approvals | 25 | |
| Section 3.11 | Litigation | 25 |
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| Section 3.12 | Material Adverse Change | 26 | |
| Section 3.13 | Ownership | 26 | |
| Section 3.14 | The Note | 26 | |
| Section 3.15 | Taxes | 27 | |
| Section 3.16 | Investment Company | 27 | |
| Section 3.17 | Chief Executive Office; Jurisdiction of Organization | 27 | |
| Section 3.18 | Location of Books and Records | 27 | |
| Section 3.19 | ERISA | 27 | |
| Section 3.20 | Financing of Note and Additional Balances | 27 | |
| Section 3.21 | Agreements | 27 | |
| Section 3.22 | Other Indebtedness | 28 | |
| Section 3.23 | No Reliance | 28 | |
| Section 3.24 | Plan Assets | 28 | |
| Section 3.25 | No Prohibited Persons | 28 | |
| Section 3.26 | Compliance with 1933 Act | 28 | |
| Section 3.27 | Anti-Money Laundering Laws | 29 | |
| ARTICLE IV | |||
| CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST | |||
| Section 4.01 | Ownership | 29 | |
| Section 4.02 | Security Interest | 29 | |
| Section 4.03 | Further Documentation | 30 | |
| Section 4.04 | Changes in Locations, Name, etc | 30 | |
| Section 4.05 | Performance by Administrative Agent of Seller’s Obligations | 30 | |
| Section 4.06 | Proceeds | 31 | |
| Section 4.07 | Remedies | 31 | |
| Section 4.08 | Limitation on Duties Regarding Preservation of Repurchase Assets | 32 | |
| Section 4.09 | Powers Coupled with an Interest | 32 | |
| Section 4.10 | Release of Security Interest | 32 | |
| Section 4.11 | Reinstatement | 32 | |
| Section 4.12 | Subordination | 32 | |
| ARTICLE V | |||
| CONDITIONS PRECEDENT | |||
| Section 5.01 | Initial Transaction | 33 | |
| Section 5.02 | All Transactions | 33 | |
| Section 5.03 | Closing Subject to Conditions Precedent | 35 | |
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| ARTICLE VI | |||
| COVENANTS | |||
| Section 6.01 | Litigation | 37 | |
| Section 6.02 | Prohibition of Fundamental Changes | 37 | |
| Section 6.03 | Reporting | 38 | |
| Section 6.04 | No Adverse Claims | 38 | |
| Section 6.05 | Assignment | 38 | |
| Section 6.06 | Security Interest | 38 | |
| Section 6.07 | Records | 38 | |
| Section 6.08 | Books | 39 | |
| Section 6.09 | Approvals | 39 | |
| Section 6.10 | Material Change in Business | 39 | |
| Section 6.11 | Distributions | 39 | |
| Section 6.12 | Applicable Law | 39 | |
| Section 6.13 | Existence | 39 | |
| Section 6.14 | Chief Executive Office; Jurisdiction of Organization | 39 | |
| Section 6.15 | Taxes | 39 | |
| Section 6.16 | Transactions with Affiliates | 40 | |
| Section 6.17 | Guarantees | 40 | |
| Section 6.18 | Indebtedness | 40 | |
| Section 6.19 | True and Correct Information | 40 | |
| Section 6.20 | No Pledge | 40 | |
| Section 6.21 | Plan Assets | 40 | |
| Section 6.22 | Sharing of Information | 40 | |
| Section 6.23 | Modification of the Base Indenture and Series 2016-MSRVF1 Indenture Supplement | 41 | |
| Section 6.24 | Reporting Requirements | 41 | |
| Section 6.25 | Liens on Substantially All Assets | 43 | |
| Section 6.26 | Litigation Summary | 43 | |
| Section 6.27 | Hedging | 43 | |
| Section 6.28 | MSR Valuation | 43 | |
| Section 6.29 | Most Favored Status | 44 | |
| Section 6.30 | Threshold Events and Commitment Modifications | 44 | |
| ARTICLE VII | |||
| DEFAULTS/RIGHTS AND REMEDIES OF BUYERS UPON DEFAULT | |||
| Section 7.01 | Events of Default | 44 | |
| Section 7.02 | No Waiver | 47 | |
| Section 7.03 | Due and Payable | 47 |
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| Section 7.04 | Fees | 47 | |
| Section 7.05 | Default Rate | 47 | |
| ARTICLE VIII | |||
| ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYERS | |||
| Section 8.01 | Entire Agreement; Amendments | 48 | |
| Section 8.02 | Waivers, Separate Actions by Buyers | 48 | |
| ARTICLE IX | |||
| SUCCESSORS AND ASSIGNS | |||
| Section 9.01 | Successors and Assigns | 48 | |
| Section 9.02 | Participations and Transfers | 48 | |
| Section 9.03 | Buyer and Participant Register | 50 | |
| ARTICLE X | |||
| AGENT PROVISIONS | |||
| Section 10.01 | Appointment of Administrative Agent | 50 | |
| Section 10.02 | Powers and Duties | 51 | |
| Section 10.03 | General Immunity | 51 | |
| Section 10.04 | Administrative Agent to Act as Buyer | 52 | |
| Section 10.05 | Buyers’ Representations, Warranties and Acknowledgment | 52 | |
| Section 10.06 | Right to Indemnity | 53 | |
| Section 10.07 | Successor Administrative Agent | 54 | |
| Section 10.08 | Delegation of Duties | 54 | |
| Section 10.09 | Right to Realize on Collateral | 55 | |
| Section 10.10 | Erroneous Payments | 55 | |
| ARTICLE XI | |||
| MISCELLANEOUS | |||
| Section 11.01 | Survival | 57 | |
| Section 11.02 | Indemnification | 57 | |
| Section 11.03 | Nonliability of Buyers | 57 | |
| Section 11.04 | Governing Law; Submission to Jurisdiction; Waivers | 58 | |
| Section 11.05 | Notices | 59 | |
| Section 11.06 | Severability | 61 | |
| Section 11.07 | Section Headings | 61 | |
| Section 11.08 | Counterparts | 61 |
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| Section 11.09 | Periodic Due Diligence Review | 61 | |
| Section 11.10 | Hypothecation or Pledge of Repurchase Assets | 62 | |
| Section 11.11 | Non-Confidentiality of Tax Treatment | 62 | |
| Section 11.12 | Set-off | 63 | |
| Section 11.13 | Intent | 63 | |
| Section 11.14 | Amendment and Restatement | 64 | |
| Schedule 1 | – | Responsible Officers of Seller | |
| Schedule 2 | – | Asset Schedule | |
| Schedule 3 | – | Administrative Agent Account | |
| Exhibit A | – | Form of Transaction Notice | |
| Exhibit B | – | Existing Indebtedness | |
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AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
This Amended and Restated Master Repurchase Agreement (this “Agreement”) is made as of July 30, 2021, among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (“CSFB”), as administrative agent (the “Administrative Agent”), the Buyers (as defined herein) from time to time party hereto, and PENNYMAC LOAN SERVICES, LLC, as seller (“Seller” or “PLS”).
W I T N E S S E T H :
WHEREAS, pursuant to the Base Indenture and the Original Series 2016-MSRVF1 Indenture Supplement, PNMAC GMSR ISSUER TRUST (“Issuer”) duly authorized the issuance of a Series of Notes, as a single Class of Variable Funding Note, known as the “PNMAC GMSR ISSUER TRUST MSR Collateralized Notes, Series 2016-MSRVF1” (the “Original Note”);
WHEREAS, the Original Note was issued to the Seller and the Seller sold the Original Note to Credit Suisse AG, Cayman Islands Branch (“CSCIB”), as buyer pursuant to a master repurchase agreement, dated as of December 19, 2016, (as amended by Amendment No. 1, dated as of February 28, 2018, Amendment No. 2, dated as of April 1, 2020, Amendment No. 3, dated as of April 24, 2020, and Amendment No. 4, dated as of August 25, 2020, and as may be further amended, restated supplemented or otherwise modified from time to time, the “Original Agreement”);
WHEREAS, the Administrative Agent, CSCIB and PLS desire to amend and restate the Original Agreement in its entirety, on the terms and subject to the conditions as set forth herein;
WHEREAS, in connection with the restatement and amendment of the Original Agreement, CSCIB and PLS will agree to return and cancel the Original Note in exchange for a single replacement note (the “Note”) issued pursuant to the Series 2016-MSRVF1 Indenture Supplement;
WHEREAS, from time to time, the parties hereto may enter into Transactions;
WHEREAS, Seller is the owner of the Note, and the Administrative Agent is the holder of the Note on behalf of the Buyers; and
WHEREAS, Seller wishes to sell its entire interest in the Note to Buyers pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent, Buyers and Seller hereby agree as follows.
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ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Capitalized terms used herein shall have the indicated meanings:
“1933 Act” means the Securities Act of 1933, as amended from time to time.
“1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Act of Insolvency” means, with respect to any Person or its Affiliates, (i) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding, or the voluntary joining of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested or results in entry of an order for relief; (ii) the seeking of the appointment of a receiver, trustee, custodian or similar official for such party or an Affiliate or any substantial part of the property of either; (iii) the appointment of a receiver, conservator, or manager for such party or an Affiliate by any governmental agency or authority having the jurisdiction to do so; (iv) the making or offering by such party or an Affiliate of a composition with its creditors or a general assignment for the benefit of creditors; (v) the admission by such party or an Affiliate of such party of its inability to pay its debts or discharge its obligations as they become due or mature; or (vi) that any governmental authority or agency or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such party or of any of its Affiliates, or shall have taken any action to displace the management of such party or of any of its Affiliates or to curtail its authority in the conduct of the business of such party or of any of its Affiliates.
“Additional Balance” has the meaning set forth in Section 2.13.
“Additional Repurchase Assets” has the meaning set forth in Section 4.02(c).
“Administrative Agent” has the meaning given to such term in the preamble to this Agreement.
“Administrative Agent Account” means the account identified on Schedule 3 hereto.
“Administrative Fee” has the meaning set forth in each of the Series 2016-MBSADV1 Indenture Supplement and the Series 2021-MBSADV1 Indenture Supplement.
“Affiliate” means, with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code; provided, however, that in respect of Seller the term “Affiliate” shall include only PNMAC and its wholly owned subsidiaries.
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“Aggregate Committed Amount” means the sum of all Committed Amounts.
“Agreement” has the meaning given to such term in the preamble to this Agreement.
“Anti-Money Laundering Laws” shall have the meaning set forth in Section 3.27.
“Applicable Lending Office” means the “lending office” of a Buyer (or of an Affiliate of such Buyer) designated on the signature page hereof or such other office of a Buyer (or of an Affiliate of such Buyer) as such Buyer may from time to time specify to Seller in writing as the office by which the Transactions are to be made and/or maintained.
“Asset Schedule” means Schedule 2 attached hereto, which lists the Note and the terms thereof, as such schedule shall be updated from time to time in accordance with Section 2.02 hereof, including in connection with Administrative Agent’s approval of any Additional Balances pursuant to Section 2.13.
“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.
“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended from time to time.
“Base Indenture” means the Third Amended and Restated Base Indenture, dated as of April 1, 2020, among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, Seller, as administrator and as servicer, CSFB, as administrative agent and the Credit Manager, including the schedules and exhibits thereto.
“Base Rate” has the meaning assigned to the term in the Pricing Side Letter.
“Business Day” means any day other than (i) a Saturday or Sunday or (ii) any other day on which national banking associations or state banking institutions in New York, New York, the State of California, the State of Texas, the city and state where the Corporate Trust Office is located or the Federal Reserve Bank of New York, are authorized or obligated by law, executive order or governmental decree to be closed.
“Buyer” means each Person listed on the signature pages to this Agreement as Buyer, together with their successors, and any Transferee of such Person, other than any such Person that ceases to be a Buyer pursuant to this Agreement.
“Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
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“Change in Control” occurs if any of the following occur:
(A) any transaction or event as a result of which PNMAC ceases to own, beneficially or of record, 100% of the stock of Seller, except with respect to an initial public offering of Seller’s common stock on a U.S. national securities exchange;
(B) the sale, transfer, or other disposition of all or substantially all of Seller’s or PNMAC’s assets (excluding any such action taken in connection with any securitization transaction); or
(C) the consummation of a merger or consolidation of Seller or PNMAC with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s stock outstanding immediately after such merger, consolidation or such other reorganization is owned by Persons who were not stockholders of Seller or PNMAC immediately prior to such merger, consolidation or other reorganization.
“Closing Date” has the meaning assigned to the term in the Pricing Side Letter.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment Fee” has the meaning assigned to the term in the Pricing Side Letter.
“Commitment Modification” has the meaning assigned to the term in the Pricing Side Letter.
“Committed Amount” has the meaning assigned to the term in the Pricing Side Letter.
“Commitment Share” means, with respect to each Buyer, 50%.
“Confidential Information” has the meaning set forth in Section 11.11(b).
“Control”, “Controlling” or “Controlled” means the possession of the power to direct or cause the direction of the management or policies of a Person through the right to exercise voting power or by contract, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
“Corresponding Repurchase Price” has the meaning set forth in Section 10.10(c).
“Credit Manager” means Pentalpha Surveillance LLC and any successor thereto in such capacity.
“CSCIB” has the meaning given to such term in the preamble to this Agreement.
“CSFB” has the meaning given to such term in the preamble to this Agreement.
“Default” means an event, condition or default that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
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“Defaulting Buyer” has the meaning set forth in Section 2.02.
“Dollars” and “$” means dollars in lawful currency of the United States of America.
“EO13224” has the meaning set forth in Section 3.25.
“Erroneous Payment” has the meaning set forth in Section 10.10(a).
“Erroneous Payment Return Deficiency” has the meaning set forth in Section 10.10(c).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any corporation or trade or business that, together with Seller or PNMAC is treated as a single employer under Section 414(b) or (c) of the Code or solely for purposes of Section 302 of ERISA and Section 412 of the Code is treated as single employer described in Section 414 of the Code.
“ERISA Event of Termination” means with respect to Seller or PNMAC (i) with respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified with thirty (30) days of the occurrence of such event, or (ii) the withdrawal of Seller, PNMAC or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the failure by Seller, PNMAC or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including the failure to make on or before its due date a required installment under Section 412(m) of the Code (or Section 430(j) of the Code as amended by the Pension Protection Act) or Section 302(e) of ERISA (or Section 303(j) of ERISA, as amended by the Pension Protection Act), or (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by Seller, PNMAC or any ERISA Affiliate thereof to terminate any plan, or (v) the failure to meet requirements of Section 436 of the Code resulting in the loss of qualified status under Section 401(a)(29) of the Code, or (vi) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (vii) the receipt by Seller, PNMAC or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for Seller, PNMAC or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412(b) or 430(k) of the Code with respect to any Plan.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Existing Indebtedness” has the meaning specified in Section 3.22.
“Expenses” means all present and future expenses reasonably incurred by or on behalf of Administrative Agent and Buyers in connection with the negotiation, execution or enforcement of this Agreement or any of the other Program Agreements and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the reasonable and documented cost of title, lien, judgment and other record searches; reasonable and documented attorneys’ fees; any ongoing audits or due diligence costs in connection with valuation, entering into Transactions or determining whether a Margin Deficit may exist; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.
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“FATCA” Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or regulatory legislation, guidance, notes, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code.
“Fidelity Insurance” means insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount acceptable to Seller’s regulators.
“Financing Document” means any or all of the “Program Agreements” or “Facility Documents” as defined in any repurchase agreement or loan and security agreement between Seller and any Buyer.
“GAAP” means U.S. generally accepted accounting principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its successors, as in effect from time to time, and (ii) applied consistently with principles applied to past financial statements of Seller and its subsidiaries; provided, that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) that such principles have been properly applied in preparing such financial statements.
“GLB Act” has the meaning set forth in Section 11.11(b).
“Governmental Actions” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions over Administrative Agent, Seller or Buyers, as applicable.
“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.
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“Guarantee” means, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a mortgaged property. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
“Indebtedness” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements, including, without limitation, any Indebtedness arising hereunder; (g) Indebtedness of others Guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (i) Indebtedness of general partnerships of which such Person is a general partner and (j) with respect to clauses (a)-(i) above both on and off balance sheet.
“Indenture” means the Base Indenture, together with the Series 2016-MSRVF1 Indenture Supplement thereto.
“Indenture Trustee” means Citibank, N.A., its permitted successors and assigns.
“Issuer” has the meaning given to such term in the recitals to this Agreement.
“Laws” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Governmental Authority.
“Lien” means, with respect to any property or asset of any Person (a) any mortgage, lien, pledge, charge or other security interest or encumbrance of any kind in respect of such property or asset or (b) the interest of a vendor or lessor arising out of the acquisition of or agreement to acquire such property or asset under any conditional sale agreement, lease purchase agreement or other title retention agreement.
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“Margin” has the meaning assigned to the term in the Pricing Side Letter.
“Margin Call” has the meaning set forth in Section 2.05(a).
“Margin Deadlines” has the meaning set forth in Section 2.05(b).
“Margin Deficit” has the meaning set forth in Section 2.05(a).
“Market Value” means, with respect to the Note as of any date of determination, and without duplication, the fair market value of the Note on such date as determined by Administrative Agent in its sole discretion.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of Seller or any Affiliate that is a party to any Program Agreement taken as a whole; (b) a material impairment of the ability of Seller or any Affiliate that is a party to any Program Agreement to perform under any Program Agreement and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Agreement against Seller or any Affiliate that is a party to any Program Agreement.
“Maximum Purchase Price” has the meaning assigned to the term in the Pricing Side Letter.
“Maximum Purchase Price Modification” shall have the meaning set forth in the definition of Maximum Purchase Price.
“Net Income” has the meaning assigned to the term in the Pricing Side Letter.
“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.
“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been or are required to be made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.
“Non-Excluded Taxes” has the meaning set forth in Section 2.11(a).
“Note” has the meaning given to such term in the recitals to this Agreement.
“Notice” or “Notices” means all requests, demands and other communications, in writing (including facsimile transmissions and e-mails), sent by overnight delivery service, facsimile transmission, electronic transmission or hand-delivery to the intended recipient at the address specified in Section 11.05 or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.
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“Obligations” means (a) all of Seller’s indebtedness, obligations to pay the outstanding principal balance of the Purchase Price, together with interest thereon on the Termination Date, outstanding interest due on each Price Differential Payment Date, and other obligations and liabilities, to Administrative Agent, Buyers and each of their Affiliates arising under, or in connection with, the Program Agreements, whether now existing or hereafter arising; (b) any and all sums reasonably incurred and paid by Administrative Agent or Buyers or on behalf of Administrative Agent or Buyers in order to preserve any Repurchase Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of Seller’s indebtedness, obligations or liabilities referred to in this definition, the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Repurchase Asset, or of any exercise by Administrative Agent and Buyers of their respective rights under the Program Agreements, including reasonable attorneys’ fees and disbursements and court costs; and (d) all of Seller’s indemnity obligations to Administrative Agent and Buyers pursuant to the Program Agreements.
“OFAC” has the meaning set forth in Section 3.25.
“Officer’s Compliance Certificate” has the meaning assigned to such term in the Pricing Side Letter.
“Original Agreement” has the meaning given to such term in the recitals to this Agreement.
“Original Note” has the meaning given to such term in the recitals to this Agreement.
“Original Series 2016-MSRVF1 Indenture Supplement” means the Amended and Restated Series 2016-MSRVF1 Indenture Supplement, dated as of February 28, 2018, as amended by Amendment No. 1 thereto, dated as of August 10, 2018, Amendment No. 2, dated as of April 24, 2020, Amendment No. 3, dated as of August 25, 2020, and Amendment No. 4, dated as of April 1, 2021, by and among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and Administrative Agent, as administrative agent.
“Other Taxes” has the meaning set forth in Section 2.11(b).
“Participant” has the meaning set forth in Section 9.02(b).
“Payment Recipient” has the meaning set forth in Section 10.10(a).
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
“Pension Protection Act” means the Pension Protection Act of 2006, as amended from time to time.
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“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“PFSI” means PennyMac Financial Services Inc.
“Plan” means an employee benefit or other plan established or maintained by any Seller or any ERISA Affiliate and covered by Title IV of ERISA, other than a Multiemployer Plan.
“PLS” has the meaning given to such term in the preamble to this Agreement.
“PMH” means PennyMac Holdings, LLC, a limited liability company organized under the laws of the State of Delaware.
“PMH Documents” means the PMH Repurchase Agreement, PMT Guaranty, Acknowledgment and Subordination Agreement, pricing letter, side letter, confirmations and all documents ancillary thereto that evidence a PMH Transaction in the form approved by the Issuer in writing in its sole discretion with any material modifications approved by the Issuer in writing in its sole discretion (excluding provisions related to the advance rate or interest rate of such PMH Transactions, which shall not be subject to Issuer’s review or approval).
“PMH Transaction” means a transaction between PLS and PMH whereby PMH pledges the Purchased MSR Excess Spread and the corresponding Purchased MSR Excess Spread PC to PLS against the transfer of funds by PLS, which Purchased MSR Excess Spread is concurrently or consecutively pledged to the Issuer under the PC Repurchase Agreement.
“PNMAC” means Private National Mortgage Acceptance Company, LLC, its permitted successors and assigns.
“Price Differential” means with respect to any Transaction as of any date of determination, an amount equal to the product of (A) the Pricing Rate for such Transaction and (B) the Purchase Price for such Transaction, calculated daily on the basis of a 360 day year for the actual number of days during the Price Differential Period.
“Price Differential Payment Date” means, for as long as any Obligations shall remain owing by Seller to Administrative Agent and Buyers, each Payment Date (as defined in the Indenture).
“Price Differential Period” means, the period from and including a Price Differential Payment Date, up to but excluding the next Price Differential Payment Date.
“Price Differential Statement Date” has the meaning set forth in Section 2.04.
“Pricing Rate” means Base Rate plus the applicable Margin.
“Pricing Side Letter” means the fifth amended and restated pricing side letter dated as of the Closing Date, by and among Administrative Agent, Buyers, Seller and the VFN Guarantor, as amended, restated, supplemented or otherwise modified from time to time.
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“Primary Repurchase Assets” has the meaning set forth in Section 4.02(a).
“Program Agreements” means this Agreement, the Pricing Side Letter, each Side Letter Agreement, the VFN Repo Guaranty, the PC Repurchase Agreement, the PC Guaranty, the Purchased MSR Excess Spread Participation Agreement, the Originated MSR Excess and Retained Spread Participation Agreement, the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement.
“Prohibited Person” has the meaning set forth in Section 3.25.
“Pro Rata Share” means, with respect to each Buyer, the percentage obtained from the fraction: (i) the numerator of which is the outstanding Purchase Price attributable to such Buyer and (ii) the denominator of which is the aggregate outstanding Purchase Price.
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“Purchase Date” means, subject to the satisfaction of the conditions precedent set forth in Article V hereof, each Funding Date (as defined in the Indenture) on which a Transaction is entered into by Administrative Agent (as agent for Buyers) pursuant to Section 2.02 or such other mutually agreed upon date as more particularly set forth on Exhibit A hereto.
“Purchase Price” means on any date of determination:
(i) the price at which each Purchased Asset (or portion thereof) is transferred by Seller to Buyers (or Administrative Agent, as agent and bailee for Buyers), which shall equal the Asset Value of such Purchased Asset on the related Purchase Date, minus
(ii) the sum of (a) any Repurchase Price paid with respect to such Purchased Asset pursuant to Section 2.03, plus (b) any Additional Note Payment made with respect to such Purchased Asset pursuant to Section 4.4(a) or Section 4.5(e) of the Indenture, plus (c) any Redemption Amount paid pursuant to Section 13.1 of the Indenture, plus (d) any funds paid or applied by Administrative Agent against the Purchase Price pursuant to Section 2.05.
“Purchase Price Percentage” has the meaning assigned to the term in the Pricing Side Letter.
“Purchased Assets” means, collectively, the Note (including all outstanding Additional Balances thereunder) together with the Repurchase Assets related to the Note until it has been repurchased by Seller in accordance with the terms of this Agreement.
“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller, or any other person or entity with respect to the Purchased Assets.
“Register” has the meaning set forth in Section 9.02(c).
“Report Date” has the meaning set forth in Section 6.03.
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“Repurchase Assets” has the meaning set forth in Section 4.02(c).
“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date requested by Seller on which the Repurchase Price is paid pursuant to Section 2.03.
“Repurchase Price” means the price at which Purchased Assets are to be transferred by or on behalf of Buyers to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the accrued but unpaid Price Differential as of the date of such determination.
“Repurchase Rights” has the meaning set forth in Section 4.02(c).
“Required Buyers” means, (a) at any time any Obligations are outstanding, Buyers (other than Defaulting Buyers) holding sixty-six and two-thirds percent (66 2/3%) of the Obligations outstanding at such time (excluding the portion of the Obligations owed to a Defaulting Buyer), or (b) at any time there are no Obligations outstanding, “Required Buyers” shall mean the Buyers (other than Defaulting Buyers) holding sixty-six and two-thirds percent (66 2/3%) of Committed Amounts (excluding the Committed Amounts of any Defaulting Buyers).
“Requirement of Law” means, with respect to any Person, any law, treaty, rule or regulation or determination of an arbitrator, a court or other Governmental Authority, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” means as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer or treasurer of such Person. The Responsible Officers of Seller as of the Closing Date are listed on Schedule 1 hereto.
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor thereto.
“SEC” means the Securities and Exchange Commission, or any successor thereto.
“Seller” has the meaning assigned to such term in the preamble to this Agreement and includes PLS’ permitted successors and assigns.
“Seller Termination Option” means (a)(i) a Buyer has or shall incur costs in connection with those matters provided for in Section 2.10 or 2.11 and (ii) Administrative Agent, on behalf of Buyer, requests that Seller pay to such Buyer those costs in connection therewith, or (b) Administrative Agent has declared in writing that an event described in Section 5.02(g)(A) has occurred.
“Series 2016-MBSADV1 Indenture Supplement” means the Amended and Restated Series 2016-MBSADV1 Indenture Supplement, dated as of July 30, 2021, by and among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and Administrative Agent.
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“Series 2016-MSRVF1 Indenture Supplement” means the Original Series 2016-MSRVF1 Indenture Supplement (as amended by Amendment No. 5, dated as of July 30, 2021), by and among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and Administrative Agent.
“Series 2021-MBSADV1 Indenture Supplement” means the Series 2021-MBSADV1 Indenture Supplement, dated as of July 30, 2021, by and among the Issuer, PLS, the Indenture Trustee, the Calculation Agent, the Paying Agent, the Securities Intermediary, and CSFB, as Administrative Agent.
“Side Letter Agreement” means each side letter agreement to be dated as of the Closing Date, by and between the Seller and a Buyer.
“Subsidiary” means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Taxes” has the meaning assigned to such term in Section 2.11(a).
“Termination Date” has the meaning assigned to such term in the Pricing Side Letter.
“Test Period” has the meaning assigned to such term in the Pricing Side Letter.
“Threshold Event” shall mean with respect to a Buyer, a Transaction Notice submitted by Seller which, if satisfied as to such Buyer’s Pro Rata Share, would exceed the Maximum Purchase Price for such Buyer.
“Transaction” means a transaction pursuant to which Seller transfers the Note or Additional Balances, as applicable, to Buyers (or to Administrative Agent, as agent and bailee for Buyers) against the transfer of funds by Buyers, with a simultaneous agreement by Buyers (or by Administrative Agent, as agent and bailee for Buyers) to transfer such Note or Additional Balances, as applicable, back to Seller at a date certain or on demand, against the transfer of funds by Seller.
“Transaction Document” has the meaning assigned to such term in Appendix A to the Indenture.
“Transaction Notice” has the meaning assigned to such term in Section 2.02(a).
“Transaction Register” has the meaning assigned to such term in Section 9.03(b).
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“Transferee” has the meaning set forth in Section 9.02(c).
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.
“VFN Guarantor” means Private National Mortgage Acceptance Company, LLC, in its capacity as guarantor under the VFN Repo Guaranty.
“VFN Repo Guaranty” means the Second Amended and Restated Guaranty, dated as of the Closing Date, pursuant to which VFN Guarantor fully and unconditionally guarantees the obligations of Seller hereunder.
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Section 1.02 Other Defined Terms.
(a) Any capitalized terms used and not defined herein shall have the meaning set forth in the Base Indenture or the Series 2016-MSRVF1 Indenture Supplement, as applicable.
(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting. All references to Sections, subsections, Articles and Exhibits shall be to Sections, subsections, and Articles of, and Exhibits to, this Agreement unless otherwise specifically provided.
(c) Reference to and the definition of any document (including this Agreement) shall be deemed a reference to such document as it may be amended, restated, supplemented or otherwise modified from time to time.
(d) In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein the words “commencing on” mean “commencing on and including,” the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”
ARTICLE II
GENERAL TERMS
Section 2.01 Transactions. Subject to the terms and conditions hereof, Buyers severally, not jointly, agree to enter into Transactions with Seller for a Purchase Price outstanding at any one time not to exceed the Aggregate Committed Amount; however, the Buyers may agree from time to time to enter into Transactions with Seller for a Purchase Price outstanding in excess of the Aggregate Committed Amount but not to exceed the Maximum Purchase Price. No Buyer shall have any commitment or obligation to enter into a Transaction in connection with the Note to the extent the outstanding Purchase Price related to such Buyer after giving effect to such Transaction exceeds the related Committed Amount for such Buyer. During the term of this Agreement, Seller may pay the Repurchase Price in whole or in part at any time during such period without penalty, and additional Transactions may be entered into in accordance with the terms and conditions hereof. Each Buyer’s obligation to enter into Transactions pursuant to the terms of this Agreement shall terminate on the Termination Date. All Transactions, up to the Maximum Purchase Price, shall be effected by Buyers simultaneously and proportionately to their respective Commitment Share, it being understood that no Buyer shall be responsible for any default by any other Buyer in such other Buyer’s obligation to enter into a Transaction nor shall any Commitment Share of any Buyer be increased or decreased as a result of a default by any other Buyer in such other Buyer’s obligation to enter into a Transaction hereunder, except to the extent agreed to by the non-Defaulting Buyer pursuant to Section 2.02(b).
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Section 2.02 Procedure for Entering into Transactions.
(a) Seller may enter into Transactions with Buyers under this Agreement on any Purchase Date; provided, that Seller shall have given Administrative Agent and Buyers irrevocable notice (each, a “Transaction Notice”), which notice (i) shall be substantially in the form of Exhibit A, (ii) shall be signed by a Responsible Officer of Seller and be received by Administrative Agent and Buyers prior to 1:00 p.m. (New York time) one (1) Business Day prior to the related Purchase Date, and (iii) shall specify: (A) the Market Value (as defined in the PC Repurchase Agreement) of the MSR (as defined in the PC Repurchase Agreement), (B) the Series Invested Amount; (C) the Maximum VFN Principal Balance of the Note; (D) the current Note Balance of the Note/Purchase Price; (E) the requested Additional Balance/Purchase Price; (F) the total Note Balance/Repurchase Price after giving effect to such Transaction; (G) the effective Advance Rate; and (H) any additional terms or conditions of the Transaction not inconsistent with this Agreement. Each Transaction Notice on any Purchase Date shall be in an amount equal to at least $500,000.
(b) If Seller delivers a Transaction Notice that satisfies the requirements of Section 2.02(a) and all applicable conditions precedent set forth in Article V have been satisfied or waived on or prior to the Purchase Date, then subject to the foregoing, on the Purchase Date, each Buyer shall remit its Commitment Share of the requested Purchase Price in U.S. Dollars and in immediately available funds to Administrative Agent at the account specified in Schedule 3 (or such other account designated in writing by the Administrative Agent) no later than 11:00 a.m. (New York time) on the date specified in the Transaction Notice as the Purchase Date, and upon satisfaction or waiver of all applicable conditions set forth herein, the Administrative Agent shall deposit such proceeds into the account of Seller specified in Schedule 5 to the Base Indenture not later than 3:00 p.m. (New York time) on the Purchase Date (or such other account designated by Seller in the Transaction Notice).
The failure of either Buyer to advance the proceeds of its Commitment Share of any Transaction required to be advanced hereunder shall not relieve the other Buyer of its obligation to advance the proceeds of its Commitment Share of any such Transaction required to be advanced hereunder.
If a Buyer does not intend to fund its Commitment Share of the requested Purchase Price, such Buyer shall, within one (1) Business Day of the related Purchase Date, notify the Administrative Agent, the other Buyers and the Seller of its intent not to fund together with a description of the reason for not remitting its Commitment Share of the requested Purchase Price.
The liabilities and obligations of each Buyer hereunder shall be several and not joint, and neither the Administrative Agent nor the other Buyer shall be responsible for the performance by a Buyer of its obligations hereunder. Each Buyer shall be liable to Seller only for the amount of its respective Committed Amount. If a Buyer does not perform its obligations hereunder with respect to its Committed Amount (such Buyer a “Defaulting Buyer”), all or any part of such Defaulting Buyer’s participation in any Transaction shall be reallocated to the other, non-Defaulting Buyer, but only if (x) such non-Defaulting Buyer has consented to such reallocation in its sole and absolute discretion and (y) the Seller has confirmed that the conditions set forth in Section 2.02(a) are satisfied at the time of such reallocation.
Any Buyer previously designated as a Defaulting Buyer shall no longer be deemed a Defaulting Buyer once each Buyer’s proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to its respective Commitment Share.
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(c) Upon entering into each Transaction hereunder, the Asset Schedule shall be automatically updated and replaced with the Asset Schedule attached to the related Transaction Notice.
Section 2.03 Repurchase; Payment of Repurchase Price.
(a) Seller hereby promises to repurchase the Purchased Assets and pay all outstanding Obligations on the Termination Date.
(b) By notifying Administrative Agent and each Buyer in writing at least one (1) Business Day in advance, Seller shall be permitted, at its option, to prepay, subject to Section 2.12, the Purchase Price in whole or in part at any time, together with accrued and unpaid interest on the amount so prepaid.
Section 2.04 Price Differential. On each Price Differential Payment Date, Seller hereby promises to pay to Administrative Agent (on behalf of Buyers) all accrued and unpaid Price Differential on the Transactions, as invoiced by Administrative Agent to Seller three (3) Business Days prior to the related Price Differential Payment Date (the “Price Differential Statement Date”); provided, that on each Price Differential Payment Date prior to the occurrence and continuation of an Event of Default, the estimated Price Differential owed hereunder shall be subject to a true-up of the amount determined by Administrative Agent and agreed by Seller one (1) Business Day prior to the related Price Differential Payment Date. If Administrative Agent fails to deliver such statement on the Price Differential Statement Date, on such Price Differential Payment Date Seller shall pay the amount which Seller calculates as the Price Differential due and upon delivery of the statement, Seller shall remit to Administrative Agent any shortfall, or Administrative Agent shall refund to Seller any excess, in the Price Differential paid. Price Differential shall accrue each day on the Purchase Price at a rate per annum equal to the Pricing Rate. The Price Differential shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.
Section 2.05 Margin Maintenance.
(a) If at any time the aggregate outstanding amount of the Purchase Price of the Note is greater than the related Asset Value or the Maximum Purchase Price (any such excess, a “Margin Deficit”), then Administrative Agent may, and, at the direction of all Buyers, shall, by notice to Seller require Seller to transfer to Administrative Agent cash in an amount at least equal to the Margin Deficit (such requirement, a “Margin Call”).
(b) Notice delivered pursuant to Section 2.05(a) may be given by any written or electronic means. With respect to a Margin Call, any notice given before 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the following Business Day. With respect to a Margin Call, any notice given after 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the second (2nd) Business Day following the date of such notice. The foregoing time requirements for satisfaction of a Margin Call are referred to as the “Margin Deadlines”. The failure of Administrative Agent, on any one or more occasions, to exercise the rights of Buyers hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Administrative Agent to do so at a later date. Seller, Buyers and Administrative Agent each agree that a failure or delay by Administrative Agent to exercise the rights of Buyers hereunder shall not limit or waive Administrative Agent’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.
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Section 2.06 Payment Procedure. Seller absolutely, unconditionally, and irrevocably, shall make, or cause to be made, all payments required to be made by Seller hereunder. Seller shall deposit or cause to be deposited all amounts constituting collection, payments and proceeds of the Note (including all fees and proceeds of sale to a third party) to the Administrative Agent Account.
Section 2.07 Application of Payments.
(a) On each Price Differential Payment Date prior to the occurrence of an Event of Default, all amounts deposited into the Administrative Agent Account from and after the immediately preceding Price Differential Payment Date (or the Closing Date in connection with the initial Price Differential Payment Date), or received by Administrative Agent from the Issuer in Administrative Agent’s capacity as VFN Noteholder on behalf of Buyers, shall be applied by the Administrative Agent as follows:
(i) first, to each Buyer (other than a Defaulting Buyer), its Pro Rata Share of the payment of any accrued and unpaid Administrative Fee owing to such Buyer;
(ii) second, to each Buyer (other than a Defaulting Buyer), any accrued and unpaid Price Differential owing with respect to the amount of the Purchase Price attributable to such Buyer in excess of the Purchase Price attributable to the Defaulting Buyer, such amounts distributed pro rata among each non-Defaulting Buyer;
(iii) third, to each Buyer (other than a Defaulting Buyer) such that its proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to the Commitment Share;
(iv) fourth, to each Buyer to the extent not otherwise paid pursuant to clause first, its Pro Rata Share of the payment of any accrued and unpaid Administrative Fee owing to such Buyer;
(v) fifth, to each Buyer to the extent not otherwise paid pursuant to clause second, its Pro Rata Share of the payment of any accrued and unpaid Price Differential owed;
(vi) sixth, to each Buyer, its Pro Rata Share of the payment of Purchase Price outstanding to satisfy any Margin Deficit owed;
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(vii) seventh, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer on a pro rata basis, based on the proportion of such other costs and fees payable to such Buyer; and
(viii) eighth, any remainder to Seller.
(b) Notwithstanding the preceding provisions, if an Event of Default shall have occurred hereunder, all funds related to the Note shall be applied by the Administrative Agent as follows:
(i) first, to each Buyer (other than a Defaulting Buyer), its Pro Rata Share of the payment of any accrued and unpaid Administrative Fee owing to such Buyer;
(ii) second, to each Buyer (other than a Defaulting Buyer), any accrued and unpaid Price Differential owing with respect to the amount of the Purchase Price attributable to such Buyer in excess of the Purchase Price attributable to the Defaulting Buyer, such amounts distributed pro rata among each non-Defaulting Buyer;
(iii) third, to each Buyer (other than a Defaulting Buyer) such that its proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to the Commitment Share;
(iv) fourth, to each Buyer to the extent not otherwise paid pursuant to clause first, its Pro Rata Share of the payment of any accrued and unpaid Administrative Fee owing to such Buyer;
(v) fifth, to each Buyer to the extent not otherwise paid pursuant to clause second, its Pro Rata Share of the payment of any accrued and unpaid Price Differential owed;
(vi) sixth, to each Buyer, its Pro Rata Share of the payment of Purchase Price until reduced to zero;
(vii) seventh, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer, on a pro rata basis, based on the proportion of such other costs and fees payable to such Buyer;
(viii) eighth, to the payment of any other Obligations; and
(ix) ninth, any remainder to Seller.
Section 2.08 Use of Purchase Price and Transaction Requests. The Purchase Price shall be used by Seller to satisfy its obligations under the Indenture and for general corporate purposes.
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Section 2.09 Recourse. Notwithstanding anything else to the contrary contained or implied herein or in any other Program Agreement, Administrative Agent and Buyers shall have full, unlimited recourse against Seller and its assets in order to satisfy the Obligations.
Section 2.10 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any amendment made to a Buyer’s certificate of trust and trust agreement or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by such Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:
(i) shall subject such Buyer to any tax of any kind whatsoever with respect to this Agreement or the Transactions (excluding income taxes, branch profits taxes, franchise taxes or similar taxes imposed on a Buyer as a result of any present or former connection between such Buyer and the United States, other than any such connection arising solely from such Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or change the basis of taxation of payments to such Buyer in respect thereof;
(ii) shall impose, modify or hold any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of such Buyer which is not otherwise included in the determination of the Price Differential hereunder; or
(iii) shall impose on such Buyer any other condition;
and the result of any of the foregoing is to increase the cost to such Buyer, by an amount which such Buyer deems to be material, of entering, continuing or maintaining this Agreement or any other Program Agreement, the Transactions or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Seller shall promptly pay such Buyer such additional amount or amounts as calculated by such Buyer in good faith as will compensate such Buyer for such increased cost or reduced amount receivable.
(b) If a Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to such Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by such Buyer or any corporation Controlling such Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date shall have the effect of reducing the rate of return on such Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Buyer to be material, then from time to time, Seller shall promptly pay to such Buyer such additional amount or amounts as will compensate such Buyer for such reduction.
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(c) If a Buyer becomes entitled to claim any additional amounts pursuant to this Section 2.10, it shall promptly notify Seller of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section 2.10 submitted by such Buyer to Seller shall be conclusive in the absence of manifest error.
Section 2.11 Taxes.
(a) Any and all payments by or on behalf of Seller under or in respect of this Agreement or any other Program Agreements to which Seller is a party shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law. If Seller shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Program Agreements to Administrative Agent and Buyers (including for purposes of Section 2.10 and this Section 2.11, any assignee, successor or participant), (i) Seller shall make all such deductions and withholdings in respect of Taxes, (ii) Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any applicable Requirement of Law, and (iii) the sum payable by Seller shall be increased as may be necessary so that after Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 2.11) Administrative Agent and Buyers receive an amount equal to the sum they would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than, in the case of Administrative Agent and Buyers, Taxes that are (i) imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which Administrative Agent or Buyers are organized or of their Applicable Lending Office, or any political subdivision thereof, unless such Taxes are imposed as a result of Administrative Agent or Buyers having executed, delivered or performed its obligations or received payments under, or enforced, this Agreement or any of the other Program Agreements (in which case such Taxes will be treated as Non-Excluded Taxes) and (ii) imposed pursuant to FATCA.
(b) In addition, Seller hereby agrees to pay any present or future stamp, recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Program Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Agreement or any other Program Agreement (collectively, “Other Taxes”).
(c) Seller hereby agrees to indemnify Administrative Agent and Buyers for, and to hold each of them harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable by Seller under this Section 2.11 imposed on or paid by Administrative Agent or Buyers and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by Seller provided for in this Section 2.11 shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by Seller under the indemnity set forth in this Section 2.11(c) shall be paid within ten (10) days from the date on which Administrative Agent makes written demand therefor.
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(d) Without prejudice to the survival of any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Section 2.11 shall survive the termination of this Agreement and the other Program Agreements. Nothing contained in Section 2.10 or this Section 2.11 shall require Administrative Agent or any Buyer to make available any of their tax returns or any other information that they deem to be confidential or proprietary.
(e) Administrative Agent and Buyers will timely furnish Seller, or any agent of Seller, any tax forms or certifications (such as an applicable IRS Form W-8, IRS Form W-9 or any successors to such IRS forms) that it is legally entitled to provide and that Seller or its agents may reasonably request (A) to permit Seller or its agents to make payments to it without, or at a reduced rate of, deduction or withholding, (B) to enable Seller or its agents to qualify for a reduced rate of withholding or deduction in any jurisdiction from or through which Seller or its agents receive payments and (C) to enable Seller or its agents to satisfy reporting and other obligations under the Code and Treasury Regulations and under any other applicable laws, and shall update or replace such tax forms or certifications as appropriate or in accordance with their terms or subsequent amendments, and acknowledges that the failure to provide, update or replace any such tax forms or certifications may result in the imposition of withholding or back-up withholding upon payments to Administrative Agent and Buyers.
Section 2.12 Indemnity. Without limiting, and in addition to, the provisions of Section 10.02, Seller agrees to indemnify the Administrative Agent and each Buyer and to hold each of them harmless from any loss or expense that Administrative Agent or Buyers may sustain or incur as a consequence of (i) a default by Seller in payment when due of the Repurchase Price or Price Differential or (ii) a default by Seller in making any prepayment of Repurchase Price after Seller has given a notice thereof in accordance with Section 2.03.
Section 2.13 Additional Balance and Additional Funding. In the event that Seller wishes an increase in the VFN Principal Balance, Seller shall deliver to Administrative Agent and Buyers a copy of the VFN Note Balance Adjustment Request that is delivered under the Indenture. If all the Funding Conditions required pursuant to Sections 2.02(b) and 5.02 hereof and the Indenture have been satisfied, the VFN Principal Balance shall be increased by the amount so reflected (such increase, an “Additional Balance”), and (i) the outstanding VFN Principal Balance set forth in the Asset Schedule hereof shall be automatically updated and (ii) if requested by Seller pursuant to Section 2.02, each Buyer shall thereupon deliver its portion of the related Purchase Price as set forth in Section 2.02(b).
Section 2.14 Commitment Fee. Seller shall pay the Commitment Fee, if any, as specified in the Pricing Side Letter. Such payment shall be made in U.S. Dollars in immediately available funds, without deduction, set off or counterclaim, to Administrative Agent at such account designated in writing by Administrative Agent.
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Section 2.15 Termination.
(a) Notwithstanding anything to the contrary set forth herein, if a Seller Termination Option occurs, Seller may, upon five (5) Business Days’ prior written notice to Administrative Agent and each Buyer of such event, upon payment of the applicable Repurchase Price and satisfaction of the other termination conditions set forth in the Indenture, terminate this Agreement and the Termination Date shall be deemed to have occurred (upon the expiration of such five (5) Business Day period).
(b) In the event that a Seller Termination Option as described in clause (a) of the definition thereof has occurred and Seller has notified Administrative Agent and each Buyer in writing of its option to terminate this Agreement, each affected Buyer shall have the right to withdraw its request for payment within three (3) Business Days of Seller’s notice of its exercise of the Seller Termination Option and Seller shall no longer have the right to terminate this Agreement.
(c) For the avoidance of doubt, Seller shall remain responsible for all costs actually incurred by Administrative Agent or Buyers pursuant to Sections 2.10 and 2.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Administrative Agent and Buyers as of the Closing Date and as of each Purchase Date for any Transaction that:
Section 3.01 Seller Existence. Seller has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware.
Section 3.02 Licenses. Seller is duly licensed or is otherwise qualified in each jurisdiction in which it transacts business for the business which it conducts and is not in default of any applicable federal, state or local laws, rules and regulations unless, in either instance, the failure to take such action is not reasonably likely (either individually or in the aggregate) to cause a Material Adverse Effect and is not in default of such state’s applicable laws, rules and regulations. Seller has the requisite power and authority and legal right to own, sell and grant a lien on all of its right, title and interest in and to the Note. Seller has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement, each other Program Agreement and any Transaction Notice.
Section 3.03 Power. Seller has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect.
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Section 3.04 Due Authorization. Seller has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Program Agreements, as applicable. This Agreement, any Transaction Notice and the Program Agreements have been (or, in the case of Program Agreements and any Transaction Notice not yet executed, will be) duly authorized, executed and delivered by Seller, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against Seller in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.
Section 3.05 Financial Statements. (A) Seller has heretofore furnished to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of Seller ended December 31, 2020 and the related statements of income for Seller for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of Seller ended March 31, 2021 and the related statements of income for Seller for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of Seller (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of Seller’s knowledge, do not omit any material fact as of the date(s) thereof. Since March 31, 2021, there has been no material adverse change in the consolidated business, operations or financial condition of Seller from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. Seller has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller except as heretofore disclosed to Administrative Agent and each Buyer in writing.
(B) Seller has heretofore caused PFSI to furnish to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of PFSI ended December 31, 2020 and the related statements of income for PFSI for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of the PFSI ended March 31, 2021 and the related statements of income for PFSI for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of PFSI (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of Seller’s knowledge, do not omit any material fact as of the date(s) thereof. Since March 31, 2021, there has been no material adverse change in the consolidated business, operations or financial condition of PFSI from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. PFSI has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of PFSI except as heretofore disclosed to Administrative Agent and each Buyer in writing.
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Section 3.06 No Event of Default. There exists no Event of Default under Section 7.01 hereof, which default gives rise to a right to accelerate indebtedness as referenced in Section 7.03 hereof, under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money or to the repurchase of mortgage loans or securities.
Section 3.07 Solvency. Seller is solvent and will not be rendered insolvent by any Transaction and, after giving effect to such Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature and is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of such entity or any of its assets. Seller is not selling and/or pledging any Repurchase Assets with any intent to hinder, delay or defraud any of its creditors.
Section 3.08 No Conflicts. The execution, delivery and performance by of Seller of this Agreement, any Transaction Notice hereunder and the Program Agreements do not conflict with any term or provision of the organizational documents of Seller or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to Seller of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller, which conflict would have a Material Adverse Effect and will not result in any violation of any such mortgage, instrument, agreement or obligation to which Seller is a party.
Section 3.09 True and Complete Disclosure. All information, reports, exhibits, schedules, financial statements or certificates of Seller or any Affiliate thereof or any of their officers furnished or to be furnished to Administrative Agent and Buyers in connection with the initial or any ongoing due diligence of Seller or any Affiliate or officer thereof, negotiation, preparation, or delivery of the Program Agreements, taken as a whole, are true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All financial statements have been prepared in accordance with GAAP.
Section 3.10 Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to any governmental authority or court is required under applicable law in connection with the execution, delivery and performance by Seller of this Agreement, any Transaction Notice and the Program Agreements.
Section 3.11 Litigation. There is no action, proceeding or investigation pending with respect to which Seller has received service of process or, to the best of Seller’s knowledge threatened against it before any court, administrative agency or other tribunal (A) asserting the invalidity of this Agreement, any Transaction, Transaction Notice or any Program Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, any Transaction Notice or any Program Agreement, (C) makes a claim individually or in the aggregate in an amount greater than 5% of Seller’s Adjusted Tangible Net Worth, (D) which requires filing with the SEC in accordance with the 1934 Act or any rules thereunder, (E) which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Seller’s business, or (F) which might materially and adversely affect the validity of the Purchased Assets or the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any Transaction Notice or any Program Agreement.
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Section 3.12 Material Adverse Change. There has been no material adverse change in the business, operations, financial condition, properties or prospects of Seller or its Affiliates since the date set forth in the most recent financial statements supplied to Administrative Agent and Buyers that is reasonably likely to have a Material Adverse Effect on Seller.
Section 3.13 Ownership.
(a) Seller has good title to all of the Repurchase Assets, free and clear of all mortgages, security interests, restrictions, Liens and encumbrances of any kind other than the Liens created hereby or contemplated herein.
(b) Each item of the Repurchase Assets was acquired by Seller in the ordinary course of its business, in good faith, for value and without notice of any defense against or claim to it on the part of any Person.
(c) There are no agreements or understandings between Seller and any other party which would modify, release, terminate or delay the attachment of the security interests granted to Administrative Agent under this Agreement.
(d) The provisions of this Agreement are effective to create in favor of Administrative Agent a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets.
(e) Upon the filing of financing statements on Form UCC-1 naming Administrative Agent as “Secured Party” and Seller as “Debtor”, and describing the Repurchase Assets, in the recording offices of the Secretary of State of Delaware the security interests granted hereunder in the Repurchase Assets will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of Seller in, to and under such Repurchase Assets which can be perfected by filing under the Uniform Commercial Code.
Section 3.14 The Note. Seller has (i) delivered the Note to Administrative Agent, (ii) duly endorsed the Note to Administrative Agent or Administrative Agent’s designee, (iii) notified the Indenture Trustee of such transfer and (iv) completed all documents required to effect such transfer in the Note Register, including receipt by the Note Registrar of the Rule 144A Note Transfer Certificate and such other information and documents that may be required pursuant to the terms of the Indenture. In addition, Administrative Agent has received all other Program Agreements (including all exhibits and schedules referred to therein or delivered pursuant thereto), all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof and all agreements and other material documents relating thereto, and Seller hereby certifies that the copies delivered to Administrative Agent by Seller are true and complete. None of such documents has been amended, supplemented or otherwise modified (including waivers) since the respective dates thereof, except by amendments, copies of which have been delivered to Administrative Agent. Each such document to which Seller is a party has been duly executed and delivered by Seller and is in full force and effect, and no default or material breach has occurred and is continuing thereunder.
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Section 3.15 Taxes. Seller and its Subsidiaries have timely filed all tax returns that are required to be filed by them and have paid all taxes, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of Seller and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of Seller, adequate.
Section 3.16 Investment Company. Neither Seller nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; provided, however, that any entity that is under the management of PNMAC Capital Management LLC in its capacity as an “investment adviser” within the meaning of the Investment Advisers Act of 1940 and is otherwise not directly or indirectly owned or controlled by Seller shall not be deemed a “Subsidiary” for the purposes of this Section 3.16.
Section 3.17 Chief Executive Office; Jurisdiction of Organization. On the Closing Date, Seller’s chief executive office, is, and has been, located at 3043 Townsgate Road, Westlake Village, CA 91361. On the Effective Date, Seller’s jurisdiction of organization is the State of Delaware. Seller shall provide Administrative Agent with thirty (30) days advance notice of any change in Seller’s principal office or place of business or jurisdiction. Seller has no trade name. During the preceding five (5) years, Seller has not been known by or done business under any other name, corporate or fictitious, and has not filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.
Section 3.18 Location of Books and Records. The location where Seller keeps its books and records, including all computer tapes and records relating to the Repurchase Assets is its chief executive office.
Section 3.19 ERISA. Each Plan to which Seller or its Subsidiaries make direct contributions, and, to the knowledge of Seller, each other Plan and each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law.
Section 3.20 Financing of Note and Additional Balances. Each Transaction will be used to purchase the Note and funding of the Additional Balances as provided herein, which Note will be conveyed and/or sold by Seller to Buyers.
Section 3.21 Agreements. Neither Seller nor any Subsidiary of Seller is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 3.05 hereof. Neither Seller nor any Subsidiary of Seller is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture which default could have a material adverse effect on the business, operations, properties, or financial condition of Seller as a whole. No holder of any indebtedness of Seller or of any of its Subsidiaries has given notice of any asserted default thereunder.
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Section 3.22 Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by this Agreement) of Seller existing on the Closing Date is listed on Exhibit B hereto (the “Existing Indebtedness”).
Section 3.23 No Reliance. Seller has made its own independent decisions to enter into the Program Agreements and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including legal counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Administrative Agent or Buyers as to any aspect of the Transactions, including the legal, accounting or tax treatment of such Transactions.
Section 3.24 Plan Assets. Seller is not an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR § 2510.3 101 as amended by Section 3(42) of ERISA, in Seller’s hands, and transactions by or with Seller are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.
Section 3.25 No Prohibited Persons. Neither Seller nor any of its Affiliates, officers, directors, partners or members, is an entity or person (or to the Seller’s knowledge, owned or controlled by an entity or person) (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).
Section 3.26 Compliance with 1933 Act. Neither Seller nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Note, any interest in the Note or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Note, any interest in the Note or any other similar security from, or otherwise approached or negotiated with respect to the Note, any interest in the Note or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Note under the 1933 Act or which would render the disposition of the Note a violation of Section 5 of the 1933 Act or require registration pursuant thereto.
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Section 3.27 Anti-Money Laundering Laws. The operations of Seller and each of their subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where such Seller or any of their subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Seller or any of their subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of any Seller, threatened.
ARTICLE IV
CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST
Section 4.01 Ownership. Upon payment of the Purchase Price and delivery of the Note to Administrative Agent on behalf of the Buyers, Buyers shall become the sole owner of the Purchased Assets, free and clear of all liens and encumbrances.
Section 4.02 Security Interest.
(a) Although the parties intend (other than for U.S. federal tax purposes) that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, and in any event, Seller hereby pledges to Administrative Agent, for the benefit of Buyers, as security for the performance by Seller of its Obligations and hereby grants, assigns and pledges to Administrative Agent a fully perfected first priority security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Primary Repurchase Assets”:
(i) the Note identified on the Asset Schedule;
(ii) all rights to reimbursement or payment of the Note and/or amounts due in respect thereof under the Note identified on the Asset Schedule;
(iii) all records, instruments or other documentation evidencing any of the foregoing;
(iv) all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including all of Seller’s rights, title and interest in and under the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement); and
(v) any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.
(b) [Reserved].
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(c) Subject to the priority interest of the Indenture Trustee, Administrative Agent, Buyers and Seller hereby agree that in order to further secure Seller’s Obligations hereunder, Seller hereby assigns, pledges, conveys and grants to Administrative Agent, for the benefit of Buyers, a security interest in (i) Seller’s rights (but not its obligations) under the Program Agreements including any rights to receive payments thereunder or any rights to collateral thereunder whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Rights”) and (ii) all collateral however defined or described under the Program Agreements to the extent not otherwise included under the definitions of Primary Repurchase Assets or Repurchase Rights (such collateral, “Additional Repurchase Assets,” and collectively with the Primary Repurchase Assets and the Repurchase Rights, the “Repurchase Assets”) to secure the Obligations.
(d) The foregoing provisions of this Section 4.02 are intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement and the Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.
Section 4.03 Further Documentation. At any time and from time to time, upon the written request of Administrative Agent, and at the sole expense of Seller, Seller will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any applicable jurisdiction with respect to the Liens created hereby. Seller also hereby authorizes Administrative Agent to file any such financing or continuation statement to the extent permitted by applicable law.
Section 4.04 Changes in Locations, Name, etc. Seller shall not (a) change the location of its chief executive office/chief place of business from that specified in Section 3.17 or (b) change its name or identity, unless it shall have given Administrative Agent at least thirty (30) days’ prior written notice thereof and shall have delivered to Administrative Agent all Uniform Commercial Code financing statements and amendments thereto as Administrative Agent shall request and taken all other actions deemed necessary by Administrative Agent to continue its perfected status in the Repurchase Assets with the same or better priority.
Section 4.05 Performance by Administrative Agent of Seller’s Obligations. If Seller fails to perform or comply with any of its agreements contained in the Program Agreements, the Administrative Agent may itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable (under the circumstances) out-of-pocket expenses of Administrative Agent actually incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Pricing Rate shall be payable by Seller to Administrative Agent on demand and shall constitute Obligations. Such interest shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.
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Section 4.06 Proceeds. If an Event of Default shall occur and be continuing, (a) all proceeds of Repurchase Assets received by Seller consisting of cash, checks and other liquid assets readily convertible to cash items shall be held by Seller in trust for Administrative Agent segregated from other funds of Seller, and shall forthwith upon receipt by Seller be turned over to Administrative Agent in the exact form received by Seller (duly endorsed by Seller to Administrative Agent, if required) and (b) any and all such proceeds received by Administrative Agent (whether from Seller or otherwise) may, in the sole discretion of Administrative Agent, be held by Administrative Agent as collateral security for, and/or then or at any time thereafter may be applied by Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as Administrative Agent shall elect. Any balance of such proceeds remaining after the Obligations shall have been paid in full and this Agreement shall have been terminated shall be paid over to Seller or to whomsoever may be lawfully entitled to receive the same.
Section 4.07 Remedies. If an Event of Default shall occur and be continuing, Administrative Agent may exercise (and at the direction of the Required Buyers shall exercise), in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Uniform Commercial Code (including Administrative Agent’s rights to a strict foreclosure under Section 9-620 of the Uniform Commercial Code). Without limiting the generality of the foregoing, Administrative Agent may seek (and at the direction of the Required Buyers shall seek) the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of Seller or any of Seller’s property. Administrative Agent without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required under this Agreement or by law referred to below) to or upon Seller or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may (and at the direction of the Required Buyers shall) in such circumstances forthwith collect, receive, appropriate and realize upon the Repurchase Assets, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Repurchase Assets or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of Administrative Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Administrative Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Repurchase Assets so sold, free of any right or equity of redemption in Seller, which right or equity is hereby waived or released. Seller further agrees, at Administrative Agent’s request, to assemble the Repurchase Assets and make them available to Administrative Agent at places which Administrative Agent shall reasonably select, whether at Seller’s premises or elsewhere. Administrative Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable (under the circumstances) out-of-pocket costs and expenses of every kind actually incurred therein or incidental to the care or safekeeping of any of the Repurchase Assets or in any way relating to the Repurchase Assets or the rights of Administrative Agent hereunder, including reasonable attorneys’ fees and disbursements of Administrative Agent or Buyers, to the payment in whole or in part of the Obligations, in such order as Administrative Agent may elect (or shall elect at the direction of the Required Buyers), and only after such application and after the payment by Administrative Agent of any other amount required or permitted by any provision of law, including Section 9-615 of the Uniform Commercial Code, need Administrative Agent account for the surplus, if any, to Seller. To the extent permitted by applicable law, Seller waives all claims, damages and demands it may acquire against Administrative Agent arising out of the exercise by Administrative Agent of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of Administrative Agent. If any notice of a proposed sale or other disposition of Repurchase Assets shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. Seller shall remain liable for any deficiency (plus accrued interest thereon as contemplated herein) if the proceeds of any sale or other disposition of the Repurchase Assets are insufficient to pay the Obligations and the fees and disbursements in amounts reasonable under the circumstances, of any attorneys employed by Administrative Agent to collect such deficiency.
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Section 4.08 Limitation on Duties Regarding Preservation of Repurchase Assets. Administrative Agent’s duty with respect to the custody, safekeeping and physical preservation of the Repurchase Assets in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same manner as Administrative Agent deals with similar property for its own account. Neither Administrative Agent nor any of its directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Repurchase Assets or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Repurchase Assets upon the request of Seller or otherwise.
Section 4.09 Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Repurchase Assets are irrevocable and powers coupled with an interest.
Section 4.10 Release of Security Interest. Upon the latest to occur of (a) the repayment to Administrative Agent and Buyers of all Obligations hereunder, and (b) the occurrence of the Termination Date, Administrative Agent shall release its security interest in any remaining Repurchase Assets hereunder and shall promptly execute and deliver to Seller such documents or instruments as Seller shall reasonably request to evidence such release.
Section 4.11 Reinstatement. All security interests created by this Article IV shall continue to be effective, or be reinstated, as the case may be, if at any time any payment, or any part thereof, of any Obligation of Seller is rescinded or must otherwise be restored or returned by Administrative Agent or Buyers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Seller or any substantial part of its property, or otherwise, all as if such release had not been made.
Section 4.12 Subordination. Seller shall not seek in any Insolvency Event of the Issuer to be treated as part of the same class of creditors as Administrative Agent and Buyers and shall not oppose any pleading or motion by Administrative Agent and Buyers advocating that Administrative Agent and Buyers should be treated as a separate class of creditors from Seller. Seller acknowledges and agrees that its rights with respect to the Repurchase Assets are and shall continue to be at all times while the obligations are outstanding junior and subordinate to the rights of Administrative Agent and Buyers under this Agreement.
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ARTICLE V
CONDITIONS PRECEDENT
Section 5.01 Initial Transaction. The obligation of Administrative Agent and Buyers to enter into Transactions with Seller hereunder is subject to the satisfaction, immediately prior to or concurrently with the entering into such Transaction, of the condition precedent that Administrative Agent and Buyers shall have received all of the following items, each of which shall be satisfactory to Administrative Agent and its counsel in form and substance:
(a) Program Agreements and Note. The Program Agreements and Note, in all instances duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver.
(b) Security Interest. Evidence that all other actions necessary or, in the opinion of Administrative Agent, desirable to perfect and protect Administrative Agent’s interest in the Repurchase Assets have been taken, including duly authorized and filed Uniform Commercial Code financing statements on Form UCC-1.
(c) Organizational Documents. A certificate of the corporate secretary of Seller in form and substance acceptable to Administrative Agent, attaching certified copies of Seller’s certificate of formation, operating agreement and corporate resolutions approving the Program Agreements and transactions thereunder (either specifically or by general resolution) and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Agreements.
(d) Good Standing Certificate. A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date ten (10) Business Days prior to the Closing Date.
(e) Incumbency Certificate. An incumbency certificate of the corporate secretary of each of Seller, certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Program Agreements.
(f) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.
Section 5.02 All Transactions. The obligation of Administrative Agent and Buyers to enter into each Transaction pursuant to this Agreement is subject to the following conditions precedent:
(a) Transaction Notice and Asset Schedule. In accordance with Section 2.02 hereof, Administrative Agent shall have received from Seller a Transaction Notice with an updated Asset Schedule which includes the Note and any Additional Balance, if applicable, related to a proposed Transaction hereunder on such Business Day. Buyers shall have received a copy of the Note and evidence of any Additional Balance, if applicable.
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(b) No Margin Deficit. After giving effect to each new Transaction, the aggregate outstanding amount of the Purchase Price shall not exceed the Asset Value of the Note then in effect.
(c) No Default. No Default or Event of Default shall have occurred and be continuing.
(d) Requirements of Law. Administrative Agent and Buyers shall not have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Administrative Agent and Buyers has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or Buyers to enter into Transactions with a Pricing Rate based on Base Rate.
(e) Representations and Warranties. Both immediately prior to the related Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in each Program Agreement shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
(f) Note. Administrative Agent shall have received the Note and evidence of the Additional Balances relating to any Purchased Assets, which is in form and substance satisfactory to Administrative Agent in its sole discretion.
(g) Material Adverse Change. None of the following shall have occurred and/or be continuing:
(A) a Buyer’s corporate bond rating as calculated by S&P or Moody’s has been lowered or downgraded to a rating below investment grade by S&P or Moody’s;
(B) an event or events shall have occurred in the good faith determination of Administrative Agent resulting in the effective absence of a “lending market” for financing debt obligations secured by mortgage loans or servicing receivables or securities backed by mortgage loans or servicing receivables or an event or events shall have occurred resulting in Buyers not being able to finance the Note through the “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or
(C) there shall have occurred a material adverse change in the financial condition of a Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of such Buyer to fund its obligations under this Agreement.
(h) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.
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(i) Threshold Event. No Threshold Event shall occur after giving effect to such Transaction.
Section 5.03 Closing Subject to Conditions Precedent. The obligation of Buyers to purchase the Note is subject to the satisfaction on or prior to the Closing Date of the following conditions (any or all of which may be waived by Administrative Agent and Buyers):
(a) Performance by the Issuer and PLS. All the terms, covenants, agreements and conditions of the Transaction Documents to be complied with, satisfied, observed and performed by Issuer and PLS on or before the Closing Date shall have been complied with, satisfied, observed and performed in all material respects.
(b) Representations and Warranties. Each of the representations and warranties of Issuer and PLS made in the Transaction Documents shall be true and correct in all material respects as of the Closing Date (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof and except to the extent they expressly relate to an earlier or later time).
(c) Officer’s Certificate. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an officer’s certificate from PLS and a certificate of an Authorized Officer of Issuer, dated the Closing Date, each certifying to the satisfaction of the conditions set forth in the preceding paragraphs (a) and (b), in each case together with incumbency, by-laws, resolutions and good standing.
(d) Opinions of Counsel to Issuer and PLS. Counsel to Issuer and PLS shall have delivered to Administrative Agent and Buyers favorable opinions, dated the Closing Date and satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel, relating to corporate matters, enforceability, securities contract, non-consolidation and perfection and an opinion as to which state’s law applies to security interest and perfection matters. In addition to the foregoing, PLS, as servicer, shall have caused its counsel to deliver to Administrative Agent and Buyers an opinion as to certain tax matters dated as of the Closing Date, satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.
(e) Officer’s Certificate of Indenture Trustee. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an Officer’s Certificate from Indenture Trustee, dated the Closing Date, with respect to the Base Indenture, together with incumbency and good standing.
(f) Opinions of Counsel to the Indenture Trustee. Counsel to Indenture Trustee shall have delivered to Administrative Agent and Buyers a favorable opinion dated the Closing Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel related to the enforceability of the Base Indenture.
(g) Opinions of Counsel to the Owner Trustee. Delaware counsel to the Owner Trustee of Issuer shall have delivered to Administrative Agent and Buyers favorable opinions regarding the formation, existence and standing of Issuer and of Issuer’s execution, authorization and delivery of each of the Transaction Documents to which it is a party and such other matters as Administrative Agent or Buyers may reasonably request, dated the Closing Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.
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(h) Filings and Recordations. Administrative Agent and Buyers shall have received evidence reasonably satisfactory to Administrative Agent and Buyers of (i) the completion of all recordings, registrations and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence: (A) the assignment by PLS, as Seller, to Issuer of the ownership interest in the Collateral conveyed pursuant to the PC Repurchase Agreement and the proceeds thereof and (ii) the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence the grant of a first priority perfected security interest in Issuer’s ownership interest in the Collateral in favor of Indenture Trustee, subject to no Liens prior to the Lien created by the Base Indenture.
(i) Documents. Administrative Agent shall have received the Note and Administrative Agent and Buyers shall have received a duly executed counterpart of each of the other Transaction Documents, in form acceptable to Administrative Agent and Buyers, and each and every document or certification delivered by any party in connection with any such Transaction Documents or the Note, and each such document shall be in full force and effect.
(j) Actions or Proceedings. No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by the Transaction Documents, the Note and the documents related thereto in any material respect.
(k) Approvals and Consents. All Governmental Actions of all Governmental Authorities required with respect to the transactions contemplated by the Transaction Documents, the Note and the documents related thereto shall have been obtained or made.
(l) Fees, Costs and Expenses. Each Buyer shall have received payment in full of all fees and Expenses (including the Commitment Fee) which are payable hereunder to such Buyer on or before the Closing Date and the fees, costs and expenses payable by Issuer and PLS on or prior to the Closing Date pursuant to this Agreement or any other Transaction Document shall have been paid in full.
(m) Other Documents. PLS shall have furnished to Administrative Agent and Indenture Trustee such other opinions, information, certificates and documents as Administrative Agent and the Indenture Trustee may reasonably request.
(n) MSR Valuation Agent. PLS shall have engaged the MSR Valuation Agent pursuant to an agreement reasonably satisfactory to Administrative Agent.
(o) Proceedings in Contemplation of Sale of the Note. All actions and proceedings undertaken by the Issuer and PLS in connection with the issuance and sale of the Note as herein contemplated shall be satisfactory in all respects to the Administrative Agent and its counsel.
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(p) Advance Rate Reduction Event, Servicer Termination Events, Events of Default and Funding Interruption Events. No Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event shall then be occurring.
(q) Satisfaction of Conditions. Each of the Funding Conditions shall have been satisfied.
(r) Maintenance of Profitability. Seller shall have at all times maintained profitability of at least $1.00 in Net Income for at least one of any two consecutive Test Periods
If any condition specified in this Section 5.03 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Administrative Agent and the Buyers by notice to PLS at any time at or prior to the Closing Date, and neither the Administrative Agent nor any Buyer shall incur any liability as a result of such termination.
ARTICLE VI
COVENANTS
Seller covenants and agrees that until the payment and satisfaction in full of all Obligations, whether now existing or arising hereafter, shall have occurred:
Section 6.01 Litigation. Seller will promptly, and in any event within ten (10) days after service of process on any of the following, give to Administrative Agent and each Buyer notice of all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim individually or in the aggregate in an amount greater than 5% of Seller’s Adjusted Tangible Net Worth, or (iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect. On the twelfth (12th) day of each calendar month (or if such day is not a Business Day, the next succeeding Business Day), Seller will provide to Administrative Agent and each Buyer a litigation docket listing all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority. Seller will promptly provide to Administrative Agent and each Buyer notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.
Section 6.02 Prohibition of Fundamental Changes. Seller shall not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided, that Seller may merge or consolidate with (a) any wholly owned subsidiary of Seller, or (b) any other Person if Seller is the surviving entity; and provided further, that if after giving effect thereto, no Default would exist hereunder.
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Section 6.03 Reporting. Seller shall at all times maintain a current list (which may be stored in electronic form) of the Note and Additional Balances. Seller shall deliver to Administrative Agent and each Buyer on or before each Price Differential Payment Date (the “Report Date”) a cumulative Asset Schedule, each of which, when so delivered, shall replace the current Asset Schedule and which may be delivered in electronic form acceptable to Administrative Agent and each Buyer. Each such updated Asset Schedule shall indicate the outstanding VFN Principal Balance of the Note as of the close of the preceding week. As of each Report Date, Seller hereby certifies, represents and warrants to Administrative Agent and each Buyer that each such updated Asset Schedule is true, complete and correct in all material respects. Seller shall further ensure that each Buyer receives all reports and information that the Administrative Agent and the VFN Noteholders are entitled to receive pursuant to the Indenture (including all reports and information delivered by the Issuer, the Administrator or the Indenture Trustee relating to the Note). Each Buyer agrees to be bound by any confidentiality provisions reasonably requested by Seller and upon request of Seller execute and deliver a separate confidentiality agreement memorializing such provisions.
Section 6.04 No Adverse Claims. Seller warrants and will defend the right, title and interest of Administrative Agent and Buyers in and to all Purchased Assets against all adverse claims and demands.
Section 6.05 Assignment. Except as permitted herein, Seller shall not sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except pursuant to the Program Agreements), any of the Purchased Assets or any interest therein, provided that this Section 6.05 shall not prevent any transfer of Purchased Assets in accordance with the Program Agreements.
Section 6.06 Security Interest. Seller shall do all things necessary to preserve the Purchased Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, Seller will comply with all rules, regulations and other laws of any Governmental Authority and cause the Purchased Assets to comply with all applicable rules, regulations and other laws. Seller will not allow any default for which Seller is responsible to occur under any Purchased Assets or any Program Agreement and Seller shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets and any Program Agreement.
Section 6.07 Records.
(a) Seller shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Assets in accordance with industry custom and practice for assets similar to the Purchased Assets, including those maintained pursuant to Section 6.08, and all such Records shall be in Seller’s or Administrative Agent’s possession unless Administrative Agent otherwise approves. Seller will maintain all such Records in good and complete condition in accordance with industry practices for assets similar to the Purchased Assets and preserve them against loss.
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(b) For so long as Administrative Agent and Buyers have an interest in or lien on any Purchased Assets, Seller will hold or cause to be held all related Records in trust for Administrative Agent and Buyers. Seller shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Administrative Agent and Buyers granted hereby.
(c) Upon reasonable advance notice from Administrative Agent or a Buyer, Seller shall (x) make any and all such Records available to Administrative Agent and each Buyer to examine any such Records, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, and (y) permit Administrative Agent or any Buyer or their authorized agents to discuss the affairs, finances and accounts of Seller with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Seller with its independent certified public accountants.
Section 6.08 Books. Seller shall keep or cause to be kept in reasonable detail books and records of account of its assets and business and shall clearly reflect therein the transfer of Purchased Assets to Buyers.
Section 6.09 Approvals. Seller shall maintain all licenses, permits or other approvals necessary for Seller to conduct its business and to perform its obligations under the Program Agreements, and Seller shall conduct its business strictly in accordance with applicable law.
Section 6.10 Material Change in Business. Seller shall not make any material change in the nature of its business as carried on at the Closing Date.
Section 6.11 Distributions. If an Event of Default has occurred and is continuing, Seller shall not pay any dividends with respect to any capital stock or other equity interests in such entity, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller.
Section 6.12 Applicable Law. Seller shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority.
Section 6.13 Existence. Seller shall preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises.
Section 6.14 Chief Executive Office; Jurisdiction of Organization. Seller shall not move its chief executive office from the address referred to in Section 3.17 or change its jurisdiction of organization from the jurisdiction referred to in Section 3.17 unless it shall have provided Administrative Agent at least thirty (30) days’ prior written notice of such change.
Section 6.15 Taxes. Seller shall timely file all tax returns that are required to be filed by it and shall timely pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.
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Section 6.16 Transactions with Affiliates. Other than the purchase of the Note, Seller will not enter into any transaction, including any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction (a) does not result in a Default hereunder, (b) is in the ordinary course of Seller’s business and (c) is upon fair and reasonable terms no less favorable to Seller than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate, or make a payment that is not otherwise permitted by this Section 6.16 to any Affiliate.
Section 6.17 Guarantees. Seller shall notify each Buyer and the Administrative Agent in writing upon creating, incurring, assuming or suffering to exist any Guarantees, except (i) to the extent reflected in Seller’s financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of Seller do not exceed $250,000.
Section 6.18 Indebtedness. Seller shall notify each Buyer and the Administrative Agent in writing upon the incurrence of any additional material Indebtedness other than (i) the Existing Indebtedness specified on Exhibit B hereto; (ii) Indebtedness incurred with Buyers or their Affiliates; (iii) Indebtedness incurred in connection with new or existing secured lending facilities and (iv) usual and customary accounts payable for a mortgage company.
Section 6.19 True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Seller, any Affiliate thereof or any of their officers furnished to Administrative Agent and Buyers hereunder and during Administrative Agent’s and Buyers’ diligence of Seller are and will be true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by Seller to Administrative Agent and Buyers pursuant to this Agreement shall be prepared in accordance with U.S. GAAP, or, if applicable, to SEC filings, the appropriate SEC accounting regulations.
Section 6.20 No Pledge. Except as contemplated herein, Seller shall not pledge, grant a security interest or assign any existing or future rights to service any of the Repurchase Assets or pledge or grant to any other Person any security interest in the Note.
Section 6.21 Plan Assets. Seller shall not be an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and Seller shall not use “plan assets” within the meaning of 29 CFR § 2510.3 101, as amended by Section 3(42) of ERISA to engage in this Agreement or any Transaction hereunder. Transactions to or with Seller shall not be subject to any state or local statute regulating investments of or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.
Section 6.22 Sharing of Information. Seller shall allow Administrative Agent and Buyers to exchange information related to Seller and the Transactions hereunder with third party lenders and Seller shall permit each third party lender to share such information with Administrative Agent and Buyers.
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Section 6.23 Modification of the Base Indenture and Series 2016-MSRVF1 Indenture Supplement. Seller shall not consent with respect to any of the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement related to the Purchased Assets, to (i) the modification, amendment or termination of the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, (ii) the waiver of any provision of the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, or (iii) the resignation of PLS as servicer under the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, or the assignment, transfer, or material delegation of any of its rights or obligations, under such the Base Indenture and the Series 2016-MSRVF1 Indenture Supplement, without the prior written consent of Administrative Agent and each Buyer exercised in such Person’s sole discretion.
Section 6.24 Reporting Requirements.
(a) Seller shall furnish to Administrative Agent and each Buyer (i) promptly, copies of any material and adverse notices (including notices of defaults, breaches, potential defaults or potential breaches) and any material financial information that is not otherwise required to be provided by Seller hereunder which is given to Seller’s lenders, (ii) promptly, notice of the occurrence of (1) any Event of Default hereunder; (2) any default or material breach by Seller of any obligation under any Program Agreement or any material contract or agreement of Seller or (3) the occurrence of any event or circumstance that such party reasonably expects has resulted in, or will, with the passage of time, result in, a Material Adverse Effect or an Event of Default and (iii) the following:
(1) as soon as available and in any event within forty (40) calendar days after the end of each calendar month, the unaudited balance sheet of Seller, as at the end of such period and the related unaudited consolidated statements of income for Seller for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);
(2) as soon as available and in any event within forty (40) calendar days after the end of each calendar quarter, the unaudited cash flow statements of Seller, as at the end of such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);
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(3) as soon as available and in any event within ninety (90) days after the end of each fiscal year of Seller, the balance sheet of Seller, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for Seller for such year, setting forth in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion and the scope of audit shall be acceptable to Administrative Agent and each Buyer in their sole discretion, shall have no “going concern” qualification and shall state that said consolidated financial statements or financial statements, as applicable, fairly present the consolidated financial condition or financial condition, as applicable, and results of operations of Seller as at the end of, and for, such fiscal year in accordance with GAAP;
(4) such other prepared statements that Administrative Agent or a Buyer may reasonably request;
(5) from time to time such other information regarding the financial condition, operations, or business of Seller as Administrative Agent or a Buyer may reasonably request;
(6) as soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of Seller has knowledge of the occurrence of any ERISA Event of Termination, stating the particulars of such ERISA Event of Termination in reasonable detail;
(7) as soon as reasonably possible, notice of any of the following events:
a. any material dispute, litigation, investigation, proceeding or suspension between Seller on the one hand, and any Governmental Authority or any Person;
b. any material change in accounting policies or financial reporting practices of Seller;
c. any material issues raised upon examination of Seller or Seller’s facilities by any Governmental Authority;
d. any material change in the Indebtedness of Seller, including any default, renewal, non-renewal, termination, increase in available amount or decrease in available amount related thereto;
e. promptly upon receipt of notice or knowledge of any lien or security interest (other than security interests created hereby or by the other Program Agreements) on, or claim asserted against, any of the Purchased Assets; and
f. any other event, circumstance or condition that has resulted, or has a reasonable possibility of resulting, in a Material Adverse Effect with respect to Seller.
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(b) Officer’s Certificates. Seller will furnish to Administrative Agent and each Buyer, at the time Seller furnishes each set of financial statements pursuant to Section 6.24(a)(iii)(1), (2) or (3) above, an Officer’s Compliance Certificate of Seller.
(c) Other. Seller shall deliver to Administrative Agent and each Buyer any other reports or information reasonably requested by Administrative Agent or a Buyer or as otherwise required pursuant to this Agreement and the Indenture (including all reports and information delivered by the Issuer, the Administrator or the Indenture Trustee relating to the Note).
(d) Regulatory Reporting Compliance. Seller shall, on or before the last Business Day of the fifth (5th) month following the end of each of Seller’s fiscal years (December 31), beginning with the fiscal year ending in 2020, deliver to Administrative Agent and each Buyer a copy of the results of any Uniform Single Attestation Program for Mortgage Bankers or an Officer’s Certificate that satisfies the requirements of Item 1122(a) of Regulation AB, an independent public accountant’s report that satisfies the requirements of Item 1123 of Regulation AB, or similar review conducted on Seller by its accountants, and such other reports as Seller may prepare relating to its servicing functions as Seller.
Section 6.25 Liens on Substantially All Assets. Seller shall not grant a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of Seller unless Seller has entered into an amendment to this Agreement that grants to Administrative Agent a pari passu security interest on such assets.
Section 6.26 Litigation Summary. On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Administrative Agent and each Buyer a true and correct summary of all material actions, notices, proceedings and investigations pending with respect to which Seller has received service of process or other form of notice or, to the best of Seller’s knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal.
Section 6.27 Hedging. On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Administrative Agent and each Buyer a true and correct summary of all interest rate protection agreements entered into or maintained by Seller.
Section 6.28 MSR Valuation. On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Administrative Agent and each Buyer a detailed summary of the fair market value and Market Value Percentage of MSRs from the most recently delivered Market Value Report in accordance with the timing requirements of Section 3.3(g) of the Base Indenture.
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Section 6.29 Most Favored Status. Seller, Administrative Agent and Buyers each agree that should Seller or any Affiliate thereof enter into a repurchase agreement or credit facility with any Person other than Administrative Agent or a Buyer or an Affiliate of Administrative Agent or a Buyer which by its terms provides any of the following (each, a “More Favorable Agreement”):
(a) more favorable terms with respect to any guaranties or financial covenants, including covenants covering the same or similar subject matter set forth or referred to in Section 6.11 hereof and Section 2 of the Pricing Side Letter;
(b) a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of Seller or any Affiliate thereof; or
(c) a requirement that Seller has added or will add any Person other than Administrative Agent or an Affiliate of Administrative Agent as a loss payee under Seller’s Fidelity Insurance;
then the terms of this Agreement shall be deemed automatically amended to include such more favorable terms contained in such More Favorable Agreement, such that such terms operate in favor of Administrative Agent, Buyers or an Affiliate of Administrative Agent or Buyers; provided, that in the event that such More Favorable Agreement is terminated, upon notice by Seller to Administrative Agent of such termination, the original terms of this Agreement shall be deemed to be automatically reinstated. Administrative Agent, Seller and Buyers further agree to execute and deliver any new guaranties, agreements or amendments to this Agreement evidencing such provisions, provided that the execution of such amendment shall not be a precondition to the effectiveness of such amendment, but shall merely be for the convenience of the parties hereto. Promptly upon Seller or any Affiliate thereof entering into a repurchase agreement or other credit facility with any Person other than Administrative Agent or a Buyer, Seller shall deliver to Administrative Agent and each Buyer a true, correct and complete copy of such repurchase agreement, loan agreement, guaranty or other financing documentation.
Section 6.30 Threshold Events and Commitment Modifications. Seller shall not request any Transaction that would cause a Threshold Event for any Buyer. Seller shall provide prompt notice of any Commitment Modification and/or Maximum Purchase Price Modification for any Buyer to Ginnie Mae, Administrative Agent and each Buyer.
ARTICLE VII
DEFAULTS/RIGHTS AND REMEDIES OF BUYERS UPON DEFAULT
Section 7.01 Events of Default. Each of the following events or circumstances shall constitute an “Event of Default”:
(a) Payment Failure. Failure of Seller to (i) make any payment (which failure continues for a period of two (2) Business Days following written notice (which may be in electronic form) from Administrative Agent) of Price Differential or Repurchase Price or any other sum which has become due, on a Price Differential Payment Date or a Repurchase Date or otherwise, whether by acceleration or otherwise, under the terms of this Agreement, any other warehouse and security agreement or any other document, in each case evidencing or securing Indebtedness of Seller to Administrative Agent or Buyers or to any Affiliate of Administrative Agent or Buyers, or (ii) cure any Margin Deficit when due pursuant to Section 2.05 hereof.
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(b) Cross Default. Seller or Affiliates thereof shall be in default under (i) any Program Agreement or any Financing Document; provided that any such default under the Indenture shall constitute an “Event of Default” only if it continues unremedied for a period of two (2) Business Days after a Responsible Officer of Seller obtains actual knowledge of such failure, or receives written notice from Administrative Agent of such default; (ii) any Indebtedness, in the aggregate, in excess of $1 million of Seller or any Affiliate thereof which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, or (iii) any other contract or contracts, in the aggregate in excess of $1 million to which Seller or any Affiliate thereof is a party which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract.
(c) Assignment. Assignment or attempted assignment by Seller of this Agreement or any rights hereunder without first obtaining the specific written consent of Administrative Agent, or the granting by Seller of any security interest, lien or other encumbrances on any Purchased Assets to any person other than Administrative Agent.
(d) Insolvency. An Act of Insolvency shall have occurred with respect to Seller or any Affiliate thereof.
(e) Material Adverse Change. Any material adverse change in the Property, business, financial condition or operations of Seller or any of its Affiliates shall occur, in each case as determined by Administrative Agent in its sole good faith discretion, or any other condition shall exist which, in Administrative Agent’s sole good faith discretion, constitutes a material impairment of Seller’s ability to perform its obligations under this Agreement or any other Program Agreement.
(f) Immediate Breach of Representation or Covenant or Obligation. A breach by Seller of any of the representations, warranties or covenants or obligations set forth in Section 3.01 (Seller Existence), Section 3.07 (Solvency), Section 3.12 (Material Adverse Change), Section 3.22 (Other Indebtedness), Section 6.02 (Prohibition of Fundamental Changes), Section 6.13 (Existence), Section 6.17 (Guarantees), Section 6.18 (Indebtedness), Section 6.20 (No Pledge) or Section 6.21 (Plan Assets) of this Agreement.
(g) Additional Breach of Representation or Covenant. A material breach by Seller of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 7.01(f) above), if such breach is not cured within five (5) Business Days or, in the case of a breach of Section 6.02, three (3) Business Days, and in the case of a breach of Section 2 of the Pricing Side Letter (Financial Covenants), one (1) Business Day.
(h) Change in Control. The occurrence of a Change in Control.
(i) Failure to Transfer. Seller fails to transfer the Note or a material portion of the other Purchased Assets to Administrative Agent on the applicable Purchase Date (provided Administrative Agent has tendered the related Purchase Price on behalf of Buyers).
(j) Judgment. A final judgment or judgments for the payment of money in excess of $10,000,000 shall be rendered against Seller or any of their Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof.
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(k) Government Action. Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of Seller or any Affiliate thereof, or shall have taken any action to displace the management of Seller or any Affiliate thereof or to curtail its authority in the conduct of the business of Seller or any Affiliate thereof, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller or Affiliate as an issuer, buyer or a seller/servicer of mortgage loans or securities backed thereby, and such action provided for in this subparagraph (k) shall not have been discontinued or stayed within thirty (30) days.
(l) Inability to Perform. A Responsible Officer of Seller or VFN Guarantor shall admit its inability to, or its intention not to, perform any of Seller’s Obligations or VFN Guarantor’s obligations hereunder or the VFN Repo Guaranty.
(m) Security Interest. This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Repurchase Assets purported to be covered hereby.
(n) Financial Statements. Seller’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of Seller as a “going concern” or a reference of similar import.
(o) Validity of Agreement. For any reason, this Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or Seller or any Affiliate of Seller shall seek to disaffirm, terminate, limit or reduce its obligations hereunder or VFN Guarantor’s obligations under the VFN Repo Guaranty.
(p) VFN Guarantor Breach. A breach by VFN Guarantor of any material representation, warranty or covenant set forth in the VFN Repo Guaranty or any other Program Agreement, any “event of default” by VFN Guarantor under the VFN Repo Guaranty, any repudiation of the VFN Repo Guaranty by VFN Guarantor, or if the VFN Repo Guaranty is not enforceable against VFN Guarantor.
(q) PMH Documents.
(i) Any material provision of any PMH Document shall at any time for any reason cease to be valid and binding or in full force and effect.
(ii) PMH shall deny that it has any or further liability or obligation under any material provision of any PMH Document.
(iii) PLS or PMH shall fail to perform or observe any material covenant, term, obligation or agreement contained in any PMH Document or defaults in the performance or observance of any of its material obligations under any PMH Document and such default shall continue after the earlier of (x) the expiration of the grace period applicable thereto under such PMH Document and (y) two (2) Business Days.
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(iv) The validity or enforceability of any material provision of any PMH Document shall be contested by any party thereto.
(v) Any representation or warranty set forth on Schedule 1-C to the PC Repurchase Agreement shall be untrue in any material respect; unless in each case of clauses (i) through (v) above, the related Purchased MSR Excess Spread subject to the PMH Document is repurchased by PMH within two (2) Business Days following notice or knowledge thereof.
Section 7.02 No Waiver. An Event of Default shall be deemed to be continuing unless expressly waived by Administrative Agent, at the direction of the Required Buyers, in writing.
Section 7.03 Due and Payable. Upon the occurrence of any Event of Default which has not been waived in writing by Administrative Agent, Administrative Agent may (or shall, at the direction of the Required Buyers), by notice to Seller, declare all Obligations to be immediately due and payable, and any obligation of Administrative Agent and Buyers to enter into Transactions with Seller shall thereupon immediately terminate. Upon such declaration, the Obligations shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding, except with respect to any Event of Default set forth in Section 7.01(d), in which case all Obligations shall automatically become immediately due and payable without the necessity of any notice or other demand, and any obligation of Administrative Agent and Buyers to enter into Transactions with Seller shall immediately terminate. Administrative Agent may (or shall at the direction of the Required Buyers) enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by Administrative Agent and Buyers, whether under this Agreement or any other Program Agreement or afforded by applicable law.
Section 7.04 Fees. The remedies provided for herein are cumulative and are not exclusive of any other remedies provided by law. In addition to the Seller's obligations contained in Section 3 of the Pricing Side Letter, Seller agrees to pay to Administrative Agent reasonable attorneys’ fees and reasonable legal expenses incurred in enforcing Administrative Agent’s and Buyers’ rights, powers and remedies under this Agreement and each other Program Agreement.
Section 7.05 Default Rate. Without regard to whether Administrative Agent has exercised any other rights or remedies hereunder, if an Event of Default shall have occurred and be continuing, the applicable Margin in respect of the Pricing Rate shall be increased, to the extent permitted by law, as set forth in clause (ii) of the definition of “Margin”.
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ARTICLE VIII
ENTIRE
AGREEMENT; AMENDMENTS
AND WAIVERS; SEPARATE ACTIONS BY BUYERS
Section 8.01 Entire Agreement; Amendments. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the parties hereto and supersedes any and all prior or contemporaneous agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or any of the Program Agreements, nor consent to the departure by Seller therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which it is given. This Agreement may not be amended, modified or supplemented except by a writing executed by Seller, Administrative Agent and Required Buyers. The Administrative Agent shall comply with its obligations under Section 6(C) of the Acknowledgment Agreement; and in addition, the Seller shall deliver to Ginnie Mae a copy of any executed amendment to this Agreement promptly after execution thereof.
Section 8.02 Waivers, Separate Actions by Buyers. Any amendment or waiver effected in accordance with this Article VIII shall be binding upon Administrative Agent, Buyers and Seller; and Administrative Agent’s or a Buyer’s failure to insist upon the strict performance of any term, condition or other provision of this Agreement or any of the Program Agreements, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by Administrative Agent or such Buyer of any such term, condition or other provision or Default or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term, condition or other provision or of any such Default or Event of Default shall not affect or alter this Agreement or any of the Program Agreements, and each and every term, condition and other provision of this Agreement and the Program Agreements shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent Default or Event of Default in connection therewith. An Event of Default hereunder or under any of the Program Agreements shall be deemed to be continuing unless and until waived in writing by Administrative Agent and Buyers.
ARTICLE IX
SUCCESSORS AND ASSIGNS
Section 9.01 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, any portion thereof, or any interest therein. Seller shall not have the right to assign all or any part of this Agreement or any interest herein without the prior written consent of Administrative Agent and Buyers.
Section 9.02 Participations and Transfers.
(a) All actions taken by a Buyer pursuant to this Section 9.02 shall be at the expense of Buyer. Buyer may distribute to any prospective assignee any document or other information delivered to a Buyer by Seller.
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(b) A Buyer may in accordance with applicable law at any time sell to one or more banks or other entities (“Participants”) participating interests in all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) Seller has consented to such sale; provided, however, Seller’s consent shall not be required in the event that (A) such Participant is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) each such sale shall represent an interest in a Transaction in a Purchase Price of $1,000,000 or more and (iii) other than with respect to a participating interest consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer receives an opinion of a nationally recognized tax counsel experienced in such matters that such sale will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. In the event of any such sale by a Buyer of participating interests to a Participant, such Buyer shall remain a party to the Transaction for all purposes under this Agreement and the Program Agreements and Seller shall continue to deal solely and directly with such Buyer in connection with such Buyer’s rights and obligations under this Agreement and the Program Agreements. The related Buyer shall provide notice to Ginnie Mae within five (5) Business Days of any participation made in accordance with this Section 9.02(b).
(c) A Buyer may in accordance with applicable law at any time assign, pledge, hypothecate, or otherwise transfer to one or more banks, financial institutions, investment companies, investment funds or any other Person (each, a “Transferee”) all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements so long as a Noteholder of an MBS Advance VFN continues to own interests in the outstanding Series of VFNs that are funded in an aggregate amount that equals or exceeds the amount required to avoid an Early Amortization Event under any outstanding Series of Term Notes; provided, that (i) Seller has consented to such assignment, pledge, hypothecation, or other transfer; provided, however, Seller’s consent shall not be required in the event that (A) such Transferee is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) absent an Event of Default, such Buyer shall give at least ten days’ prior notice thereof to Seller; (iii) that each such sale shall represent an interest in the Transactions in an aggregate Purchase Price of $1,000,000 or more; (iv) such Transferee shall have also acquired the same percentage interest in each other Series of Variable Funding Notes, unless such Transferee is an Affiliate of such Buyer or unless Ginnie Mae has consented in writing to waive this requirement and (v) other than with respect to an assignment, pledge, hypothecation or transfer consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer received an opinion of a nationally recognized tax counsel experienced in such matters that such assignment, pledge, hypothecation or transfer will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. The related Buyer shall provide notice to Ginnie Mae within five (5) Business Days of any assignment, pledge or hypothecation made in accordance with this Section 9.02(c). In the event of any such assignment, pledge, hypothecation or transfer by a Buyer of its rights under this Agreement and the other Program Agreements, Seller shall continue to deal solely and directly with such Buyer in connection with its rights and obligations under this Agreement. Administrative Agent (acting as agent for Seller) shall maintain at its address referred to in Section 11.05 a register (the “Register”) for the recordation of the names and addresses of Transferees, and the Purchase Price outstanding and Price Differential in the Transactions held by each thereof. The entries in the Register shall be prima facie conclusive and binding, and Seller may treat each Person whose name is recorded in the Register as the owner of the Transactions recorded therein for all purposes of this Agreement. No assignment shall be effective until it is recorded in the Register.
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Section 9.03 Buyer and Participant Register.
(a) Subject to acceptance and recording thereof pursuant to paragraph (b) of this Section 9.03, from and after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of a Buyer under this Agreement. Any assignment or transfer by a Buyer of rights or obligations under this Agreement that does not comply with this Section 9.03 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 9.02.
(b) Seller or an agent of Seller shall maintain a register (the “Transaction Register”) on which it will record the Transactions entered into hereunder, and each assignment and acceptance and participation. The Transaction Register shall include the names and addresses of Buyers (including all assignees, successors and Participants), and the Purchase Price of the Transactions entered into by Buyers. Failure to make any such recordation, or any error in such recordation shall not affect Seller’s obligations in respect of such Transactions. If a Buyer sells a participation in any Transaction, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure.
ARTICLE X
AGENT PROVISIONS
Section 10.01 Appointment of Administrative Agent.
(a) Each Buyer hereby irrevocably appoints Credit Suisse First Boston Mortgage Capital LLC, as Administrative Agent hereunder and under the other Program Agreements, and each Buyer hereby authorizes Credit Suisse First Boston Mortgage Capital LLC, in such capacity, to act as its agent in accordance with the terms hereof. The provisions of this Article X are solely for the benefit of Administrative Agent and Buyers, and Seller shall not have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, Administrative Agent shall act solely as an agent of Buyers and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Seller.
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(b) The Required Buyers may, to the extent permitted by applicable law, and with the consent of Seller (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), by notice in writing to such Person remove such Person as Administrative Agent and, with the consent of Seller (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), appoint a successor Administrative Agent. If no such successor Administrative Agent shall have been so appointed by the Required Buyers and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Seller), then such removal shall nonetheless become effective in accordance with such notice on the date thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Seller) after the Administrative Agent’s receipt of such notice of removal.
Section 10.02 Powers and Duties. Each Buyer irrevocably authorizes Administrative Agent to take such action on such Buyer’s behalf and to exercise such powers, rights and remedies hereunder and under the other Program Agreements as are specifically delegated or granted to Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified herein and the other Program Agreements. Administrative Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. Administrative Agent shall not have, by reason hereof or any of the other Program Agreements, a fiduciary relationship in respect of any Buyer; and nothing herein or any of the other Program Agreements, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect hereof or any of the other Program Agreements except as expressly set forth herein or therein.
Section 10.03 General Immunity.
(a) No Responsibility for Certain Matters. Except for Administrative Agent’s failure to perform a specifically required task set forth herein (and which failure constitutes gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order), Administrative Agent shall not be responsible for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Program Agreement or with respect to any other party for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by or on behalf of Buyers or any other party in connection with the Program Agreements and the transactions contemplated thereby or for the financial condition or business affairs of Seller or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required (except as set forth herein or in the Program Agreements) to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Program Agreements or as to the use of the proceeds of the Transactions or as to the existence or possible existence of any Event of Default or Default.
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(b) Exculpatory Provisions. Neither Administrative Agent nor any of its officers, partners, directors, employees or agents shall be liable for any action taken or omitted by Administrative Agent under or in connection with any of the Program Agreements except to the extent caused by Administrative Agent’s gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order. Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Program Agreements or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until Administrative Agent shall have received instructions in respect thereof from Buyers and, upon receipt of such instructions from the Required Buyers, Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Seller), accountants, experts and other professional advisors selected by it; (ii) no Buyer shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting hereunder or any of the other Program Agreements in accordance with the instructions of the Required Buyers; and (iii) no action taken or omitted by Administrative Agent shall be considered to have resulted from Administrative Agent’s gross negligence, bad faith or willful misconduct if such action or omission was done at the direction of the Required Buyers.
Section 10.04 Administrative Agent to Act as Buyer. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Buyer, to the extent it becomes a Buyer hereunder. To the extent that it becomes a Buyer hereunder, Administrative Agent shall have the same rights and powers as any other Buyer and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Buyer” shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Seller or any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Seller for services in connection herewith and otherwise without having to account for the same to Buyers.
Section 10.05 Buyers’ Representations, Warranties and Acknowledgment.
(a) Each Buyer represents and warrants that it has made its own independent investigation of the financial condition and affairs of Seller in connection with the Transactions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Seller. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Buyers or to provide any Buyer with any credit or other information with respect thereto, whether coming into its possession before the making of the Transactions or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Buyers.
(b) Unless otherwise agreed to by Buyers and Seller, each Buyer, by delivering its signature page to this Agreement and entering into Transactions with Seller hereunder shall be deemed to have acknowledged receipt of, and consented to and approved, each Program Agreement and each other document required to be approved by Administrative Agent or Buyers, as applicable on the Closing Date or such other funding date. Each Buyer acknowledges that by agreeing to remit its Commitment Share of the Purchase Price on any Purchase Date, such Buyer agrees that all conditions precedent to entering into such Transaction have been met on such Purchase Date.
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Section 10.06 Right to Indemnity.
(a) Each Buyer, pro rata based on its outstanding Purchase Price, severally, but not jointly, shall, and hereby agrees to indemnify Administrative Agent, any Affiliate of the Administrative Agent, and their respective directors, officers, agents and employees (each, an “Indemnitee Agent Party”), and hold such Indemnitee Agent Party harmless to the extent that such Indemnitee Agent Party shall not have been reimbursed by Seller, from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it has resulted from the gross negligence or willful misconduct of such Indemnitee Agent Party) which may be imposed on, incurred by or asserted against such Indemnitee Agent Party in exercising its powers, rights and remedies or performing its duties hereunder or under the other Program Agreements or otherwise in its capacity as an Indemnitee Agent Party in any way relating to or arising out of this Agreement or the other Program Agreements, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If any indemnity furnished to any Indemnitee Agent Party for any purpose shall, in the opinion of such Indemnitee Agent Party, be insufficient or become impaired, such Indemnitee Agent Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Buyer’s pro rata portion of the outstanding Purchase Price thereof; and provided, further, this sentence shall not be deemed to require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
(b) Promptly after receipt by the Indemnitee Agent Party of notice of the commencement of any action regarding which a claim in respect thereof is to be made against Buyers, the Indemnitee Agent Party shall notify Buyers in writing of the commencement thereof, but the omission to so notify will not relieve Buyers from any liability which they may have under this Agreement or from any other liability which they may have, except to the extent that they have been prejudiced in any material respect by the failure by the Indemnitee Agent Party to provide prompt notice. Upon receipt of notice by Buyers, Buyers will be entitled to participate in the related action, and they may elect by written notice delivered to the Indemnitee Agent Party to assume the defense thereof. Upon receipt of notice by the Indemnitee Agent Party of the Buyers’ election to assume the defense of such action, Buyers shall not be liable to the Indemnitee Agent Party for legal expenses incurred by such party in connection with the defense thereof unless (i) Buyers shall not have employed counsel to represent the Indemnitee Agent Party within a reasonable time after receipt of notice of commencement of the action, (ii) Buyers have authorized in writing the employment of separate counsel for the Indemnitee Agent Party, or (iii) the Indemnitee Agent Party has previously engaged counsel and reasonable legal expenses are necessary (a) to transfer the file to the Buyers’ designated counsel, or (b) to pursue immediate legal action necessary to preserve the legal rights or defenses of the Indemnitee Agent Party as against a third party claimant, and such legal action must occur prior to said transfer. Buyers shall not settle any suit or claim without the Indemnitee Agent Party’s written consent unless such settlement solely involves the payment of money by parties other than the Indemnitee Agent Party and includes unconditional release of the Indemnitee Agent Party from all liability on all matters that are the subject of such proceeding or claim.
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Section 10.07 Successor Administrative Agent.
(a) Administrative Agent may resign at any time by giving sixty (60) days’ prior written notice thereof to Buyers. Upon any such notice of resignation, Buyers shall have the right to appoint a successor administrative agent; provided, that the retiring Administrative Agent shall continue to hold the Collateral and all liens and security interest therein for the benefit of Buyers until a successor administrative agent is appointed.
(b) Upon the acceptance of any appointment as Administrative Agent hereunder by a successor administrative agent, that successor administrative agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall promptly (i) transfer to such successor administrative agent all sums and items of Collateral held under the Program Agreements, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor administrative agent under the Program Agreements, and (ii) execute and deliver to such successor administrative agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor administrative agent of the security interests created under the Program Agreements, whereupon such retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X and Section 11.02 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder.
(c) Notwithstanding anything herein to the contrary, Administrative Agent may assign its rights and duties as Administrative Agent hereunder to an Affiliate without written notice to, the Buyers; provided, that Seller and Buyers may deem and treat such assigning Administrative Agent as Administrative Agent for all purposes hereof, unless and until such assigning Administrative Agent provides written notice to Seller and Buyers of such assignment. Upon such assignment such Affiliate shall succeed to and become vested with all rights, powers, privileges and duties as Administrative Agent hereunder and under the other Program Agreements.
Section 10.08 Delegation of Duties. Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Program Agreement by or through (i) any one or more of its Affiliates or (ii) any one or more sub agents appointed by Administrative Agent with the prior consent of the Required Buyers. Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates and their respective officers, partners, directors, trustees, employees and agents. The exculpatory provisions of this Article X shall apply to any such Affiliate or sub agent and to such other parties as are listed above provided that notwithstanding this Section 10.08, no such delegation relieves the Administrative Agent of its duties or obligations under this Agreement.
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Section 10.09 Right to Realize on Collateral. Anything contained in any of the Program Agreements to the contrary notwithstanding, Seller, Administrative Agent and each Buyer hereby agree that (i) no Buyer shall have any right individually to realize upon any of the Collateral, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Buyers in accordance with the terms hereof and all powers, rights and remedies under the Program Agreements may be exercised solely by Administrative Agent, and (ii) in the event of a foreclosure by Administrative Agent on any of the Collateral pursuant to a public or private sale, Administrative Agent or any Buyer may be the purchaser of any or all of such Collateral at any such sale and Administrative Agent, as agent for and representative of Buyers (but not any Buyer or Buyers in its or their respective individual capacities unless Buyers shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Administrative Agent at such sale.
Section 10.10 Erroneous Payments. (a) If the Administrative Agent notifies a Buyer or any Person who has received funds on behalf of a Buyer (any such Buyer or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Buyer or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Buyer shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the overnight federal funds rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error. If a Payment Recipient receives any payment, prepayment or repayment of principal, interest, fees, distribution or otherwise and does not receive a corresponding payment notice or payment advice, such payment, prepayment or repayment shall be presumed to be in error absent written confirmation from the Administrative Agent to the contrary.
(b) Each Buyer hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Buyer under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Buyer from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
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(c) For so long as an Erroneous Payment (or portion thereof) has not been returned by any Payment Recipient who received such Erroneous Payment (or portion thereof) (such unrecovered amount, an “Erroneous Payment Return Deficiency”) to the Administrative Agent after demand therefor in accordance with immediately preceding clause (a), (i) the Administrative Agent may elect, in its sole discretion on written notice to such Buyer, that all rights and claims of such Buyer with respect to the Repurchase Price or other Obligations owed to such Person up to the amount of the corresponding Erroneous Payment Return Deficiency in respect of such Erroneous Payment (the “Corresponding Repurchase Price”) shall immediately vest in the Administrative Agent upon such election; after such election, the Administrative Agent (x) may reflect its ownership interest in the related Repurchase Price in a principal amount equal to the Corresponding Repurchase Price on the Asset Schedule, and (y) upon five business days’ written notice to such Buyer, may sell such Repurchase Price (or portion thereof) in respect of the Corresponding Repurchase Price, and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by such Buyer shall be reduced by the net proceeds of the sale of such Repurchase Price (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Buyer (and/or against any Payment Recipient that receives funds on its behalf), and (ii) each party hereto agrees that, except to the extent that the Administrative Agent has sold such Repurchase Price, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of such Buyer with respect to the Erroneous Payment Return Deficiency. For the avoidance of doubt, no vesting or sale pursuant to the foregoing clause (i) will reduce the Committed Amount of any Buyer and such Committed Amount shall remain available in accordance with the terms of this Agreement.
(d) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Seller, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Seller for the purpose of making such Erroneous Payment.
(e) No Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(f) Each party’s obligations, agreements and waivers under this Section 10.10 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Buyer, the termination of the obligations set forth in Section 2.01 with respect to the Committed Amount and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Transaction Document.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Survival. This Agreement and the other Program Agreements and all covenants, agreements, representations and warranties herein and therein and in the certificates delivered pursuant hereto and thereto, shall survive the entering into of the Transaction and shall continue in full force and effect so long as any Obligations are outstanding and unpaid.
Section 11.02 Indemnification. Seller shall, and hereby agrees to, indemnify, defend and hold harmless Administrative Agent, each Buyer, any Affiliate of Administrative Agent, any Affiliate of any Buyer and their respective directors, officers, agents and employees from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it is finally judicially determined to have resulted from their own gross negligence or willful misconduct) as a consequence of, or arising out of or by reason of any litigation, investigations, claims or proceedings which arise out of or are in any way related to, (i) this Agreement or any other Program Agreement or the transactions contemplated hereby or thereby, (ii) Seller’s servicing practices or procedures; (iii) any actual or proposed use by Seller of the proceeds of the Purchase Price, and (iv) any Default, Event of Default or any other breach by Seller of any of the provisions of this Agreement or any other Program Agreement, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If and to the extent that any Obligations are unenforceable for any reason, Seller hereby agrees to make the maximum contribution to the payment and satisfaction of such Obligations which is permissible under applicable law. Seller’s obligations set forth in this Section 11.02 shall survive any termination of this Agreement and each other Program Agreement and the payment in full of the Obligations, and are in addition to, and not in substitution of, any other of its obligations set forth in this Agreement or otherwise. In addition, Seller shall, upon demand, pay to Administrative Agent and the Buyers all costs and expenses (including the reasonable fees and disbursements of counsel) paid or incurred by Administrative Agent and Buyers in (i) enforcing or defending its rights under or in respect of this Agreement or any other Program Agreement, (ii) collecting the Purchase Price outstanding, (iii) foreclosing or otherwise collecting upon any Repurchase Assets and (iv) and obtaining any legal, accounting or other advice in connection with any of the foregoing.
Section 11.03 Nonliability of Buyers. The parties hereto agree that, notwithstanding any affiliation that may exist between or among Administrative Agent, Seller and Buyers, the relationship between and among Administrative Agent, Seller and Buyers shall be solely that of arms-length participants. Neither Administrative Agent nor any Buyer shall have any fiduciary responsibilities to Seller. Seller (i) agrees that neither Administrative Agent nor any Buyer shall have any liability to Seller (whether sounding in tort, contract or otherwise) for losses suffered by Seller in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by this agreement, the other loan documents or any other agreement entered into in connection herewith or any act, omission or event occurring in connection therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on appeal), that such losses were the result of acts or omissions on the part of Administrative Agent or Buyers constituting gross negligence or willful misconduct and (ii) waives, releases and agrees not to sue upon any claim against Administrative Agent or any Buyer (whether sounding in tort, contract or otherwise), except a claim based upon gross negligence or willful misconduct. Whether or not such damages are related to a claim that is subject to such waiver and whether or not such waiver is effective, neither Administrative Agent nor any Buyer shall have any liability with respect to, and Seller hereby waives, releases and agrees not to sue upon any claim for, any special, indirect, consequential or punitive damages suffered by Seller in connection with, arising out of, or in any way related to the transactions contemplated or the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or therewith or any act, omission or event occurring in connection herewith or therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on appeal), that such damages were the result of acts or omissions on the part of Administrative Agent or Buyers, as applicable, constituting willful misconduct or gross negligence.
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Section 11.04 Governing Law; Submission to Jurisdiction; Waivers.
(a) This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Seller acknowledges that the obligations of the Administrative Agent and Buyers hereunder or otherwise are not the subject of any VFN Repo Guaranty by, or recourse to, any direct or indirect parent or other Affiliate of Buyers. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(b) EACH OF THE PARTIES HERETO AND THE BUYERS HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
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(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY.
Section 11.05 Notices. Any and all notices (with the exception of Transaction Notices, which shall be delivered via facsimile only), statements, demands or other communications hereunder may be given by a party to the other by mail, email, facsimile, messenger or otherwise to the address specified below, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence.
If to Seller:
PennyMac Loan Services, LLC
3043 Townsgate Road
Westlake Village, CA 91361
Attention: Pamela Marsh/Richard Hetzel
Phone Number: (805) 330-6059/ (805) 254-6088
E-mail: [email protected];
[email protected];
[email protected]
with a copy to:
PennyMac Loan Services, LLC
3043 Townsgate Road
Westlake Village, CA 91361
Attention: Derek Stark
Phone Number: (818) 746-2289
E-mail: [email protected]
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If to Administrative Agent:
For Transaction Notice:
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
c/o Credit Suisse Securities (USA) LLC
One Madison Avenue, 2nd floor
New York, NY 10010
Attention: Christopher Bergs, Resi Mortgage Warehouse Ops
Phone: 212-538-5087
E-mail: christopher.bergs@credit suisse.com
with a copy to:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, NY 10010
Attention: Margaret Dellafera
Phone Number: 212-325-6471
Fax Number: 212-743-4810
E-mail: [email protected]
For all other Notices:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, NY 10010
Attention: Margaret Dellafera
Phone Number: 212-325-6471
Fax Number: 212-743-4810
E-mail: [email protected]
If to Buyers:
At the address specified on the related signature page.
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Section 11.06 Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. In case any provision in or obligation under this Agreement or any other Program Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 11.07 Section Headings. The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or construction of any provision of this Agreement.
Section 11.08 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. The parties agree that this Agreement may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including DocuSign.
Section 11.09 Periodic Due Diligence Review. Seller acknowledges that Administrative Agent and Buyers have the right to perform continuing due diligence reviews with respect to Seller and the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable (but no less than five (5) Business Days’) prior written notice unless an Event of Default shall have occurred, in which case no notice is required, to Seller, Administrative Agent or its authorized representatives will be permitted during normal business hours, and in a manner that does not unreasonably interfere with the ordinary conduct of Seller’s business, to examine, inspect, and make copies and extracts of, any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Seller. Seller also shall make available to Buyers and Administrative Agent a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Assets. Without limiting the generality of the foregoing, Seller acknowledges that Buyers may enter into a Transaction related to any Purchased Assets from Seller based solely upon the information provided by Seller to Buyers in the Asset Schedule and the representations, warranties and covenants contained herein, and that Administrative Agent, at its option or upon the request of Buyers, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets related to a Transaction. Seller agrees to cooperate with Administrative Agent and Buyers and any third party underwriter in connection with such underwriting, including providing Administrative Agent and Buyers and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of Seller.
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Section 11.10 Hypothecation or Pledge of Repurchase Assets. Buyers shall have free and unrestricted use of all Repurchase Assets and nothing in this Agreement shall preclude Buyers from engaging in repurchase transactions with all or part of its pro rata portion of the Repurchase Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating all or a portion of its pro rata portion of the Repurchase Assets; provided that prior to an Event of Default, such pledge, repledge, transfer, hypothecation or rehypothecation is treated as a financing or hedging transaction for U.S. federal income tax purposes or a pro rata interest in all payments due to Buyers under this Agreement; provided, further that other than with respect to a pro rata interest in all payments due to Buyers under this Agreement and prior to an Event of Default Buyers receive an opinion of a nationally recognized tax counsel experienced in such matters that such repurchase transaction, pledge, repledge, transfer, hypothecation or rehypothecation will not result in Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.
Section 11.11 Non-Confidentiality of Tax Treatment.
(a) This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyers or Seller, as applicable and shall be held by each party hereto, as applicable in strict confidence and shall not be disclosed to any third party without the written consent of the Required Buyers or Seller, except for (i) disclosure to Buyers’ or Seller’s direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreements, the parties hereto may disclose to any and all Persons of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that Seller may not disclose the name of or identifying information with respect to Buyers or any pricing terms (including the Pricing Rate, Purchase Price Percentage, Purchase Price and Commitment Fee (if any)) or other nonpublic business or financial information (including any sublimits) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Administrative Agent and Buyers.
(b) Notwithstanding anything in this Agreement to the contrary, Seller shall comply with all applicable local, state and federal laws, including all privacy and data protection law, rules and regulations that are applicable to the Repurchase Assets and/or any applicable terms of this Agreement (the “Confidential Information”). Seller understands that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and Seller agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Seller shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers which Seller holds, (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Seller represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the GLB Act and of the applicable standards adopted pursuant thereto, as now or hereafter in effect. Upon request, Seller will provide evidence reasonably satisfactory to allow Administrative Agent to confirm that the providing party has satisfied its obligations as required under this Section 11.11. Without limitation, this may include Administrative Agent’s review of audits, summaries of test results, and other equivalent evaluations of Seller. Seller shall notify Administrative Agent and Buyers immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers provided directly to Seller by Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers. Seller shall provide such notice to Administrative Agent by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.
| -62- |
Section 11.12 Set-off. In addition to any rights and remedies of Administrative Agent and Buyers hereunder and by law, Administrative Agent and Buyers shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Seller or any Affiliate thereof to Administrative Agent, Buyers or any of their Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return funds to Seller), credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Administrative Agent, Buyers or any Affiliate thereof to or for the credit or the account of Seller or any Affiliate thereof. Administrative Agent agrees promptly to notify Seller after any such set off and application made by a Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.
Section 11.13 Intent.
(a) The parties recognize that each Transaction is a “master netting agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended and that all payments hereunder are deemed “margin payments” or “settlement payments” as defined in Title 11 of the United States Code.
(b) It is understood that any party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 7.03 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and Section 561 of Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).
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(d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).
(e) This Agreement is intended to be a “securities contract,” within the meaning of Section 555 under the Bankruptcy Code, and a “master netting agreement,” within the meaning of Section 561 under the Bankruptcy Code.
(f) It is the intention of the parties that, for U.S. federal income tax purposes and for accounting purposes, each Transaction constitute a financing, and that Seller be (except to the extent that Administrative Agent shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Administrative Agent, Seller and Buyers shall treat the Transactions as described in the preceding sentence (including on any and all filings with any U.S. federal, state, or local taxing authority and agree not to take any action inconsistent with such treatment).
Section 11.14 Amendment and Restatement. The Administrative Agent, CSCIB and PLS entered into the Original Agreement. The Administrative Agent, CSCIB and PLS desire to enter into this Agreement in order to amend and restate the Original Agreement in its entirety. The amendment and restatement of the Original Agreement shall become effective on the date hereof, and each of the Administrative Agent, the Buyers and PLS shall hereafter be bound by the terms and conditions of this Agreement and the other Program Agreements. This Agreement amends and restates the terms and conditions of the Original Agreement, and is not a novation of any of the agreements or obligations incurred pursuant to the terms of the Original Agreement. Accordingly, all of the agreements and obligations incurred pursuant to the terms of the Original Agreement are hereby ratified and affirmed by the parties hereto and remain in full force and effect. For the avoidance of doubt, it is the intent of the Administrative Agent, CSCIB and PLS that the security interests and liens granted in the Purchased Assets or Repurchase Assets pursuant to Original Agreement shall continue in full force and effect. All references to the Original Agreement in any Program Agreement or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof.
[Signature Pages Follow]
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IN WITNESS WHEREOF, Administrative Agent, Seller and Buyers have caused this Amended and Restated Master Repurchase Agreement to be executed and delivered by their duly authorized officers or trustees as of the date first above written.
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent | |||
| By: | /s/ Dominic Obaditch | ||
| Name: | Dominic Obaditch | ||
| Title: | Vice President | ||
[PNMAC GMSR Issuer Trust – A&R Series 2016-MSRVF1 Repurchase Agreement]
| PENNYMAC LOAN SERVICES, LLC, | ||
| as Seller | ||
| By: | /s/ Pamela Marsh | |
| Name: Pamela Marsh | ||
| Title: Senior Managing Director and Treasurer | ||
| PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC, solely with respect to Section 11.14, as VFN Guarantor | ||
| By: | /s/ Pamela Marsh | |
| Name: Pamela Marsh | ||
| Title: Senior Managing Director and Treasurer | ||
[PNMAC GMSR Issuer Trust – A&R Series 2016-MSRVF1 Repurchase Agreement]
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, | ||
| as a Buyer | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Authorized Signatory | |
| By: | /s/ Margaret D. Dellafera | |
| Name: | Margaret D. Dellafera | |
| Title: | Authorized Signatory | |
| NOTICE INFORMATION | ||
| For Transaction Notice: | ||
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | ||
| c/o Credit Suisse Securities (USA) LLC | ||
| Eleven Madison Avenue, 13th floor | ||
| New York, NY 10010 | ||
| Attention: Christopher Czako | ||
| Phone: 212 538 5087 | ||
| E-mail: [email protected] | ||
| with a copy to: | ||
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC | ||
| c/o Credit Suisse Securities (USA) LLC | ||
| Eleven Madison Avenue, 4th Floor | ||
| New York, NY 10010 | ||
| Attention: Margaret Dellafera | ||
| Phone Number: 212-325-6471 | ||
| Fax Number: 212-743-4810 | ||
| E-mail: [email protected] | ||
| For all other Notices: | ||
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC | ||
| c/o Credit Suisse Securities (USA) LLC | ||
| Eleven Madison Avenue, 4th Floor | ||
| New York, NY 10010 | ||
| Attention: Margaret Dellafera | ||
| Phone Number: 212-325-6471 | ||
| Fax Number: 212-743-4810 | ||
| E-mail: [email protected] | ||
[PNMAC GMSR Issuer Trust – A&R Series 2016-MSRVF1 Repurchase Agreement]
| CITIBANK, N.A., | ||
| as a Buyer | ||
| By: | /s/ Arunthathi Theivakumaran | |
| Name: | Arunthathi Theivakumaran | |
| Title: | Vice President | |
| NOTICE INFORMATION | ||
| CITIBANK, N.A. | ||
| 390 Greenwich Street | ||
| New York, NY 10013 | ||
| Attention: Bobbie Theivakumaran | ||
| Telephone No.: (212) 723-6753 | ||
| email: [email protected] | ||
| WITH A COPY TO | ||
| CITIBANK, N.A. | ||
| 390 Greenwich Street | ||
| New York, NY 10013 | ||
| Attention: James Kessler | ||
| Telephone No.: (212) 723-6377 | ||
| email: [email protected] | ||
[PNMAC GMSR Issuer Trust – A&R Series 2016-MSRVF1 Repurchase Agreement]
SCHEDULE 1
RESPONSIBLE OFFICERS – SELLER
SELLER AUTHORIZATIONS
Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for Seller under this Agreement:
Responsible Officers for execution of Program Agreements and amendments:
|
Name |
Title |
Signature | ||
| Pamela Marsh | Senior Managing Director, Treasurer |
|
Responsible Officers for execution of Transaction Notices and day-to-day operational functions:
|
Name |
Title |
Signature | ||
| Pamela Marsh | Senior Managing Director, Treasurer |
| ||
| Maurice Watkins | Senior Managing Director, Capital Markets Operations |
| ||
| Thomas Rettinger | Senior Managing Director, Portfolio Risk Management |
| ||
| Richard Hetzel | Senior Vice President, Treasury |
| ||
| Paul Newman | Executive Vice President, Treasury |
| ||
| Ryan Huddleston | Authorized Representative |
| ||
| Adeshola Makinde | Authorized Representative |
| ||
| Angela Everest | Authorized Representative |
|
Schedule 1- 1
SCHEDULE 2
ASSET SCHEDULE
Series 2016-MSRVF1 Variable Funding Note and Additional Balances
| Note | Initial Note Balance | Additional Balance(s) | Outstanding VFN Principal Balance | Maximum VFN Principal Balance | ||||||||
| PNMAC GMSR Issuer Trust, Series 2016-MSRVF1 Variable Funding Note | $ | 460,209,784 | $ | 0 | $ | 460,209,784 | $ | 1,000,000,000 | ||||
| CSCIB Pro Rata Share | $ | 230,104,892 | $ | 0 | $ | 230,104,892 | $ | 500,000,000 | ||||
| Citibank Pro Rata Share | $ | 230,104,892 | $ | 0 | $ | 230,104,892 | $ | 500,000,000 | ||||
Repurchase Price attributable to the Series 2016-MSRVF1 Variable Funding Note and Additional Balances pursuant to the Series 2016-MSRVF1 Repurchase Agreement
| Current Balance | Additional Balance(s) | Outstanding Principal Balance | Maximum Principal Balance | |||||||||
| Aggregate Amount | $ | 100,000,000 | $ | 0 | $ | 100,000,000 | $ | 500,000,000 | ||||
| CSCIB Pro Rata Share | $ | 50,000,000 | $ | 0 | $ | 50,000,000 | $ | 250,000,000 | ||||
| Citibank Pro Rata Share | $ | 50,000,000 | $ | 0 | $ | 50,000,000 | $ | 250,000,000 | ||||
Schedule 2- 1
SCHEDULE 3
ADMINISTRATIVE AGENT’S ACCOUNT
| Name of Bank: | BNY Mellon |
| ABA Number of Bank: | 021000018 |
| Name of Account: | CSFB Mortgage Capital |
| Account Number: | 8901149543 |
Schedule 3- 1
EXHIBIT A
FORM OF TRANSACTION NOTICE
Dated: [_________]
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010
Attention: Dominic Obaditch
Email: [email protected]
TRANSACTION NOTICE
Ladies and Gentlemen:
We refer to the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021 (the “Agreement”), among PennyMac Loan Services, LLC (the “Seller”), the buyers party thereto (“Buyers”) and Credit Suisse First Boston Mortgage Capital LLC (“Administrative Agent”). Each capitalized term used but not defined herein shall have the meaning specified in the Agreement. This notice is being delivered by Seller pursuant to Section 2.02 of the Agreement.
Please be notified that Seller hereby irrevocably requests that the Buyers enter into the following Transaction(s) with the Seller as follows:
| VFN | VFN Repo | |
| Market Value (MSR) | ||
| Series Invested Amount | ||
| Maximum VFN Principal Balance | ||
| Current Note Balance/Purchase Price requested | ||
| Additional Balance/Purchase Price requested | ||
| New Note Balance/Repurchase Price | ||
| Effective Advance Rate | ||
Seller requests that the proceeds of the Purchase Price be deposited in Seller’s account at _______, ABA Number _______, account number ____, References: _____, Attn: _______.
Seller hereby represents and warrants that each of the representations and warranties made by Seller in each of the Program Agreements to which it is a party is true and correct in all material respects, in each case, on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. Attached hereto is a true and complete updated copy of the Asset Schedule.
Exhibit A-1
| PennyMac Loan Services, LLC, as Seller | ||
| By: | ||
Exhibit A-2
Asset Schedule
Series 2016-MSRVF1 Variable Funding Note and Additional Balances
| Note | Initial Note Balance | Additional Balance(s) | Outstanding VFN Principal Balance |
Maximum VFN Principal Balance | ||||||||
| PNMAC GMSR Issuer Trust, Series 2016-MSRVF1 Variable Funding Note | $ | [________] | $ | [________] | $ | [________] | $ | [________] | ||||
| CSCIB Pro Rata Share | ||||||||||||
| Citibank Pro Rata Share |
Repurchase Price attributable to the Series 2016-MSRVF1 Variable Funding Note and Additional Balances pursuant to the Series 2016-MSRVF1 Repurchase Agreement
| Current Note Balance | Additional Balance(s) | Outstanding Principal Balance | Maximum Principal Balance | |||||||||
| Aggregate Amount | $ | [________] | $ | [________] | $ | [________] | $ | [________] | ||||
| CSCIB Pro Rata Share | ||||||||||||
| Citibank Pro Rata Share |
Exhibit A-3
EXHIBIT B
EXISTING INDEBTEDNESS
[See Attached]
Exhibit B-1
Exhibit 10.2
EXECUTION VERSION
[Information indicated with brackets has been excluded from this exhibit because it is not material and would be competitively harmful if publicly disclosed]
PNMAC GMSR ISSUER TRUST,
as Issuer
and
CITIBANK, N.A.,
as Indenture Trustee, Calculation Agent, Paying Agent and Securities Intermediary
and
PENNYMAC LOAN SERVICES, LLC,
as Administrator and as Servicer
and
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
as Administrative Agent and Noteholder for the benefit of the Series 2016-MSRVF1 Repo Buyers
and consented to by
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Series 2016-MSRVF1 Repo Buyer
and
CITIBANK, N.A.,
as a Series 2016-MSRVF1 Repo Buyer
AMENDMENT NO. 5
Dated as of July 30, 2021
to the
AMENDED AND RESTATED SERIES 2016-MSRVF1 INDENTURE
SUPPLEMENT
Dated as of February 28, 2018
PNMAC GMSR ISSUER TRUST
MSR COLLATERALIZED NOTES,
SERIES 2016-MSRVF1
AMENDMENT NO. 5 TO AMENDED AND RESTATED SERIES 2016-MSRVF1 INDENTURE SUPPLEMENT
This Amendment No. 5 to the Amended and Restated Series 2016-MSRVF1 Indenture Supplement (this “Amendment”) is dated as of July 30, 2021, by and among PNMAC GMSR ISSUER TRUST, as issuer (the “Issuer”), CITIBANK, N.A. (“Citibank”), as indenture trustee (the “Indenture Trustee”), PENNYMAC LOAN SERVICES, LLC, as administrator (in such capacity, the “Administrator”) and as servicer (in such capacity, the “Servicer”), and CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent (the “Administrative Agent”) and noteholder (the “Noteholder”) for the benefit of the Series 2016-MSRVF1 Repo Buyers (as defined below), and is consented to by CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“CSCIB”) and CITIBANK, N.A. (“Citi”) (each a “Series 2016-MSRVF1 Repo Buyer” and together, the “Series 2016-MSRVF1 Repo Buyers”), the buyers of 100% of the Series 2016-MSRVF1 Note under the Series 2016-MSRVF1 Repurchase Agreement.
RECITALS
WHEREAS, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent are parties to that certain Third Amended and Restated Indenture, dated as of April 1, 2020 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Base Indenture”), the provisions of which are incorporated, as modified by that certain Amended and Restated Series 2016-MSRVF1 Indenture Supplement, dated as of February 28, 2018 (as amended by Amendment No. 1, dated as of August 10, 2018, Amendment No. 2, dated as of April 24, 2020, Amendment No. 3, dated as of August 25, 2020, and Amendment No. 4, dated as of April 1, 2021, and as may be further amended, restated, supplement or otherwise modified from time to time, the “Series 2016-MSRVF1 Indenture Supplement”, and together with the Base Indenture, the “Indenture”), among the Issuer, Citibank, the Servicer, the Administrator and the Administrative Agent. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Indenture;
WHEREAS, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent (in its capacity as Administrative Agent and Noteholder) have agreed, subject to the terms and conditions of this Amendment, that the Series 2016-MSRVF1 Indenture Supplement be amended to reflect certain agreed upon revisions to the terms of the Series 2016-MSRVF1 Indenture Supplement;
WHEREAS, pursuant to Section 12.2 of the Base Indenture, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent, with prior notice to each Note Rating Agency and the consent of the Majority Noteholders of each Series materially and adversely affected by such amendment, by Act of said Noteholders delivered to the Issuer, the Administrator, the Servicer, the Administrative Agent and the Indenture Trustee, upon delivery of an Issuer Tax Opinion (unless the Noteholders unanimously consent to waive such opinion), for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, any Indenture Supplement;
| 1 |
WHEREAS, pursuant to Section 12.3 of the Base Indenture, in executing or accepting the additional trusts created by any amendment or Indenture Supplement of the Base Indenture permitted by Article XII or the modifications thereby of the trusts created by the Base Indenture, the Indenture Trustee will be entitled to receive, and (subject to Section 11.1 of the Base Indenture) will be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or Indenture Supplement is authorized and permitted by the Base Indenture and that all conditions precedent thereto have been satisfied (the “Authorization Opinion”); provided, that no such Authorization Opinion shall be required in connection with any amendment or Indenture Supplement consented to by all Noteholders if all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or Indenture Supplement;
WHEREAS, pursuant to Section 1.3 of the Base Indenture, the Issuer shall deliver an Officer’s Certificate stating that all conditions precedent, if any, provided for in the Base Indenture relating to a proposed action have been complied with and that the Issuer reasonably believes that this Amendment will not have a material Adverse Effect, and shall also furnish to the Indenture Trustee an opinion of counsel stating that in the opinion of such counsel all conditions precedent to a proposed action, if any, have been complied with (unless 100% of the Noteholders have consented to the related amendment, modification or action and all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or supplement, or with respect or with respect to any other modification or action, directed the Indenture Trustee in writing to permit such modification or action without receiving such certificate or opinion);
WHEREAS, pursuant to Section 11.1 of the Trust Agreement, prior to the execution of any amendment to any Transaction Documents to which the Trust is a party, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by the Trust Agreement and that all conditions precedent have been met;
WHEREAS, pursuant to Section 4.1(a)(iii) of the Trust Agreement, the consent of each of the Owners (as defined in the Trust Agreement) (unless an Event of Default has occurred and is continuing), the Administrative Agent and the Series Required Noteholders of all Variable Funding Notes is required for the amendment or other change to any Transaction Document in circumstances where the consent of any Noteholder or the Administrative Agent is required (other than an amendment or supplement to the Base Indenture pursuant to Section 12.1 thereof);
WHEREAS, the Series 2016-MSRVF1 Note (the “Series 2016-MSRVF1 Note”), was issued to PennyMac Loan Services, LLC (“PLS”) pursuant to the terms of the Series 2016-MSRVF1 Indenture Supplement, and was purchased by CSCIB and Citi under the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021, by and among the Administrative Agent, CSCIB, as a Series 2016-MSRVF1 Repo Buyer, Citi, as a Series 2016-MSRVF1 Repo Buyer and PLS, as seller (as amended, restated, supplemented or otherwise modified from time to time, the “Series 2016-MSRVF1 Repurchase Agreement”), pursuant to which PLS sold all of rights, title and interest in the Series 2016-MSRVF1 Note to CSCIB and Citi as Series 2016-MSRVF1 Repo Buyers, and transferred the Series 2016-MSRVF1 Note to the Administrative Agent as “Noteholder” for the benefit of the Series 2016-MSRVF1 Repo Buyers;
WHEREAS, pursuant to the Series 2016-MSRVF1 Indenture Supplement, with respect to the Series 2016-MSRVF1 Note, any Action provided by the Base Indenture or the Series 2016-MSRVF1 Indenture Supplement to be given or taken by a Noteholder shall be taken by the Series 2016-MSRVF1 Repo Buyers, as the buyers of the Series 2016-MSRVF1 Note under the Series 2016-MSRVF1 Repurchase Agreement;
| 2 |
WHEREAS, pursuant to Section 10 of the Series 2016-MSRVF1 Indenture Supplement, the parties hereto may enter into an amendment to supplement, amend or revise any term or provision of the Series 2016-MSRVF1 Indenture Supplement pursuant to the terms and provisions of Section 12.2 of the Base Indenture with the consent of the Noteholders of 100% of the Series 2016-MSRVF1 Note; and
WHEREAS, as of the date hereof, the Series 2016-MSRVF1 Note is not rated by any Note Rating Agency.
NOW, THEREFORE, the Issuer, Indenture Trustee, the Administrator, the Servicer and the Administrative Agent hereby agree, in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, that the Series 2016-MSRVF1 Indenture Supplement is hereby amended as follows:
Section 1. Amendments to the Series 2016-MSRVF1 Indenture Supplement.
(a) The Series 2016-MSRVF1 Indenture Supplement is hereby amended by deleting the definitions of “Initial Term Note Offering,” “LIBOR Index Rate,” “Margin,” “Note Interest Rate,” “Series 2016-MSRVF1 Repurchase Agreement” and “Series Required Noteholders” from Section 2 thereof in their entirety and replacing them with the following:
“Additional Term Note Offering” means the issuance of at least $200,000,000 in Term Notes to third party investors in accordance with the Base Indenture on or after July 30, 2021.
“LIBOR Index Rate” means for a one-month period, the LIBOR per annum (rounded upward, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a one-month period, which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the Benchmark Determination Date.
“Margin” means, (i) with respect to the Series 2016-MSRVF1 Note, (A) prior to the occurrence of an Event of Default (as defined under the Series 2016-MSRVF1 Repurchase Agreement), [****]% per annum, or (B) upon the occurrence of an Additional Term Note Offering, the margin over the related swap rate in effect for the Term Notes subject to such Additional Term Note Offering plus [****]%, and (ii) with respect to the Series 2016-MSRVF1 Note following the occurrence of an Event of Default (as defined under the Series 2016-MSRVF1 Repurchase Agreement), the amount calculated pursuant to clause (i) plus an additional [****]% per annum.
“Note Interest Rate” means, with respect to any Interest Accrual Period, the sum of (a) the greater of (i) Benchmark and (ii) [****]% plus (b) the Margin.
“Series 2016-MSRVF1 Repurchase Agreement” means the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021, by and among the Administrative Agent, CSCIB, as a Series 2016-MSRVF1 Repo Buyer, Citi, as a Series 2016-MSRVF1 Repo Buyer and PLS, as seller.
| 3 |
“Series Required Noteholders” means, for so long as the Series 2016-MSRVF1 Notes are Outstanding, 100% of the Noteholders of the Series 2016-MSRVF1 Notes. With respect to the Series 2016-MSRVF1 Notes, any Action provided by the Base Indenture or this Indenture Supplement to be given or taken by a Noteholder shall be taken by Series 2016-MSRVF1 Repo Buyers, as buyers of the Series 2016-MSRVF1 Notes under the Series 2016-MSRVF1 Repurchase Agreement.
(b) The Series 2016-MSRVF1 Indenture Supplement is hereby amended by adding the below listed definitions to Section 2 thereof in proper alphabetical order as follows:
“Benchmark” means, with respect to any Interest Accrual Period, initially, the Benchmark Rate for a one-month period, if such rate is available; provided, that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the Benchmark Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Rate.
“Benchmark Determination Date” means, for each Payment Date and the related Interest Accrual Period means (1) if the Benchmark is LIBOR, the second (2nd) London Banking Day prior to the commencement of such Interest Accrual Period, and (2) if the Benchmark is not LIBOR, the date determined by the Designated Transaction Representative in accordance with the Benchmark Replacement Conforming Changes for each Payment Date and the related Interest Accrual Period.
“Benchmark Rate” means, with respect to any Interest Accrual Period with respect to which interest is to be calculated by reference to the “Benchmark Rate,” (a) the LIBOR Index Rate for a one-month period, if such rate is available, (b) in the event that LIBOR and LIBOR Index Rate are phased out, and a new benchmark intended as a replacement for LIBOR and LIBOR Index Rate is established or administered by the Financial Conduct Authority or ICE Benchmark Administration or other comparable authority, and such new benchmark with a one-month maturity is readily available through Bloomberg or a comparable medium, then the Designated Transaction Representative, with the Administrative Agent’s written consent, shall direct the Indenture Trustee to utilize such new benchmark with a one-month maturity for all purposes hereof in place of the LIBOR Index Rate, and (c) if the LIBOR Index Rate cannot be determined or has been phased out and no new benchmark under clause (b) has been established, the arithmetic average of the rates of interest per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) London Banking Days before the beginning of such one-month period by three (3) or more major banks in the interbank Eurodollar market selected by the Administrative Agent for delivery on the first day of and for a period equal to such one-month period and in an amount equal or comparable to the principal amount of the portion of the Note Balance on which the “Benchmark Rate” is being calculated.
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“Benchmark Reference Agreement” means the first applicable alternative set forth in the order below that can be determined by the Designated Transaction Representative:
(1) any repurchase or financing facility entered into with respect to a Series of Variable Funding Notes that are Outstanding;
(2) any repurchase or financing facility entered into by the Servicer with respect to MSRs or mortgage loans with CSCIB, CSFB or Citibank as repo buyers or lenders, as applicable;
(3) any other repurchase or financing facility entered into by the Servicer with respect to MSRs or mortgage loans; or
(4) any other financing facility identified by the Designated Transaction Representative.
“Benchmark Reference Time” means, with respect to any determination of the Benchmark, (i) if the Benchmark is the Benchmark Rate, 11:00 a.m. (London time) on the second (2nd) London Banking Day prior to the commencement of such Interest Accrual Period and (ii) if the Benchmark is not the Benchmark Rate, the time determined by the Designated Transaction Representative in accordance with the Benchmark Replacement Conforming Changes for each Payment Date and the related Interest Accrual Period.
“Benchmark Replacement” means the first applicable alternative set forth in the order below that can be determined by the Calculation Agent as of the applicable Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the Benchmark Replacement Adjustment;
(2) the sum of: (a) Compounded SOFR and (b) the Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment;
(4) the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or
(5) the sum of: (a) the alternate rate of interest that has been selected by the Designated Transaction Representative as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated securitizations at such time and (b) the Benchmark Replacement Adjustment.
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“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Designated Transaction Representative as of the applicable Benchmark Replacement Date:
(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;
(2) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment; or
(3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Designated Transaction Representative giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated securitization transactions at such time, and as reasonably necessary such that the parties are similarly situated to the period prior to the replacement of the LIBOR Index Rate.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Interest Accrual Period,” timing and frequency of determining rates and making payments of interest, changes to the definition of “Corresponding Tenor” solely when such tenor is longer than the Interest Accrual Period and other administrative matters) that the Designated Transaction Representative decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with the practices adopted with respect to the applicable Benchmark Reference Agreement, in each case as notified to the Administrative Agent, the Indenture Trustee, the Calculation Agent and the Administrative Agent prior to the inclusion of such Benchmark Replacement Conforming Changes in the Payment Date Report notifying Noteholders of such changes and such Benchmark Replacement Conforming Changes taking effect, which such changes shall automatically become effective without further action on behalf of any party (upon inclusion in such Payment Date Report) to the extent that the Administrative Agent has not provided a written objection (in its reasonable discretion) to such Benchmark Replacement Conforming Changes to each of the Designated Transaction Representative and the Indenture Trustee prior to the inclusion in the Payment Date Report. The Benchmark Replacement Conforming Changes will be prepared by the Designated Transaction Representative and delivered to the Indenture Trustee and Calculation Agent for inclusion in the Payment Date Report together with an acknowledgement thereto by the Administrative Agent.
“Benchmark Replacement Date” means:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event” either (a) the date of the public statement or publication of information referenced therein or (b) if later, and the Benchmark is the LIBOR Index Rate, then the date on which the administrator of the relevant Benchmark permanently or indefinitely ceases to provide such Benchmark;
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(2) with respect to clause (3) of the definition of “Benchmark Transition Event” the first date of the public statement or publication of information. Note that if the Designated Transaction Representative determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Benchmark Reference Time in respect of any determination of the Benchmark on any date, the Benchmark Replacement shall replace the then-current Benchmark for all purposes with respect to the Notes in respect of such determination on such date and all determinations on all subsequent dates. However, if the initial Benchmark Replacement is any rate other than Term SOFR and the Designated Transaction Representative later determines that Term SOFR can be determined, then a Benchmark Transition Event shall be deemed to have occurred and Term SOFR shall become the new Unadjusted Benchmark Replacement and shall, together with a new Benchmark Replacement Adjustment for Term SOFR, replace the then-current Benchmark on the next Benchmark Determination Date for Term SOFR; or
(3) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the Early Opt-in Election by Administrative Agent and Seller.
For the avoidance of doubt, if the event giving rise to the applicable Benchmark Replacement Date occurs on the same day as, but earlier than, the Benchmark Reference Time in respect of any determination, the Benchmark Replacement Date shall be deemed to have occurred prior to the Benchmark Reference Time for such determination.
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that the administrator has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;
(2) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark; or
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(3) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative.
“Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Interest Accrual Period or compounded in advance) being established by the Designated Transaction Representative in accordance with:
(1) the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:
(2) if, and to the extent that, the Designated Transaction Representative determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Designated Transaction Representative giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated securitization transactions at such time.
“Corresponding Tenor” means one month.
“Designated Transaction Representative” means the Administrator.
“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Buyers, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Buyers, written notice of objection to such Early Opt-in Election from Buyers comprising the Required Buyers.
“Early Opt-in Election” means the occurrence of the following:
(1) a determination by Administrative Agent that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such credit facilities are identified in the notice to Seller described in clause (2) below and are publicly available for review), and
(2) the election by Administrative Agent to trigger a fallback from LIBOR Index Rate and the provision by Administrative Agent of written notice of such election to the Buyers.
“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
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“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.
“ISDA Fallback Adjustment” means the spread adjustment, (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.
“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“Series 2016-MSRVF1 Repo Buyer” means each of Credit Suisse AG, Cayman Islands Branch and Citibank, N.A., as buyers under the Series 2016-MSRVF1 Repurchase Agreement, and each of their permitted successors and assigns.
“SOFR” means, with respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s Website.
“Term SOFR” means the forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the applicable Benchmark Replacement Adjustment.
(c) The Series 2016-MSRVF1 Indenture Supplement is hereby amended by deleting the definitions of “LIBOR Determination Date” and “LIBOR Rate” from Section 2 thereof in their entirety.
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(d) The Series 2016-MSRVF1 Indenture Supplement is hereby amended by deleting Section 5(d) thereof and replacing it with the following:
(d) The parties hereto acknowledge that the Series 2016-MSRVF1 Notes will be financed by the Series 2016-MSRVF1 Repo Buyers under the Series 2016-MSRVF1 Repurchase Agreement, pursuant to which PLS will sell all its rights, title and interest in the Series 2016-MSRVF1 Notes to the Series 2016-MSRVF1 Repo Buyers. The parties hereto acknowledge that with respect to the Series 2016-MSRVF1 Notes, any Action provided by the Base Indenture or this Indenture Supplement to be given or taken by a Noteholder shall be taken by the Required Buyers (as defined in the Series 2016-MSRVF1 Repurchase Agreement). Subject to the foregoing, the Administrative Agent and the Issuer further confirm that the Series 2016-MSRVF1 Notes issued on the Issuance Date pursuant to this Indenture Supplement shall be issued in the name of “Credit Suisse First Boston Mortgage Capital LLC, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch, as a Series 2016-MSRVF1 Repo Buyer, and Citibank, N.A., as a Series 2016-MSRVF1 Repo Buyer.” The Issuer and the Administrative Agent hereby direct the Indenture Trustee to issue the Series 2016-MSRVF1 Notes in the name of “Credit Suisse First Boston Mortgage Capital LLC, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch, as a Series 2016-MSRVF1 Repo Buyer, and Citibank, N.A., as a Series 2016-MSRVF1 Repo Buyer.”
(e) The Series 2016-MSRVF1 Indenture Supplement is hereby amended by deleting Section 7 thereof in its entirety and replacing it with the following:
Section 7. Determination of Note Interest Rate and Benchmark.
(a) At least one (1) Business Day prior to each Determination Date, the Calculation Agent shall calculate the Note Interest Rate for the related Interest Accrual Period and the Interest Payment Amount for the Series 2016-MSRVF1 Notes for the upcoming Payment Date, and include a report of such amount in the related Payment Date Report.
(b) On each Benchmark Determination Date, the Calculation Agent will calculate the Benchmark for the succeeding Interest Accrual Period for the related Series 2016-MSRVF1 Notes on the basis of the procedures specified in the definition of Benchmark.
(c) In connection with the implementation of a Benchmark Replacement, the Designated Transaction Representative will have the right from time to time to make Benchmark Replacement Conforming Changes as described in the definition thereof.
(d) Notwithstanding the foregoing, if prior to the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date a published LIBOR Index Rate is unavailable, the Benchmark will be determined on the basis of the rates at which deposits in dollars are offered by major banks selected by the Designated Transaction Representative. If the banks selected by the Designated Transaction Representative are not quoting rates at the time the LIBOR Index Rate is to be determined for such Interest Accrual Period, the LIBOR Index Rate for the related Interest Accrual Period will be the same as the LIBOR Index Rate for the immediately preceding Interest Accrual Period until the occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date. The Calculation Agent will calculate the Benchmark for each Interest Accrual Period on the related Benchmark Determination Date. The Indenture Trustee (in any capacity in which it acts) shall have no duty, obligation or responsibility to determine whether a Benchmark Transition Event has occurred or to select an alternative index, and shall have no liability for the Designated Transaction Representative’s selection of such alternative index.
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(e) A Benchmark Transition Event occurred on March 5, 2021. Notice or materials relating to the occurrence of any additional Benchmark Transition Event, any Benchmark Replacement Date, the determination of a Benchmark Replacement and the making of any Benchmark Replacement Conforming Changes shall be made available with the relevant Payment Date Report. Notwithstanding anything in the Base Indenture, any Indenture Supplement or any other Transaction Document to the contrary, upon the inclusion of such information in the Payment Date Report, the Base Indenture, any Indenture Supplement or any other relevant Transaction Document, as applicable, shall be deemed to have been amended to reflect the new Unadjusted Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark Replacement Conforming Changes without further compliance with the amendment provisions of the Base Indenture, any Indenture Supplement or any other relevant Transaction Document.
(f) Any determination, decision or election that may be made by the Designated Transaction Representative in connection with a Benchmark Transition Event or a Benchmark Replacement as described above, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, shall be conclusive and binding absent manifest error, may be made in the Designated Transaction Representative’s sole discretion, and, notwithstanding anything to the contrary in the Transaction Documents, shall become effective without consent from any other party, except for the Administrative Agent, which will have the right to provide its written objection to the Calculation Agent and the Designated Transaction Representative with respect to any such actions in its reasonable discretion within thirty (30) days of notice of such changes from the Designated Transaction Representative, in which case such proposed changes will not come into effect and the Calculation Agent shall continue to use the most recent Benchmark until resolved. In the event that the Administrative Agent provides such written objection, the Administrative Agent and the Designated Transaction Representative shall work in good faith to resolve the issues related to the Unadjusted Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark Replacement Conforming Changes such that the parties are similarly situated to the period prior to the replacement of the LIBOR Index Rate. The Designated Transaction Representative shall provide notice of any determination, decision or election made by the Designated Transaction Representative in connection with a Benchmark Transition Event or a Benchmark Replacement as described above at least thirty (30) days prior to the proposed inclusion of such changes in the related Payment Date Report. None of the Issuer, Owner Trustee, the Indenture Trustee, the Calculation Agent, the Administrator, the Designated Transaction Representative, the Administrative Agent, the Servicer or any other transaction party will have any liability for any determination made by or on behalf of the Issuer by any party, including the Designated Transaction Representative or any action or inaction by the Administrative Agent, in connection with a Benchmark Transition Event or a Benchmark Replacement as described above, and each Noteholder, by its acceptance of a Note or a beneficial interest in a Note, shall be deemed to waive and release any and all claims against any of the Issuer, Owner Trustee, the Indenture Trustee, the Calculation Agent, the Administrator, the Designated Transaction Representative, the Administrative Agent or the Servicer relating to any such determinations.
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(g) The establishment of the Benchmark Rate by the Calculation Agent and the Designated Transaction Representative, as applicable, and the Calculation Agent’s subsequent calculation of the Note Interest Rate and the Interest Payment Amount on the Series 2016-MSRVF1 Notes for the relevant Interest Accrual Period based on the determination made by the Designated Transaction Representative, in the absence of manifest error, will be final and binding.
(h) The Designated Transaction Representative and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by it under or in connection with this Indenture Supplement or the other Transaction Documents in its capacity as Designated Transaction Representative, other than action or inaction undertaken with gross negligence, willful misconduct or bad faith. Without limiting the foregoing and notwithstanding any understanding to the contrary, no Noteholder shall have any right of action whatsoever against the Designated Transaction Representative as a result of the Designated Transaction Representative acting or refraining from acting under this Indenture Supplement, the Notes or any of the other Transaction Documents in its own interests or otherwise, other than as a result of gross negligence, willful misconduct or bad faith by the Designated Transaction Representative.
(i) The Issuer, Indenture Trustee, PLS, Administrative Agent and each Series Required Noteholder hereby agree to negotiate in good faith with the other parties hereto in connection with mutually acceptable amendments to this Indenture Supplement to revise this Section 7, the definitions of “Benchmark”, “Benchmark Replacement” and related terms hereto.
Section 2. Replacement of Series 2016-MSRVF1 Note.
(a) The parties hereto acknowledge and agree that the Series 2016-MSRVF1 Note No. 1, dated as of December 19, 2016 with a Maximum VFN Principal Balance of $1,000,000,000 (the “Outstanding Note”) is (1) hereby deemed cancelled and for all purposes no longer outstanding under the Indenture and applicable law and (2) replaced by Series 2016-MSRVF1 Note No. 2, to be dated as of the date hereof with a Maximum VFN Principal Balance of $1,000,000,000 (the “Replacement Note”).
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(b) The Noteholder shall promptly deliver the Outstanding Note to the Indenture Trustee for cancellation and hereby consents to the issuance of the Replacement Note.
Section 3. No Note Rating Agency. As of the date hereof and prior to the execution of this Amendment, the Series 2016-MSRVF1 Note is not rated by any Note Rating Agency.
Section 4. Waiver of Issuer Tax Opinion and Authorization Opinion. Pursuant to Section 12.2 of the Base Indenture and Section 10 of the Series 2016-MSRVF1 Indenture Supplement, the Noteholder hereby waives and instructs the Administrative Agent and the Indenture Trustee to waive the provisions of Section 12.2 of the Base Indenture and Section 10 of the Series 2016-MSRVF1 Indenture Supplement which require delivery of an Issuer Tax Opinion with respect to this Amendment. Pursuant to Section 12.3 of the Base Indenture, the Noteholder hereby waives and instructs the Administrative Agent and the Indenture Trustee to waive the provisions of Section 12.3 of the Base Indenture which requires delivery of an Authorization Opinion with respect to this Amendment.
Section 5. Conditions to Effectiveness of this Amendment. This Amendment shall become effective upon the execution and delivery of this Amendment by all parties hereto (the “Amendment Effective Date”).
Section 6. Consent and Acknowledgment. By execution of this Amendment, each of CSCIB and Citi, in its capacity as Series 2016-MSRVF1 Repo Buyer, hereby consents to this Amendment. The Series 2016-MSRVF1 Repo Buyers certify that together they own 100% of the Series 2016-MSRVF1 Note. In addition, each Series 2016-MSRVF1 Repo Buyer certifies as to itself that (i) it is authorized to execute and deliver this consent and such power has not been granted or assigned to any other person, (ii) the Person executing this Indenture Supplement on behalf of such Series 2016-MSRVF1 Repo Buyer is duly authorized to do so, (iii) the Indenture Trustee may conclusively rely upon such consent and certifications, (iv) the execution of this Amendment by the Administrative Agent as Noteholder on behalf of the Series 2016-MSRVF1 Repo Buyers should be considered an “Act” by the Noteholder pursuant to Section 1.5 of the Base Indenture and (v) it acknowledges and agrees that the amendments effected by this Amendment shall become effective on the Amendment Effective Date. The Series 2016-MSRVF1 Repo Buyers hereby instruct the Indenture Trustee to execute this Amendment, thereby waiving the requirement for delivery of the Authorization Opinion and the Officer’s Certificate pursuant to Section 1.3 and 12.3 of the Base Indenture.
The Indenture Trustee is hereby authorized and directed to execute that certain Fourth Amended and Restated Acknowledgment Agreement, dated as of July 30, 2021, by and among the Indenture Trustee, PLS, and Ginnie Mae.
Section 7. Representations and Warranties. The Issuer hereby represents and warrants to the Indenture Trustee, the Administrative Agent and the Series 2016-MSRVF1 Repo Buyers that as of the date hereof it is in compliance with all the terms and provisions set forth in the Indenture on its part to be observed or performed remains bound by the terms thereof, and that no Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 9.1 of the Base Indenture.
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Section 8. Limited Effect. Except as expressly amended and modified by this Amendment, the Indenture shall continue to be, and shall remain, in full force and effect in accordance with its terms and the execution of this Amendment.
Section 9. No Recourse. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Savings Fund Society, FSB (“WSFS”), not individually or personally but solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, warranties, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, warranties, undertakings and agreements by WSFS but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WSFS, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WSFS has made no investigation as to the accuracy or completeness of any representations or warranties made by the Issuer in this Amendment and (e) under no circumstances shall WSFS be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
Section 10. Successors and Assigns. This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
Section 11. GOVERNING LAW. THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AMENDMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12. Counterparts. This Amendment may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including DocuSign.
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Section 13. Entire Agreement. The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.
Section 14. Recitals. The recitals and statements contained in this Amendment shall be taken as the statements of the Issuer, and the Indenture Trustee does not assume any responsibility for their correctness. The Indenture Trustee does not make any representation as to the validity or sufficiency of this Amendment (except as may be made with respect to the validity of its own obligations hereunder.) In entering into this Amendment, the Indenture Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct of, or affecting the liability of or affording protection to it.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.
| PNMAC GMSR ISSUER TRUST, as Issuer | ||
| By: Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Owner Trustee | ||
| By: | /s/ Shaheen Mohajer | |
| Name: | Shaheen Mohajer | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| PENNYMAC LOAN SERVICES, LLC, as Servicer and as Administrator | ||
| By: | /s/ Pamela Marsh | |
| Name: | Pamela Marsh | |
| Title: | Senior Managing Director and Treasurer | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| CITIBANK, N.A., as Indenture Trustee, and not in its individual capacity | ||
| By: | /s/ Valerie Delgado | |
| Name: | Valerie Delgado | |
| Title: | Senior Trust Officer | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as 100% Noteholder of Series 2016-MSRVF1 Note, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| CONSENTED TO BY: | ||
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Series 2016-MSRVF1 Repo Buyer | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Authorized Signatory | |
| By: | /s/ Margaret D. Dellafera | |
| Name: | Margaret D. Dellafera | |
| Title: | Authorized Signatory | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
| CONSENTED TO BY: | ||
| CITIBANK, N.A., as a Series 2016-MSRVF1 Repo Buyer | ||
| By: | /s/ Arunthathi Theivakumaran | |
| Name: | Arunthathi Theivakumaran | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 5 to A&R Series 2016-MSRVF1 Indenture Supplement]
Exhibit 10.3
EXECUTION VERSION
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
among
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent (“Administrative Agent”)
and
THE BUYERS FROM TIME TO TIME PARTY HERETO, as buyers (“Buyers”)
and
PENNYMAC LOAN SERVICES, LLC, as seller (“Seller”)
Dated as of July 30, 2021
PNMAC GMSR ISSUER TRUST
MSR COLLATERALIZED NOTES,
SERIES 2020-SPIADVF1
TABLE OF CONTENTS
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| ARTICLE I | DEFINITIONS | 2 | ||
| Section 1.01 | Certain Defined Terms | 2 | ||
| Section 1.02 | Other Defined Terms | 14 | ||
| ARTICLE II | GENERAL TERMS | 14 | ||
| Section 2.01 | Transactions | 14 | ||
| Section 2.02 | Procedure for Entering into Transactions | 15 | ||
| Section 2.03 | Repurchase; Payment of Repurchase Price | 16 | ||
| Section 2.04 | Price Differential | 16 | ||
| Section 2.05 | Margin Maintenance | 16 | ||
| Section 2.06 | Payment Procedure | 17 | ||
| Section 2.07 | Application of Payments | 17 | ||
| Section 2.08 | Use of Purchase Price and Transaction Requests | 18 | ||
| Section 2.09 | Recourse | 18 | ||
| Section 2.10 | Requirements of Law | 19 | ||
| Section 2.11 | Taxes | 20 | ||
| Section 2.12 | Indemnity | 21 | ||
| Section 2.13 | Additional Balance and Additional Funding | 21 | ||
| Section 2.14 | Commitment Fee | 21 | ||
| Section 2.15 | Termination | 22 | ||
| ARTICLE III | REPRESENTATIONS AND WARRANTIES | 22 | ||
| Section 3.01 | Seller Existence | 22 | ||
| Section 3.02 | Licenses | 22 | ||
| Section 3.03 | Power | 22 | ||
| Section 3.04 | Due Authorization | 23 | ||
| Section 3.05 | Financial Statements | 23 | ||
| Section 3.06 | No Event of Default | 24 | ||
| Section 3.07 | Solvency | 24 | ||
| Section 3.08 | No Conflicts | 24 | ||
| Section 3.09 | True and Complete Disclosure | 24 | ||
| Section 3.10 | Approvals | 24 | ||
| Section 3.11 | Litigation | 24 | ||
| Section 3.12 | Material Adverse Change | 25 | ||
| Section 3.13 | Ownership | 25 | ||
| Section 3.14 | The Note | 25 | ||
| Section 3.15 | Taxes | 26 | ||
| Section 3.16 | Investment Company | 26 | ||
| Section 3.17 | Chief Executive Office; Jurisdiction of Organization | 26 | ||
| Section 3.18 | Location of Books and Records | 26 | ||
| Section 3.19 | ERISA | 26 | ||
| Section 3.20 | Financing of Note and Additional Balances | 26 | ||
| Section 3.21 | Agreements | 26 | ||
| Section 3.22 | Other Indebtedness | 27 | ||
| Section 3.23 | No Reliance | 27 | ||
| Section 3.24 | Plan Assets | 27 | ||
| Section 3.25 | No Prohibited Persons | 27 | ||
| Section 3.26 | Compliance with 1933 Act | 27 | ||
| Section 3.27 | Anti-Money Laundering Laws | 28 | ||
| ARTICLE IV | CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST | 28 | ||
| Section 4.01 | Ownership | 28 | ||
| Section 4.02 | Security Interest | 28 | ||
| Section 4.03 | Further Documentation | 29 | ||
| Section 4.04 | Changes in Locations, Name, etc | 29 | ||
| Section 4.05 | Performance by Administrative Agent of Seller’s Obligations | 29 | ||
| Section 4.06 | Proceeds | 30 | ||
| Section 4.07 | Remedies | 30 | ||
| Section 4.08 | Limitation on Duties Regarding Preservation of Repurchase Assets | 31 | ||
| Section 4.09 | Powers Coupled with an Interest | 31 | ||
| Section 4.10 | Release of Security Interest | 31 | ||
| Section 4.11 | Reinstatement | 31 | ||
| Section 4.12 | Subordination | 31 | ||
| ARTICLE V | CONDITIONS PRECEDENT | 32 | ||
| Section 5.01 | Initial Transaction | 32 | ||
| Section 5.02 | All Transactions | 32 | ||
| Section 5.03 | Closing Subject to Conditions Precedent | 34 | ||
| ARTICLE VI | COVENANTS | 36 | ||
| Section 6.01 | Litigation | 36 | ||
| Section 6.02 | Prohibition of Fundamental Changes | 37 | ||
| Section 6.03 | Weekly Reporting | 37 | ||
| Section 6.04 | No Adverse Claims | 37 | ||
| Section 6.05 | Assignment | 37 | ||
| Section 6.06 | Security Interest | 38 | ||
| Section 6.07 | Records | 38 | ||
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| Section 6.08 | Books | 38 | ||
| Section 6.09 | Approvals | 38 | ||
| Section 6.10 | Material Change in Business | 38 | ||
| Section 6.11 | Distributions | 38 | ||
| Section 6.12 | Applicable Law | 39 | ||
| Section 6.13 | Existence | 39 | ||
| Section 6.14 | Chief Executive Office; Jurisdiction of Organization | 39 | ||
| Section 6.15 | Taxes | 39 | ||
| Section 6.16 | Transactions with Affiliates | 39 | ||
| Section 6.17 | Guarantees | 39 | ||
| Section 6.18 | Indebtedness | 39 | ||
| Section 6.19 | True and Correct Information | 39 | ||
| Section 6.20 | No Pledge | 40 | ||
| Section 6.21 | Plan Assets | 40 | ||
| Section 6.22 | Sharing of Information | 40 | ||
| Section 6.23 | Modification of the Base Indenture and Series 2020-SPIADVF1 Indenture Supplement | 40 | ||
| Section 6.24 | Reporting Requirements | 40 | ||
| Section 6.25 | Liens on Substantially All Assets | 42 | ||
| Section 6.26 | Litigation Summary | 43 | ||
| Section 6.27 | Hedging | 43 | ||
| Section 6.28 | [Reserved] | 43 | ||
| Section 6.29 | Most Favored Status | 43 | ||
| Section 6.30 | Threshold Events and Commitment Modifications | 44 | ||
| ARTICLE VII | DEFAULTS/RIGHTS AND REMEDIES OF BUYERS UPON DEFAULT | 44 | ||
| Section 7.01 | Events of Default | 44 | ||
| Section 7.02 | No Waiver | 46 | ||
| Section 7.03 | Due and Payable | 46 | ||
| Section 7.04 | Fees | 46 | ||
| Section 7.05 | Default Rate | 46 | ||
| ARTICLE VIII |
ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYERS |
47 | ||
| Section 8.01 | Entire Agreement; Amendments | 47 | ||
| Section 8.02 | Waivers, Separate Actions by Buyers | 47 | ||
| ARTICLE IX | SUCCESSORS AND ASSIGNS | 48 | ||
| Section 9.01 | Successors and Assigns | 48 | ||
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| Section 9.02 | Participations and Transfers | 48 | ||
| Section 9.03 | Buyer and Participant Register | 49 | ||
| ARTICLE X | AGENT PROVISIONS | 49 | ||
| Section 10.01 | Appointment of Administrative Agent | 49 | ||
| Section 10.02 | Powers and Duties | 50 | ||
| Section 10.03 | General Immunity | 50 | ||
| Section 10.04 | Administrative Agent to Act as Buyer | 51 | ||
| Section 10.05 | Buyers’ Representations, Warranties and Acknowledgment | 51 | ||
| Section 10.06 | Right to Indemnity | 51 | ||
| Section 10.07 | Successor Administrative Agent | 52 | ||
| Section 10.08 | Delegation of Duties | 52 | ||
| Section 10.09 | Right to Realize on Collateral | 53 | ||
| Section 10.10 | Erroneous Payments | 53 | ||
| ARTICLE XI | MISCELLANEOUS | 55 | ||
| Section 11.01 | Survival | 55 | ||
| Section 11.02 | Indemnification | 55 | ||
| Section 11.03 | Nonliability of Buyers | 56 | ||
| Section 11.04 | Governing Law; Submission to Jurisdiction; Waivers | 56 | ||
| Section 11.05 | Notices | 57 | ||
| Section 11.06 | Severability | 59 | ||
| Section 11.07 | Section Headings | 59 | ||
| Section 11.08 | Counterparts | 59 | ||
| Section 11.09 | Periodic Due Diligence Review | 59 | ||
| Section 11.10 | Hypothecation or Pledge of Repurchase Assets | 60 | ||
| Section 11.11 | Non-Confidentiality of Tax Treatment | 60 | ||
| Section 11.12 | Set-off | 61 | ||
| Section 11.13 | Intent | 61 | ||
| Section 11.14 | Amendment and Restatement | 62 | ||
| Schedule 1 | – | Responsible Officers of Seller | |
| Schedule 2 | – | Asset Schedule | |
| Schedule 3 | – | Administrative Agent Account | |
| Exhibit A | – | Form of Transaction Notice | |
| Exhibit B | – | Existing Indebtedness |
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AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
This Amended and Restated Master Repurchase Agreement (this “Agreement”) is made as of July 30, 2021, among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (“CSFB”), as administrative agent (the “Administrative Agent”), the Buyers (as defined herein) from time to time party hereto, and PENNYMAC LOAN SERVICES, LLC, as seller (“Seller” or “PLS”).
W I T N E S S E T H :
WHEREAS, pursuant to the Base Indenture and the Original Series 2020-SPIADVF1 Indenture Supplement, PNMAC GMSR ISSUER TRUST (the “Issuer”) duly authorized the issuance of a Series of Notes, as a single Class of Variable Funding Note, known as the “PNMAC GMSR ISSUER TRUST MSR Collateralized Notes, Series 2020-SPIADVF1” (the “Original Note”);
WHEREAS, the Original Note was issued to the Seller and the Seller sold the Original Note to Credit Suisse AG, Cayman Islands Branch (“CSCIB”), as buyer, pursuant to a master repurchase agreement, dated as of April 1, 2020 (as amended by Amendment No. 1, dated as of April 24, 2020, and Amendment No. 2, dated as of August 25, 2020, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Original Agreement”), by and among the Seller, CSCIB, as buyer, and the Administrative Agent.
WHEREAS, the Administrative Agent, CSCIB and PLS desire to amend and restate the Original Agreement in its entirety, on the terms and subject to the conditions as set forth herein;
WHEREAS, in connection with the restatement and amendment of the Original Agreement, CSCIB and PLS will agree to return and cancel the Original Note in exchange for a single replacement note (the “Note”) issued pursuant to the Series 2020-SPIADVF1 Indenture Supplement;
WHEREAS, from time to time, the parties hereto may enter into Transactions;
WHEREAS, Seller is the owner of the Note, and the Administrative Agent is the holder of the Note on behalf of Buyers; and
WHEREAS, Seller wishes to sell its entire interest in the Note to Buyers pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent, Buyers and Seller hereby agree as follows.
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ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Capitalized terms used herein shall have the indicated meanings:
“1933 Act” means the Securities Act of 1933, as amended from time to time.
“1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Act of Insolvency” means, with respect to any Person or its Affiliates, (i) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding, or the voluntary joining of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested or results in entry of an order for relief; (ii) the seeking of the appointment of a receiver, trustee, custodian or similar official for such party or an Affiliate or any substantial part of the property of either; (iii) the appointment of a receiver, conservator, or manager for such party or an Affiliate by any governmental agency or authority having the jurisdiction to do so; (iv) the making or offering by such party or an Affiliate of a composition with its creditors or a general assignment for the benefit of creditors; (v) the admission by such party or an Affiliate of such party of its inability to pay its debts or discharge its obligations as they become due or mature; or (vi) that any governmental authority or agency or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such party or of any of its Affiliates, or shall have taken any action to displace the management of such party or of any of its Affiliates or to curtail its authority in the conduct of the business of such party or of any of its Affiliates.
“Additional Balance” has the meaning set forth in Section 2.13.
“Additional Repurchase Assets” has the meaning set forth in Section 4.02(c).
“Administrative Agent” has the meaning given to such term in the preamble to this Agreement.
“Administrative Agent Account” means the account identified on Schedule 3 hereto.
“Affiliate” means, with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code; provided, however, that in respect of Seller the term “Affiliate” shall include only PNMAC and its wholly owned subsidiaries.
“Aggregate Committed Amount” means the sum of all Committed Amounts.
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“Agreement” has the meaning given to such term in the preamble to this Agreement.
“Anti-Money Laundering Laws” shall have the meaning set forth in Section 3.27.
“Applicable Lending Office” means the “lending office” of a Buyer (or of an Affiliate of such Buyer) designated on the signature page hereof or such other office of a Buyer (or of an Affiliate of such Buyer) as such Buyer may from time to time specify to Seller in writing as the office by which the Transactions are to be made and/or maintained.
“Asset Schedule” means Schedule 2 attached hereto, which lists the Note and the terms thereof, as such schedule shall be updated from time to time in accordance with Section 2.02 hereof, including in connection with Administrative Agent’s approval of any Additional Balances pursuant to Section 2.13.
“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.
“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended from time to time.
“Base Indenture” means the Third Amended and Restated Base Indenture, dated as of April 1, 2020, among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, Seller, as administrator and as servicer, CSFB, as administrative agent, and the Credit Manager, including the schedules and exhibits thereto.
“Base Rate” has the meaning assigned to the term in the Pricing Side Letter.
“Business Day” means any day other than (i) a Saturday or Sunday or (ii) any other day on which national banking associations or state banking institutions in New York, New York, the State of California, the State of Texas, the city and state where the Corporate Trust Office is located or the Federal Reserve Bank of New York, are authorized or obligated by law, executive order or governmental decree to be closed.
“Buyer” means each Person listed on the signature pages to this Agreement as Buyer, together with their successors, and any Transferee of such Person, other than any such Person that ceases to be a Buyer pursuant to this Agreement.
“Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“Change in Control” occurs if any of the following occur:
(A) any transaction or event as a result of which PNMAC ceases to own, beneficially or of record, 100% of the stock of Seller, except with respect to an initial public offering of Seller’s common stock on a U.S. national securities exchange;
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(B) the sale, transfer, or other disposition of all or substantially all of Seller’s or PNMAC’s assets (excluding any such action taken in connection with any securitization transaction); or
(C) the consummation of a merger or consolidation of Seller or PNMAC with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s stock outstanding immediately after such merger, consolidation or such other reorganization is owned by Persons who were not stockholders of Seller or PNMAC immediately prior to such merger, consolidation or other reorganization.
“Closing Date” has the meaning assigned to the term in the Pricing Side Letter.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment Fee” has the meaning assigned to the term in the Pricing Side Letter.
“Commitment Modification” has the meaning assigned to the term in the Pricing Side Letter.
“Committed Amount” has the meaning assigned to the term in the Pricing Side Letter.
“Commitment Share” means, with respect to each Buyer, 50%.
“Confidential Information” has the meaning set forth in Section 11.11(b).
“Control”, “Controlling” or “Controlled” means the possession of the power to direct or cause the direction of the management or policies of a Person through the right to exercise voting power or by contract, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
“Corresponding Repurchase Price” has the meaning set forth in Section 10.10(c).
“Credit Manager” means Pentalpha Surveillance LLC and any successor thereto in such capacity.
“CSCIB” has the meaning given to such term in the preamble to this Agreement.
“CSFB” has the meaning given to such term in the preamble to this Agreement.
“Default” means an event, condition or default that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
“Defaulting Buyer” has the meaning set forth in Section 2.02.
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“Dollars” and “$” means dollars in lawful currency of the United States of America.
“EO13224” has the meaning set forth in Section 3.25.
“Erroneous Payment” has the meaning set forth in Section 10.10(a).
“Erroneous Payment Return Deficiency” has the meaning set forth in Section 10.10(c).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any corporation or trade or business that, together with Seller or PNMAC is treated as a single employer under Section 414(b) or (c) of the Code or solely for purposes of Section 302 of ERISA and Section 412 of the Code is treated as single employer described in Section 414 of the Code.
“ERISA Event of Termination” means with respect to Seller or PNMAC (i) with respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified with thirty (30) days of the occurrence of such event, or (ii) the withdrawal of Seller, PNMAC or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the failure by Seller, PNMAC or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including the failure to make on or before its due date a required installment under Section 412(m) of the Code (or Section 430(j) of the Code as amended by the Pension Protection Act) or Section 302(e) of ERISA (or Section 303(j) of ERISA, as amended by the Pension Protection Act), or (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by Seller, PNMAC or any ERISA Affiliate thereof to terminate any plan, or (v) the failure to meet requirements of Section 436 of the Code resulting in the loss of qualified status under Section 401(a)(29) of the Code, or (vi) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (vii) the receipt by Seller, PNMAC or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for Seller, PNMAC or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412(b) or 430(k) of the Code with respect to any Plan.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Existing Indebtedness” has the meaning specified in Section 3.22.
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“Expenses” means all present and future expenses reasonably incurred by or on behalf of Administrative Agent and Buyers in connection with the negotiation, execution or enforcement of this Agreement or any of the other Program Agreements and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the reasonable and documented cost of title, lien, judgment and other record searches; reasonable and documented attorneys’ fees; any ongoing audits or due diligence costs in connection with valuation, entering into Transactions or determining whether a Margin Deficit may exist; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.
“FATCA” Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or regulatory legislation, guidance, notes, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code.
“Fidelity Insurance” means insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount acceptable to Seller’s regulators.
“Financing Document” means any or all of the “Program Agreements” or “Facility Documents” as defined in any repurchase agreement or loan and security agreement between Seller and any Buyer.
“GAAP” means U.S. generally accepted accounting principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its successors, as in effect from time to time, and (ii) applied consistently with principles applied to past financial statements of Seller and its subsidiaries; provided, that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) that such principles have been properly applied in preparing such financial statements.
“GLB Act” has the meaning set forth in Section 11.11(b).
“Governmental Actions” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions over Administrative Agent, Seller or Buyers, as applicable.
“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.
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“Guarantee” means, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a mortgaged property. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
“Indebtedness” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements, including, without limitation, any Indebtedness arising hereunder; (g) Indebtedness of others Guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (i) Indebtedness of general partnerships of which such Person is a general partner and (j) with respect to clauses (a)-(i) above both on and off balance sheet.
“Indenture” means the Base Indenture, together with the Series 2020-SPIADVF1 Indenture Supplement thereto.
“Indenture Trustee” means Citibank, N.A., its permitted successors and assigns.
“Issuer” has the meaning given to such term in the recitals to this Agreement.
“Laws” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Governmental Authority.
“Lien” means, with respect to any property or asset of any Person (a) any mortgage, lien, pledge, charge or other security interest or encumbrance of any kind in respect of such property or asset or (b) the interest of a vendor or lessor arising out of the acquisition of or agreement to acquire such property or asset under any conditional sale agreement, lease purchase agreement or other title retention agreement.
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“Margin” has the meaning assigned to the term in the Pricing Side Letter.
“Margin Call” has the meaning set forth in Section 2.05(a).
“Margin Deadlines” has the meaning set forth in Section 2.05(b).
“Margin Deficit” has the meaning set forth in Section 2.05(a).
“Market Value” means, with respect to the Note as of any date of determination, and without duplication, the fair market value of the Note on such date as determined by Administrative Agent in its sole discretion.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of Seller or any Affiliate that is a party to any Program Agreement taken as a whole; (b) a material impairment of the ability of Seller or any Affiliate that is a party to any Program Agreement to perform under any Program Agreement and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Agreement against Seller or any Affiliate that is a party to any Program Agreement.
“Maximum Purchase Price” has the meaning assigned to the term in the Pricing Side Letter.
“Maximum Purchase Price Modification” shall have the meaning set forth in the definition of Maximum Purchase Price.
“Net Income” has the meaning assigned to the term in the Pricing Side Letter.
“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.
“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been or are required to be made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.
“Non-Excluded Taxes” has the meaning set forth in Section 2.11(a).
“Note” has the meaning given to such term in the recitals to this Agreement.
“Notice” or “Notices” means all requests, demands and other communications, in writing (including facsimile transmissions and e-mails), sent by overnight delivery service, facsimile transmission, electronic transmission or hand-delivery to the intended recipient at the address specified in Section 11.05 or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.
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“Obligations” means (a) all of Seller’s indebtedness, obligations to pay the outstanding principal balance of the Purchase Price, together with interest thereon on the Termination Date, outstanding interest due on each Price Differential Payment Date, and other obligations and liabilities, to Administrative Agent, Buyers and each of their Affiliates arising under, or in connection with, the Program Agreements, whether now existing or hereafter arising; (b) any and all sums reasonably incurred and paid by Administrative Agent or Buyers or on behalf of Administrative Agent or Buyers in order to preserve any Repurchase Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of Seller’s indebtedness, obligations or liabilities referred to in this definition, the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Repurchase Asset, or of any exercise by Administrative Agent and Buyers of their respective rights under the Program Agreements, including reasonable attorneys’ fees and disbursements and court costs; and (d) all of Seller’s indemnity obligations to Administrative Agent and Buyers pursuant to the Program Agreements.
“OFAC” has the meaning set forth in Section 3.25.
“Officer’s Compliance Certificate” has the meaning assigned to such term in the Pricing Side Letter.
“Original Agreement” has the meaning given to such term in the recitals to this Agreement.
“Original Note” has the meaning given to such term in the recitals to this Agreement.
“Original Series 2020-SPIADVF1 Indenture Supplement” means the Series 2020-SPIADVF1 Indenture Supplement, dated as of April 1, 2020, as amended by Amendment No. 1, dated as of August 25, 2020, and Amendment No. 2, dated as of April 1, 2021, by and among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and Administrative Agent.
“Other Taxes” has the meaning set forth in Section 2.11(b).
“Participant” has the meaning set forth in Section 9.02(a).
“Payment Recipient” has the meaning set forth in Section 10.10(a).
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
“Pension Protection Act” means the Pension Protection Act of 2006, as amended from time to time.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
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“PFSI” means PennyMac Financial Services Inc.
“Plan” means an employee benefit or other plan established or maintained by any Seller or any ERISA Affiliate and covered by Title IV of ERISA, other than a Multiemployer Plan.
“PLS” has the meaning given to such term in the preamble to this Agreement.
“PNMAC” means Private National Mortgage Acceptance Company, LLC, its permitted successors and assigns.
“Price Differential” means with respect to any Transaction as of any date of determination, an amount equal to the product of (A) the Pricing Rate for such Transaction and (B) the Purchase Price for such Transaction, calculated daily on the basis of a 360 day year for the actual number of days during the Price Differential Period.
“Price Differential Payment Date” means, for as long as any Obligations shall remain owing by Seller to Administrative Agent and Buyers, each Payment Date (as defined in the Indenture).
“Price Differential Period” means, the period from and including a Price Differential Payment Date, up to but excluding the next Price Differential Payment Date.
“Price Differential Statement Date” has the meaning set forth in Section 2.04.
“Pricing Rate” means Base Rate plus the applicable Margin.
“Pricing Side Letter” means the amended and restated pricing side letter, dated as of the Closing Date, by and among Administrative Agent, Buyers, Seller and the VFN Guarantor, as amended, restated, supplemented or otherwise modified from time to time.
“Primary Repurchase Assets” has the meaning set forth in Section 4.02(a).
“Program Agreements” means this Agreement, the Pricing Side Letter, each Side Letter Agreement, the VFN Repo Guaranty, the PC Repurchase Agreement, the PC Guaranty, the Purchased MSR Excess Spread Participation Agreement, the Originated MSR Excess and Retained Spread Participation Agreement, the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement.
“Prohibited Person” has the meaning set forth in Section 3.25.
“Pro Rata Share” means, with respect to each Buyer, the percentage obtained from the fraction: (i) the numerator of which is the outstanding Purchase Price attributable to such Buyer and (ii) the denominator of which is the aggregate outstanding Purchase Price.
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
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“Purchase Date” means, subject to the satisfaction of the conditions precedent set forth in Article V hereof, each Funding Date (as defined in the Indenture) on which a Transaction is entered into by Administrative Agent (as agent for Buyers) pursuant to Section 2.02 or such other mutually agreed upon date as more particularly set forth on Exhibit A hereto.
“Purchase Price” means on any date of determination:
(i) the price at which each Purchased Asset (or portion thereof) is transferred by Seller to Buyers (or Administrative Agent, as agent and bailee for Buyers), which shall equal the Asset Value of such Purchased Asset on the related Purchase Date, minus
(ii) the sum of (a) any Repurchase Price paid with respect to such Purchased Asset pursuant to Section 2.03, plus (b) any Additional Note Payment made with respect to such Purchased Asset pursuant to Section 4.4(b) or Section 4.5(e) of the Indenture, plus (c) any Redemption Amount paid pursuant to Section 13.1 of the Indenture, plus (d) any funds paid or applied by Administrative Agent against the Purchase Price pursuant to Section 2.05.
“Purchase Price Percentage” has the meaning assigned to the term in the Pricing Side Letter.
“Purchased Assets” means, collectively, the Note (including all outstanding Additional Balances thereunder) together with the Repurchase Assets related to the Note until it has been repurchased by Seller in accordance with the terms of this Agreement.
“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller, or any other person or entity with respect to the Purchased Assets.
“Register” has the meaning set forth in Section 9.02(b).
“Repurchase Assets” has the meaning set forth in Section 4.02(c).
“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date requested by Seller on which the Repurchase Price is paid pursuant to Section 2.03.
“Repurchase Price” means the price at which Purchased Assets are to be transferred by or on behalf of Buyers to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the accrued but unpaid Price Differential as of the date of such determination.
“Repurchase Rights” has the meaning set forth in Section 4.02(c).
“Required Buyers” means, (a) at any time any Obligations are outstanding, Buyers (other than Defaulting Buyers) holding sixty-six and two-thirds percent (66 2/3%) of the Obligations outstanding at such time (excluding the portion of the Obligations owed to a Defaulting Buyer), or (b) at any time there are no Obligations outstanding, “Required Buyers” shall mean the Buyers (other than Defaulting Buyers) holding sixty-six and two-thirds percent (66 2/3%) of Committed Amounts (excluding the Committed Amounts of any Defaulting Buyers).
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“Requirement of Law” means, with respect to any Person, any law, treaty, rule or regulation or determination of an arbitrator, a court or other Governmental Authority, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” means as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer or treasurer of such Person. The Responsible Officers of Seller as of the Closing Date are listed on Schedule 1 hereto.
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor thereto.
“SEC” means the Securities and Exchange Commission, or any successor thereto.
“Seller” has the meaning assigned to such term in the preamble to this Agreement and includes PLS’ permitted successors and assigns.
“Seller Termination Option” means (a) (i) a Buyer has or shall incur costs in connection with those matters provided for in Section 2.10 or 2.11 and (ii) Administrative Agent, on behalf of Buyer, requests that Seller pay to such Buyer those costs in connection therewith, or (b) Administrative Agent has declared in writing that an event described in Section 5.02(h)(A) has occurred.
“Series 2020-SPIADVF1 Indenture Supplement” means the Original Series 2020-SPIADVF1 Indenture Supplement, as amended by Amendment No. 3, dated as of July 30, 2021, by and among the Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PLS, as administrator and as servicer, and Administrative Agent.
“Side Letter Agreement” means each side letter agreement to be dated as of the Closing Date, by and between the Seller and a Buyer.
“SPIADVF1 Funding Conditions” with respect to the Series 2020-SPIADVF1 Notes and any Funding Date, the following conditions:
(i) the Advance Verification Agent Report immediately preceding such Funding Date has been delivered in accordance with Section 3.3(g)(2) of the Base Indenture;
(ii) to the extent the Advance Verification Agent Report delivered immediately preceding such Funding Date contains any exceptions noted therein, such exceptions have been waived by the Administrative Agent in its sole discretion; and
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(iii) solely with respect to funding of MBS Advances, Seller shall not have submitted an Appendix XI-01A Request for Pass-Through Assistance Related to COVID-19 and Repayment Agreement.
“Subsidiary” means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Taxes” has the meaning assigned to such term in Section 2.11(a).
“Termination Date” has the meaning assigned to such term in the Pricing Side Letter.
“Test Period” has the meaning assigned to such term in the Pricing Side Letter.
“Threshold Event” shall mean with respect to a Buyer, a Transaction Notice submitted by Seller which, if satisfied as to such Buyer’s Pro Rata Share, would exceed the Maximum Purchase Price for such Buyer.
“Transaction” means a transaction pursuant to which Seller transfers the Note or Additional Balances, as applicable, to Buyers (or to Administrative Agent, as agent and bailee for Buyers) against the transfer of funds by Buyers, with a simultaneous agreement by Buyers (or by Administrative Agent, as agent and bailee for Buyers) to transfer such Note or Additional Balances, as applicable, back to Seller at a date certain or on demand, against the transfer of funds by Seller.
“Transaction Document” has the meaning assigned to such term in Appendix A to the Indenture.
“Transaction Notice” has the meaning assigned to such term in Section 2.02(a).
“Transaction Register” has the meaning assigned to such term in Section 9.03(b).
“Transferee” has the meaning set forth in Section 9.02(b).
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.
“VFN Guarantor” means Private National Mortgage Acceptance Company, LLC, in its capacity as guarantor under the VFN Repo Guaranty.
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“VFN Repo Guaranty” means the Second Amended and Restated Guaranty, dated as of July 30, 2021, pursuant to which VFN Guarantor fully and unconditionally guarantees the obligations of Seller hereunder.
“Weekly Report Date” has the meaning set forth in Section 6.03.
Section 1.02 Other Defined Terms.
(a) Any capitalized terms used and not defined herein shall have the meaning set forth in the Base Indenture or the Series 2020-SPIADVF1 Indenture Supplement, as applicable.
(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting. All references to Sections, subsections, Articles and Exhibits shall be to Sections, subsections, and Articles of, and Exhibits to, this Agreement unless otherwise specifically provided.
(c) Reference to and the definition of any document (including this Agreement) shall be deemed a reference to such document as it may be amended, restated, supplemented or otherwise modified from time to time.
(d) In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein the words “commencing on” mean “commencing on and including,” the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”
ARTICLE II
GENERAL TERMS
Section 2.01 Transactions. Subject to the terms and conditions hereof, Buyers severally, not jointly, agree to enter into Transactions with Seller for a Purchase Price outstanding at any one time not to exceed the Aggregate Committed Amount; however, the Buyers may agree from time to time to enter into Transactions with Seller for a Purchase Price outstanding in excess of the Aggregate Committed Amount but not to exceed the Maximum Purchase Price. No Buyer shall have any commitment or obligation to enter into a Transaction in connection with the Note to the extent the outstanding Purchase Price related to such Buyer after giving effect to such Transaction exceeds the related Committed Amount for such Buyer. During the term of this Agreement, Seller may pay the Repurchase Price in whole or in part at any time during such period without penalty, and additional Transactions may be entered into in accordance with the terms and conditions hereof. Each Buyer’s obligation to enter into Transactions pursuant to the terms of this Agreement shall terminate on the Termination Date. All Transactions, up to the Maximum Purchase Price, shall be effected by Buyers simultaneously and proportionately to their respective Commitment Share, it being understood that no Buyer shall be responsible for any default by any other Buyer in such other Buyer’s obligation to enter into a Transaction nor shall any Commitment Share of any Buyer be increased or decreased as a result of a default by any other Buyer in such other Buyer’s obligation to enter into a Transaction hereunder, except to the extent agreed to by the non-Defaulting Buyer pursuant to Section 2.02(b).
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Section 2.02 Procedure for Entering into Transactions.
(a) Seller may enter into Transactions with Buyers under this Agreement on any Purchase Date; provided, that Seller shall have given Administrative Agent and Buyers irrevocable notice (each, a “Transaction Notice”), which notice (i) shall be substantially in the form of Exhibit A, (ii) shall be signed by a Responsible Officer of Seller and be received by Administrative Agent and Buyers prior to 1:00 p.m. (New York time) one (1) Business Day prior to the related Purchase Date, and (iii) shall specify: (A) (i) the Maximum VFN Principal Balance of the Note; (ii) with respect to the first Purchase Date, the Initial Note Balance of the Note, and, with respect to any other Purchase Date, the Additional Balance and (iii) after taking into account the Additional Balance being requested on such Purchase Date, the outstanding VFN Principal Balance of the Note; (B) the Dollar amount of the requested Purchase Price; (C) the requested Purchase Date; and (D) any additional terms or conditions of the Transaction not inconsistent with this Agreement. Each Transaction Notice on any Purchase Date shall be in an amount equal to at least $500,000.
(b) If Seller delivers a Transaction Notice that satisfies the requirements of Section 2.02(a) and all applicable conditions precedent set forth in Article V have been satisfied or waived on or prior to the Purchase Date, then subject to the foregoing, on the Purchase Date, each Buyer shall remit its Commitment Share of the requested Purchase Price in U.S. Dollars and in immediately available funds to Administrative Agent at the account specified in Schedule 3 (or such other account designated in writing by the Administrative Agent) no later than 11:00 a.m. (New York time) on the date specified in the Transaction Notice as the Purchase Date, and upon satisfaction or waiver of all applicable conditions set forth herein, the Administrative Agent shall deposit such proceeds into the account of Seller specified in Schedule 5 to the Base Indenture not later than 3:00 p.m. (New York time) on the Purchase Date (or such other account designated by Seller in the Transaction Notice).
The failure of either Buyer to advance the proceeds of its Commitment Share of any Transaction required to be advanced hereunder shall not relieve the other Buyer of its obligation to advance the proceeds of its Commitment Share of any such Transaction required to be advanced hereunder.
If a Buyer does not intend to fund its Commitment Share of the requested Purchase Price, such Buyer shall, within one (1) Business Day of the related Purchase Date, notify the Administrative Agent, the other Buyers and the Seller of its intent not to fund together with a description of the reason for not remitting its Commitment Share of the requested Purchase Price.
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The liabilities and obligations of each Buyer hereunder shall be several and not joint, and neither the Administrative Agent nor the other Buyer shall be responsible for the performance by a Buyer of its obligations hereunder. Each Buyer shall be liable to Seller only for the amount of its respective Committed Amount. If a Buyer does not perform its obligations hereunder with respect to its Committed Amount (such Buyer a “Defaulting Buyer”), all or any part of such Defaulting Buyer’s participation in any Transaction shall be reallocated to the other, non-Defaulting Buyer, but only if (x) such non-Defaulting Buyer has consented to such reallocation in its sole and absolute discretion and (y) the Seller has confirmed that the conditions set forth in Section 2.02(a) are satisfied at the time of such reallocation.
Any Buyer previously designated as a Defaulting Buyer shall no longer be deemed a Defaulting Buyer once each Buyer’s proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to its respective Commitment Share.
(c) Upon entering into each Transaction hereunder, the Asset Schedule shall be automatically updated and replaced with the Asset Schedule attached to the related Transaction Notice.
Section 2.03 Repurchase; Payment of Repurchase Price.
(a) Seller hereby promises to repurchase the Purchased Assets and pay all outstanding Obligations on the Termination Date.
(b) By notifying Administrative Agent and each Buyer in writing at least one (1) Business Day in advance, Seller shall be permitted, at its option, to prepay, subject to Section 2.12, the Purchase Price in whole or in part at any time, together with accrued and unpaid interest on the amount so prepaid.
Section 2.04 Price Differential. On each Price Differential Payment Date, Seller hereby promises to pay to Administrative Agent (on behalf of Buyers) all accrued and unpaid Price Differential on the Transactions, as invoiced by Administrative Agent to Seller three (3) Business Days prior to the related Price Differential Payment Date (the “Price Differential Statement Date”); provided, that on each Price Differential Payment Date prior to the occurrence and continuation of an Event of Default, the estimated Price Differential owed hereunder shall be subject to a true-up of the amount determined by Administrative Agent and agreed by Seller one (1) Business Day prior to the related Price Differential Payment Date. If Administrative Agent fails to deliver such statement on the Price Differential Statement Date, on such Price Differential Payment Date Seller shall pay the amount which Seller calculates as the Price Differential due and upon delivery of the statement, Seller shall remit to Administrative Agent any shortfall, or Administrative Agent shall refund to Seller any excess, in the Price Differential paid. Price Differential shall accrue each day on the Purchase Price at a rate per annum equal to the Pricing Rate. The Price Differential shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.
Section 2.05 Margin Maintenance.
(a) If at any time the aggregate outstanding amount of the Purchase Price of the Note is greater than the related Asset Value or the Maximum Purchase Price (any such excess, a “Margin Deficit”), then Administrative Agent may, and, at the direction of all Buyers, shall by notice to Seller require Seller to transfer to Administrative Agent cash in an amount at least equal to the Margin Deficit (such requirement, a “Margin Call”).
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(b) Notice delivered pursuant to Section 2.05(a) may be given by any written or electronic means. With respect to a Margin Call, any notice given before 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the following Business Day. With respect to a Margin Call, any notice given after 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the second (2nd) Business Day following the date of such notice. The foregoing time requirements for satisfaction of a Margin Call are referred to as the “Margin Deadlines”. The failure of Administrative Agent, on any one or more occasions, to exercise the rights of Buyers hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Administrative Agent to do so at a later date. Seller, Buyers and Administrative Agent each agree that a failure or delay by Administrative Agent to exercise the rights of Buyers hereunder shall not limit or waive Administrative Agent’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.
Section 2.06 Payment Procedure. Seller absolutely, unconditionally, and irrevocably, shall make, or cause to be made, all payments required to be made by Seller hereunder. Seller shall deposit or cause to be deposited all amounts constituting collection, payments and proceeds of the Note (including all fees and proceeds of sale to a third party) to the Administrative Agent Account.
Section 2.07 Application of Payments.
(a) On each Price Differential Payment Date prior to the occurrence of an Event of Default, all amounts deposited into the Administrative Agent Account from and after the immediately preceding Price Differential Payment Date (or the Closing Date in connection with the initial Price Differential Payment Date), or received by Administrative Agent from the Issuer in Administrative Agent’s capacity as VFN Noteholder on behalf of Buyers, shall be applied by the Administrative Agent as follows:
(i) first, to each Buyer (other than a Defaulting Buyer), any accrued and unpaid Price Differential owing with respect to the amount of the Purchase Price attributable to such Buyer in excess of the Purchase Price attributable to the Defaulting Buyer, such amounts distributed pro rata among each non-Defaulting Buyer;
(ii) second, to each Buyer (other than a Defaulting Buyer) such that its proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to the Commitment Share;
(iii) third, to each Buyer to the extent not otherwise paid pursuant to clause first, its Pro Rata Share of the payment of any accrued and unpaid Price Differential owed to such Buyer;
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(iv) fourth, to each Buyer, its Pro Rata Share of the payment of Purchase Price outstanding to satisfy any Margin Deficit owed;
(v) fifth, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer on a pro rata basis, based on the proportion of such other costs and fees payable to such Buyer; and
(vi) sixth, any remainder to Seller.
(b) Notwithstanding the preceding provisions, if an Event of Default shall have occurred hereunder, all funds related to the Note shall be applied by the Administrative Agent as follows:
(i) first, to each Buyer (other than a Defaulting Buyer), any accrued and unpaid Price Differential owing with respect to the amount of the Purchase Price attributable to such Buyer in excess of the Purchase Price attributable to the Defaulting Buyer, such amounts distributed pro rata among each non-Defaulting Buyer;
(ii) second, to each Buyer (other than a Defaulting Buyer) such that its proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to the Commitment Share;
(iii) third, to each Buyer to the extent not otherwise paid pursuant to clause first, its Pro Rata Share of the payment of any accrued and unpaid Price Differential owed to such Buyer;
(iv) fourth, to each Buyer, its Pro Rata Share of the payment of Purchase Price until reduced to zero;
(v) fifth, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer, on a pro rata basis, based on the proportion of such other costs and fees payable to such Buyer;
(vi) sixth, to the payment of any other Obligations; and
(vii) seventh, any remainder to Seller.
Section 2.08 Use of Purchase Price and Transaction Requests. The Purchase Price shall be used by Seller to satisfy its obligations under the Indenture and for general corporate purposes.
Section 2.09 Recourse. Notwithstanding anything else to the contrary contained or implied herein or in any other Program Agreement, Administrative Agent and Buyers shall have full, unlimited recourse against Seller and its assets in order to satisfy the Obligations.
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Section 2.10 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any amendment made to a Buyer’s certificate of trust and trust agreement or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by such Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:
(i) shall subject such Buyer to any tax of any kind whatsoever with respect to this Agreement or the Transactions (excluding income taxes, branch profits taxes, franchise taxes or similar taxes imposed on a Buyer as a result of any present or former connection between such Buyer and the United States, other than any such connection arising solely from such Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or change the basis of taxation of payments to such Buyer in respect thereof;
(ii) shall impose, modify or hold any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of such Buyer which is not otherwise included in the determination of the Price Differential hereunder; or
(iii) shall impose on such Buyer any other condition;
and the result of any of the foregoing is to increase the cost to such Buyer, by an amount which such Buyer deems to be material, of entering, continuing or maintaining this Agreement or any other Program Agreement, the Transactions or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Seller shall promptly pay such Buyer such additional amount or amounts as calculated by such Buyer in good faith as will compensate such Buyer for such increased cost or reduced amount receivable.
(b) If a Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to such Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by such Buyer or any corporation Controlling such Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date shall have the effect of reducing the rate of return on such Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Buyer to be material, then from time to time, Seller shall promptly pay to such Buyer such additional amount or amounts as will compensate such Buyer for such reduction.
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(c) If a Buyer becomes entitled to claim any additional amounts pursuant to this Section 2.10, it shall promptly notify Seller of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section 2.10 submitted by such Buyer to Seller shall be conclusive in the absence of manifest error.
Section 2.11 Taxes.
(a) Any and all payments by or on behalf of Seller under or in respect of this Agreement or any other Program Agreements to which Seller is a party shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law. If Seller shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Program Agreements to Administrative Agent and Buyers (including for purposes of Section 2.10 and this Section 2.11, any assignee, successor or participant), (i) Seller shall make all such deductions and withholdings in respect of Taxes, (ii) Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any applicable Requirement of Law, and (iii) the sum payable by Seller shall be increased as may be necessary so that after Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 2.11) Administrative Agent and Buyers receive an amount equal to the sum they would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than, in the case of Administrative Agent and Buyers, Taxes that are (i) imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which Administrative Agent or Buyers are organized or of their Applicable Lending Office, or any political subdivision thereof, unless such Taxes are imposed as a result of Administrative Agent or Buyers having executed, delivered or performed its obligations or received payments under, or enforced, this Agreement or any of the other Program Agreements (in which case such Taxes will be treated as Non-Excluded Taxes) and (ii) imposed pursuant to FATCA.
(b) In addition, Seller hereby agrees to pay any present or future stamp, recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Program Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Agreement or any other Program Agreement (collectively, “Other Taxes”).
(c) Seller hereby agrees to indemnify Administrative Agent and Buyers for, and to hold each of them harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable by Seller under this Section 2.11 imposed on or paid by Administrative Agent or Buyers and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by Seller provided for in this Section 2.11 shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by Seller under the indemnity set forth in this Section 2.11(c) shall be paid within ten (10) days from the date on which Administrative Agent makes written demand therefor.
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(d) Without prejudice to the survival of any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Section 2.11 shall survive the termination of this Agreement and the other Program Agreements. Nothing contained in Section 2.10 or this Section 2.11 shall require Administrative Agent or any Buyer to make available any of their tax returns or any other information that they deem to be confidential or proprietary.
(e) Administrative Agent and Buyers will timely furnish Seller, or any agent of Seller, any tax forms or certifications (such as an applicable IRS Form W-8, IRS Form W-9 or any successors to such IRS forms) that it is legally entitled to provide and that Seller or its agents may reasonably request (A) to permit Seller or its agents to make payments to it without, or at a reduced rate of, deduction or withholding, (B) to enable Seller or its agents to qualify for a reduced rate of withholding or deduction in any jurisdiction from or through which Seller or its agents receive payments and (C) to enable Seller or its agents to satisfy reporting and other obligations under the Code and Treasury Regulations and under any other applicable laws, and shall update or replace such tax forms or certifications as appropriate or in accordance with their terms or subsequent amendments, and acknowledges that the failure to provide, update or replace any such tax forms or certifications may result in the imposition of withholding or back-up withholding upon payments to Administrative Agent and Buyers.
Section 2.12 Indemnity. Without limiting, and in addition to, the provisions of Section 11.02, Seller agrees to indemnify the Administrative Agent and each Buyer and to hold each of them harmless from any loss or expense that Administrative Agent or Buyers may sustain or incur as a consequence of (i) a default by Seller in payment when due of the Repurchase Price or Price Differential or (ii) a default by Seller in making any prepayment of Repurchase Price after Seller has given a notice thereof in accordance with Section 2.03.
Section 2.13 Additional Balance and Additional Funding. In the event that Seller wishes an increase in the VFN Principal Balance, Seller shall deliver to Administrative Agent and Buyers a copy of the VFN Note Balance Adjustment Request that is delivered under the Indenture. If all the Funding Conditions required pursuant to Sections 2.02(b) and 5.02 hereof and the Indenture have been satisfied, the VFN Principal Balance shall be increased by the amount so reflected (such increase, an “Additional Balance”), and (i) the outstanding VFN Principal Balance set forth in the Asset Schedule hereof shall be automatically updated and (ii) if requested by Seller pursuant to Section 2.02, each Buyer shall thereupon deliver its portion of the related Purchase Price as set forth in Section 2.02(b).
Section 2.14 Commitment Fee. Seller shall pay the Commitment Fee, if any, as specified in the Pricing Side Letter. Such payment shall be made in U.S. Dollars in immediately available funds, without deduction, set off or counterclaim, to Administrative Agent at such account designated in writing by Administrative Agent.
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Section 2.15 Termination.
(a) Notwithstanding anything to the contrary set forth herein, if a Seller Termination Option occurs, Seller may, upon five (5) Business Days’ prior written notice to Administrative Agent and each Buyer of such event, upon payment of the applicable Repurchase Price and satisfaction of the other termination conditions set forth in the Indenture, terminate this Agreement and the Termination Date shall be deemed to have occurred (upon the expiration of such five (5) Business Day period).
(b) In the event that a Seller Termination Option as described in clause (a) of the definition thereof has occurred and Seller has notified Administrative Agent and each Buyer in writing of its option to terminate this Agreement, each affected Buyer shall have the right to withdraw its request for payment within three (3) Business Days of Seller’s notice of its exercise of the Seller Termination Option and Seller shall no longer have the right to terminate this Agreement.
(c) For the avoidance of doubt, Seller shall remain responsible for all costs actually incurred by Administrative Agent or Buyers pursuant to Sections 2.10 and 2.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Administrative Agent and Buyers as of the Closing Date and as of each Purchase Date for any Transaction that:
Section 3.01 Seller Existence. Seller has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware.
Section 3.02 Licenses. Seller is duly licensed or is otherwise qualified in each jurisdiction in which it transacts business for the business which it conducts and is not in default of any applicable federal, state or local laws, rules and regulations unless, in either instance, the failure to take such action is not reasonably likely (either individually or in the aggregate) to cause a Material Adverse Effect and is not in default of such state’s applicable laws, rules and regulations. Seller has the requisite power and authority and legal right to own, sell and grant a lien on all of its right, title and interest in and to the Note. Seller has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement, each other Program Agreement and any Transaction Notice.
Section 3.03 Power. Seller has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect.
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Section 3.04 Due Authorization. Seller has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Program Agreements, as applicable. This Agreement, any Transaction Notice and the Program Agreements have been (or, in the case of Program Agreements and any Transaction Notice not yet executed, will be) duly authorized, executed and delivered by Seller, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against Seller in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.
Section 3.05 Financial Statements. (A) Seller has heretofore furnished to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of Seller ended December 31, 2020 and the related statements of income for Seller for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of Seller ended March 31, 2021 and the related statements of income for Seller for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of Seller (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of Seller’s knowledge, do not omit any material fact as of the date(s) thereof. Since March 31, 2021, there has been no material adverse change in the consolidated business, operations or financial condition of Seller from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. Seller has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller except as heretofore disclosed to Administrative Agent and each Buyer in writing.
(B) Seller has heretofore caused PFSI to furnish to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of PFSI ended December 31, 2020 and the related statements of income for PFSI for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of the PFSI ended March 31, 2021 and the related statements of income for PFSI for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of PFSI (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of Seller’s knowledge, do not omit any material fact as of the date(s) thereof. Since March 31, 2021, there has been no material adverse change in the consolidated business, operations or financial condition of PFSI from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. PFSI has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of PFSI except as heretofore disclosed to Administrative Agent and each Buyer in writing.
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Section 3.06 No Event of Default. There exists no Event of Default under Section 7.01 hereof, which default gives rise to a right to accelerate indebtedness as referenced in Section 7.03 hereof, under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money or to the repurchase of mortgage loans or securities.
Section 3.07 Solvency. Seller is solvent and will not be rendered insolvent by any Transaction and, after giving effect to such Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature and is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of such entity or any of its assets. Seller is not selling and/or pledging any Repurchase Assets with any intent to hinder, delay or defraud any of its creditors.
Section 3.08 No Conflicts. The execution, delivery and performance by of Seller of this Agreement, any Transaction Notice hereunder and the Program Agreements do not conflict with any term or provision of the organizational documents of Seller or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to Seller of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller, which conflict would have a Material Adverse Effect and will not result in any violation of any such mortgage, instrument, agreement or obligation to which Seller is a party.
Section 3.09 True and Complete Disclosure. All information, reports, exhibits, schedules, financial statements or certificates of Seller or any Affiliate thereof or any of their officers furnished or to be furnished to Administrative Agent and Buyers in connection with the initial or any ongoing due diligence of Seller or any Affiliate or officer thereof, negotiation, preparation, or delivery of the Program Agreements, taken as a whole, are true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All financial statements have been prepared in accordance with GAAP.
Section 3.10 Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to any governmental authority or court is required under applicable law in connection with the execution, delivery and performance by Seller of this Agreement, any Transaction Notice and the Program Agreements.
Section 3.11 Litigation. There is no action, proceeding or investigation pending with respect to which Seller has received service of process or, to the best of Seller’s knowledge threatened against it before any court, administrative agency or other tribunal (A) asserting the invalidity of this Agreement, any Transaction, Transaction Notice or any Program Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, any Transaction Notice or any Program Agreement, (C) makes a claim individually or in the aggregate in an amount greater than 5% of Seller’s Adjusted Tangible Net Worth, (D) which requires filing with the SEC in accordance with the 1934 Act or any rules thereunder, (E) which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Seller’s business, or (F) which might materially and adversely affect the validity of the Purchased Assets or the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any Transaction Notice or any Program Agreement.
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Section 3.12 Material Adverse Change. There has been no material adverse change in the business, operations, financial condition, properties or prospects of Seller or its Affiliates since the date set forth in the most recent financial statements supplied to Administrative Agent and Buyers that is reasonably likely to have a Material Adverse Effect on Seller.
Section 3.13 Ownership.
(a) Seller has good title to all of the Repurchase Assets, free and clear of all mortgages, security interests, restrictions, Liens and encumbrances of any kind other than the Liens created hereby or contemplated herein.
(b) Each item of the Repurchase Assets was acquired by Seller in the ordinary course of its business, in good faith, for value and without notice of any defense against or claim to it on the part of any Person.
(c) There are no agreements or understandings between Seller and any other party which would modify, release, terminate or delay the attachment of the security interests granted to Administrative Agent under this Agreement.
(d) The provisions of this Agreement are effective to create in favor of Administrative Agent a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets.
(e) Upon the filing of financing statements on Form UCC-1 naming Administrative Agent as “Secured Party” and Seller as “Debtor”, and describing the Repurchase Assets, in the recording offices of the Secretary of State of Delaware the security interests granted hereunder in the Repurchase Assets will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of Seller in, to and under such Repurchase Assets which can be perfected by filing under the Uniform Commercial Code.
Section 3.14 The Note. Seller has (i) delivered the Note to Administrative Agent, (ii) duly endorsed the Note to Administrative Agent or Administrative Agent’s designee, (iii) notified the Indenture Trustee of such transfer and (iv) completed all documents required to effect such transfer in the Note Register, including receipt by the Note Registrar of the Rule 144A Note Transfer Certificate and such other information and documents that may be required pursuant to the terms of the Indenture. In addition, Administrative Agent has received all other Program Agreements (including all exhibits and schedules referred to therein or delivered pursuant thereto), all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof and all agreements and other material documents relating thereto, and Seller hereby certifies that the copies delivered to Administrative Agent by Seller are true and complete. None of such documents has been amended, supplemented or otherwise modified (including waivers) since the respective dates thereof, except by amendments, copies of which have been delivered to Administrative Agent. Each such document to which Seller is a party has been duly executed and delivered by Seller and is in full force and effect, and no default or material breach has occurred and is continuing thereunder.
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Section 3.15 Taxes. Seller and its Subsidiaries have timely filed all tax returns that are required to be filed by them and have paid all taxes, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of Seller and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of Seller, adequate.
Section 3.16 Investment Company. Neither Seller nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; provided, however, that any entity that is under the management of PNMAC Capital Management LLC in its capacity as an “investment adviser” within the meaning of the Investment Advisers Act of 1940 and is otherwise not directly or indirectly owned or controlled by Seller shall not be deemed a “Subsidiary” for the purposes of this Section 3.16.
Section 3.17 Chief Executive Office; Jurisdiction of Organization. On the Closing Date, Seller’s chief executive office, is, and has been, located at 3043 Townsgate Road, Westlake Village, CA 91361. On the Effective Date, Seller’s jurisdiction of organization is the State of Delaware. Seller shall provide Administrative Agent with thirty (30) days advance notice of any change in Seller’s principal office or place of business or jurisdiction. Seller has no trade name. During the preceding five (5) years, Seller has not been known by or done business under any other name, corporate or fictitious, and has not filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.
Section 3.18 Location of Books and Records. The location where Seller keeps its books and records, including all computer tapes and records relating to the Repurchase Assets is its chief executive office.
Section 3.19 ERISA. Each Plan to which Seller or its Subsidiaries make direct contributions, and, to the knowledge of Seller, each other Plan and each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law.
Section 3.20 Financing of Note and Additional Balances. Each Transaction will be used to purchase the Note and funding of the Additional Balances as provided herein, which Note will be conveyed and/or sold by Seller to Buyers.
Section 3.21 Agreements. Neither Seller nor any Subsidiary of Seller is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 3.05 hereof. Neither Seller nor any Subsidiary of Seller is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture which default could have a material adverse effect on the business, operations, properties, or financial condition of Seller as a whole. No holder of any indebtedness of Seller or of any of its Subsidiaries has given notice of any asserted default thereunder.
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Section 3.22 Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by this Agreement) of Seller existing on the Closing Date is listed on Exhibit B hereto (the “Existing Indebtedness”).
Section 3.23 No Reliance. Seller has made its own independent decisions to enter into the Program Agreements and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including legal counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Administrative Agent or Buyers as to any aspect of the Transactions, including the legal, accounting or tax treatment of such Transactions.
Section 3.24 Plan Assets. Seller is not an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR § 2510.3 101 as amended by Section 3(42) of ERISA, in Seller’s hands, and transactions by or with Seller are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.
Section 3.25 No Prohibited Persons. Neither Seller nor any of its Affiliates, officers, directors, partners or members, is an entity or person (or to the Seller’s knowledge, owned or controlled by an entity or person) (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).
Section 3.26 Compliance with 1933 Act. Neither Seller nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Note, any interest in the Note or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Note, any interest in the Note or any other similar security from, or otherwise approached or negotiated with respect to the Note, any interest in the Note or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Note under the 1933 Act or which would render the disposition of the Note a violation of Section 5 of the 1933 Act or require registration pursuant thereto.
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Section 3.27 Anti-Money Laundering Laws. The operations of Seller and each of their subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where such Seller or any of their subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Seller or any of their subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of any Seller, threatened.
ARTICLE IV
CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST
Section 4.01 Ownership. Upon payment of the Purchase Price and delivery of the Note to Administrative Agent on behalf of the Buyers, Buyers shall become the sole owner of the Purchased Assets, free and clear of all liens and encumbrances.
Section 4.02 Security Interest.
(a) Although the parties intend (other than for U.S. federal tax purposes) that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, and in any event, Seller hereby pledges to Administrative Agent, for the benefit of Buyers, as security for the performance by Seller of its Obligations and hereby grants, assigns and pledges to Administrative Agent a fully perfected first priority security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Primary Repurchase Assets”:
(i) the Note identified on the Asset Schedule;
(ii) all rights to reimbursement or payment of the Note and/or amounts due in respect thereof under the Note identified on the Asset Schedule;
(iii) all records, instruments or other documentation evidencing any of the foregoing;
(iv) all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including all of Seller’s rights, title and interest in and under the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement); and
(v) any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.
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(b) [Reserved].
(c) Subject to the priority interest of the Indenture Trustee, Administrative Agent, Buyers and Seller hereby agree that in order to further secure Seller’s Obligations hereunder, Seller hereby assigns, pledges, conveys and grants to Administrative Agent, for the benefit of Buyers, a security interest in (i) Seller’s rights (but not its obligations) under the Program Agreements including any rights to receive payments thereunder or any rights to collateral thereunder whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Rights”) and (ii) all collateral however defined or described under the Program Agreements to the extent not otherwise included under the definitions of Primary Repurchase Assets or Repurchase Rights (such collateral, “Additional Repurchase Assets,” and collectively with the Primary Repurchase Assets and the Repurchase Rights, the “Repurchase Assets”) to secure the Obligations.
(d) The foregoing provisions of this Section 4.02 are intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement and the Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.
Section 4.03 Further Documentation. At any time and from time to time, upon the written request of Administrative Agent, and at the sole expense of Seller, Seller will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any applicable jurisdiction with respect to the Liens created hereby. Seller also hereby authorizes Administrative Agent to file any such financing or continuation statement to the extent permitted by applicable law.
Section 4.04 Changes in Locations, Name, etc. Seller shall not (a) change the location of its chief executive office/chief place of business from that specified in Section 3.17 or (b) change its name or identity, unless it shall have given Administrative Agent at least thirty (30) days’ prior written notice thereof and shall have delivered to Administrative Agent all Uniform Commercial Code financing statements and amendments thereto as Administrative Agent shall request and taken all other actions deemed necessary by Administrative Agent to continue its perfected status in the Repurchase Assets with the same or better priority.
Section 4.05 Performance by Administrative Agent of Seller’s Obligations. If Seller fails to perform or comply with any of its agreements contained in the Program Agreements, Administrative Agent may itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable (under the circumstances) out-of-pocket expenses of Administrative Agent actually incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Pricing Rate shall be payable by Seller to Administrative Agent on demand and shall constitute Obligations. Such interest shall be computed on the basis of the actual number of days in each Price Differential Period and a 360-day year.
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Section 4.06 Proceeds. If an Event of Default shall occur and be continuing, (a) all proceeds of Repurchase Assets received by Seller consisting of cash, checks and other liquid assets readily convertible to cash items shall be held by Seller in trust for Administrative Agent segregated from other funds of Seller, and shall forthwith upon receipt by Seller be turned over to Administrative Agent in the exact form received by Seller (duly endorsed by Seller to Administrative Agent, if required) and (b) any and all such proceeds received by Administrative Agent (whether from Seller or otherwise) may, in the sole discretion of Administrative Agent, be held by Administrative Agent as collateral security for, and/or then or at any time thereafter may be applied by Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as Administrative Agent shall elect. Any balance of such proceeds remaining after the Obligations shall have been paid in full and this Agreement shall have been terminated shall be paid over to Seller or to whomsoever may be lawfully entitled to receive the same.
Section 4.07 Remedies. If an Event of Default shall occur and be continuing, Administrative Agent may exercise (and at the direction of the Required Buyers shall exercise), in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Uniform Commercial Code (including Administrative Agent’s rights to a strict foreclosure under Section 9-620 of the Uniform Commercial Code). Without limiting the generality of the foregoing, Administrative Agent may seek (and at the direction of the Required Buyers shall seek) the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of Seller or any of Seller’s property. Administrative Agent without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required under this Agreement or by law referred to below) to or upon Seller or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may (and at the direction of the Required Buyers shall) in such circumstances forthwith collect, receive, appropriate and realize upon the Repurchase Assets, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Repurchase Assets or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of Administrative Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Administrative Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Repurchase Assets so sold, free of any right or equity of redemption in Seller, which right or equity is hereby waived or released. Seller further agrees, at Administrative Agent’s request, to assemble the Repurchase Assets and make them available to Administrative Agent at places which Administrative Agent shall reasonably select, whether at Seller’s premises or elsewhere. Administrative Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable (under the circumstances) out-of-pocket costs and expenses of every kind actually incurred therein or incidental to the care or safekeeping of any of the Repurchase Assets or in any way relating to the Repurchase Assets or the rights of Administrative Agent hereunder, including reasonable attorneys’ fees and disbursements of Administrative Agent or Buyers, to the payment in whole or in part of the Obligations, in such order as Administrative Agent may elect (or shall elect at the direction of the Required Buyers), and only after such application and after the payment by Administrative Agent of any other amount required or permitted by any provision of law, including Section 9-615 of the Uniform Commercial Code, need Administrative Agent account for the surplus, if any, to Seller. To the extent permitted by applicable law, Seller waives all claims, damages and demands it may acquire against Administrative Agent arising out of the exercise by Administrative Agent of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of Administrative Agent. If any notice of a proposed sale or other disposition of Repurchase Assets shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. Seller shall remain liable for any deficiency (plus accrued interest thereon as contemplated herein) if the proceeds of any sale or other disposition of the Repurchase Assets are insufficient to pay the Obligations and the fees and disbursements in amounts reasonable under the circumstances, of any attorneys employed by Administrative Agent to collect such deficiency.
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Section 4.08 Limitation on Duties Regarding Preservation of Repurchase Assets. Administrative Agent’s duty with respect to the custody, safekeeping and physical preservation of the Repurchase Assets in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same manner as Administrative Agent deals with similar property for its own account. Neither Administrative Agent nor any of its directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Repurchase Assets or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Repurchase Assets upon the request of Seller or otherwise.
Section 4.09 Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Repurchase Assets are irrevocable and powers coupled with an interest.
Section 4.10 Release of Security Interest. Upon the latest to occur of (a) the repayment to Administrative Agent and Buyers of all Obligations hereunder, and (b) the occurrence of the Termination Date, Administrative Agent shall release its security interest in any remaining Repurchase Assets hereunder and shall promptly execute and deliver to Seller such documents or instruments as Seller shall reasonably request to evidence such release.
Section 4.11 Reinstatement. All security interests created by this Article IV shall continue to be effective, or be reinstated, as the case may be, if at any time any payment, or any part thereof, of any Obligation of Seller is rescinded or must otherwise be restored or returned by Administrative Agent or Buyers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Seller or any substantial part of its property, or otherwise, all as if such release had not been made.
Section 4.12 Subordination. Seller shall not seek in any Insolvency Event of the Issuer to be treated as part of the same class of creditors as Administrative Agent and Buyers and shall not oppose any pleading or motion by Administrative Agent and Buyers advocating that Administrative Agent and Buyers should be treated as a separate class of creditors from Seller. Seller acknowledges and agrees that its rights with respect to the Repurchase Assets are and shall continue to be at all times while the obligations are outstanding junior and subordinate to the rights of Administrative Agent and Buyers under this Agreement.
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ARTICLE V
CONDITIONS PRECEDENT
Section 5.01 Initial Transaction. The obligation of Administrative Agent and Buyers to enter into Transactions with Seller hereunder is subject to the satisfaction, immediately prior to or concurrently with the entering into such Transaction, of the condition precedent that Administrative Agent and Buyers shall have received all of the following items, each of which shall be satisfactory to Administrative Agent and its counsel in form and substance:
(a) Program Agreements and Note. The Program Agreements and Note, in all instances duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver.
(b) Security Interest. Evidence that all other actions necessary or, in the opinion of Administrative Agent, desirable to perfect and protect Administrative Agent’s interest in the Repurchase Assets have been taken, including duly authorized and filed Uniform Commercial Code financing statements on Form UCC-1.
(c) Organizational Documents. A certificate of the corporate secretary of Seller in form and substance acceptable to Administrative Agent, attaching certified copies of Seller’s certificate of formation, operating agreement and corporate resolutions approving the Program Agreements and transactions thereunder (either specifically or by general resolution) and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Agreements.
(d) Good Standing Certificate. A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date ten (10) Business Days prior to the Closing Date.
(e) Incumbency Certificate. An incumbency certificate of the corporate secretary of each of Seller, certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Program Agreements.
(f) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.
Section 5.02 All Transactions. The obligation of Administrative Agent and Buyers to enter into each Transaction pursuant to this Agreement is subject to the following conditions precedent:
(a) [Reserved].
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(b) Transaction Notice and Asset Schedule. In accordance with Section 2.02 hereof, Administrative Agent shall have received from Seller a Transaction Notice with an updated Asset Schedule which includes the Note and any Additional Balance, if applicable, related to a proposed Transaction hereunder on such Business Day. Buyers shall have received a copy of the Note and evidence of any Additional Balance, if applicable.
(c) No Margin Deficit. After giving effect to each new Transaction, the aggregate outstanding amount of the Purchase Price shall not exceed the Asset Value of the Note then in effect.
(d) No Default. No Default or Event of Default shall have occurred and be continuing.
(e) Requirements of Law. Administrative Agent and Buyers shall not have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Administrative Agent and Buyers has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or Buyers to enter into Transactions with a Pricing Rate based on Base Rate.
(f) Representations and Warranties. Both immediately prior to the related Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in each Program Agreement shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
(g) Note. Administrative Agent shall have received the Note and evidence of the Additional Balances relating to any Purchased Assets, which is in form and substance satisfactory to Administrative Agent in its sole discretion.
(h) Material Adverse Change. None of the following shall have occurred and/or be continuing:
(A) a Buyer’s corporate bond rating as calculated by S&P or Moody’s has been lowered or downgraded to a rating below investment grade by S&P or Moody’s;
(B) an event or events shall have occurred in the good faith determination of Administrative Agent resulting in the effective absence of a “lending market” for financing debt obligations secured by mortgage loans or servicing receivables or securities backed by mortgage loans or servicing receivables or an event or events shall have occurred resulting in Buyers not being able to finance the Note through the “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or
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(C) there shall have occurred a material adverse change in the financial condition of a Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of such Buyer to fund its obligations under this Agreement.
(i) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.
(j) Threshold Event. No Threshold Event shall occur after giving effect to such Transaction.
Section 5.03 Closing Subject to Conditions Precedent. The obligation of Buyers to purchase the Note is subject to the satisfaction on or prior to the Closing Date of the following conditions (any or all of which may be waived by Administrative Agent and Buyers):
(a) Performance by the Issuer and PLS. All the terms, covenants, agreements and conditions of the Transaction Documents to be complied with, satisfied, observed and performed by Issuer and PLS on or before the Closing Date shall have been complied with, satisfied, observed and performed in all material respects.
(b) Representations and Warranties. Each of the representations and warranties of Issuer and PLS made in the Transaction Documents shall be true and correct in all material respects as of the Closing Date (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof and except to the extent they expressly relate to an earlier or later time).
(c) Officer’s Certificate. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an officer’s certificate from PLS and a certificate of an Authorized Officer of Issuer, dated the Closing Date, each certifying to the satisfaction of the conditions set forth in the preceding paragraphs (a) and (b), in each case together with incumbency, by-laws, resolutions and good standing.
(d) Opinions of Counsel to Issuer and PLS. Counsel to Issuer and PLS shall have delivered to Administrative Agent and Buyers favorable opinions, dated the Closing Date and satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel, relating to corporate matters, enforceability, securities contract, non-consolidation and perfection and an opinion as to which state’s law applies to security interest and perfection matters. In addition to the foregoing, PLS, as servicer, shall have caused its counsel to deliver to Administrative Agent and Buyers an opinion as to certain tax matters dated as of the Closing Date, satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.
(e) Officer’s Certificate of Indenture Trustee. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an Officer’s Certificate from Indenture Trustee, dated the Closing Date, with respect to the Base Indenture, together with incumbency and good standing.
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(f) Opinions of Counsel to the Indenture Trustee. Counsel to Indenture Trustee shall have delivered to Administrative Agent and Buyers a favorable opinion dated the Closing Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel related to the enforceability of the Base Indenture.
(g) Opinions of Counsel to the Owner Trustee. Delaware counsel to the Owner Trustee of Issuer shall have delivered to Administrative Agent and Buyers favorable opinions regarding the formation, existence and standing of Issuer and of Issuer’s execution, authorization and delivery of each of the Transaction Documents to which it is a party and such other matters as Administrative Agent or Buyers may reasonably request, dated the Closing Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.
(h) Filings and Recordations. Administrative Agent and Buyers shall have received evidence reasonably satisfactory to Administrative Agent and Buyers of (i) the completion of all recordings, registrations and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence: (A) the assignment by PLS, as Seller, to Issuer of the ownership interest in the Collateral conveyed pursuant to the PC Repurchase Agreement and the proceeds thereof and (ii) the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence the grant of a first priority perfected security interest in Issuer’s ownership interest in the Collateral in favor of Indenture Trustee, subject to no Liens prior to the Lien created by the Base Indenture.
(i) Documents. Administrative Agent shall have received the Note and Administrative Agent and Buyers shall have received a duly executed counterpart of each of the other Transaction Documents, in form acceptable to Administrative Agent and Buyers, and each and every document or certification delivered by any party in connection with any such Transaction Documents or the Note, and each such document shall be in full force and effect.
(j) Actions or Proceedings. No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by the Transaction Documents, the Note and the documents related thereto in any material respect.
(k) Approvals and Consents. All Governmental Actions of all Governmental Authorities required with respect to the transactions contemplated by the Transaction Documents, the Note and the documents related thereto shall have been obtained or made.
(l) Fees, Costs and Expenses. Each Buyer shall have received payment in full of all fees and Expenses (including the Commitment Fee) which are payable hereunder to such Buyer on or before the Closing Date, and the fees, costs and expenses payable by Issuer and PLS on or prior to the Closing Date pursuant to this Agreement or any other Transaction Document shall have been paid in full.
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(m) [Reserved].
(n) Other Documents. PLS shall have furnished to Administrative Agent and Indenture Trustee such other opinions, information, certificates and documents as Administrative Agent and the Indenture Trustee may reasonably request.
(o) Advance Verification Agent. PLS shall have engaged the Advance Verification Agent pursuant to an agreement reasonably satisfactory to the Administrative Agent.
(p) Proceedings in Contemplation of Sale of the Note. All actions and proceedings undertaken by the Issuer and PLS in connection with the issuance and sale of the Note as herein contemplated shall be satisfactory in all respects to the Administrative Agent and its counsel.
(q) SPIA Advance Receivable Advance Rate Reduction Event, Servicer Termination Events, Events of Default and Funding Interruption Events. No SPIA Advance Receivable Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event shall then be occurring.
(r) Satisfaction of Conditions. Each of the Funding Conditions and the SPIADVF1 Funding Conditions shall have been satisfied. The Administrator shall include the SPIADVF1 Funding Conditions in each Funding Certification in addition to the Funding Conditions and present a “yes” or “no” answer beside such SPIADVF1 Funding Conditions indicating whether such SPIADVF1 Funding Conditions have been satisfied, as set forth in Section 4.3 of the Base Indenture.
(s) Maintenance of Profitability. Seller shall have at all times maintained profitability of at least $1.00 in Net Income for at least one of any two consecutive Test Periods
If any condition specified in this Section 5.03 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Administrative Agent and the Buyers by notice to PLS at any time at or prior to the Closing Date, and neither the Administrative Agent nor any Buyer shall incur any liability as a result of such termination.
ARTICLE VI
COVENANTS
Seller covenants and agrees that until the payment and satisfaction in full of all Obligations, whether now existing or arising hereafter, shall have occurred:
Section 6.01 Litigation. Seller will promptly, and in any event within ten (10) days after service of process on any of the following, give to Administrative Agent and each Buyer notice of all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim individually or in the aggregate in an amount greater than 5% of Seller’s Adjusted Tangible Net Worth, or (iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect. On the twelfth (12th) day of each calendar month (or if such day is not a Business Day, the next succeeding Business Day), Seller will provide to Administrative Agent and each Buyer a litigation docket listing all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority. Seller will promptly provide to Administrative Agent and each Buyer notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.
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Section 6.02 Prohibition of Fundamental Changes. Seller shall not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided, that Seller may merge or consolidate with (a) any wholly owned subsidiary of Seller, or (b) any other Person if Seller is the surviving entity; and provided further, that if after giving effect thereto, no Default would exist hereunder.
Section 6.03 Weekly Reporting. Seller shall at all times maintain a current list (which may be stored in electronic form) of the Note and Additional Balances. Seller shall deliver to Administrative Agent and each Buyer on the third Business Day of each week (the “Weekly Report Date”) a cumulative Asset Schedule, each of which, when so delivered, shall replace the current Asset Schedule and which may be delivered in electronic form acceptable to Administrative Agent and each Buyer. Each such updated Asset Schedule shall indicate the outstanding VFN Principal Balance of the Note as of the close of the preceding week. As of each Weekly Report Date, Seller hereby certifies, represents and warrants to Administrative Agent and each Buyer that each such updated Asset Schedule is true, complete and correct in all material respects. Seller shall further ensure that each Buyer receives all reports and information that the Administrative Agent and the VFN Noteholders are entitled to receive pursuant to the Indenture (including all reports and information delivered by the Issuer, the Administrator or the Indenture Trustee relating to the Note). Each Buyer agrees to be bound by any confidentiality provisions reasonably requested by Seller and upon request of Seller execute and deliver a separate confidentiality agreement memorializing such provisions.
Section 6.04 No Adverse Claims. Seller warrants and will defend the right, title and interest of Administrative Agent and Buyers in and to all Purchased Assets against all adverse claims and demands.
Section 6.05 Assignment. Except as permitted herein, Seller shall not sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except pursuant to the Program Agreements), any of the Purchased Assets or any interest therein, provided that this Section 6.05 shall not prevent any transfer of Purchased Assets in accordance with the Program Agreements.
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Section 6.06 Security Interest. Seller shall do all things necessary to preserve the Purchased Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, Seller will comply with all rules, regulations and other laws of any Governmental Authority and cause the Purchased Assets to comply with all applicable rules, regulations and other laws. Seller will not allow any default for which Seller is responsible to occur under any Purchased Assets or any Program Agreement and Seller shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets and any Program Agreement.
Section 6.07 Records.
(a) Seller shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Assets in accordance with industry custom and practice for assets similar to the Purchased Assets, including those maintained pursuant to Section 6.08, and all such Records shall be in Seller’s or Administrative Agent’s possession unless Administrative Agent otherwise approves. Seller will maintain all such Records in good and complete condition in accordance with industry practices for assets similar to the Purchased Assets and preserve them against loss.
(b) For so long as Administrative Agent and Buyers have an interest in or lien on any Purchased Assets, Seller will hold or cause to be held all related Records in trust for Administrative Agent and Buyers. Seller shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Administrative Agent and Buyers granted hereby.
(c) Upon reasonable advance notice from Administrative Agent or a Buyer, Seller shall (x) make any and all such Records available to Administrative Agent and each Buyer to examine any such Records, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, and (y) permit Administrative Agent or any Buyer or their authorized agents to discuss the affairs, finances and accounts of Seller with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Seller with its independent certified public accountants.
Section 6.08 Books. Seller shall keep or cause to be kept in reasonable detail books and records of account of its assets and business and shall clearly reflect therein the transfer of Purchased Assets to Buyers.
Section 6.09 Approvals. Seller shall maintain all licenses, permits or other approvals necessary for Seller to conduct its business and to perform its obligations under the Program Agreements, and Seller shall conduct its business strictly in accordance with applicable law.
Section 6.10 Material Change in Business. Seller shall not make any material change in the nature of its business as carried on at the Closing Date.
Section 6.11 Distributions. If an Event of Default has occurred and is continuing, Seller shall not pay any dividends with respect to any capital stock or other equity interests in such entity, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller.
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Section 6.12 Applicable Law. Seller shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority.
Section 6.13 Existence. Seller shall preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises.
Section 6.14 Chief Executive Office; Jurisdiction of Organization. Seller shall not move its chief executive office from the address referred to in Section 3.17 or change its jurisdiction of organization from the jurisdiction referred to in Section 3.17 unless it shall have provided Administrative Agent at least thirty (30) days’ prior written notice of such change.
Section 6.15 Taxes. Seller shall timely file all tax returns that are required to be filed by it and shall timely pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.
Section 6.16 Transactions with Affiliates. Other than the purchase of the Note, Seller will not enter into any transaction, including any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction (a) does not result in a Default hereunder, (b) is in the ordinary course of Seller’s business and (c) is upon fair and reasonable terms no less favorable to Seller than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate, or make a payment that is not otherwise permitted by this Section 6.16 to any Affiliate.
Section 6.17 Guarantees. Seller shall notify each Buyer and the Administrative Agent in writing upon creating, incurring, assuming or suffering to exist any Guarantees, except (i) to the extent reflected in Seller’s financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of Seller do not exceed $250,000.
Section 6.18 Indebtedness. Seller shall notify each Buyer and the Administrative Agent in writing upon the incurrence of any additional material Indebtedness other than (i) the Existing Indebtedness specified on Exhibit B hereto; (ii) Indebtedness incurred with Buyers or their Affiliates; (iii) Indebtedness incurred in connection with new or existing secured lending facilities and (iv) usual and customary accounts payable for a mortgage company.
Section 6.19 True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Seller, any Affiliate thereof or any of their officers furnished to Administrative Agent and Buyers hereunder and during Administrative Agent’s and Buyers’ diligence of Seller are and will be true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by Seller to Administrative Agent and Buyers pursuant to this Agreement shall be prepared in accordance with U.S. GAAP, or, if applicable, to SEC filings, the appropriate SEC accounting regulations.
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Section 6.20 No Pledge. Except as contemplated herein, Seller shall not pledge, grant a security interest or assign any existing or future rights to service any of the Repurchase Assets or pledge or grant to any other Person any security interest in the Note.
Section 6.21 Plan Assets. Seller shall not be an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and Seller shall not use “plan assets” within the meaning of 29 CFR § 2510.3 101, as amended by Section 3(42) of ERISA to engage in this Agreement or any Transaction hereunder. Transactions to or with Seller shall not be subject to any state or local statute regulating investments of or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.
Section 6.22 Sharing of Information. Seller shall allow Administrative Agent and Buyers to exchange information related to Seller and the Transactions hereunder with third party lenders and Seller shall permit each third party lender to share such information with Administrative Agent and Buyers.
Section 6.23 Modification of the Base Indenture and Series 2020-SPIADVF1 Indenture Supplement. Seller shall not consent with respect to any of the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement related to the Purchased Assets, to (i) the modification, amendment or termination of the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement, (ii) the waiver of any provision of the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement, or (iii) the resignation of PLS as servicer under the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement, or the assignment, transfer, or material delegation of any of its rights or obligations, under such the Base Indenture and the Series 2020-SPIADVF1 Indenture Supplement, without the prior written consent of Administrative Agent and each Buyer exercised in such Person’s sole discretion.
Section 6.24 Reporting Requirements.
(a) Seller shall furnish to Administrative Agent and each Buyer (i) promptly, copies of any material and adverse notices (including notices of defaults, breaches, potential defaults or potential breaches) and any material financial information that is not otherwise required to be provided by Seller hereunder which is given to Seller’s lenders, (ii) promptly, notice of the occurrence of (1) any Event of Default hereunder; (2) any default or material breach by Seller of any obligation under any Program Agreement or any material contract or agreement of Seller or (3) the occurrence of any event or circumstance that such party reasonably expects has resulted in, or will, with the passage of time, result in, a Material Adverse Effect or an Event of Default and (iii) the following:
(1) as soon as available and in any event within forty (40) calendar days after the end of each calendar month, the unaudited balance sheet of Seller, as at the end of such period and the related unaudited consolidated statements of income for Seller for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);
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(2) as soon as available and in any event within forty (40) calendar days after the end of each calendar quarter, the unaudited cash flow statements of Seller, as at the end of such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);
(3) as soon as available and in any event within ninety (90) days after the end of each fiscal year of Seller, the balance sheet of Seller, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for Seller for such year, setting forth in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion and the scope of audit shall be acceptable to Administrative Agent and each Buyer in their sole discretion, shall have no “going concern” qualification and shall state that said consolidated financial statements or financial statements, as applicable, fairly present the consolidated financial condition or financial condition, as applicable, and results of operations of Seller as at the end of, and for, such fiscal year in accordance with GAAP;
(4) such other prepared statements that Administrative Agent or a Buyer may reasonably request;
(5) from time to time such other information regarding the financial condition, operations, or business of Seller as Administrative Agent or a Buyer may reasonably request;
(6) as soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of Seller has knowledge of the occurrence of any ERISA Event of Termination, stating the particulars of such ERISA Event of Termination in reasonable detail;
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(7) as soon as reasonably possible, notice of any of the following events:
a. any material dispute, litigation, investigation, proceeding or suspension between Seller on the one hand, and any Governmental Authority or any Person;
b. any material change in accounting policies or financial reporting practices of Seller;
c. any material issues raised upon examination of Seller or Seller’s facilities by any Governmental Authority;
d. any material change in the Indebtedness of Seller, including any default, renewal, non-renewal, termination, increase in available amount or decrease in available amount related thereto;
e. promptly upon receipt of notice or knowledge of any lien or security interest (other than security interests created hereby or by the other Program Agreements) on, or claim asserted against, any of the Purchased Assets; and
f. any other event, circumstance or condition that has resulted, or has a reasonable possibility of resulting, in a Material Adverse Effect with respect to Seller.
(b) Officer’s Certificates. Seller will furnish to Administrative Agent and each Buyer, at the time Seller furnishes each set of financial statements pursuant to Section 6.24(a)(iii)(1), (2) or (3) above, an Officer’s Compliance Certificate of Seller.
(c) Other. Seller shall deliver to Administrative Agent and each Buyer any other reports or information reasonably requested by Administrative Agent or a Buyer or as otherwise required pursuant to this Agreement and the Indenture (including all reports and information delivered by the Issuer, the Administrator or the Indenture Trustee relating to the Note).
(d) Regulatory Reporting Compliance. Seller shall, on or before the last Business Day of the fifth (5th) month following the end of each of Seller’s fiscal years (December 31), beginning with the fiscal year ending in 2020, deliver to Administrative Agent and each Buyer a copy of the results of any Uniform Single Attestation Program for Mortgage Bankers or an Officer’s Certificate that satisfies the requirements of Item 1122(a) of Regulation AB, an independent public accountant’s report that satisfies the requirements of Item 1123 of Regulation AB, or similar review conducted on Seller by its accountants, and such other reports as Seller may prepare relating to its servicing functions as Seller.
Section 6.25 Liens on Substantially All Assets. Seller shall not grant a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of Seller unless Seller has entered into an amendment to this Agreement that grants to Administrative Agent a pari passu security interest on such assets.
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Section 6.26 Litigation Summary. On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Administrative Agent and each Buyer a true and correct summary of all material actions, notices, proceedings and investigations pending with respect to which Seller has received service of process or other form of notice or, to the best of Seller’s knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal.
Section 6.27 Hedging. On each date on which the Officer’s Compliance Certificate is delivered, Seller shall provide to Administrative Agent and each Buyer a true and correct summary of all interest rate protection agreements entered into or maintained by Seller.
Section 6.28 [Reserved].
Section 6.29 Most Favored Status. Seller, Administrative Agent and Buyers each agree that should Seller or any Affiliate thereof enter into a repurchase agreement or credit facility with any Person other than Administrative Agent or a Buyer or an Affiliate of Administrative Agent or a Buyer which by its terms provides any of the following (each, a “More Favorable Agreement”):
(a) more favorable terms with respect to any guaranties or financial covenants, including covenants covering the same or similar subject matter set forth or referred to in Section 6.11 hereof and Section 2 of the Pricing Side Letter;
(b) a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of Seller or any Affiliate thereof; or
(c) a requirement that Seller has added or will add any Person other than Administrative Agent or an Affiliate of Administrative Agent as a loss payee under Seller’s Fidelity Insurance;
then the terms of this Agreement shall be deemed automatically amended to include such more favorable terms contained in such More Favorable Agreement, such that such terms operate in favor of Administrative Agent, Buyers or an Affiliate of Administrative Agent or Buyers; provided, that in the event that such More Favorable Agreement is terminated, upon notice by Seller to Administrative Agent of such termination, the original terms of this Agreement shall be deemed to be automatically reinstated. Administrative Agent, Seller and Buyers further agree to execute and deliver any new guaranties, agreements or amendments to this Agreement evidencing such provisions, provided that the execution of such amendment shall not be a precondition to the effectiveness of such amendment, but shall merely be for the convenience of the parties hereto. Promptly upon Seller or any Affiliate thereof entering into a repurchase agreement or other credit facility with any Person other than Administrative Agent or a Buyer, Seller shall deliver to Administrative Agent and each Buyer a true, correct and complete copy of such repurchase agreement, loan agreement, guaranty or other financing documentation.
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Section 6.30 Threshold Events and Commitment Modifications. Seller shall not request any Transaction that would cause a Threshold Event for any Buyer. Seller shall provide prompt notice of any Commitment Modification and/or Maximum Purchase Price Modification for any Buyer to Ginnie Mae, Administrative Agent and each Buyer.
ARTICLE VII
DEFAULTS/RIGHTS AND REMEDIES OF BUYERS UPON DEFAULT
Section 7.01 Events of Default. Each of the following events or circumstances shall constitute an “Event of Default”:
(a) Payment Failure. Failure of Seller to (i) make any payment (which failure continues for a period of two (2) Business Days following written notice (which may be in electronic form) from Administrative Agent) of Price Differential or Repurchase Price or any other sum which has become due, on a Price Differential Payment Date or a Repurchase Date or otherwise, whether by acceleration or otherwise, under the terms of this Agreement, any other warehouse and security agreement or any other document, in each case evidencing or securing Indebtedness of Seller to Administrative Agent or Buyers or to any Affiliate of Administrative Agent or Buyers, or (ii) cure any Margin Deficit when due pursuant to Section 2.05 hereof.
(b) Cross Default. Seller or Affiliates thereof shall be in default under (i) any Program Agreement or any Financing Document; provided that any such default under the Indenture shall constitute an “Event of Default” only if it continues unremedied for a period of two (2) Business Days after a Responsible Officer of Seller obtains actual knowledge of such failure, or receives written notice from Administrative Agent of such default; (ii) any Indebtedness, in the aggregate, in excess of $1 million of Seller or any Affiliate thereof which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, or (iii) any other contract or contracts, in the aggregate in excess of $1 million to which Seller or any Affiliate thereof is a party which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract.
(c) Assignment. Assignment or attempted assignment by Seller of this Agreement or any rights hereunder without first obtaining the specific written consent of Administrative Agent, or the granting by Seller of any security interest, lien or other encumbrances on any Purchased Assets to any person other than Administrative Agent.
(d) Insolvency. An Act of Insolvency shall have occurred with respect to Seller or any Affiliate thereof.
(e) Material Adverse Change. Any material adverse change in the Property, business, financial condition or operations of Seller or any of its Affiliates shall occur, in each case as determined by Administrative Agent in its sole good faith discretion, or any other condition shall exist which, in Administrative Agent’s sole good faith discretion, constitutes a material impairment of Seller’s ability to perform its obligations under this Agreement or any other Program Agreement.
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(f) Immediate Breach of Representation or Covenant or Obligation. A breach by Seller of any of the representations, warranties or covenants or obligations set forth in Section 3.01 (Seller Existence), Section 3.07 (Solvency), Section 3.12 (Material Adverse Change), Section 3.22 (Other Indebtedness), Section 6.02 (Prohibition of Fundamental Changes), Section 6.13 (Existence), Section 6.17 (Guarantees), Section 6.18 (Indebtedness), Section 6.20 (No Pledge) or Section 6.21 (Plan Assets) of this Agreement.
(g) Additional Breach of Representation or Covenant. A material breach by Seller of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 7.01(f) above), if such breach is not cured within five (5) Business Days or, in the case of a breach of Section 6.02, three (3) Business Days, and in the case of a breach of Section 2 of the Pricing Side Letter (Financial Covenants), one (1) Business Day.
(h) Change in Control. The occurrence of a Change in Control.
(i) Failure to Transfer. Seller fails to transfer the Note or a material portion of the other Purchased Assets to Administrative Agent on the applicable Purchase Date (provided Administrative Agent has tendered the related Purchase Price on behalf of Buyers).
(j) Judgment. A final judgment or judgments for the payment of money in excess of $10,000,000 shall be rendered against Seller or any of their Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof.
(k) Government Action. Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of Seller or any Affiliate thereof, or shall have taken any action to displace the management of Seller or any Affiliate thereof or to curtail its authority in the conduct of the business of Seller or any Affiliate thereof, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller or Affiliate as an issuer, buyer or a seller/servicer of mortgage loans or securities backed thereby, and such action provided for in this subparagraph (k) shall not have been discontinued or stayed within thirty (30) days.
(l) Inability to Perform. A Responsible Officer of Seller or VFN Guarantor shall admit its inability to, or its intention not to, perform any of Seller’s Obligations or VFN Guarantor’s obligations hereunder or the VFN Repo Guaranty.
(m) Security Interest. This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Repurchase Assets purported to be covered hereby.
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(n) Financial Statements. Seller’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of Seller as a “going concern” or a reference of similar import.
(o) Validity of Agreement. For any reason, this Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or Seller or any Affiliate of Seller shall seek to disaffirm, terminate, limit or reduce its obligations hereunder or VFN Guarantor’s obligations under the VFN Repo Guaranty.
(p) VFN Guarantor Breach. A breach by VFN Guarantor of any material representation, warranty or covenant set forth in the VFN Repo Guaranty or any other Program Agreement, any “event of default” by VFN Guarantor under the VFN Repo Guaranty, any repudiation of the VFN Repo Guaranty by VFN Guarantor, or if the VFN Repo Guaranty is not enforceable against VFN Guarantor.
Section 7.02 No Waiver. An Event of Default shall be deemed to be continuing unless expressly waived by Administrative Agent, at the direction of the Required Buyers, in writing.
Section 7.03 Due and Payable. Upon the occurrence of any Event of Default which has not been waived in writing by Administrative Agent, Administrative Agent may (or shall, at the direction of the Required Buyers), by notice to Seller, declare all Obligations to be immediately due and payable, and any obligation of Administrative Agent and Buyers to enter into Transactions with Seller shall thereupon immediately terminate. Upon such declaration, the Obligations shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding, except with respect to any Event of Default set forth in Section 7.01(d), in which case all Obligations shall automatically become immediately due and payable without the necessity of any notice or other demand, and any obligation of Administrative Agent and Buyers to enter into Transactions with Seller shall immediately terminate. Administrative Agent may (or shall at the direction of the Required Buyers) enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by Administrative Agent and Buyers, whether under this Agreement or any other Program Agreement or afforded by applicable law.
Section 7.04 Fees. The remedies provided for herein are cumulative and are not exclusive of any other remedies provided by law. In addition to the Seller’s obligations contained in Section 3 of the Pricing Side Letter, Seller agrees to pay to Administrative Agent reasonable attorneys’ fees and reasonable legal expenses incurred in enforcing Administrative Agent’s and Buyers’ rights, powers and remedies under this Agreement and each other Program Agreement.
Section 7.05 Default Rate. Without regard to whether Administrative Agent has exercised any other rights or remedies hereunder, if an Event of Default shall have occurred and be continuing, the applicable Margin in respect of the Pricing Rate shall be increased, to the extent permitted by law, as set forth in clause (ii) of the definition of “Margin”.
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ARTICLE VIII
ENTIRE
AGREEMENT; AMENDMENTS
AND WAIVERS; SEPARATE ACTIONS BY BUYERS
Section 8.01 Entire Agreement; Amendments. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the parties hereto and supersedes any and all prior or contemporaneous agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or any of the Program Agreements, nor consent to the departure by Seller therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which it is given. This Agreement may not be amended, modified or supplemented except by a writing executed by Seller, Administrative Agent and Required Buyers. The Administrative Agent shall comply with its obligations under Section 6(C) of the Acknowledgment Agreement; and in addition, the Seller shall deliver to Ginnie Mae a copy of any executed amendment to this Agreement promptly after execution thereof.
Section 8.02 Waivers, Separate Actions by Buyers. Any amendment or waiver effected in accordance with this Article VIII shall be binding upon Administrative Agent, Buyers and Seller; and Administrative Agent’s or a Buyer’s failure to insist upon the strict performance of any term, condition or other provision of this Agreement or any of the Program Agreements, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by Administrative Agent or such Buyer of any such term, condition or other provision or Default or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term, condition or other provision or of any such Default or Event of Default shall not affect or alter this Agreement or any of the Program Agreements, and each and every term, condition and other provision of this Agreement and the Program Agreements shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent Default or Event of Default in connection therewith. An Event of Default hereunder or under any of the Program Agreements shall be deemed to be continuing unless and until waived in writing by Administrative Agent and Buyers.
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ARTICLE IX
SUCCESSORS AND ASSIGNS
Section 9.01 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, any portion thereof, or any interest therein. Seller shall not have the right to assign all or any part of this Agreement or any interest herein without the prior written consent of Administrative Agent and Buyers.
Section 9.02 Participations and Transfers.
(a) A Buyer may in accordance with applicable law at any time sell to one or more banks or other entities (“Participants”) participating interests in all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) Seller has consented to such sale; provided, however, Seller’s consent shall not be required in the event that (A) such Participant is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) each such sale shall represent an interest in a Transaction in a Purchase Price of $1,000,000 or more and (iii) other than with respect to a participating interest consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer receives an opinion of a nationally recognized tax counsel experienced in such matters that such sale will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. In the event of any such sale by a Buyer of participating interests to a Participant, such Buyer shall remain a party to the Transaction for all purposes under this Agreement and the Program Agreements and Seller shall continue to deal solely and directly with such Buyer in connection with such Buyer’s rights and obligations under this Agreement and the Program Agreements. The related Buyer shall provide notice to Ginnie Mae within five (5) Business Days of any participation made in accordance with this Section 9.02(a).
(b) A Buyer may in accordance with applicable law at any time assign, pledge, hypothecate, or otherwise transfer to one or more banks, financial institutions, investment companies, investment funds or any other Person (each, a “Transferee”) all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) Seller has consented to such assignment, pledge, hypothecation, or other transfer; provided, however, Seller’s consent shall not be required in the event that (A) such Transferee is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) absent an Event of Default, such Buyer shall give at least ten days’ prior notice thereof to Seller; (iii) that each such sale shall represent an interest in the Transactions in an aggregate Purchase Price of $1,000,000 or more; (iv) such Transferee shall have also acquired the same percentage interest in each other Series of Variable Funding Notes, unless such Transferee is an Affiliate of such Buyer or unless Ginnie Mae has consented in writing to waive this requirement and (v) other than with respect to an assignment, pledge, hypothecation or transfer consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer received an opinion of a nationally recognized tax counsel experienced in such matters that such assignment, pledge, hypothecation or transfer will not result in the Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. The related Buyer shall provide notice to Ginnie Mae within five (5) Business Days of any assignment, pledge or hypothecation made in accordance with this Section 9.02(b). In the event of any such assignment, pledge, hypothecation or transfer by a Buyer of its rights under this Agreement and the other Program Agreements, Seller shall continue to deal solely and directly with such Buyer in connection with its rights and obligations under this Agreement. Administrative Agent (acting as agent for Seller) shall maintain at its address referred to in Section 11.05 a register (the “Register”) for the recordation of the names and addresses of Transferees, and the Purchase Price outstanding and Price Differential in the Transactions held by each thereof. The entries in the Register shall be prima facie conclusive and binding, and Seller may treat each Person whose name is recorded in the Register as the owner of the Transactions recorded therein for all purposes of this Agreement. No assignment shall be effective until it is recorded in the Register.
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(c) All actions taken by Buyer pursuant to this Section 9.02 shall be at the expense of Buyer. Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by Seller.
Section 9.03 Buyer and Participant Register.
(a) Subject to acceptance and recording thereof pursuant to paragraph (b) of this Section 9.03, from and after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of a Buyer under this Agreement. Any assignment or transfer by a Buyer of rights or obligations under this Agreement that does not comply with this Section 9.03 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 9.02.
(b) Seller or an agent of Seller shall maintain a register (the “Transaction Register”) on which it will record the Transactions entered into hereunder, and each assignment and acceptance and participation. The Transaction Register shall include the names and addresses of Buyers (including all assignees, successors and Participants), and the Purchase Price of the Transactions entered into by Buyers. Failure to make any such recordation, or any error in such recordation shall not affect Seller’s obligations in respect of such Transactions. If a Buyer sells a participation in any Transaction, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure.
ARTICLE X
AGENT PROVISIONS
Section 10.01 Appointment of Administrative Agent.
(a) Each Buyer hereby irrevocably appoints Credit Suisse First Boston Mortgage Capital LLC, as Administrative Agent hereunder and under the other Program Agreements, and each Buyer hereby authorizes Credit Suisse First Boston Mortgage Capital LLC, in such capacity, to act as its agent in accordance with the terms hereof. The provisions of this Article X are solely for the benefit of Administrative Agent and Buyers, and Seller shall not have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, Administrative Agent shall act solely as an agent of Buyers and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Seller.
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(b) The Required Buyers may, to the extent permitted by applicable law, and with the consent of Seller (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), by notice in writing to such Person remove such Person as Administrative Agent and, with the consent of Seller (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), appoint a successor Administrative Agent. If no such successor Administrative Agent shall have been so appointed by the Required Buyers and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Seller), then such removal shall nonetheless become effective in accordance with such notice on the date thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Seller) after the Administrative Agent’s receipt of such notice of removal.
Section 10.02 Powers and Duties. Each Buyer irrevocably authorizes Administrative Agent to take such action on such Buyer’s behalf and to exercise such powers, rights and remedies hereunder and under the other Program Agreements as are specifically delegated or granted to Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified herein and the other Program Agreements. Administrative Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. Administrative Agent shall not have, by reason hereof or any of the other Program Agreements, a fiduciary relationship in respect of any Buyer; and nothing herein or any of the other Program Agreements, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect hereof or any of the other Program Agreements except as expressly set forth herein or therein.
Section 10.03 General Immunity.
(a) No Responsibility for Certain Matters. Except for Administrative Agent’s failure to perform a specifically required task set forth herein (and which failure constitutes gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order), Administrative Agent shall not be responsible for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Program Agreement or with respect to any other party for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by or on behalf of Buyers or any other party in connection with the Program Agreements and the transactions contemplated thereby or for the financial condition or business affairs of Seller or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required (except as set forth herein or in the Program Agreements) to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Program Agreements or as to the use of the proceeds of the Transactions or as to the existence or possible existence of any Event of Default or Default.
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(b) Exculpatory Provisions. Neither Administrative Agent nor any of its officers, partners, directors, employees or agents shall be liable for any action taken or omitted by Administrative Agent under or in connection with any of the Program Agreements except to the extent caused by Administrative Agent’s gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order. Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Program Agreements or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until Administrative Agent shall have received instructions in respect thereof from Buyers and, upon receipt of such instructions from the Required Buyers, Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Seller), accountants, experts and other professional advisors selected by it; (ii) no Buyer shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting hereunder or any of the other Program Agreements in accordance with the instructions of the Required Buyers; and (iii) no action taken or omitted by Administrative Agent shall be considered to have resulted from Administrative Agent’s gross negligence, bad faith or willful misconduct if such action or omission was done at the direction of the Required Buyers.
Section 10.04 Administrative Agent to Act as Buyer. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Buyer, to the extent it becomes a Buyer hereunder. To the extent that it becomes a Buyer hereunder, Administrative Agent shall have the same rights and powers as any other Buyer and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Buyer” shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Seller or any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Seller for services in connection herewith and otherwise without having to account for the same to Buyers.
Section 10.05 Buyers’ Representations, Warranties and Acknowledgment.
(a) Each Buyer represents and warrants that it has made its own independent investigation of the financial condition and affairs of Seller in connection with the Transactions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Seller. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Buyers or to provide any Buyer with any credit or other information with respect thereto, whether coming into its possession before the making of the Transactions or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Buyers.
(b) Unless otherwise agreed to by Buyers and Seller, each Buyer, by delivering its signature page to this Agreement and entering into Transactions with Seller hereunder shall be deemed to have acknowledged receipt of, and consented to and approved, each Program Agreement and each other document required to be approved by Administrative Agent or Buyers, as applicable on the Closing Date or such other funding date. Each Buyer acknowledges that by agreeing to remit its Commitment Share of the Purchase Price on any Purchase Date, such Buyer agrees that all conditions precedent to entering into such Transaction have been met on such Purchase Date.
Section 10.06 Right to Indemnity.
(a) Each Buyer, pro rata based on its outstanding Purchase Price, severally, but not jointly, shall, and hereby agrees to indemnify Administrative Agent, any Affiliate of the Administrative Agent, and their respective directors, officers, agents and employees (each, an “Indemnitee Agent Party”), and hold such Indemnitee Agent Party harmless to the extent that such Indemnitee Agent Party shall not have been reimbursed by Seller, from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it has resulted from the gross negligence or willful misconduct of such Indemnitee Agent Party) which may be imposed on, incurred by or asserted against such Indemnitee Agent Party in exercising its powers, rights and remedies or performing its duties hereunder or under the other Program Agreements or otherwise in its capacity as an Indemnitee Agent Party in any way relating to or arising out of this Agreement or the other Program Agreements, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If any indemnity furnished to any Indemnitee Agent Party for any purpose shall, in the opinion of such Indemnitee Agent Party, be insufficient or become impaired, such Indemnitee Agent Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Buyer’s pro rata portion of the outstanding Purchase Price thereof; and provided, further, this sentence shall not be deemed to require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
(b) Promptly after receipt by the Indemnitee Agent Party of notice of the commencement of any action regarding which a claim in respect thereof is to be made against Buyers, the Indemnitee Agent Party shall notify Buyers in writing of the commencement thereof, but the omission to so notify will not relieve Buyers from any liability which they may have under this Agreement or from any other liability which they may have, except to the extent that they have been prejudiced in any material respect by the failure by the Indemnitee Agent Party to provide prompt notice. Upon receipt of notice by Buyers, Buyers will be entitled to participate in the related action, and they may elect by written notice delivered to the Indemnitee Agent Party to assume the defense thereof. Upon receipt of notice by the Indemnitee Agent Party of the Buyers’ election to assume the defense of such action, Buyers shall not be liable to the Indemnitee Agent Party for legal expenses incurred by such party in connection with the defense thereof unless (i) Buyers shall not have employed counsel to represent the Indemnitee Agent Party within a reasonable time after receipt of notice of commencement of the action, (ii) Buyers have authorized in writing the employment of separate counsel for the Indemnitee Agent Party, or (iii) the Indemnitee Agent Party has previously engaged counsel and reasonable legal expenses are necessary (a) to transfer the file to the Buyers’ designated counsel, or (b) to pursue immediate legal action necessary to preserve the legal rights or defenses of the Indemnitee Agent Party as against a third party claimant, and such legal action must occur prior to said transfer. Buyers shall not settle any suit or claim without the Indemnitee Agent Party’s written consent unless such settlement solely involves the payment of money by parties other than the Indemnitee Agent Party and includes unconditional release of the Indemnitee Agent Party from all liability on all matters that are the subject of such proceeding or claim.
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Section 10.07 Successor Administrative Agent.
(a) Administrative Agent may resign at any time by giving sixty (60) days’ prior written notice thereof to Buyers. Upon any such notice of resignation, Buyers shall have the right to appoint a successor administrative agent; provided, that the retiring Administrative Agent shall continue to hold the Collateral and all liens and security interest therein for the benefit of Buyers until a successor administrative agent is appointed.
(b) Upon the acceptance of any appointment as Administrative Agent hereunder by a successor administrative agent, that successor administrative agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall promptly (i) transfer to such successor administrative agent all sums and items of Collateral held under the Program Agreements, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor administrative agent under the Program Agreements, and (ii) execute and deliver to such successor administrative agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor administrative agent of the security interests created under the Program Agreements, whereupon such retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X and Section 11.02 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder.
(c) Notwithstanding anything herein to the contrary, Administrative Agent may assign its rights and duties as Administrative Agent hereunder to an Affiliate without written notice to, the Buyers; provided, that Seller and Buyers may deem and treat such assigning Administrative Agent as Administrative Agent for all purposes hereof, unless and until such assigning Administrative Agent provides written notice to Seller and Buyers of such assignment. Upon such assignment such Affiliate shall succeed to and become vested with all rights, powers, privileges and duties as Administrative Agent hereunder and under the other Program Agreements.
Section 10.08 Delegation of Duties. Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Program Agreement by or through (i) any one or more of its Affiliates or (ii) any one or more sub agents appointed by Administrative Agent with the prior consent of the Required Buyers. Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates and their respective officers, partners, directors, trustees, employees and agents. The exculpatory provisions of this Article X shall apply to any such Affiliate or sub agent and to such other parties as are listed above provided that notwithstanding this Section 10.08, no such delegation relieves the Administrative Agent of its duties or obligations under this Agreement.
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Section 10.09 Right to Realize on Collateral. Anything contained in any of the Program Agreements to the contrary notwithstanding, Seller, Administrative Agent and each Buyer hereby agree that (i) no Buyer shall have any right individually to realize upon any of the Collateral, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Buyers in accordance with the terms hereof and all powers, rights and remedies under the Program Agreements may be exercised solely by Administrative Agent, and (ii) in the event of a foreclosure by Administrative Agent on any of the Collateral pursuant to a public or private sale, Administrative Agent or any Buyer may be the purchaser of any or all of such Collateral at any such sale and Administrative Agent, as agent for and representative of Buyers (but not any Buyer or Buyers in its or their respective individual capacities unless Buyers shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Administrative Agent at such sale.
Section 10.10 Erroneous Payments. (a) If the Administrative Agent notifies a Buyer or any Person who has received funds on behalf of a Buyer (any such Buyer or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Buyer or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Buyer shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the overnight federal funds rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error. If a Payment Recipient receives any payment, prepayment or repayment of principal, interest, fees, distribution or otherwise and does not receive a corresponding payment notice or payment advice, such payment, prepayment or repayment shall be presumed to be in error absent written confirmation from the Administrative Agent to the contrary.
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(b) Each Buyer hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Buyer under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Buyer from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(c) For so long as an Erroneous Payment (or portion thereof) has not been returned by any Payment Recipient who received such Erroneous Payment (or portion thereof) (such unrecovered amount, an “Erroneous Payment Return Deficiency”) to the Administrative Agent after demand therefor in accordance with immediately preceding clause (a), (i) the Administrative Agent may elect, in its sole discretion on written notice to such Buyer, that all rights and claims of such Buyer with respect to the Repurchase Price or other Obligations owed to such Person up to the amount of the corresponding Erroneous Payment Return Deficiency in respect of such Erroneous Payment (the “Corresponding Repurchase Price”) shall immediately vest in the Administrative Agent upon such election; after such election, the Administrative Agent (x) may reflect its ownership interest in the related Repurchase Price in a principal amount equal to the Corresponding Repurchase Price on the Asset Schedule, and (y) upon five business days’ written notice to such Buyer, may sell such Repurchase Price (or portion thereof) in respect of the Corresponding Repurchase Price, and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by such Buyer shall be reduced by the net proceeds of the sale of such Repurchase Price (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Buyer (and/or against any Payment Recipient that receives funds on its behalf), and (ii) each party hereto agrees that, except to the extent that the Administrative Agent has sold such Repurchase Price, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of such Buyer with respect to the Erroneous Payment Return Deficiency. For the avoidance of doubt, no vesting or sale pursuant to the foregoing clause (i) will reduce the Committed Amount of any Buyer and such Committed Amount shall remain available in accordance with the terms of this Agreement.
(d) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Seller, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Seller for the purpose of making such Erroneous Payment.
(e) No Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(f) Each party’s obligations, agreements and waivers under this Section 10.10 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Buyer, the termination of the obligations set forth in Section 2.01 with respect to the Committed Amount and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Transaction Document.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Survival. This Agreement and the other Program Agreements and all covenants, agreements, representations and warranties herein and therein and in the certificates delivered pursuant hereto and thereto, shall survive the entering into of the Transaction and shall continue in full force and effect so long as any Obligations are outstanding and unpaid.
Section 11.02 Indemnification. Seller shall, and hereby agrees to, indemnify, defend and hold harmless Administrative Agent, each Buyer, any Affiliate of Administrative Agent, any Affiliate of any Buyer and their respective directors, officers, agents and employees from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it is finally judicially determined to have resulted from their own gross negligence or willful misconduct) as a consequence of, or arising out of or by reason of any litigation, investigations, claims or proceedings which arise out of or are in any way related to, (i) this Agreement or any other Program Agreement or the transactions contemplated hereby or thereby, (ii) Seller’s servicing practices or procedures; (iii) any actual or proposed use by Seller of the proceeds of the Purchase Price, and (iv) any Default, Event of Default or any other breach by Seller of any of the provisions of this Agreement or any other Program Agreement, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If and to the extent that any Obligations are unenforceable for any reason, Seller hereby agrees to make the maximum contribution to the payment and satisfaction of such Obligations which is permissible under applicable law. Seller’s obligations set forth in this Section 11.02 shall survive any termination of this Agreement and each other Program Agreement and the payment in full of the Obligations, and are in addition to, and not in substitution of, any other of its obligations set forth in this Agreement or otherwise. In addition, Seller shall, upon demand, pay to Administrative Agent and the Buyers all costs and expenses (including the reasonable fees and disbursements of counsel) paid or incurred by Administrative Agent and Buyers in (i) enforcing or defending its rights under or in respect of this Agreement or any other Program Agreement, (ii) collecting the Purchase Price outstanding, (iii) foreclosing or otherwise collecting upon any Repurchase Assets and (iv) and obtaining any legal, accounting or other advice in connection with any of the foregoing.
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Section 11.03 Nonliability of Buyers. The parties hereto agree that, notwithstanding any affiliation that may exist between or among Administrative Agent, Seller and Buyers, the relationship between and among Administrative Agent, Seller and Buyers shall be solely that of arms-length participants. Neither Administrative Agent nor any Buyer shall have any fiduciary responsibilities to Seller. Seller (i) agrees that neither Administrative Agent nor any Buyer shall have any liability to Seller (whether sounding in tort, contract or otherwise) for losses suffered by Seller in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by this agreement, the other loan documents or any other agreement entered into in connection herewith or any act, omission or event occurring in connection therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on appeal), that such losses were the result of acts or omissions on the part of Administrative Agent or Buyers constituting gross negligence or willful misconduct and (ii) waives, releases and agrees not to sue upon any claim against Administrative Agent or any Buyer (whether sounding in tort, contract or otherwise), except a claim based upon gross negligence or willful misconduct. Whether or not such damages are related to a claim that is subject to such waiver and whether or not such waiver is effective, neither Administrative Agent nor any Buyer shall have any liability with respect to, and Seller hereby waives, releases and agrees not to sue upon any claim for, any special, indirect, consequential or punitive damages suffered by Seller in connection with, arising out of, or in any way related to the transactions contemplated or the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or therewith or any act, omission or event occurring in connection herewith or therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on appeal), that such damages were the result of acts or omissions on the part of Administrative Agent or Buyers, as applicable, constituting willful misconduct or gross negligence.
Section 11.04 Governing Law; Submission to Jurisdiction; Waivers.
(a) This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Seller acknowledges that the obligations of the Administrative Agent and Buyers hereunder or otherwise are not the subject of any VFN Repo Guaranty by, or recourse to, any direct or indirect parent or other Affiliate of Buyers. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(b) EACH OF THE PARTIES HERETO AND THE BUYERS HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
| -56- |
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY.
Section 11.05 Notices. Any and all notices (with the exception of Transaction Notices, which shall be delivered via facsimile only), statements, demands or other communications hereunder may be given by a party to the other by mail, email, facsimile, messenger or otherwise to the address specified below, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence.
If to Seller:
PennyMac Loan Services, LLC
3043 Townsgate Road
Westlake Village, CA 91361
Attention: Pamela Marsh/Richard Hetzel
Phone Number: (805) 330-6059/ (805) 254-6088
E-mail: [email protected];
| -57- |
with a copy to:
PennyMac Loan Services, LLC
3043 Townsgate Road
Westlake Village, CA 91361
Attention: Derek Stark
Phone Number: (818) 746-2289
E-mail: [email protected]
If to Administrative Agent:
For Transaction Notice:
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
c/o Credit Suisse Securities (USA) LLC
One Madison Avenue, 2nd floor
New York, NY 10010
Attention: Christopher Bergs, Resi Mortgage Warehouse Ops
Phone: 212-538-5087
E-mail: [email protected]
with a copy to:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, NY 10010
Attention: Margaret Dellafera
Phone Number: 212-325-6471
Fax Number: 212-743-4810
E-mail: [email protected]
For all other Notices:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, NY 10010
Attention: Margaret Dellafera
Phone Number: 212-325-6471
Fax Number: 212-743-4810
E-mail: [email protected]
| -58- |
If to Buyers:
At the address specified on the related signature page.
Section 11.06 Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. In case any provision in or obligation under this Agreement or any other Program Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 11.07 Section Headings. The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or construction of any provision of this Agreement.
Section 11.08 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. The parties agree that this Agreement may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including DocuSign.
Section 11.09 Periodic Due Diligence Review. Seller acknowledges that Administrative Agent and Buyers have the right to perform continuing due diligence reviews with respect to Seller and the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable (but no less than five (5) Business Days’) prior written notice unless an Event of Default shall have occurred, in which case no notice is required, to Seller, Administrative Agent or its authorized representatives will be permitted during normal business hours, and in a manner that does not unreasonably interfere with the ordinary conduct of Seller’s business, to examine, inspect, and make copies and extracts of, any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Seller. Seller also shall make available to Buyers and Administrative Agent a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Assets. Without limiting the generality of the foregoing, Seller acknowledges that Buyers may enter into a Transaction related to any Purchased Assets from Seller based solely upon the information provided by Seller to Buyers in the Asset Schedule and the representations, warranties and covenants contained herein, and that Administrative Agent at its option or upon the request of Buyers, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets related to a Transaction. Seller agrees to cooperate with Administrative Agent and Buyers and any third party underwriter in connection with such underwriting, including providing Administrative Agent and Buyers and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of Seller.
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Section 11.10 Hypothecation or Pledge of Repurchase Assets. Buyers shall have free and unrestricted use of all Repurchase Assets and nothing in this Agreement shall preclude Buyers from engaging in repurchase transactions with all or part of its pro rata portion of the Repurchase Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating all or a portion of its pro rata portion of the Repurchase Assets; provided that prior to an Event of Default, such pledge, repledge, transfer, hypothecation or rehypothecation is treated as a financing or hedging transaction for U.S. federal income tax purposes or a pro rata interest in all payments due to Buyers under this Agreement; provided, further that other than with respect to a pro rata interest in all payments due to Buyers under this Agreement and prior to an Event of Default Buyers receive an opinion of a nationally recognized tax counsel experienced in such matters that such repurchase transaction, pledge, repledge, transfer, hypothecation or rehypothecation will not result in Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.
Section 11.11 Non-Confidentiality of Tax Treatment.
(a) This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyers or Seller, as applicable and shall be held by each party hereto, as applicable in strict confidence and shall not be disclosed to any third party without the written consent of the Required Buyers or Seller, except for (i) disclosure to Buyers’ or Seller’s direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreements, the parties hereto may disclose to any and all Persons of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that Seller may not disclose the name of or identifying information with respect to Buyers or any pricing terms (including the Pricing Rate, Purchase Price Percentage, Purchase Price and Commitment Fee (if any)) or other nonpublic business or financial information (including any sublimits) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Administrative Agent and Buyers.
| -60- |
(b) Notwithstanding anything in this Agreement to the contrary, Seller shall comply with all applicable local, state and federal laws, including all privacy and data protection law, rules and regulations that are applicable to the Repurchase Assets and/or any applicable terms of this Agreement (the “Confidential Information”). Seller understands that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and Seller agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Seller shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers which Seller holds, (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Seller represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the GLB Act and of the applicable standards adopted pursuant thereto, as now or hereafter in effect. Upon request, Seller will provide evidence reasonably satisfactory to allow Administrative Agent to confirm that the providing party has satisfied its obligations as required under this Section 11.11. Without limitation, this may include Administrative Agent’s review of audits, summaries of test results, and other equivalent evaluations of Seller. Seller shall notify Administrative Agent and Buyers immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers provided directly to Seller by Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers. Seller shall provide such notice to Administrative Agent by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.
Section 11.12 Set-off. In addition to any rights and remedies of Administrative Agent and Buyers hereunder and by law, Administrative Agent and Buyers shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Seller or any Affiliate thereof to Administrative Agent, Buyers or any of their Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return funds to Seller), credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Administrative Agent, Buyers or any Affiliate thereof to or for the credit or the account of Seller or any Affiliate thereof. Administrative Agent agrees promptly to notify Seller after any such set off and application made by a Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.
Section 11.13 Intent.
(a) The parties recognize that each Transaction is a “master netting agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended and that all payments hereunder are deemed “margin payments” or “settlement payments” as defined in Title 11 of the United States Code.
| -61- |
(b) It is understood that any party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 7.03 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and Section 561 of Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).
(e) This Agreement is intended to be a “securities contract,” within the meaning of Section 555 under the Bankruptcy Code, and a “master netting agreement,” within the meaning of Section 561 under the Bankruptcy Code.
(f) It is the intention of the parties that, for U.S. federal income tax purposes and for accounting purposes, each Transaction constitute a financing, and that Seller be (except to the extent that Administrative Agent shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Administrative Agent, Seller and Buyers shall treat the Transactions as described in the preceding sentence (including on any and all filings with any U.S. federal, state, or local taxing authority and agree not to take any action inconsistent with such treatment).
Section 11.14 Amendment and Restatement. The Administrative Agent, CSCIB and PLS entered into the Original Agreement. The Administrative Agent, CSCIB and PLS desire to enter into this Agreement in order to amend and restate the Original Agreement in its entirety. The amendment and restatement of the Original Agreement shall become effective on the date hereof, and each of the Administrative Agent, the Buyers and PLS shall hereafter be bound by the terms and conditions of this Agreement and the other Program Agreements. This Agreement amends and restates the terms and conditions of the Original Agreement, and is not a novation of any of the agreements or obligations incurred pursuant to the terms of the Original Agreement. Accordingly, all of the agreements and obligations incurred pursuant to the terms of the Original Agreement are hereby ratified and affirmed by the parties hereto and remain in full force and effect. For the avoidance of doubt, it is the intent of the Administrative Agent, CSCIB and PLS that the security interests and liens granted in the Purchased Assets or Repurchase Assets pursuant to Original Agreement shall continue in full force and effect. All references to the Original Agreement in any Program Agreement or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof.
[Signature Pages Follow]
| -62- |
IN WITNESS WHEREOF, Administrative Agent, Seller and Buyers have caused this Amended and Restated Master Repurchase Agreement to be executed and delivered by their duly authorized officers or trustees as of the date first above written.
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent |
| By: | /s/ Dominic Obaditch | |
| Name: Dominic Obaditch | ||
| Title: Vice President |
[PNMAC GMSR Issuer Trust – A&R Series 2020-SPIADVF1 Repurchase Agreement]
| PENNYMAC LOAN SERVICES, LLC, as Seller |
| By: | /s/ Pamela Marsh | |
| Name: Pamela Marsh | ||
| Title: Senior Managing Director and Treasurer |
| PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC , solely with respect to Section 11.14, as VFN Guarantor |
| By: | /s/ Pamela Marsh | |
| Name: Pamela Marsh | ||
| Title: Senior Managing Director and Treasurer |
[PNMAC GMSR Issuer Trust – A&R Series 2020-SPIADVF1 Repurchase Agreement]
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Buyer |
| By: | /s/ Dominic Obaditch |
| Name: Dominic Obaditch | |
| Title: Authorized Signatory |
| By: | /s/ Margaret D. Dellafera |
| Name: Margaret D. Dellafera | |
| Title: Authorized Signatory |
| NOTICE INFORMATION | |
| For Transaction Notice: | |
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | |
| c/o Credit Suisse Securities (USA) LLC | |
| Eleven Madison Avenue, 13th floor | |
| New York, NY 10010 | |
| Attention: Christopher Czako | |
| Phone: 212 538 5087 | |
| E-mail:[email protected] | |
| with a copy to: | |
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC | |
| c/o Credit Suisse Securities (USA) LLC | |
| Eleven Madison Avenue, 4th Floor | |
| New York, NY 10010 | |
| Attention: Margaret Dellafera | |
| Phone Number: 212-325-6471 | |
| Fax Number: 212-743-4810 | |
| E-mail: [email protected] | |
| For all other Notices: | |
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC | |
| c/o Credit Suisse Securities (USA) LLC | |
| Eleven Madison Avenue, 4th Floor | |
| New York, NY 10010 | |
| Attention: Margaret Dellafera | |
| Phone Number: 212-325-6471 | |
| Fax Number: 212-743-4810 | |
| E-mail: [email protected] |
[PNMAC GMSR Issuer Trust – A&R Series 2020-SPIADVF1 Repurchase Agreement]
| CITIBANK, N.A., as a Buyer |
| By: | /s/ Arunthathi Theivakumaran | |
| Name: Arunthathi Theivakumaran | ||
| Title: Vice President |
| NOTICE INFORMATION | |
| CITIBANK, N.A. | |
| 390 Greenwich Street | |
| New York, NY 10013 | |
| Attention: Bobbie Theivakumaran | |
| Telephone No.: (212) 723-6753 | |
| email: [email protected] | |
| WITH A COPY TO | |
| CITIBANK, N.A. | |
| 390 Greenwich Street | |
| New York, NY 10013 | |
| Attention: James Kessler | |
| Telephone No.: (212) 723-6377 | |
| email: [email protected] |
[PNMAC GMSR Issuer Trust – A&R Series 2020-SPIADVF1 Repurchase Agreement]
SCHEDULE 1
RESPONSIBLE OFFICERS – SELLER
SELLER AUTHORIZATIONS
Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for Seller under this Agreement:
Responsible Officers for execution of Program Agreements and amendments:
| Name | Title | Signature | ||
| Pamela Marsh | Senior Managing Director and Treasurer |
Responsible Officers for execution of Transaction Notices and day-to-day operational functions:
|
Name |
Title |
Signature | ||
| Pamela Marsh | Senior Managing Director and Treasurer |
| ||
| Maurice Watkins | Senior Managing Director, Capital Markets Operations |
| ||
| Thomas Rettinger | Senior Managing Director, Portfolio Risk Management |
| ||
| Richard Hetzel | Senior Vice President, Treasury |
| ||
| Paul Newman | Executive Vice President, Treasury |
| ||
| Ryan Huddleston | Authorized Representative |
| ||
| Adeshola Makinde | Authorized Representative |
| ||
| Angela Everest | Authorized Representative |
|
| Schedule 1-1 |
SCHEDULE 2
ASSET SCHEDULE
Series 2020-SPIADVF1 Variable Funding Note and Additional Balances
| Note | Initial Note Balance | Additional Balance(s) | Outstanding VFN Principal Balance | Maximum VFN Principal Balance | ||||||||||||
| PNMAC GMSR Issuer Trust, Series 2020-SPIADVF1 Variable Funding Note | $ | 242,038,787 | $ | 0 | $ | 242,038,787 | $ | 1,000,000,000 | ||||||||
| CSCIB Pro Rata Share | $ | 121,019,394.50 | $ | 0 | $ | 121,019,394.50 | $ | 500,000,000 | ||||||||
| Citibank Pro Rata Share | $ | 121,019,394.50 | $ | 0 | $ | 121,019,394.50 | $ | 500,000,000 | ||||||||
Repurchase Price attributable to the Series 2020-SPIADVF1 Variable Funding Note and Additional Balances pursuant to the Series 2020-SPIADVF1 Repurchase Agreement
| Current Balance | Additional Balance(s) | Outstanding Principal Balance | Maximum Principal Balance | |||||||||||||
| Aggregate Amount | $ | 0 | $ | 0 | $ | 0 | $ | 600,000,000 | ||||||||
| CSCIB Pro Rata Share | $ | 0 | $ | 0 | $ | 0 | $ | 300,000,000 | ||||||||
| Citibank Pro Rata Share | $ | 0 | $ | 0 | $ | 0 | $ | 300,000,000 | ||||||||
| Schedule 2-1 |
SCHEDULE 3
ADMINISTRATIVE AGENT’S ACCOUNT
| Name of Bank: | BNY Mellon |
| ABA Number of Bank: | 021000018 |
| Name of Account: | CSFB Mortgage Capital |
| Account Number: | 8901149543 |
| Schedule 3-1 |
EXHIBIT A
FORM OF TRANSACTION NOTICE
Date: [_________]
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010
Attention: Dominic Obaditch
Email: [email protected]
TRANSACTION NOTICE
Ladies and Gentlemen:
We refer to the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021 (the “Agreement”), among PennyMac Loan Services, LLC (the “Seller”), the buyers party thereto (“Buyers”) and Credit Suisse First Boston Mortgage Capital LLC ( “Administrative Agent”). Each capitalized term used but not defined herein shall have the meaning specified in the Agreement. This notice is being delivered by Seller pursuant to Section 2.02 of the Agreement.
Please be notified that Seller hereby irrevocably requests that the Buyers enter into the following Transaction(s) with the Seller as follows:
| P&I | Escrow | Corp | Total | |||||||||||||
| Beginning Receivables Balance | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Ineligible Corporate Advances (Currents>25%) | $ | 0.00 | $ | 0.00 | ||||||||||||
| Advance Reimbursement Amounts | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Additional Receivables | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Ending Receivables Balance | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| WA Advance Rates | % | % | % | |||||||||||||
| Total WA Advance Rate | % | |||||||||||||||
| Initial Note Balance/Purchase Price requested (i.e. Ending VFN Balance) | $ | 0.00 | ||||||||||||||
| Purchase Price Percentage | % | |||||||||||||||
| Additional Balance/Purchase Price requested (i.e. New Purchase Price) | $ | 0.00 | ||||||||||||||
| Current Purchase Price | $ | 0.00 | ||||||||||||||
| Purchase Price Change | $ | 0.00 | ||||||||||||||
| Effective Advance Rate | % | |||||||||||||||
| Exhibit A-1 |
Seller requests that the proceeds of the Purchase Price be deposited in Seller’s account at _______, ABA Number _______, account number ____, References: _____, Attn: _______.
Seller hereby represents and warrants that each of the representations and warranties made by Seller in each of the Program Agreements to which it is a party is true and correct in all material respects, in each case, on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. Attached hereto is a true and complete updated copy of the Asset Schedule.
| Exhibit A-2 |
| PennyMac Loan Services, LLC, as Seller | |
| By: |
| Exhibit A-3 |
Asset Schedule
Series 2020-SPIADVF1 Variable Funding Note and Additional Balances
| Note | Initial Note Balance | Additional Balance(s) | Outstanding | Maximum VFN Principal Balance | ||||||||||||
| PNMAC GMSR ISSUER TRUST, Series 2020-SPIADVF1 Variable Funding Note | $ | [________] | $ | [________] | $ | [________] | $ | [________] | ||||||||
| CSCIB Pro Rata Share | ||||||||||||||||
| Citibank Pro Rata Share |
Repurchase Price attributable to the Series 2020-SPIADVF1 Variable Funding Note and Additional Balances pursuant to the Series 2020-SPIADVF1 Repurchase Agreement
| Current Note Balance | Additional Balance(s) | Outstanding Principal Balance | Maximum Principal Balance | |||||||||||||
| Aggregate Amount | $ | [________] | $ | [________] | $ | [________] | $ | [________] | ||||||||
| CSCIB Pro Rata Share | ||||||||||||||||
| Citibank Pro Rata Share |
| Exhibit A-4 |
EXHIBIT B
EXISTING INDEBTEDNESS
[See Attached]
| Exhibit B-1 |
Exhibit 10.4
EXECUTION VERSION
[Information indicated with brackets has been excluded from this exhibit because it is not material and would be competitively harmful if publicly disclosed]
PNMAC GMSR ISSUER TRUST,
as Issuer
and
CITIBANK, N.A.,
as Indenture Trustee, Calculation Agent, Paying Agent and Securities Intermediary
and
PENNYMAC LOAN SERVICES, LLC,
as Administrator and as Servicer
and
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
as Administrative Agent and Noteholder for the benefit of the Series 2020-SPIADVF1 Repo Buyers
and consented to by
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Series 2020-SPIADVF1 Repo Buyer
and
CITIBANK, N.A.,
as a Series 2020-SPIADVF1 Repo Buyer
AMENDMENT NO. 3
Dated as of July 30, 2021
to the
AMENDED AND RESTATED SERIES 2020-SPIADVF1 INDENTURE
SUPPLEMENT
Dated as of April 1, 2020
PNMAC GMSR ISSUER TRUST
MSR COLLATERALIZED NOTES,
SERIES 2020-SPIADVF1
AMENDMENT NO. 3 TO AMENDED AND RESTATED SERIES 2020-SPIADVF1 INDENTURE SUPPLEMENT
This Amendment No. 3 to the Amended and Restated Series 2020-SPIADVF1 Indenture Supplement (this “Amendment”) is dated as of July 30, 2021, by and among PNMAC GMSR ISSUER TRUST, as issuer (the “Issuer”), CITIBANK, N.A. (“Citibank”), as indenture trustee (the “Indenture Trustee”), PENNYMAC LOAN SERVICES, LLC, as administrator (in such capacity, the “Administrator”) and as servicer (in such capacity, the “Servicer”), and CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent (the “Administrative Agent”) and noteholder (the “Noteholder”) for the benefit of the Series 2020-SPIADVF1 Repo Buyers (as defined below), and is consented to by CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“CSCIB”) and CITIBANK, N.A. (“Citi”) (each a “Series 2020-SPIADVF1 Repo Buyer” and together, the “Series 2020-SPIADVF1 Repo Buyers”), the buyers of 100% of the Series 2020-SPIADVF1 Note under the Series 2020-SPIADVF1 Repurchase Agreement.
RECITALS
WHEREAS, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent are parties to that certain Third Amended and Restated Indenture, dated as of April 1, 2020 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Base Indenture”), the provisions of which are incorporated, as modified by that certain Amended and Restated Series 2020-SPIADVF1 Indenture Supplement, dated as of April 1, 2020 (as amended by Amendment No. 1, dated as of August 25, 2020, and Amendment No. 2, dated as of April 1, 2021, and as may be further amended, restated, supplement or otherwise modified from time to time, the “Series 2020-SPIADVF1 Indenture Supplement”, and together with the Base Indenture, the “Indenture”), among the Issuer, Citibank, the Servicer, the Administrator and the Administrative Agent. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Indenture;
WHEREAS, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent (in its capacity as Administrative Agent and Noteholder) have agreed, subject to the terms and conditions of this Amendment, that the Series 2020-SPIADVF1 Indenture Supplement be amended to reflect certain agreed upon revisions to the terms of the Series 2020-SPIADVF1 Indenture Supplement;
WHEREAS, pursuant to Section 12.2 of the Base Indenture, the Issuer, the Indenture Trustee, the Administrator, the Servicer and the Administrative Agent, with prior notice to each Note Rating Agency and the consent of the Majority Noteholders of each Series materially and adversely affected by such amendment, by Act of said Noteholders delivered to the Issuer, the Administrator, the Servicer, the Administrative Agent and the Indenture Trustee, upon delivery of an Issuer Tax Opinion (unless the Noteholders unanimously consent to waive such opinion), for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, any Indenture Supplement;
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WHEREAS, pursuant to Section 12.3 of the Base Indenture, in executing or accepting the additional trusts created by any amendment or Indenture Supplement of the Base Indenture permitted by Article XII or the modifications thereby of the trusts created by the Base Indenture, the Indenture Trustee will be entitled to receive, and (subject to Section 11.1 of the Base Indenture) will be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or Indenture Supplement is authorized and permitted by the Base Indenture and that all conditions precedent thereto have been satisfied (the “Authorization Opinion”); provided, that no such Authorization Opinion shall be required in connection with any amendment or Indenture Supplement consented to by all Noteholders if all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or Indenture Supplement;
WHEREAS, pursuant to Section 1.3 of the Base Indenture, the Issuer shall deliver an Officer’s Certificate stating that all conditions precedent, if any, provided for in the Base Indenture relating to a proposed action have been complied with and that the Issuer reasonably believes that this Amendment will not have a material Adverse Effect, and shall also furnish to the Indenture Trustee an opinion of counsel stating that in the opinion of such counsel all conditions precedent to a proposed action, if any, have been complied with (unless 100% of the Noteholders have consented to the related amendment, modification or action and all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or supplement, or with respect or with respect to any other modification or action, directed the Indenture Trustee in writing to permit such modification or action without receiving such certificate or opinion);
WHEREAS, pursuant to Section 11.1 of the Trust Agreement, prior to the execution of any amendment to any Transaction Documents to which the Trust is a party, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by the Trust Agreement and that all conditions precedent have been met;
WHEREAS, pursuant to Section 4.1(a)(iii) of the Trust Agreement, the consent of each of the Owners (as defined in the Trust Agreement) (unless an Event of Default has occurred and is continuing), the Administrative Agent and the Series Required Noteholders of all Variable Funding Notes is required for the amendment or other change to any Transaction Document in circumstances where the consent of any Noteholder or the Administrative Agent is required (other than an amendment or supplement to the Base Indenture pursuant to Section 12.1 thereof);
WHEREAS, the Series 2020-SPIADVF1 Note (the “Series 2020-SPIADVF1 Note”), was issued to PennyMac Loan Services, LLC (“PLS”) pursuant to the terms of the Series 2020-SPIADVF1 Indenture Supplement, and was purchased by CSCIB and Citi under the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021, by and among the Administrative Agent, CSCIB, as Series 2020-SPIADVF1 Repo Buyer, Citi, as Series 2020-SPIADVF1 Repo Buyer and PLS, as seller (as amended, restated, supplemented or otherwise modified from time to time, the “Series 2020-SPIADVF1 Repurchase Agreement”), pursuant to which PLS sold all of rights, title and interest in the Series 2020-SPIADVF1 Note to CSCIB and Citi as Series 2020-SPIADVF1 Repo Buyers, and transferred the Series 2020-SPIADVF1 Note to the Administrative Agent as “Noteholder” for the benefit of the Series 2020-SPIADVF1 Repo Buyers;
WHEREAS, pursuant to the Series 2020-SPIADVF1 Indenture Supplement, with respect to the Series 2020-SPIADVF1 Note, any Action provided by the Base Indenture or the Series 2020-SPIADVF1 Indenture Supplement to be given or taken by a Noteholder shall be taken by the Series 2020-SPIADVF1 Repo Buyers, as the buyers of the Series 2020-SPIADVF1 Note under the Series 2020-SPIADVF1 Repurchase Agreement;
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WHEREAS, pursuant to Section 10 of the Series 2020-SPIADVF1 Indenture Supplement, the parties hereto may enter into an amendment to supplement, amend or revise any term or provision of the Series 2020-SPIADVF1 Indenture Supplement pursuant to the terms and provisions of Section 12.2 of the Base Indenture with the consent of the Noteholders of 100% of the Series 2020-SPIADVF1 Note; and
WHEREAS, as of the date hereof, the Series 2020-SPIADVF1 Note is not rated by any Note Rating Agency.
NOW, THEREFORE, the Issuer, Indenture Trustee, the Administrator, the Servicer and the Administrative Agent hereby agree, in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, that the Series 2020-SPIADVF1 Indenture Supplement is hereby amended as follows:
Section 1. Amendments to the Series 2020-SPIADVF1 Indenture Supplement.
(a) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by deleting the definitions of “Initial Term Note Offering,” “LIBOR Index Rate,” “Margin,” “Note Interest Rate,” “Series 2020-SPIADVF1 Repurchase Agreement” and “Series Required Noteholders” from Section 2 thereof in their entirety and replacing them with the following:
“Additional Term Note Offering” means the issuance of at least $200,000,000 in Term Notes to third party investors in accordance with the Base Indenture on or after July 30, 2021.
“LIBOR Index Rate” means for a one-month period, the LIBOR per annum (rounded upward, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a one-month period, which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the Benchmark Determination Date.
“Margin” means, (i) with respect to the Series 2020-SPIADVF1 Note, (A) prior to the occurrence of an Event of Default (as defined under the Series 2020-SPIADVF1 Repurchase Agreement), [****]% per annum, or (B) upon the occurrence of an Additional Term Note Offering, the margin over the related swap rate in effect for the Term Notes subject to such Additional Term Note Offering plus [****]%, and (ii) with respect to the Series 2020-SPIADVF1 Note following the occurrence of an Event of Default (as defined under the Series 2020-SPIADVF1 Repurchase Agreement), the amount calculated pursuant to clause (i) plus an additional [****]% per annum.
“Note Interest Rate” means, with respect to any Interest Accrual Period, the sum of (a) the greater of (i) Benchmark and (ii) [****]% plus (b) the Margin.
“Series 2020-SPIADVF1 Repurchase Agreement” means the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021, by and among the Administrative Agent, CSCIB, as a Series 2020-SPIADVF1 Repo Buyer, Citi, as a Series 2020-SPIADVF1 Repo Buyer and PLS, as seller.
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“Series Required Noteholders” means, for so long as the Series 2020-SPIADVF1 Notes are Outstanding, 100% of the Noteholders of the Series 2020-SPIADVF1 Notes. With respect to the Series 2020-SPIADVF1 Notes, any Action provided by the Base Indenture or this Indenture Supplement to be given or taken by a Noteholder shall be taken by Series 2020-SPIADVF1 Repo Buyers, as buyers of the Series 2020-SPIADVF1 Notes under the Series 2020-SPIADVF1 Repurchase Agreement.
(b) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by adding the below listed definitions to Section 2 thereof in proper alphabetical order as follows:
“Benchmark” means, with respect to any Interest Accrual Period, initially, the Benchmark Rate for a one-month period, if such rate is available; provided, that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the Benchmark Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Rate.
“Benchmark Determination Date” means, for each Payment Date and the related Interest Accrual Period means (1) if the Benchmark is LIBOR, the second (2nd) London Banking Day prior to the commencement of such Interest Accrual Period, and (2) if the Benchmark is not LIBOR, the date determined by the Designated Transaction Representative in accordance with the Benchmark Replacement Conforming Changes for each Payment Date and the related Interest Accrual Period.
“Benchmark Rate” means, with respect to any Interest Accrual Period with respect to which interest is to be calculated by reference to the “Benchmark Rate,” (a) the LIBOR Index Rate for a one-month period, if such rate is available, (b) in the event that LIBOR and LIBOR Index Rate are phased out, and a new benchmark intended as a replacement for LIBOR and LIBOR Index Rate is established or administered by the Financial Conduct Authority or ICE Benchmark Administration or other comparable authority, and such new benchmark with a one-month maturity is readily available through Bloomberg or a comparable medium, then the Designated Transaction Representative, with the Administrative Agent’s written consent, shall direct the Indenture Trustee to utilize such new benchmark with a one-month maturity for all purposes hereof in place of the LIBOR Index Rate, and (c) if the LIBOR Index Rate cannot be determined or has been phased out and no new benchmark under clause (b) has been established, the arithmetic average of the rates of interest per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) London Banking Days before the beginning of such one-month period by three (3) or more major banks in the interbank Eurodollar market selected by the Administrative Agent for delivery on the first day of and for a period equal to such one-month period and in an amount equal or comparable to the principal amount of the portion of the Note Balance on which the “Benchmark Rate” is being calculated.
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“Benchmark Reference Agreement” means the first applicable alternative set forth in the order below that can be determined by the Designated Transaction Representative:
(1) any repurchase or financing facility entered into with respect to a Series of Variable Funding Notes that are Outstanding;
(2) any repurchase or financing facility entered into by the Servicer with respect to MSRs or mortgage loans with CSCIB, CSFB or Citibank as repo buyers or lenders, as applicable;
(3) any other repurchase or financing facility entered into by the Servicer with respect to MSRs or mortgage loans; or
(4) any other financing facility identified by the Designated Transaction Representative.
“Benchmark Reference Time” means, with respect to any determination of the Benchmark, (i) if the Benchmark is the Benchmark Rate, 11:00 a.m. (London time) on the second (2nd) London Banking Day prior to the commencement of such Interest Accrual Period and (ii) if the Benchmark is not the Benchmark Rate, the time determined by the Designated Transaction Representative in accordance with the Benchmark Replacement Conforming Changes for each Payment Date and the related Interest Accrual Period.
“Benchmark Replacement” means the first applicable alternative set forth in the order below that can be determined by the Calculation Agent as of the applicable Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the Benchmark Replacement Adjustment;
(2) the sum of: (a) Compounded SOFR and (b) the Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment;
(4) the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or
(5) the sum of: (a) the alternate rate of interest that has been selected by the Designated Transaction Representative as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated securitizations at such time and (b) the Benchmark Replacement Adjustment.
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“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Designated Transaction Representative as of the applicable Benchmark Replacement Date:
(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;
(2) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment; or
(3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Designated Transaction Representative giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated securitization transactions at such time, and as reasonably necessary such that the parties are similarly situated to the period prior to the replacement of the LIBOR Index Rate.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Interest Accrual Period,” timing and frequency of determining rates and making payments of interest, changes to the definition of “Corresponding Tenor” solely when such tenor is longer than the Interest Accrual Period and other administrative matters) that the Designated Transaction Representative decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with the practices adopted with respect to the applicable Benchmark Reference Agreement, in each case as notified to the Administrative Agent, the Indenture Trustee, the Calculation Agent and the Administrative Agent prior to the inclusion of such Benchmark Replacement Conforming Changes in the Payment Date Report notifying Noteholders of such changes and such Benchmark Replacement Conforming Changes taking effect, which such changes shall automatically become effective without further action on behalf of any party (upon inclusion in such Payment Date Report) to the extent that the Administrative Agent has not provided a written objection (in its reasonable discretion) to such Benchmark Replacement Conforming Changes to each of the Designated Transaction Representative and the Indenture Trustee prior to the inclusion in the Payment Date Report. The Benchmark Replacement Conforming Changes will be prepared by the Designated Transaction Representative and delivered to the Indenture Trustee and Calculation Agent for inclusion in the Payment Date Report together with an acknowledgement thereto by the Administrative Agent.
“Benchmark Replacement Date” means:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event” either (a) the date of the public statement or publication of information referenced therein or (b) if later, and the Benchmark is the LIBOR Index Rate, then the date on which the administrator of the relevant Benchmark permanently or indefinitely ceases to provide such Benchmark;
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(2) with respect to clause (3) of the definition of “Benchmark Transition Event” the first date of the public statement or publication of information. Note that if the Designated Transaction Representative determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Benchmark Reference Time in respect of any determination of the Benchmark on any date, the Benchmark Replacement shall replace the then-current Benchmark for all purposes with respect to the Notes in respect of such determination on such date and all determinations on all subsequent dates. However, if the initial Benchmark Replacement is any rate other than Term SOFR and the Designated Transaction Representative later determines that Term SOFR can be determined, then a Benchmark Transition Event shall be deemed to have occurred and Term SOFR shall become the new Unadjusted Benchmark Replacement and shall, together with a new Benchmark Replacement Adjustment for Term SOFR, replace the then-current Benchmark on the next Benchmark Determination Date for Term SOFR; or
(3) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the Early Opt-in Election by Administrative Agent and Seller.
For the avoidance of doubt, if the event giving rise to the applicable Benchmark Replacement Date occurs on the same day as, but earlier than, the Benchmark Reference Time in respect of any determination, the Benchmark Replacement Date shall be deemed to have occurred prior to the Benchmark Reference Time for such determination.
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that the administrator has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;
(2) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark; or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative.
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“Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Interest Accrual Period or compounded in advance) being established by the Designated Transaction Representative in accordance with:
(1) the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:
(2) if, and to the extent that, the Designated Transaction Representative determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Designated Transaction Representative giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated securitization transactions at such time.
“Corresponding Tenor” means one month.
“Designated Transaction Representative” means the Administrator.
“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Buyers, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Buyers, written notice of objection to such Early Opt-in Election from Buyers comprising the Required Buyers.
“Early Opt-in Election” means the occurrence of the following:
| (1) | a determination by Administrative Agent that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such credit facilities are identified in the notice to Seller described in clause (2) below and are publicly available for review), and |
| (2) | the election by Administrative Agent to trigger a fallback from LIBOR Index Rate and the provision by Administrative Agent of written notice of such election to the Buyers. |
“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
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“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.
“ISDA Fallback Adjustment” means the spread adjustment, (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.
“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“Series 2020-SPIADVF1 Repo Buyer” means each of Credit Suisse AG, Cayman Islands Branch and Citibank, N.A., as buyers under the Series 2020-SPIADVF1 Repurchase Agreement, and each of their permitted successors and assigns.
“SOFR” means, with respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s Website.
“Term SOFR” means the forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the applicable Benchmark Replacement Adjustment.
(c) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by deleting the definitions of “LIBOR Determination Date” and “LIBOR Rate” from Section 2 thereof in their entirety.
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(d) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by deleting Section 5(d) thereof and replacing it with the following:
(d) The parties hereto acknowledge that the Series 2020-SPIADVF1 Notes will be financed by the Series 2020-SPIADVF1 Repo Buyers under the Series 2020-SPIADVF1 Repurchase Agreement, pursuant to which PLS will sell all its rights, title and interest in the Series 2020-SPIADVF1 Notes to the Series 2020-SPIADVF1 Repo Buyers. The parties hereto acknowledge that with respect to the Series 2020-SPIADVF1 Notes, any Action provided by the Base Indenture or this Indenture Supplement to be given or taken by a Noteholder shall be taken by the Required Buyers (as defined in the Series 2020-SPIADVF1 Repurchase Agreement). Subject to the foregoing, the Administrative Agent and the Issuer further confirm that the Series 2020-SPIADVF1 Notes issued on the Issuance Date pursuant to this Indenture Supplement shall be issued in the name of “Credit Suisse First Boston Mortgage Capital LLC, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch, as a Series 2020-SPIADVF1 Repo Buyer, and Citibank, N.A., as a Series 2020-SPIADVF1 Repo Buyer.” The Issuer and the Administrative Agent hereby direct the Indenture Trustee to issue the Series 2020-SPIADVF1 Notes in the name of “Credit Suisse First Boston Mortgage Capital LLC, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch, as a Series 2020-SPIADVF1 Repo Buyer, and Citibank, N.A., as a Series 2020-SPIADVF1 Repo Buyer.”
(e) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by deleting Section 7 thereof in its entirety and replacing it with the following:
Section 7. Determination of Note Interest Rate and Benchmark.
(a) At least one (1) Business Day prior to each Determination Date, the Calculation Agent shall calculate the Note Interest Rate for the related Interest Accrual Period and the Interest Payment Amount for the Series 2020-SPIADVF1 Notes for the upcoming Payment Date, and include a report of such amount in the related Payment Date Report.
(b) On each Benchmark Determination Date, the Calculation Agent will calculate the Benchmark for the succeeding Interest Accrual Period for the related Series 2020-SPIADVF1 Notes on the basis of the procedures specified in the definition of Benchmark.
(c) In connection with the implementation of a Benchmark Replacement, the Designated Transaction Representative will have the right from time to time to make Benchmark Replacement Conforming Changes as described in the definition thereof.
(d) Notwithstanding the foregoing, if prior to the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date a published LIBOR Index Rate is unavailable, the Benchmark will be determined on the basis of the rates at which deposits in dollars are offered by major banks selected by the Designated Transaction Representative. If the banks selected by the Designated Transaction Representative are not quoting rates at the time the LIBOR Index Rate is to be determined for such Interest Accrual Period, the LIBOR Index Rate for the related Interest Accrual Period will be the same as the LIBOR Index Rate for the immediately preceding Interest Accrual Period until the occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date. The Calculation Agent will calculate the Benchmark for each Interest Accrual Period on the related Benchmark Determination Date. The Indenture Trustee (in any capacity in which it acts) shall have no duty, obligation or responsibility to determine whether a Benchmark Transition Event has occurred or to select an alternative index, and shall have no liability for the Designated Transaction Representative’s selection of such alternative index.
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(e) A Benchmark Transition Event occurred on March 5, 2021. Notice or materials relating to the occurrence of any additional Benchmark Transition Event, any Benchmark Replacement Date, the determination of a Benchmark Replacement and the making of any Benchmark Replacement Conforming Changes shall be made available with the relevant Payment Date Report. Notwithstanding anything in the Base Indenture, any Indenture Supplement or any other Transaction Document to the contrary, upon the inclusion of such information in the Payment Date Report, the Base Indenture, any Indenture Supplement or any other relevant Transaction Document, as applicable, shall be deemed to have been amended to reflect the new Unadjusted Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark Replacement Conforming Changes without further compliance with the amendment provisions of the Base Indenture, any Indenture Supplement or any other relevant Transaction Document.
(f) Any determination, decision or election that may be made by the Designated Transaction Representative in connection with a Benchmark Transition Event or a Benchmark Replacement as described above, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, shall be conclusive and binding absent manifest error, may be made in the Designated Transaction Representative’s sole discretion, and, notwithstanding anything to the contrary in the Transaction Documents, shall become effective without consent from any other party, except for the Administrative Agent, which will have the right to provide its written objection to the Calculation Agent and the Designated Transaction Representative with respect to any such actions in its reasonable discretion within thirty (30) days of notice of such changes from the Designated Transaction Representative, in which case such proposed changes will not come into effect and the Calculation Agent shall continue to use the most recent Benchmark until resolved. In the event that the Administrative Agent provides such written objection, the Administrative Agent and the Designated Transaction Representative shall work in good faith to resolve the issues related to the Unadjusted Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark Replacement Conforming Changes such that the parties are similarly situated to the period prior to the replacement of the LIBOR Index Rate. The Designated Transaction Representative shall provide notice of any determination, decision or election made by the Designated Transaction Representative in connection with a Benchmark Transition Event or a Benchmark Replacement as described above at least thirty (30) days prior to the proposed inclusion of such changes in the related Payment Date Report. None of the Issuer, Owner Trustee, the Indenture Trustee, the Calculation Agent, the Administrator, the Designated Transaction Representative, the Administrative Agent, the Servicer or any other transaction party will have any liability for any determination made by or on behalf of the Issuer by any party, including the Designated Transaction Representative or any action or inaction by the Administrative Agent, in connection with a Benchmark Transition Event or a Benchmark Replacement as described above, and each Noteholder, by its acceptance of a Note or a beneficial interest in a Note, shall be deemed to waive and release any and all claims against any of the Issuer, Owner Trustee, the Indenture Trustee, the Calculation Agent, the Administrator, the Designated Transaction Representative, the Administrative Agent or the Servicer relating to any such determinations.
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(g) The establishment of the Benchmark Rate by the Calculation Agent and the Designated Transaction Representative, as applicable, and the Calculation Agent’s subsequent calculation of the Note Interest Rate and the Interest Payment Amount on the Series 2020-SPIADVF1 Notes for the relevant Interest Accrual Period based on the determination made by the Designated Transaction Representative, in the absence of manifest error, will be final and binding.
(h) The Designated Transaction Representative and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by it under or in connection with this Indenture Supplement or the other Transaction Documents in its capacity as Designated Transaction Representative, other than action or inaction undertaken with gross negligence, willful misconduct or bad faith. Without limiting the foregoing and notwithstanding any understanding to the contrary, no Noteholder shall have any right of action whatsoever against the Designated Transaction Representative as a result of the Designated Transaction Representative acting or refraining from acting under this Indenture Supplement, the Notes or any of the other Transaction Documents in its own interests or otherwise, other than as a result of gross negligence, willful misconduct or bad faith by the Designated Transaction Representative.
(i) The Issuer, Indenture Trustee, PLS, Administrative Agent and each Series Required Noteholder hereby agree to negotiate in good faith with the other parties hereto in connection with mutually acceptable amendments to this Indenture Supplement to revise this Section 7, the definitions of “Benchmark”, “Benchmark Replacement” and related terms hereto.
(f) The Series 2020-SPIADVF1 Indenture Supplement is hereby amended by deleting Schedule 1 in its entirety and replacing it with the Exhibit A attached hereto.
Section 2. Replacement of Series 2020-SPIADVF1 Note.
(a) The parties hereto acknowledge and agree that the Series 2020-SPIADVF1 Note No. 1, dated as of April 1, 2020 with a Maximum VFN Principal Balance of $1,000,000,000 (the “Outstanding Note”) is (1) hereby deemed cancelled and for all purposes no longer outstanding under the Indenture and applicable law and (2) replaced by Series 2020-SPIADVF1 No. 2, to be dated as of the date hereof with a Maximum VFN Principal Balance of $1,000,000,000 (the “Replacement Note”).
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(b) The Noteholder shall promptly deliver the Outstanding Note to the Indenture Trustee for cancellation and hereby consents to the issuance of the Replacement Note.
Section 3. No Note Rating Agency. As of the date hereof and prior to the execution of this Amendment, the Series 2020-SPIADVF1 Note is not rated by any Note Rating Agency.
Section 4. Waiver of Issuer Tax Opinion and Authorization Opinion. Pursuant to Section 12.2 of the Base Indenture and Section 10 of the Series 2020-SPIADVF1 Indenture Supplement, the Noteholder hereby waives and instructs the Administrative Agent and the Indenture Trustee to waive the provisions of Section 12.2 of the Base Indenture and Section 10 of the Series 2020-SPIADVF1 Indenture Supplement which require delivery of an Issuer Tax Opinion with respect to this Amendment. Pursuant to Section 12.3 of the Base Indenture, the Noteholder hereby waives and instructs the Administrative Agent and the Indenture Trustee to waive the provisions of Section 12.3 of the Base Indenture which requires delivery of an Authorization Opinion with respect to this Amendment.
Section 5. Conditions to Effectiveness of this Amendment. This Amendment shall become effective upon the execution and delivery of this Amendment by all parties hereto (the “Amendment Effective Date”).
Section 6. Consent and Acknowledgment. By execution of this Amendment, each of CSCIB and Citi, in its capacity as Series 2020-SPIADVF1 Repo Buyer, hereby consents to this Amendment. The Series 2020-SPIADVF1 Repo Buyers certify that together they own 100% of the Series 2020-SPIADVF1 Note. In addition, each Series 2020-SPIADVF1 Repo Buyer certifies as to itself that (i) it is authorized to execute and deliver this consent and such power has not been granted or assigned to any other person, (ii) the Person executing this Indenture Supplement on behalf of such Series 2020-SPIADVF1 Repo Buyer is duly authorized to do so, (iii) the Indenture Trustee may conclusively rely upon such consent and certifications, (iv) the execution of this Amendment by the Administrative Agent as Noteholder on behalf of the Series 2020-SPIADVF1 Repo Buyers should be considered an “Act” by the Noteholder pursuant to Section 1.5 of the Base Indenture and (v) it acknowledges and agrees that the amendments effected by this Amendment shall become effective on the Amendment Effective Date. The Series 2020-SPIADVF1 Repo Buyers hereby instruct the Indenture Trustee to execute this Amendment, thereby waiving the requirement for delivery of the Authorization Opinion and the Officer’s Certificate pursuant to Section 1.3 and 12.3 of the Base Indenture.
The Indenture Trustee is hereby authorized and directed to execute that certain Fourth Amended and Restated Acknowledgment Agreement, dated as of July 30, 2021, by and among the Indenture Trustee, PLS, and Ginnie Mae.
Section 7. Representations and Warranties. The Issuer hereby represents and warrants to the Indenture Trustee, the Administrative Agent and the Series 2020-SPIADVF1 Repo Buyers that as of the date hereof it is in compliance with all the terms and provisions set forth in the Indenture on its part to be observed or performed remains bound by the terms thereof, and that no Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 9.1 of the Base Indenture.
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Section 8. Limited Effect. Except as expressly amended and modified by this Amendment, the Indenture shall continue to be, and shall remain, in full force and effect in accordance with its terms and the execution of this Amendment.
Section 9. No Recourse. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Savings Fund Society, FSB (“WSFS”), not individually or personally but solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, warranties, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, warranties, undertakings and agreements by WSFS but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WSFS, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WSFS has made no investigation as to the accuracy or completeness of any representations or warranties made by the Issuer in this Amendment and (e) under no circumstances shall WSFS be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
Section 10. Successors and Assigns. This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
Section 11. GOVERNING LAW. THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AMENDMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12. Counterparts. This Amendment may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including DocuSign.
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Section 13. Entire Agreement. The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.
Section 14. Recitals. The recitals and statements contained in this Amendment shall be taken as the statements of the Issuer, and the Indenture Trustee does not assume any responsibility for their correctness. The Indenture Trustee does not make any representation as to the validity or sufficiency of this Amendment (except as may be made with respect to the validity of its own obligations hereunder.) In entering into this Amendment, the Indenture Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct of, or affecting the liability of or affording protection to it.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.
| PNMAC GMSR ISSUER TRUST, as Issuer | ||
| By: Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Owner Trustee | ||
| By: | /s/ Shaheen Mohajer | |
| Name: | Shaheen Mohajer | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| PENNYMAC LOAN SERVICES, LLC, as Servicer and as Administrator | ||
| By: | /s/ Pamela Marsh | |
| Name: | Pamela Marsh | |
| Title: | Senior Managing Director and Treasurer | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| CITIBANK, N.A., as Indenture Trustee, and not in its individual capacity | ||
| By: | /s/ Valerie Delgado | |
| Name: | Valerie Delgado | |
| Title: | Senior Trust Officer | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as 100% Noteholder of Series 2016-MSRVF1 Note, solely in its capacity as Administrative Agent on behalf of Credit Suisse AG, Cayman Islands Branch | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| CONSENTED TO BY: | ||
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Series 2020-SPIADVF1 Repo Buyer | ||
| By: | /s/ Dominic Obaditch | |
| Name: | Dominic Obaditch | |
| Title: | Authorized Signatory | |
| By: | /s/ Margaret D. Dellafera | |
| Name: | Margaret D. Dellafera | |
| Title: | Authorized Signatory | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
| CONSENTED TO BY: | ||
| CITIBANK, N.A., as a Series 2020-SPIADVF1 Repo Buyer | ||
| By: | /s/ Arunthathi Theivakumaran | |
| Name: | Arunthathi Theivakumaran | |
| Title: | Vice President | |
[PNMAC GMSR Issuer Trust Amendment No. 3 to Series 2020-SPIADVF1 Indenture Supplement]
Exhibit A
SCHEDULE 1
Advance Rates
| Type of Advance | Advance Rate Percentage |
| MBS Advances | |
| FHA | [*****]% |
| VA | [*****]% |
| Other | [*****]% |
| Escrow Advances | |
| FHA | [*****]% |
| VA | [*****]% |
| Other | [*****]% |
| Corporate Advances | |
| FHA | [*****]% |
| VA | [*****]% |
| Other | [*****]% |
Advance Rates are, in each case, subject to amendment by mutual agreement of the Series Required Noteholders, the Administrative Agent and the Administrator; provided that, upon the occurrence of a SPIA VFN Advance Rate Reduction Event the applicable Advance Rate Percentage or Percentages set forth in the table above will decrease by the amount set forth in the definition of SPIA VFN Advance Rate Reduction Event, in each case, until the Advance Rate Reduction Event is cured in all respects subject to the satisfaction of the Administrative Agent, at which point the weighted average advance rate will revert to the weighted average advance rate calculated pursuant to this definition.
Notwithstanding the foregoing, on and after the commencement of the Full Amortization Period, the Advance Rate Percentage applicable to the SPIA VFNs shall be equal to the weighted average Advance Rate of all Outstanding MSR VFNs and all Outstanding Term Notes.
Exhibit A
Exhibit 10.5
EXECUTION VERSION
SECOND AMENDED AND RESTATED GUARANTY
by
PRIVATE NATIONAL MORTGAGE
ACCEPTANCE COMPANY, LLC, as guarantor
Dated as of July 30, 2021
| Table of Contents | ||
| Page | ||
| 1. | Defined Terms | 2 |
| 2. | Guaranty | 2 |
| 3. | Right of Set-off | 3 |
| 4. | Subrogation | 3 |
| 5. | Amendments, etc | 3 |
| 6. | Guaranty Absolute and Unconditional | 4 |
| 7. | Reinstatement | 5 |
| 8. | Payments | 5 |
| 9. | Event of Default | 5 |
| 10. | Severability | 6 |
| 11. | Headings | 6 |
| 12. | No Waiver; Cumulative Remedies | 6 |
| 13. | Waivers and Amendments; Successors and Assigns; Governing Law | 6 |
| 14. | Notices | 6 |
| 15. | Governing Law; Jurisdiction; Waivers | 6 |
| 16. | Integration | 7 |
| 17. | Acknowledgments | 8 |
| 18. | Electronic Signatures | 8 |
| 19. | Amendment and Restatement | 8 |
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SECOND Amended and restated GUARANTY
This SECOND AMENDED AND RESTATED GUARANTY, dated as of July 30, 2021 (as may be amended, restated, supplemented or otherwise modified from time to time, this “Guaranty”), is made by Private National Mortgage Acceptance Company, LLC, a Delaware limited liability company (“Guarantor”), in favor of Credit Suisse First Boston Mortgage Capital LLC (“CSFB”), as administrative agent (the “Administrative Agent”) on behalf of Credit Suisse AG, Cayman Islands Branch (“CSCIB” or a “Buyer”) and Citibank, N.A. (“Citi” or a “Buyer” and, together with CSCIB, the “Buyers”).
RECITALS
WHEREAS, Guarantor has entered into that certain Amended and Restated Guaranty, dated as of April 1, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Original Guaranty”), in favor of CSFB, as Administrative Agent on behalf of CSCIB;
WHEREAS, pursuant to Section 13 of the Original Guaranty, the Original Guaranty may be amended, supplemented or otherwise modified by a written instrument executed by Guarantor and CSFB, as buyer;
WHEREAS, pursuant to the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Series 2016-MSRVF1 Repurchase Agreement”), between PennyMac Loan Services, LLC, (the “Seller”), CSFB and the Buyers, the Buyers have agreed from time to time to enter into Transactions with Seller in connection with the Series 2016-MSRVF1 Notes.
WHEREAS, pursuant to the Amended and Restated Master Repurchase Agreement, dated as of July 30, 2021 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2020-SPIADVF1 Repurchase Agreement”), between PennyMac Loan Services, LLC, (the “Seller”), CSFB and the Buyers, the Buyers have agreed from time to time to enter into Transactions with Seller in connection with the Series 2020-SPIADVF1 Notes;
WHEREAS, it is a condition precedent to the obligation of the Buyers to enter into Transactions with Seller under the Series 2016-MSRVF1 Repurchase Agreement and the Series 2020-SPIADVF1 Repurchase Agreement that Guarantor shall have executed and delivered this Guaranty to the Buyers;
WHEREAS, as a condition precedent to entering into the Series 2016-MSRVF1 Repurchase Agreement and the Series 2020-SPIADVF1 Repurchase Agreement, the Guarantor is required to execute and deliver this Guaranty; and
WHEREAS, the Guarantor will receive a benefit, either directly or indirectly from the Seller for entering into this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises, to induce the Buyers to enter into the Series 2016-MSRVF1 Repurchase Agreement and the Series 2020-SPIADVF1 Repurchase Agreement and to enter into Transactions thereunder, Guarantor hereby agrees with the Buyers, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms which are defined in the Series 2016-MSRVF1 Repurchase Agreement or in the Series 2020-SPIADVF1 Repurchase Agreement, as applicable, and used herein are so used as so defined.
(b) For purposes of this Guaranty, “Obligations” shall mean all obligations and liabilities of Seller to the Buyers, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or out of or in connection with the Series 2016-MSRVF1 Repurchase Agreement or the Series 2020-SPIADVF1 Repurchase Agreement and any other Program Agreements and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Buyers that are required to be paid by Seller pursuant to the terms of the Program Agreements and costs of enforcement of this Guaranty reasonably incurred) or otherwise.
2. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees to the Buyers the prompt and complete payment and performance by Seller when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.
(b) Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by the Buyers in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. This Guaranty shall remain in full force and effect until the latest of (i) the termination of the Series 2016-MSRVF1 Repurchase Agreement, (ii) the termination of the Series 2020-SPIADVF1 Repurchase Agreement and (iii) the Obligations are paid in full, notwithstanding that from time to time prior thereto Seller may be free from any Obligations.
(c) No payment or payments made by Seller or any other Person or received or collected by the Buyers from Seller or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder which shall, notwithstanding any such payment or payments, remain liable for the amount of the outstanding Obligations until the outstanding Obligations are paid in full.
(d) Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to the Buyers on account of Guarantor’s liability hereunder, Guarantor will notify the Buyers in writing that such payment is made under this Guaranty for such purpose.
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3. Right of Set-off. The Buyers are hereby irrevocably authorized at any time and from time to time without notice to Guarantor, any such notice being hereby waived by Guarantor, to set-off and appropriate and apply any and all monies and other property of Guarantor, deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyers of any Affiliate thereof to or for the credit or the account of Guarantor, or any part thereof in such amounts as the Buyers may elect, on account of the Obligations and liabilities of Guarantor hereunder and claims of every nature and description of the Buyers against Guarantor, in any currency, whether arising hereunder, under the Series 2016-MSRVF1 Repurchase Agreement, under the Series 2020-SPIADVF1 Repurchase Agreement or otherwise, as the Buyers may elect, whether or not the Buyers have made any demand for payment and although such Obligations and liabilities and claims may be contingent or unmatured. The Buyers shall notify Guarantor promptly of any such set-off and the application made by the Buyers, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Buyers under this paragraph are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Buyers may have.
4. Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by the Buyers, Guarantor shall not be entitled to be subrogated to any of the rights of the Buyers against Seller or any other guarantor or any collateral security or guarantee or right of offset held by the Buyers for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any contribution or reimbursement from Seller or any other guarantor in respect of payments made by Guarantor hereunder, until all amounts owing to the Buyers by Seller on account of the Obligations are paid in full and both the Series 2016-MSRVF1 Repurchase Agreement and the Series 2020-SPIADVF1 Repurchase Agreement are terminated. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amounts shall be held by Guarantor for the benefit of the Buyers, segregated from other funds of Guarantor, and shall, forthwith upon receipt by Guarantor, be turned over to the Buyers in the exact form received by Guarantor (duly indorsed by Guarantor to the Buyers, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Buyers may determine.
5. Amendments, etc. with Respect to the Obligations. Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by the Buyers may be rescinded by the Buyers, and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Buyers, and the Series 2016-MSRVF1 Repurchase Agreement, the Series 2020-SPIADVF1 Repurchase Agreement and the other Program Agreements and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, pursuant to its terms and as the Buyers may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Buyers for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Buyers shall have no obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guaranty or any property subject thereto. When making any demand hereunder against Guarantor, the Buyers may, but shall be under no obligation to, make a similar demand on Seller and any failure by the Buyers to make any such demand or to collect any payments from Seller or any release of Seller shall not relieve Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Buyers against Guarantor. For the purposes hereof “demand” shall include, but is not limited to, the commencement and continuance of any legal proceedings.
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6. Guaranty Absolute and Unconditional. (a) Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Buyers upon this Guaranty or acceptance of this Guaranty; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived in reliance upon this Guaranty; and all dealings between Seller or Guarantor, on the one hand, and the Buyers, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty. Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or the Guaranty with respect to the Obligations. This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity or enforceability of the Series 2016-MSRVF1 Repurchase Agreement, the Series 2020-SPIADVF1 Repurchase Agreement, the other Program Agreements, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Buyers, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against the Buyers, or (iii) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against Guarantor, the Buyers may, but shall be under no obligation to, pursue such rights and remedies that they may have against Seller or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Buyers to pursue such other rights or remedies or to collect any payments from Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Buyers against Guarantor. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and their successors and assigns thereof, and shall inure to the benefit of the Buyers, and successors, indorsees, transferees and assigns, until all the Obligations and the obligations of Guarantor under this Guaranty shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the Series 2016-MSRVF1 Repurchase Agreement or the Series 2020-SPIADVF1 Repurchase Agreement Seller may be free from any Obligations.
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(b) Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to the Buyers as follows:
(i) Guarantor hereby waives any defense arising by reason of, and any and all right to assert against the Buyers any claim or defense based upon, an election of remedies by the Buyers which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s (x) subrogation rights, (y) rights to proceed against Seller or any other guarantor for reimbursement or contribution, and/or (z) any other rights of Guarantor to proceed against Seller, against any other guarantor, or against any other person or security.
(ii) Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed of Seller’s financial condition, the status of other guarantors, if any, of all other circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than the Buyers for such information and will not rely upon the Buyers for any such information. Absent a written request for such information by Guarantor to the Buyers, Guarantor hereby waives its right, if any, to require the Buyers to disclose to Guarantor any information which the Buyers may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.
(iii) Guarantor has independently reviewed the Series 2016-MSRVF1 Repurchase Agreement, the Series 2020-SPIADVF1 Repurchase Agreement and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to the Buyers, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any Liens or security interests of any kind or nature granted by Seller or any other guarantor to the Buyers, now or at any time and from time to time in the future.
7. Reinstatement. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Buyers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Seller or any substantial part of its property, or otherwise, all as though such payments had not been made.
8. Payments. Guarantor hereby agrees that the Obligations will be paid to the Buyers without set-off or counterclaim in U.S. Dollars.
9. Event of Default. If an Event of Default under the Series 2016-MSRVF1 Repurchase Agreement or the Series 2020-SPIADVF1 Repurchase Agreement shall have occurred and be continuing, Guarantor agrees that, as between Guarantor and the Buyers, the Obligations may be declared to be due in accordance with the terms of the Series 2016-MSRVF1 Repurchase Agreement or the Series 2020-SPIADVF1 Repurchase Agreement, as applicable, for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any such declaration as against the Seller and that, in the event of any such declaration (or attempted declaration), such Obligations shall forthwith become due by Guarantor for purposes of this Guaranty.
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10. Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
11. Headings. The paragraph headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. The Buyers shall not by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Buyers, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Buyers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Buyers would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.
13. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and the Buyers, provided that any provision of this Guaranty may be waived by the Buyers in a letter or agreement executed by the Buyers or by facsimile or electronic transmission from the Buyers to the Guarantor. This Guaranty shall be binding upon the personal representatives, successors and assigns of Guarantor and shall inure to the benefit of the Buyers and its successors and assigns.
14. Notices. Notices delivered in connection with this Guaranty shall be given in accordance with Section 11.05 of the Series 2016-MSRVF1 Repurchase Agreement or Section 10.05 of the Series 2020-SPIADVF1 Repurchase Agreement, as applicable.
15. Governing Law; Jurisdiction; Waivers.
(a) THIS GUARANTY AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
| - 6- |
(b) THE GUARANTOR SUBMITS ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(c) THE GUARANTOR CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(d) THE GUARANTOR AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING, EXCEPT THAT WITH RESPECT TO THE INDENTURE TRUSTEE, CALCULATION AGENT, PAYING AGENT AND SECURITIES INTERMEDIARY, SERVICE OF PROCESS MAY ONLY BE MADE AS REQUIRED BY APPLICABLE LAW;
(e) THE GUARANTOR AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(f) THE GUARANTOR WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16. Integration. This Guaranty represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by the Buyers relative to the subject matter hereof not reflected herein. This Guaranty may be executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Guaranty by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Guaranty.
| - 7- |
17. Acknowledgments. Guarantor hereby acknowledges that:
(a) Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Program Agreements;
(b) the Buyers do not have any fiduciary relationship to Guarantor, Guarantor does not have any fiduciary relationship to the Buyers and the relationship between the Buyers and Guarantor is solely that of surety and creditor;
(c) no joint venture exists between the Buyers and Guarantor or among the Buyers, Seller and Guarantor;
(d) this Guaranty is “a security agreement or arrangement or other credit enhancement” that is “related to” and provided “in connection with” the PC Repurchase Agreement and each Transaction thereunder and is within the meaning of Sections 101(38A)(A) and 741(7)(A)(xi) of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et seq., as amended (the “Bankruptcy Code”) and is, therefore to the extent of damages in connection with the PC Repurchase Agreement, measured in accordance with Section 562 of the Bankruptcy Code (i) a “securities contract” as that term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code and (ii) a “master netting agreement” as that term is defined in Section 101(38A) of the Bankruptcy Code; and
(e) the Buyers’s right to cause the termination, liquidation or acceleration of, or to offset or net termination values, payment amounts or other transfer obligations arising under or in connection with the Series 2016-MSRVF1 Repurchase Agreement, the Series 2020-SPIADVF1 Repurchase Agreement and this Guaranty is in each case a contractual right to cause the termination, liquidation or acceleration of, or to offset or net termination values, payment amounts or other transfer obligations arising under or in connection with this Guaranty as described in Sections 362(b)(6), 362(b)(27), 555 and/or 561 of the Bankruptcy Code.
18. Electronic Signatures. This Guaranty may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on any signatory hereof to the same extent as if it were physically executed and each signatory hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including DocuSign.
19. Amendment and Restatement. CSFB and the Guarantor entered into the Original Guaranty. CSFB, the Buyers and the Guarantor desire to enter into this Guaranty in order to amend and restate the Original Guaranty in its entirety. The amendment and restatement of the Original Guaranty shall become effective on the date hereof, and each of CSFB, the Buyers and the Guarantor shall hereafter be bound by the terms and conditions of this Guaranty and the other Program Agreements. All references to the Original Guaranty in any Program Agreement or other document or instrument delivered in connection therewith shall be deemed to refer to this Guaranty and the provisions hereof.
[Signature page follows]
| - 8- |
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.
| PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC, as Guarantor | |||
| By: | /s/ Pamela Marsh | ||
| Name: Pamela Marsh | |||
| Title: Senior Managing Director, Treasurer | |||
[Signature Page to 2d A&R Guaranty (Syndicated MSRVF1 MRA and PIAVF1 MRA)]
| CONSENTED TO BY: | |||
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent | |||
| By: | /s/ Dominic Obaditch | ||
| Name: Dominic Obaditch | |||
| Title: Vice President | |||
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Buyer | |||
| By: | /s/ Dominic Obaditch | ||
| Name: Dominic Obaditch | |||
| Title: Authorized Signatory | |||
| By: | /s/ Margaret D. Dellafera | ||
|
Name: Margaret D. Dellafera | |||
|
Title: Authorized Signatory | |||
[Signature Page to 2d A&R Guaranty (Syndicated MSRVF1 MRA and PIAVF1 MRA)]
Exhibit 99.1
| Media | Investors | |
| Kristyn Clark | Kevin Chamberlain | |
| (805) 395-9943 | Isaac Garden | |
| (818) 224-7028 |
PennyMac Financial Services, Inc. Reports Second Quarter 2021 Results
Also Announces $1.0 Billion Increase in Stock Repurchase Program
Westlake Village, CA, August 5th, 2021 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $204.2 million for the second quarter of 2021, or $2.94 per share on a diluted basis, on revenue of $742.3 million. Book value per share increased to $54.49 from $51.78 at March 31, 2021.
PFSI’s Board of Directors declared a second quarter cash dividend of $0.20 per share, payable on August 26, 2021, to common stockholders of record as of August 16, 2021.
PFSI’s Board of Directors also approved an increase to its stock repurchase authorization from $1.0 billion to $2.0 billion of outstanding common stock.
Second Quarter 2021 Highlights
| · | Pretax income was $279.5 million, down 45 percent from the prior quarter and 42 percent from the second quarter of 2020 primarily due to lower net gains on loans held for sale at fair value across both Production and Servicing |
| o | Repurchased 2.6 million shares of PFSI’s common stock at a cost of $154.9 million; also repurchased an additional 2.5 million shares in July at a cost of $151.4 million |
| · | Production segment pretax income of $244.4 million, down 33 percent from the prior quarter and 55 percent from the second quarter of 2020 primarily as a result of lower industry margins |
| o | Consumer direct interest rate lock commitments (IRLCs) were a record $14.1 billion in unpaid principal balance (UPB), up 5 percent from the prior quarter and 58 percent from the second quarter of 2020 |
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| o | Broker direct IRLCs were $4.5 billion in UPB, down 21 percent from the prior quarter and up 10 percent from the second quarter of 2020 |
| o | Government correspondent IRLCs totaled $15.7 billion in UPB, down 8 percent from the prior quarter and up 21 percent from the second quarter of 2020 |
| o | Total loan acquisitions and originations were $61.3 billion in UPB, down 8 percent from the prior quarter and up 63 percent from the second quarter of 2020 |
| o | Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $30.5 billion in UPB, down 10 percent from the prior quarter and up 61 percent from the second quarter of 2020 |
| · | Servicing segment pretax income was $30.9 million, down from $141.7 million in the prior quarter and up from a pretax loss of $62.4 million in the second quarter of 2020 |
| o | Pretax income excluding valuation-related items was $174.4 million, down 33 percent from the prior quarter driven by decreased income from loss mitigation activity related to COVID-19 |
| o | Sold $3.4 billion in UPB of early buyout (EBO) loans to third party, whole loan investors |
| o | Valuation items included: |
| – | $250.6 million in MSR fair value losses driven by increased expectations for prepayment activity in the future from lower mortgage rates and a flatter yield curve combined with significant levels of prepayment activity and early buyouts, partially offset by $91.1 million in hedging and related fair value gains |
| – | Net impact on pretax income related to these items was $(159.5) million and on earnings per share was $(1.69) |
| – | $16.0 million of reversals related to provisions for losses on active loans |
| o | Servicing portfolio grew to $473.2 billion in UPB, up 5 percent from March 31, 2021 and 22 percent from June 30, 2020, driven by strong production volumes which offset elevated prepayment activity |
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| · | Investment Management segment pretax income was $4.1 million, up from $1.4 million in the prior quarter as a result of incentive fees earned and down from $4.7 million in the second quarter of 2020 |
| o | Net assets under management (AUM) were $2.3 billion, down slightly from March 31, 2021 and up 5 percent from June 30, 2020 |
“PennyMac Financial delivered another outstanding quarter of operational and financial performance, despite the increased volatility in the mortgage market,” said Chairman and CEO David Spector. “Our higher-margin consumer direct lending channel continued to expand, producing record locked and funded volumes during the quarter which we estimate has resulted in a significant increase in market share. Strong production volumes across all three channels continued to drive the growth of our servicing portfolio despite the elevated level of prepayments. Our balanced business model is a key strategic advantage for PFSI, which has consistently delivered outstanding returns across different environments, producing a 33 percent return on equity for the first half of 2021. We also remain very active repurchasing shares, driven by our medium-term expectations for PFSI’s return on equity. Over the last four months we have repurchased a total of 5.1 million shares at a cost of $306 million, and I am pleased to announce today a $1 billion increase in our share repurchase authorization.”
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The following table presents the contributions of PennyMac Financial’s segments to pretax income:
| Quarter ended June 30, 2021 | ||||||||||||||||||||
| Mortgage Banking | Investment |
|
| |||||||||||||||||
| Production | Servicing | Total | Management | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Net gains on loans held for sale at fair value | $ | 419,293 | $ | 163,355 | $ | 582,648 | $ | - | $ | 582,648 | ||||||||||
| Loan origination fees | 97,291 | - | 97,291 | - | 97,291 | |||||||||||||||
| Fulfillment fees from PMT | 54,020 | - | 54,020 | - | 54,020 | |||||||||||||||
| Net loan servicing fees | - | 14,871 | 14,871 | - | 14,871 | |||||||||||||||
| Management fees | - | - | - | 11,913 | 11,913 | |||||||||||||||
| Net interest expense: | ||||||||||||||||||||
| Interest income | 31,830 | 48,967 | 80,797 | - | 80,797 | |||||||||||||||
| Interest expense | 36,913 | 65,515 | 102,428 | 3 | 102,431 | |||||||||||||||
| (5,083 | ) | (16,548 | ) | (21,631 | ) | (3 | ) | (21,634 | ) | |||||||||||
| Other | 630 | 925 | 1,555 | 1,588 | 3,143 | |||||||||||||||
| Total net revenue | 566,151 | 162,603 | 728,754 | 13,498 | 742,252 | |||||||||||||||
| Expenses | 321,709 | 131,679 | 453,388 | 9,349 | 462,737 | |||||||||||||||
| Pretax income | $ | 244,442 | $ | 30,924 | $ | 275,366 | $ | 4,149 | $ | 279,515 | ||||||||||
Production Segment
The Production segment includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels, including the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis.
PennyMac Financial’s loan production activity for the quarter totaled $61.3 billion in UPB, $30.8 billion of which was for its own account, and $30.5 billion of which was fee-based fulfillment activity for PMT. Correspondent government and direct lending IRLCs totaled $34.3 billion in UPB, down 5 percent from the prior quarter and up 32 percent from the second quarter of 2020.
Production segment pretax income was $244.4 million, down 33 percent from the prior quarter and 55 percent from the second quarter of 2020 primarily as a result of lower industry margins. Production revenue totaled $566.2 million, down 16 percent from the prior quarter and 23 percent from the second quarter of 2020. The quarter-over-quarter decrease was primarily driven by a $96.7 million decrease in net gains on loans held for sale primarily as a result of lower production margins.
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The components of net gains on loans held for sale are detailed in the following table:
| Quarter ended | ||||||||||||
June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands) | ||||||||||||
| Receipt of MSRs and recognition of MSLs in loan sale transactions | $ | 425,941 | $ | 463,571 | $ | 225,534 | ||||||
| Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust | (11,548 | ) | (14,248 | ) | (5,662 | ) | ||||||
| Provision of liability for representations and warranties, net | (6,664 | ) | (6,368 | ) | (2,919 | ) | ||||||
| Cash gain (1) | 61,654 | 818,937 | 275,473 | |||||||||
| Fair value changes of pipeline, inventory and hedges | 113,265 | (507,551 | ) | 189,747 | ||||||||
| Net gains on mortgage loans held for sale | $ | 582,648 | $ | 754,341 | $ | 682,173 | ||||||
| Net gains on mortgage loans held for sale by segment: | ||||||||||||
| Production | $ | 419,293 | $ | 515,963 | $ | 619,728 | ||||||
| Servicing | $ | 163,355 | $ | 238,378 | $ | 62,445 | ||||||
(1) Net of cash hedging results
Loan origination fees for the quarter totaled $97.3 million, down 6 percent from the prior quarter and up 65 percent from the second quarter of 2020. The quarterly decrease was driven by lower overall volumes, while the year-over-year increase was driven by higher overall volumes.
PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business. These services include, but are not limited to, marketing, relationship management, correspondent seller approval and monitoring, loan file review, underwriting, pricing, hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.
5
Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $54.0 million in the second quarter, down 11 percent from the prior quarter and up 2 percent from the second quarter of 2020. The quarter-over-quarter decrease in fulfillment fee revenue was driven primarily by a decrease in acquisition volumes by PMT.
Net interest expense totaled $5.1 million, an improvement from net interest expense of $8.5 million in the prior quarter and down from net interest income of $6.6 million in the second quarter of 2020. Interest income in the second quarter totaled $31.8 million, up from $29.5 million in the prior quarter. Interest expense totaled $36.9 million, down from $38.1 million in the prior quarter.
Production segment expenses were $321.7 million, up 4 percent from the prior quarter as a result of record volumes in the consumer direct channel. Production segment expenses were up 61 percent from the second quarter of 2020 as a result of higher volumes across all channels.
Servicing Segment
The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $30.9 million, down from $141.7 million in the prior quarter and up from a pretax loss of $62.4 million in the second quarter of 2020. Servicing segment net revenues totaled $162.6 million, down 38 percent from the prior quarter and up 124 percent from the second quarter of 2020. The quarter-over-quarter decrease was primarily driven by a $75.0 million decrease in net gains on loans held for sale.
Revenue from net loan servicing fees totaled $14.9 million, down from $39.7 million in the prior quarter primarily driven by higher net valuation related declines. Revenue from net loan servicing fees included $260.0 million in servicing fees, reduced by $85.7 million from the realization of MSR cash flows. Net valuation-related losses totaled $159.5 million, and included MSR fair value losses of $250.6 million, and hedging gains of $91.1 million.
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The following table presents a breakdown of net loan servicing fees:
| Quarter ended | ||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands) | ||||||||||||
| Loan servicing fees (1) | $ | 260,021 | $ | 259,445 | $ | 243,254 | ||||||
| Changes in fair value of MSRs and MSLs resulting from: | ||||||||||||
| Realization of cash flows | (85,671 | ) | (82,663 | ) | (97,435 | ) | ||||||
| Change in fair value inputs | (250,597 | ) | 306,126 | (108,354 | ) | |||||||
| Change in fair value of excess servicing spread financing | - | (1,037 | ) | 636 | ||||||||
| Hedging gains (losses) | 91,118 | (442,151 | ) | (15,764 | ) | |||||||
| Net change in fair value of MSRs and MSLs | (245,150 | ) | (219,725 | ) | (220,917 | ) | ||||||
| Net loan servicing fees | $ | 14,871 | $ | 39,720 | $ | 22,337 | ||||||
(1) Includes contractually-specified servicing fees
Servicing segment revenue included $163.4 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans, down from $238.4 million in the prior quarter and $62.4 million in the second quarter of 2020 as a result of lower gains recognized from EBO-related activities. These previously delinquent loans were purchased out of Ginnie Mae securitizations and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily through loan modifications or FHA Partial Claims. With respect to the FHA Partial Claims, the reperforming loans must remain current for a minimum of six months to be eligible for resecuritization. Net interest expense totaled $16.5 million, versus net interest expense of $17.1 million in the prior quarter and $12.4 million in the second quarter of 2020. Interest income was $49.0 million, down from $52.6 million in the prior quarter driven by declines in earnings on custodial balances. Interest expense was $65.5 million, down from $69.6 million in the prior quarter driven by a decrease in balances of financing for loans previously purchased out of Ginnie Mae securitizations.
Servicing segment expenses totaled $131.7 million, up 9 percent from the prior quarter primarily driven by an increase in losses and provisions for defaulted and active loans.
The total servicing portfolio grew to $473.2 billion in UPB at June 30, 2021, an increase of 5 percent from March 31, 2021 and 22 percent from June 30, 2020. PennyMac Financial subservices and conducts special servicing for $204.2 billion in UPB, an increase of 8 percent from March 31, 2021 and 38 percent from June 30, 2020. PennyMac Financial’s owned MSR portfolio grew to $269.0 billion in UPB, an increase of 3 percent from March 31, 2021 and 12 percent from June 30, 2020.
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The table below details PennyMac Financial’s servicing portfolio UPB:
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands) | ||||||||||||
| Prime servicing: | ||||||||||||
| Owned | ||||||||||||
| Mortgage servicing rights | ||||||||||||
| Originated | $ | 221,492,618 | $ | 208,189,112 | $ | 180,277,670 | ||||||
| Acquisitions | 30,982,782 | 36,178,818 | 53,530,059 | |||||||||
| 252,475,400 | 244,367,930 | 233,807,729 | ||||||||||
| Mortgage servicing liabilities | 6,135,249 | 3,173,793 | 2,130,520 | |||||||||
| Loans held for sale | 10,438,935 | 12,959,016 | 4,672,171 | |||||||||
| 269,049,584 | 260,500,739 | 240,610,420 | ||||||||||
| Subserviced for PMT | 204,132,766 | 188,279,019 | 147,612,389 | |||||||||
| Total prime servicing | 473,182,350 | 448,779,758 | 388,222,809 | |||||||||
| Special servicing - subserviced for PMT | 41,696 | 45,143 | 83,066 | |||||||||
| Total loans serviced | $ | 473,224,046 | $ | 448,824,901 | $ | 388,305,875 | ||||||
| Loans serviced: | ||||||||||||
| Owned | ||||||||||||
| Mortgage servicing rights | $ | 252,475,400 | $ | 244,367,930 | $ | 233,807,729 | ||||||
| Mortgage servicing liabilities | 6,135,249 | 3,173,793 | 2,130,520 | |||||||||
| Loans held for sale | 10,438,935 | 12,959,016 | 4,672,171 | |||||||||
| 269,049,584 | 260,500,739 | 240,610,420 | ||||||||||
| Subserviced | 204,174,462 | 188,324,162 | 147,695,455 | |||||||||
| Total loans serviced | $ | 473,224,046 | $ | 448,824,901 | $ | 388,305,875 | ||||||
Investment Management Segment
PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.3 billion as of June 30, 2021, down slightly from March 31, 2021.
Pretax income for the Investment Management segment was $4.1 million, up from $1.4 million in the prior quarter and down from $4.7 million in the second quarter of 2020. Management fees, which include base management and performance incentive fees from PMT were $11.9 million, up from $8.4 million in the prior quarter and $8.3 million in the second quarter of 2020. Base management fees were $8.6 million, up from $8.4 million in the prior quarter and $8.3 million in the second quarter of 2020. Performance-based incentive fees were $3.3 million in the second quarter as a result of PMT’s strong performance over the last four quarters. Performance-based incentive fees were not earned in the prior quarter or in the second quarter of 2020.
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The following table presents a breakdown of management fees:
| Quarter ended | ||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands) | ||||||||||||
| Management fees: | ||||||||||||
| PennyMac Mortgage Investment Trust | ||||||||||||
| Base | $ | 8,648 | $ | 8,449 | $ | 8,288 | ||||||
| Performance incentive | 3,265 | - | - | |||||||||
| Total management fees | $ | 11,913 | $ | 8,449 | $ | 8,288 | ||||||
| Net assets of PennyMac Mortgage Investment Trust | $ | 2,343,390 | $ | 2,357,143 | $ | 2,235,277 | ||||||
Investment Management segment expenses totaled $9.3 million, up 14 percent from the prior quarter and 61 percent from the second quarter of 2020.
Consolidated Expenses
Total expenses were $462.7 million, up 5 percent from the prior quarter and 36 percent from the second quarter of 2020. The quarter-over-quarter increase was driven by record volumes in the consumer direct lending channel and the increase in losses and provisions for defaulted and active loans mentioned above.
***
Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Time) on Thursday, August 5, 2021.
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About PennyMac Financial Services, Inc.
PennyMac Financial Services, Inc. is a specialty financial services firm focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market.
Founded in 2008, the company is recognized as a leader in the U.S. residential mortgage industry and employs approximately 7,300 people across the country. For the twelve months ended June 30, 2021, PennyMac Financial’s production of newly originated loans totaled $252 billion in unpaid principal balance, making it the second largest mortgage lender in the nation. As of June 30, 2021, PennyMac Financial serviced loans totaling $473 billion in unpaid principal balance, making it a top ten mortgage servicer in the nation.
Additional information about PennyMac Financial Services, Inc. is available at ir.pennymacfinancial.com.
10
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “project,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics such as COVID-19; failure to modify, resell or refinance early buyout loans; the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; elimination of the FHFA’s adverse market refinance fee; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; our substantial amount of indebtedness; expected discontinuation of LIBOR; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; maintaining sufficient capital and liquidity to support business growth including compliance with financial covenants; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation or expansion of new business activities or strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our ability to pay dividends to our stockholders; and our organizational structure and certain requirements in our charter documents. You should not place undue reliance on any forward- looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.
The Company’s earnings materials contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation-related items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business. Non-GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.
11
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands, except share amounts) | ||||||||||||
| ASSETS | ||||||||||||
| Cash | $ | 324,158 | $ | 441,870 | $ | 910,257 | ||||||
| Short-term investments at fair value | 3,720 | 24,850 | 7,746 | |||||||||
| Loans held for sale at fair value | 10,884,506 | 13,385,789 | 4,918,253 | |||||||||
| Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell pledged to creditors | - | - | 90,101 | |||||||||
| Derivative assets | 371,269 | 530,852 | 400,302 | |||||||||
| Servicing advances, net | 519,028 | 550,150 | 282,285 | |||||||||
| Mortgage servicing rights | 3,412,648 | 3,268,910 | 2,213,539 | |||||||||
| Operating lease right-of-use assets | 75,829 | 74,795 | 73,571 | |||||||||
| Investment in PennyMac Mortgage Investment Trust at fair value | 1,580 | 1,470 | 1,310 | |||||||||
| Receivable from PennyMac Mortgage Investment Trust | 61,883 | 68,644 | 44,329 | |||||||||
| Loans eligible for repurchase | 7,613,244 | 12,312,393 | 13,762,157 | |||||||||
| Other | 612,273 | 638,257 | 522,625 | |||||||||
| Total assets | $ | 23,880,138 | $ | 31,297,980 | $ | 23,226,475 | ||||||
| LIABILITIES | ||||||||||||
| Assets sold under agreements to repurchase | $ | 8,254,543 | $ | 10,848,477 | $ | 3,759,315 | ||||||
| Mortgage loan participation and sale agreements | 512,253 | 518,747 | 536,395 | |||||||||
| Obligations under capital lease | 7,677 | 10,468 | 16,749 | |||||||||
| Notes payable secured by mortgage servicing assets | 1,296,731 | 1,296,285 | 1,294,949 | |||||||||
| Unsecured senior notes | 1,288,769 | 1,288,198 | - | |||||||||
| Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value | - | - | 151,206 | |||||||||
| Derivative liabilities | 43,910 | 68,557 | 21,154 | |||||||||
| Mortgage servicing liabilities at fair value | 100,091 | 46,026 | 29,858 | |||||||||
| Operating lease liabilities | 96,463 | 96,069 | 93,605 | |||||||||
| Accounts payable and accrued expenses | 369,766 | 355,429 | 216,399 | |||||||||
| Payable to PennyMac Mortgage Investment Trust | 136,660 | 164,469 | 56,558 | |||||||||
| Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 31,815 | 35,165 | 46,158 | |||||||||
| Income taxes payable | 570,052 | 751,855 | 736,870 | |||||||||
| Liability for loans eligible for repurchase | 7,613,244 | 12,312,393 | 13,762,157 | |||||||||
| Liability for losses under representations and warranties | 44,335 | 38,428 | 25,909 | |||||||||
| Total liabilities | 20,366,309 | 27,830,566 | 20,747,282 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock¾authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 64,483,965, 66,961,401, and 72,358,167 shares, respectively | 6 | 7 | 7 | |||||||||
| Additional paid-in capital | 618,337 | 762,585 | 1,113,412 | |||||||||
| Retained earnings | 2,895,486 | 2,704,822 | 1,365,774 | |||||||||
| Total stockholders' equity | 3,513,829 | 3,467,414 | 2,479,193 | |||||||||
| Total liabilities and stockholders’ equity | $ | 23,880,138 | $ | 31,297,980 | $ | 23,226,475 | ||||||
12
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Quarter ended | ||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||
| (in thousands, except earnings per share) | ||||||||||||
| Revenue | ||||||||||||
| Net gains on loans held for sale at fair value | $ | 582,648 | $ | 754,341 | $ | 682,173 | ||||||
| Loan origination fees | 97,291 | 104,037 | 58,948 | |||||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 54,020 | 60,835 | 52,815 | |||||||||
| Net loan servicing fees: | ||||||||||||
| Loan servicing fees | 260,021 | 259,445 | 243,254 | |||||||||
| Change in fair value of mortgage servicing rights, mortgage servicing liabilities and excess servicing spread financing | (336,268 | ) | 222,426 | (205,153 | ) | |||||||
| Hedging results | 91,118 | (442,151 | ) | (15,764 | ) | |||||||
| Net loan servicing fees | 14,871 | 39,720 | 22,337 | |||||||||
| Net interest expense: | ||||||||||||
| Interest income | 80,797 | 82,081 | 47,318 | |||||||||
| Interest expense | 102,431 | 107,713 | 53,207 | |||||||||
| (21,634 | ) | (25,632 | ) | (5,889 | ) | |||||||
| Management fees from PennyMac Mortgage Investment Trust | 11,913 | 8,449 | 8,288 | |||||||||
| Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust | 144 | 401 | 543 | |||||||||
| Results of real estate acquired in settlement of loans | 540 | 780 | 296 | |||||||||
| Other | 2,459 | 1,755 | 2,123 | |||||||||
| Total net revenue | 742,252 | 944,686 | 821,634 | |||||||||
| Expenses | ||||||||||||
| Compensation | 265,067 | 258,829 | 179,886 | |||||||||
| Loan origination | 75,675 | 87,392 | 50,921 | |||||||||
| Technology | 34,236 | 33,672 | 21,905 | |||||||||
| Servicing | 31,290 | 19,183 | 56,503 | |||||||||
| Professional services | 24,834 | 13,286 | 12,500 | |||||||||
| Occupancy and equipment | 9,029 | 9,038 | 8,293 | |||||||||
| Other | 22,606 | 17,278 | 11,264 | |||||||||
| Total expenses | 462,737 | 438,678 | 341,272 | |||||||||
| Income before provision for income taxes | 279,515 | 506,008 | 480,362 | |||||||||
| Provision for income taxes | 75,286 | 129,140 | 127,685 | |||||||||
| Net income | $ | 204,229 | $ | 376,868 | $ | 352,677 | ||||||
| Earnings per share | ||||||||||||
| Basic | $ | 3.10 | $ | 5.45 | $ | 4.53 | ||||||
| Diluted | $ | 2.94 | $ | 5.15 | $ | 4.39 | ||||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 65,890 | 69,113 | 77,790 | |||||||||
| Diluted | 69,399 | 73,117 | 80,424 | |||||||||
| Dividend declared per share | $ | 0.20 | $ | 0.20 | $ | 0.12 | ||||||
13
Exhibit 99.2
PENNYMAC FINANCIAL SERVICES, INC. 2Q21 EARNINGS REPORT August 2021
2 This presentation contains forward - looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and inves tme nt strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “project,” “plan,” and other expressions or words of simi lar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward - looking statements. Actual results and operations for any future pe riod may vary materially from those projected herein and from past results discussed herein. These forward - looking statements include, but are not limited to, statements regarding the future impact of th e COVID - 19 pandemic on our business; future loan origination, servicing and production; future loan delinquencies, forbearances and servicing advances; future early buyout activity; elimination of the FHF A’s adverse market refinance fee and other business and financial expectations. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are n ot limited to: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man - made or natural disasters, climate change and pandemics such as COVID - 19; failure to modify, res ell or refinance early buyout loans; the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions tha t may result from any noncompliance with the laws and regulations applicable to our businesses; elimination of the FHFA’s adverse market refinance fee; the mortgage lending and servicing - related regulations p romulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government - sponsored entities and changes in their current roles or their guarantees o r guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our ba nk competitors are not subject; foreclosure delays and changes in foreclosure practices; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production vol ume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevaili ng interest rates; our substantial amount of indebtedness; expected discontinuation of LIBOR; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; maintaining sufficient capital and liquidity to support business growth including compliance with financial covenan ts; our obligation to indemnify third - party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under oth er circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our cli ent s, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment o ppo rtunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiat ion or expansion of new business activities or strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our ability to pay dividends to our stockholders; an d our organizational structure and certain requirements in our charter documents. You should not place undue reliance on any forward - looking statement and should consider all of the uncertainties and risks desc ribed above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no oblig ati on to publicly update or revise any forward - looking statements or any other information contained herein, and the statements made in this presentation are current as of the date of this presentat ion only. This presentation contains financial information calculated other than in accordance with U.S. generally accepted accounting princ ipl es (“GAAP”), such as pretax income excluding valuation - related items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate an d m anage the business. Non - GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP. FORWARD - LOOKING STATEMENTS
3 • Net income was $ 204.2 million, or diluted earnings per share (EPS) of $ 2.94 ; annualized return on average common stockholders’ equity of 23% – Earnings reflect continued strong production and core servicing results partially offset by net MSR fair value declines – Repurchased 2.6 million shares of PFSI’s common stock at a cost of $154.9 million; also repurchased an additional 2.5 million shares in July at a cost of $151.4 million – PFSI’s Board of Directors approved an increase to its stock repurchase authorization from $1.0 billion to $2.0 billion of outstandin g c ommon stock – B ook value per share increased 5 % to $54.49 from $51.78 at March 31, 2021 – PFSI’s Board of Directors declared a second quarter cash dividend of $0.20 per share, payable on August 26, 2021, to common stockholders of record as of August 16, 2021 • Production segment pretax income of $ 244.4 million, down 33% from 1Q21 and 55% from 2Q20 primarily as a result of lower industry margins – Consumer direct lock volume was a record $14.1 billion in unpaid principal balance (UPB), up 5% from 1Q21 and up 58% from 2Q20 – Broker direct lock volume was $4.5 billion in UPB, down 21% from 1Q21 and up 10 % from 2Q20 – Government correspondent lock volume was $15.7 billion in UPB, down 8% from 1Q21 and up 21 % from 2Q20 – Total loan acquisitions and originations were $61.3 billion in UPB, down 8 % from 1Q21 and up 63 % from 2Q20 – Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $30.5 bill ion in UPB, down 10 % from 1Q21 and up 61 % from 2Q20 SECOND QUARTER HIGHLIGHTS
4 • Servicing segment pretax income was $30.9 million, down from $141.7 million in 1Q21 and up from a pretax loss of $62.4 million in 2Q20 – Pretax income excluding valuation - related items was $174.4 million (1) , down 33% from 1Q21 driven by decreased income from loss mitigation activity related to COVID - 19 – Sold $3.4 billion in UPB of early buyout (EBO) loans to third - party, whole loan investors – $250.6 million in MSR fair value losses primarily driven by increased expectations for prepayment activity in the future from lo wer mortgage rates and a flatter yield curve combined with significant levels of prepayment activity and early buyouts, partially offset by $91.1 mill ion in hedging gains o Net impact on pretax income was $(159.5) million and on EPS was $(1.69) – Servicing portfolio grew to $ 473.2 billion in UPB, up 5% from March 31, 2021 and 22% from June 30, 2020, driven by strong production volumes which offset elevated prepayment activity • Investment Management segment pretax income was $4.1 million, up from $1.4 million in 1Q21 as a result of incentive fees earned and down from $4.7 million in 2Q20 – Net assets under management (AUM) were $ 2.3 billion , down slightly from March 31, 2021, and up 5% from June 30, 2020 SECOND QUARTER HIGHLIGHTS (CONTINUED) (1) Excludes $250.6 million in MSR fair value losses, $91.1 million in hedging gains and a $16.0 million reversal related to provisions for losses on active loans. See slide 13 for additional details.
5 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Average 30-year fixed rate mortgage Primary/secondary spread ORIGINATION MARKET REMAINS HISTORICALLY STRONG • Economic forecasts for 2021 total originations range from $3.6 to $4.2 trillion driven by the continuation of low mortgage rates ‒ Purchase originations are expected to total $1.7 and $1.9 trillion in 2021 and 2022, respectively , higher than 2020 levels • Economic forecasts for 2022 total originations average $ 2.7 trillion, a strong market by historical standards, supported by a strong purchase market • FHFA’s elimination of the Adverse Market Refinance Fee is expected to increase the population of loans currently eligible for re finance (1) Actual originations: Inside Mortgage Finance. Total originations forecast: Average of Mortgage Bankers Association (7/21/21), Fannie Mae (7/12/21), and Freddie Mac (7/15/21) forecasts. (2) Freddie Mac Primary Mortgage Market Survey. 2.80% as of 7/29/21 (3) Bloomberg: Difference between Freddie Mac Primary Mortgage Market Survey and the 30 - Year Fannie Mae or Freddie Mac Par Coupon ( MTGEFNCL) Index ($ in trillions) (2) (3) U.S. Mortgage Origination Market (1) Mortgage Rates Remain Historically Low $1.3 $1.5 $1.7 $1.9 $1.1 $2.6 $2.2 $0.9 $2.3 $4.1 $3.9 $2.7 2019 2020 2021E 2022E Purchase Refinance
6 DIRECT LENDING AND SERVICING ARE DRIVING PFSI’S PROFITABILITY ($ in millions) ($ in millions) (1) Valuation - related changes include MSR fair value changes before recognition of realization of cash flows, related hedging and o ther gains (losses), and provision for losses on active loans considered in the assessment of MSR fair value changes – see slide 13. (2) See slide 20 (1) • Our consumer direct lending channel remains a significant contributor to PFSI’s sustained profitability despite margins that have declined from record levels • Servicing income reflects growing portfolio, economies of scale and loss mitigation activities Production Pretax Income Servicing Pretax Income For the remainder of 2021, we expect PFSI’s return on equity to remain near our pre - COVID historical returns (2) ($62) $142 $31 $87 $258 $174 2Q20 1Q21 2Q21 Pretax income Pretax income excluding valuation-related changes $538 $363 $244 2Q20 1Q21 2Q21 Estimated contribution from direct lending (CDL & BDL)
7 0.3% 1.1% 2.2% 2.5% 2017 2018 2019 2020 1H21 N/A 2.3% 2.8% 3.4% 3.7% 4.0% 12/31/17 12/31/18 12/31/19 12/31/20 6/30/21 PENNYMAC CONTINUES TO DRIVE TOWARDS ITS MEDIUM - TERM GOALS Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT (1) Historical market share estimates based on Inside Mortgage Finance. Inside Mortgage Finance estimates $2.585 trillion in tota l o rigination volume for 1H21. For 1H21, we estimate the correspondent channel represented 21% of the overall origination market, retail represented 65% and broker represented 14%. Loan servicing market share is based on PFSI’s servicing portfolio UPB of $ 473.1 billion divided by an estimated $ 11.7 trillion in mortgage debt outstanding as of March 31, 2021. Correspondent Market Share (1) Loan Servicing Market Share (1) Consumer Direct Market Share (1) Broker Direct Market Share (1) 10.5% 11.8% 14.9% 17.7% 18.0% 2017 2018 2019 2020 1H21 0.5% 0.5% 0.7% 0.9% 1.3% 2017 2018 2019 2020 1H21
8 $11.0 $17.4 $16.2 $18.9 $33.8 $30.5 $29.9 $51.2 $46.7 $37.7 $51.1 $46.0 2Q20 1Q21 2Q21 Government loans Conventional loans for PMT Total locks PRODUCTION SEGMENT HIGHLIGHTS – VOLUME BY CHANNEL (1) (2) (3) Note: Figures may not sum due to rounding ( 1 ) For government - insured loans, PFSI earns income from holding and selling or securitizing the loans (2) For conventional and jumbo loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securi tiz ing the loans ( 3) Includes locks related to PMT loan acquisitions, including conventional loans for which PFSI earns a fulfillment fee upon loa n funding (4) Commitments to originate mortgage loans at specified terms at period end Correspondent Consumer Direct Broker Direct (UPB in billions) (UPB in billions) (UPB in billions) July 2021 July 2021 July 2021 $2.6 $6.0 $5.7 $2.5 $4.6 $5.0 $5.1 $10.7 $10.7 $8.9 $13.4 $14.1 2Q20 1Q21 2Q21 Government loans Conventional loans Total locks $0.5 $1.2 $0.7 $2.1 $4.0 $3.2 $2.6 $5.1 $4.0 $4.1 $5.7 $4.5 2Q20 1Q21 2Q21 Government loans Conventional loans Total locks Locks: (UPB in billions) $12.8 Locks: (UPB in billions) $5.5 Locks: (UPB in billions) $1.7 Acquisitions: (UPB in billions) $15.0 Originations: (UPB in billions) $3.5 Originations: (UPB in billions) $1.2 Committed pipeline (4) : (UPB in billions) $7.2 Committed pipeline (4) : (UPB in billions) $1.9
9 PRODUCTION SEGMENT HIGHLIGHTS – BUSINESS TRENDS BY CHANNEL • PennyMac remains the largest correspondent aggregator in the U.S. • Drives servicing portfolio growth while generating additional leads for consumer direct • Profitability driven by low cost structure and operational excellence • Role of well - capitalized correspondent aggregators will be increasingly important in a changing regulatory environment • Continued to originate and lock record volumes of loans, driven by the application of data analytics and growth in the servicing portfolio ‒ Purchase lock volume in 2Q21 was a record $744 million, up from $514 million in 1Q21 and $505 million in 2Q20 ‒ New Customer Acquisition interest rate lock commitments in 2Q21 totaled $1.5 billion, essentially unchanged from the prior quarter and up from $274 million in 2 Q20 • Second quarter margins remained attractive • Decrease in funding volumes from the prior quarter driven by intense levels of competition among channel leaders • Approved brokers totaled 2,045 at June 30, 2021, up 11% from March 31, 2021 ‒ Approximately 14,000 brokers and non - delegated sellers active in the market • Margins decreased more sharply than other channels in the second quarter consistent with elevated levels of competition CORRESPONDENT CONSUMER DIRECT BROKER DIRECT Omni - channel approach provides flexibility and has proven to be a competitive advantage, supporting profitability and pricing discipline while driving growth of the servicing portfolio
10 DRIVERS OF PRODUCTION SEGMENT PROFITABILITY (1) Expected revenue net of direct origination costs at time of lock (2) Reflects hedging, pricing and execution changes, timing of revenue recognition, and other items (3) Costs are fully allocated Production expenses net of Loan origination expense • Direct lending channels (consumer and broker direct) have outsized impact on Production earnings – represented 23% of fallout ad justed lock volume in 2Q21, but approximately 70% of segment pretax income • Production revenue margins across all channels declined – revenue per fallout adjusted lock for PFSI’s own account was 154 basis points in 2Q21, down from 176 basis points in 1Q21; impact on profitability mitigated by the larger proportion of loans originated in the consumer direct channel • Costs (3 ) vary by channel – range from approximately 15 basis points in correspondent to 150 basis points in consumer direct; as the mix shift towards direct lending continues, production expenses as a percentage of fallout adjusted locks are expected to trend higher 2Q20 1Q21 2 Q21 Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps) (1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Government Correspondent 11,757$ 163 191.6$ 28% 16,073$ 37 60.1$ 10% 15,022$ 30 45.1$ 9% Consumer Direct 5,637 575 324.1 47% 9,362 477 446.3 76% 9,713 343 333.1 68% Broker Direct 3,073 304 93.4 14% 4,413 140 61.6 11% 3,560 71 25.4 5% Other (2) n/a n/a 25.5 4% n/a n/a (43.4) -7% n/a n/a 32.8 7% Total PFSI account revenues (net of Loan origination expense) 20,467$ 310 634.7$ 92% 29,849$ 176 524.7$ 90% 28,296$ 154 436.5$ 89% PMT Conventional Correspondent 22,324 24 52.8 8% 31,626 19 60.8 10% 29,279 18 54.0 11% Total Production revenues (net of Loan origination expense) 161 687.5$ 100% 95 585.5$ 100% 85 490.5$ 100% Production expenses (less Loan origination expense) 35 149.4$ 22% 36 222.6$ 38% 43 246.0$ 50% Production segment pretax income 126 538.1$ 78% 59 362.9$ 62% 42 244.4$ 50% 57,575$ 61,475$ 42,790$
11 1Q21 2Q21 Loans serviced (in thousands) 1,998 2,058 60+ day delinquency rate - owned portfolio (1) 8.6% 6.7% 60+ day delinquency rate - sub-serviced portfolio (2) 2.1% 1.6% Actual CPR - owned portfolio (1) 32.6% 28.3% Actual CPR - sub-serviced (2) 35.1% 24.7% UPB of completed modifications ($ in millions) (3) $5,464 $5,487 EBO loan volume ($ in millions) (4) $4,159 $6,776 Selected Operational Metrics $448.8 $473.2 ($36.9) $61.3 At 3/31/21 Runoff Additions from loan production At 6/30/21 (1) CPR = Conditional Prepayment Rate. Owned portfolio is predominantly government - insured and guaranteed loans under the FHA (49%), VA (29%), and USDA (12%) programs. Delinquency data b ased on loan count (i.e., not UPB). (2) Represents PMT’s MSRs. Excludes distressed loan investments (3) UPB of completed modifications includes loss mitigation efforts associated with partial claims programs (4) Early buyouts of delinquent loans from Ginnie Mae pools during the period (5) Also includes loans servicing released in connection with any asset sales by PMT (6) Includes consumer direct production, government correspondent acquisitions, and conventional conforming and jumbo loan acquis it ions subserviced for PMT SERVICING SEGMENT HIGHLIGHTS • Servicing portfolio totaled $473.2 billion in UPB at June 30, 2021, up 5 % Q/Q and 22% Y/Y • Strong production volumes led to continued portfolio growth despite elevated prepayment activity • Decrease in delinquency rates as borrowers continue to emerge from forbearance plans with the successful implementation of loss mitigation activities • Increase in EBO loan volume as a result of additional partner relationships – see slide 12 (5) (6) Loan Servicing Portfolio Composition Net Portfolio Growth (UPB in billions) (UPB in billions) $388.3 $448.8 $473.2 6/30/20 3/31/21 6/30/21 Prime owned Prime subserviced and other
12 ENHANCEMENTS • Buyout volume increased to $6.8 billion in UPB in 2Q21 versus $4.2 billion in 1Q21 • The UPB of government - insured EBOs serviced for third - party investors totaled $6.1 billion at June 30, up from $3.2 billion at March 31, 2021 • Provides meaningful savings over the life of the loans and the opportunity for redelivery in the future • Lower capital utilization and margin call risk compared to holding EBOs in inventory • Removes the obligation to remit advances of scheduled principal and interest to Ginnie Mae for delinquent government - insured loans • PennyMac retains the servicing rights with an option to repurchase the loans in the event they become eligible for redelivery into Ginnie Mae securities • PFSI has had a program in place for several years to buy delinquent Ginnie Mae loans out of securitizations and simultaneously sell them to third - party EBO loan investors • PFSI increased the volumes of EBO sales to existing and new partners in the second quarter IMPACT BENEFITS DETAILS AND BENEFITS OF PFSI’S SALE OF DELINQUENT GOVERNMENT - INSURED LOANS
13 (1) Of average portfolio UPB, annualized (2 ) Comprised of net gains on mortgage loans held for sale at fair value and net interest income related to EBO loans (3) Consists of interest shortfall and recording and release fees (4) Changes in fair value do not include realization of MSR cash flows, which are included in a mortization and realization of MSR cash flows above (5) Includes fair value changes and provision for impairment (6) Considered in the assessment of MSR fair value changes SERVICING PROFITABILITY EXCLUDING VALUATION - RELATED CHANGES • EBO loan related revenue decreased $76 million driven by lower gains recognized from EBO - related activities • Operating revenue decreased $2.0 million Q/Q primarily driven by declines in earnings on custodial balances; operating expens es also decreased slightly as the prior quarter included seasonal accruals of compensation - related expenses • Payoff - related expense from prepayments remains elevated but decreased slightly Q/Q • Valuation - related changes include $16 million of reversals related to provisions for losses on active loans $ in millions basis points (1) $ in millions basis points (1) $ in millions basis points (1) Operating revenue 257.2$ 26.6 266.7$ 24.4 264.7$ 22.9 Realization of MSR cash flows (97.4) (10.1) (82.7) (7.6) (85.7) (7.4) EBO loan-related revenue (2) 75.9 7.9 283.7 25.9 208.0 18.0 Servicing expenses: Operating expenses (85.9) (8.9) (109.5) (10.0) (107.9) (9.3) Payoff-related expense (3) (25.1) (2.6) (43.7) (4.0) (42.9) (3.7) Losses and provisions for defaulted loans (12.3) (1.3) (9.4) (0.9) (16.5) (1.4) EBO loan transaction-related expense (6.2) (0.6) (8.0) (0.7) (10.3) (0.9) Financing expenses: Interest on ESS (2.4) (0.2) (1.3) (0.1) - 0.0 Interest to third parties (16.8) (1.7) (37.4) (3.4) (35.1) (3.0) Pretax income excluding valuation-related changes 86.9$ 9.0 258.4$ 23.6 174.4$ 15.1 Valuation-related changes (4) MSR fair value (5) (108.4) 306.1 (250.6) ESS liability fair value 0.6 (1.0) - Hedging derivatives gains (losses) (15.8) (442.2) 91.1 Provision for losses on active loans (6) (25.8) 20.4 16.0 Servicing segment pretax income (62.4)$ 141.7$ 30.9$ Average servicing portfolio UPB 386,456$ 437,826$ 461,499$ 2Q211Q212Q20
14 ($108.4) $306.1 ($250.6) ($15.1) ($443.2) $91.1 $538.0 $362.9 $244.4 2Q20 1Q21 2Q21 MSR fair value change before recognition of realization of cash flows Hedging and related gains (declines) Production pretax income HEDGING APPROACH CONTINUES TO MODERATE THE VOLATILITY OF PFSI’S RESULTS • PFSI seeks to moderate the impact of interest rate changes on the fair value of its MSR asset through a comprehensive hedge strategy that also considers production - related income • In 2Q21, MSR fair value decreased $251 million – $196 million in fair value losses as a result of higher expectations for prepayment activity in the future driven by lower mortgage rates and a flatter yield curve – $55 million in other valuation declines, primarily driven by significant levels of prepayment activity and early buyouts • MSR fair value losses partially offset by hedging and related gains of $91 million MSR Valuation Changes and Offsets ($ in millions)
15 Beginning period forbearance TRENDS IN DELINQUENCIES, FORBEARANCE AND LOSS MITIGATION • In PFSI’s predominately government MSR portfolio, approximately 249,000 borrowers have been enrolled in a forbearance plan related to COVID - 19 since the enactment of the CARES Act – Through June 30, approximately 185,000 borrowers have exited or are in the process of exiting their forbearance plan including those borrowers that have paid - in - full • Servicing advances outstanding decreased to approximately $424 million at June 30, 2021 from $437 million at March 31, 2021 – Advances are expected to increase over the next few quarters as many property tax payments become due toward the end of the calendar year – No P&I advances are outstanding, as prepayment activity continues to sufficiently cover remittance obligations • Of the 0.8% reduction in forbearance related to re - performance – 0.3% were forbearances that remained current or went delinquent and subsequently became current – 0.5% were FHA Partial Claims or completed modifications • Elevated EBO activity is expected to continue in 2021 Note: Figures may not sum due to rounding (1) Owned MSR portfolio. Delinquency and forbearance data based on loan count (i.e. not UPB). As of 6/30/21, 30+ day delinquency units amounted to 115,860, forbearance units amounted to 63,829, total portfolio units were 1,294,030, and portfolio UPB was $270 billion. (2) Forbearance outcomes based on loan count as a percentage of beginning period loans in forbearance. 30+ Day Delinquency Rate and Forbearance Trend (1) Forbearance Outcomes (2) Ending period forbearance 4.9% 6.3% 0.8% 0.9% 0.2% 0.0% 4.4% 0.6% 3/31/21 Re- performing Active Loss Mitigation Paid- in-full 30+ DQ not in forbearance Extended New forbearances 6/30/21 6.4% 12.4% 10.1% 7.8% 6.3% 4.9% 7.2% 15.1% 14.1% 12.6% 10.2% 9.0% 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 Forbearance Rate 30+ Day Delinquency Rate
16 INVESTMENT MANAGEMENT SEGMENT HIGHLIGHTS • Net AUM as of June 30, 2021 were $2.3 billion, down slightly from March 31, 2021, and up 5% from June 30, 2020 • Investment M anagement segment revenues were $ 13.5 million, up 41% from 1Q21 and 28% from 2Q20 ‒ PMT’s strong performance over the last four quarters resulted in $3.3 million of performance - based incentive fees $9.9 Investment Management Revenues ($ in millions) Investment Management AUM ($ in b illions) $10.2 $3.3 $10.5 $9.6 $13.5 2Q20 1Q21 2Q21 Base management fees & other revenue Performance incentive $2.2 $2.4 $2.3 6/30/20 3/31/21 6/30/21
APPENDIX
18 $197 billion in 2020 $ 473 billion outstanding IN SER VIC ING (1) YEARS FOR PFSI AS A PUBLIC COMPANY 8 14 YEARS OF OPERATIONS PMT # 2 • CORRESPONDENT PRODUCTION • CONSUMER DIRECT • BROKER DIRECT IN PRODUCTION (1) IS A LEADING RESIDENTIAL MORTGAGE REIT PENNYMAC IS AN ESTABLISHED LEADER IN THE U.S. MORTGAGE MARKET WITH SUBSTANTIAL GROWTH POTENTIAL # 6 Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT. All figures are as of 6/30/21. (1) Inside Mortgage Finance for the year ended or as of 6/30/21 $ 2.3 billion in assets under management 12 - year track record 2+ million customers $ 128 billion in 1H21
19 OVERVIEW OF PENNYMAC FINANCIAL’S BUSINESSES LOAN PRODUCTION Correspondent aggregation of newly originated loans from third - party sellers - PFSI earns gains on delegated government - insured and non - delegated loans - Fulfillment fees for PMT’s delegated conventional loans Consumer direct origination of conventional and government - insured loans Broker direct origination launched in 2018 LOAN SERVICING Servicing for owned MSRs and subservicing for MSRs owned by PMT Major loan servicer for Fannie Mae, Freddie Mac and Ginnie Mae Industry - leading capabilities in special servicing Organic growth results from loan production, supplemented by MSR acquisitions and PMT investment activity INVESTMENT MANAGEMENT External manager of PMT, which invests in mortgage - related assets: - GSE credit risk transfer investments - MSR investments - Investments in prime non - agency MBS and asset - backed securities Synergistic partnership with PMT Complex and highly regulated mortgage industry requires effective governance, compliance and operating systems Operating platform has been developed organically and is highly scalable Commitment to strong corporate governance, compliance and risk management since inception PFSI is well positioned for continued growth in this market and regulatory environment
20 $1.8 $1.3 $1.7 $2.1 $1.8 $1.6 $2.3 $4.1 $3.9 2013 2014 2015 2016 2017 2018 2019 2020 2021E U.S. Origination Market (in trillions) 0.0% 1.0% 2.0% 3.0% 4.0% 10-Year Treasury Yield 11% 19% 20% 22% 26% 13% 22% 61% 33% 2013 2014 2015 2016 2017 2018 2019 2020 1H21 PFSI's Annualized Return on Average Common Stockholders' Equity (ROE) 48% 75% 64% 61% 73% 80% 63% 40% 40% 40% 58% 53% 49% 63% 71% 54% 36% 36% 2013 2014 2015 2016 2017 2018 2019 2020 1H21 PFSI Purchase Mix Industry Purchase Mix Average: 25% PFSI’S TRACK RECORD ACROSS VARIOUS MARKET ENVIRONMENTS IS UNIQUE AMONG INDEPENDENT MORTGAGE BANKS (1) (4) Proven ability to generate attractive ROEs… …across different market environments… …with a strong orientation towards purchase money mortgages. (1) Represents partial year. Initial Public Offering was May 8, 2013. (2) Bloomberg (3) Inside Mortgage Finance. Full year 2021 estimate is an average of Mortgage Bankers Association (7/21/21), Fannie Mae (7/12/21), and Freddie Mac (7/15/21) forecasts. (4) Inside Mortgage Finance for historical data. Industry purchase mix for 1H21 represents the average of Mortgage Bankers Association (7/21/21), Fannie Mae (7/12/21), and Freddie Mac (7/15/21) estimates. (2) (3) 1H2 1
21 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 0.0% 1.0% 2.0% 3.0% 4.0% CURRENT MARKET ENVIRONMENT AND MACROECONOMIC TRENDS (1) Freddie Mac Primary Mortgage Market Survey. 2.80% as of 7/29/21 (2) U.S. Department of the Treasury. 1.22% as of 7/30/21 (3) 10 - year Treasury bond yield and 2/10 year Treasury yield spread: Bloomberg. Average 30 - year fixed rate mortgage: Freddie Mac Primary Mortgage Market Survey. Average secondary mortgage rate: 30 - Year FNCL Par Coupon Index (MTGEFNCL), Bloomberg. U.S. home price appreciation: S&P CoreLogic Case - Schiller U.S. National Home Price NSA Index (SPCSUSA). Data for 6/30/21 is as of 5/31/21. Residential mortgage originations are for the quarterly period ended. Source: Inside Mortgage Finance. Average 30 - year fixed rate mortgage (1) 10 - year Treasury Bond Yield (2) Macroeconomic Metrics (3) 3.02% 3.17% 1.47% 1.74% Footnotes 6/30/209/30/2012/31/203/31/216/30/21 10-year Treasury bond yield 0.7% 0.7% 0.9% 1.7% 1.5% 2/10 year Treasury yield spread 0.5% 0.6% 0.8% 1.6% 1.2% 30-year fixed rate mortgage 3.1% 2.9% 2.7% 3.2% 3.0% Secondary mortgage rate 1.6% 1.4% 1.3% 2.0% 1.9% U.S. home price appreciation (Y/Y % change) 4.4% 7.0% 10.4% 13.3% 16.6% Residential mortgage originations (in billions) $990 $1,155 $1,265 $1,305 $1,280
22 PFSI’s BALANCED BUSINESS MODEL IS A FLYWHEEL • Diversified business through correspondent, consumer direct and broker direct channels • Correspondent and broker direct channels in particular allow PFSI to access purchase - money volume • Lacks the fixed overhead of the traditional, retail origination model • Recurring fee income business captured over the life of the loan • In the event of higher interest rates, expected life of the loan increases resulting in a more valuable MSR asset • Creates a natural hedge to production income Customer base of over 2 million drives leads for consumer direct Large volumes of production grow servicing portfolio Loan Production 2 nd largest in the U.S. (1) Loan Servicing 6 th largest in the U.S. (1) (1) Inside Mortgage Finance for the year ended or as of March 31, 2021. Includes volume fulfilled or subserviced for PMT. In both businesses, scale and efficiency are critical for success
23 SIGNIFICANT TECHNOLOGY INVESTMENTS DRIVE GROWTH, EFFICIENCY AND SCALE Investments in technology, processes, and data management to - date have resulted in PennyMac’s integrated and scalable platform Invested $165 MILLION in transformational technology initiatives from 2018 through 2020; plan to invest an additional $140 MILLION in 2021 STATE - OF - THE - ART TECHNOLOGY combining PROPRIETARY and leading THIRD PARTY PLATFORMS Proven ability to INVEST IN TECHNOLOGY with MORTGAGE BANKING EXPERTISE Pricing & Loan Bidding Engine Workflows and processes Fulfillment SSE
24 PENNYMAC HAS DEVELOPED IN A SUSTAINABLE MANNER FOR LONG - TERM GROWTH 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Operations launched; de novo build of legacy - free mortgage servicer Raised $500 million of capital in private opportunity funds PMT formed in an initial public offering raising $320 million Correspondent group established with a focus on operations development and process design Added servicing leadership for prime portfolio and to drive scalable growth Correspondent system launches Expanded infrastructure with flagship operations facility in Moorpark, CA Correspondent leadership team expands Expanded infrastructure in Tampa, FL Became largest non - bank correspondent aggregator PFSI completed initial public offering Expanded infrastructure in Fort Worth, TX Continued organic growth and servicing portfolio UPB reaches $100 billion (1) PFSI stockholders’ equity surpasses $1 billion Substantial growth in PFSI’s consumer direct capacity PFSI issued MSR - backed term notes PFSI launched broker - direct lending channel PFSI completes corporate reorganization Achieved position as the largest correspondent aggregator in the U.S. PFSI launched proprietary, cloud - based Servicing Systems Environment (SSE) Record production volumes across all channels; nearly $200 billion in UPB (1) PFSI issued inaugural unsecured Senior Notes of $650 million PFSI issued an additional $650 million of unsecured Senior Notes Servicing portfolio surpasses 2 million customers (1) • Disciplined growth to address the demands of the GSEs, Agencies, regulators and our financing partners ‒ Since inception, PennyMac has focused on building and testing processes and systems before adding significant transaction vol ume s • Highly experienced management team has created a robust corporate governance system centered on compliance, risk management a nd quality control (1) All figures are for PFSI and include volume fulfilled or subserviced for PMT.
25 Pool UPB $252,475 Coupon 3.3% Servicing fee/spread 0.34% Prepayment speed assumption (CPR) 10.5% Fair value $3,412.6 As a multiple of servicing fee 3.97 June 30, 2021 Unaudited ($ in millions) MSR ASSET VALUATION Mortgage Servicing Rights
26 ACQUISITIONS AND ORIGINATIONS BY PRODUCT First Lien Acquisitions/Originations Note: Figures may not sum exactly due to rounding Unaudited ($ in millions) 2Q20 3Q20 4Q20 1Q21 2Q21 Correspondent Acquisitions Conventional Conforming 18,900$ 27,351$ 37,986$ 33,762$ 30,479$ Government 10,991 16,977 18,923 17,440 16,175 Total 29,890$ 44,328$ 56,908$ 51,202$ 46,654$ Consumer Direct Originations Conventional Conforming 2,475$ 3,091$ 3,659$ 4,634$ 5,012$ Government 2,647 3,240 4,356 6,023 5,661 Total 5,122$ 6,331$ 8,015$ 10,657$ 10,672$ Broker Direct Originations Conventional Conforming 2,136$ 2,657$ 3,527$ 3,959$ 3,246$ Government 481 845 956 1,158 728 Total 2,617$ 3,502$ 4,484$ 5,117$ 3,974$ Total acquisitions/originations 37,630$ 54,161$ 69,407$ 66,976$ 61,300$ UPB of loans fulfilled for PMT (included in correspondent acquisitions) 18,900$ 27,351$ 37,986$ 33,762$ 30,479$
27 INTEREST RATE LOCKS BY PRODUCT First Lien Locks Note: Figures may not sum exactly due to rounding Unaudited ($ in millions) 2Q20 3Q20 4Q20 1Q21 2Q21 Correspondent Locks Conventional Conforming 24,804$ 34,363$ 39,451$ 33,998$ 30,332$ Government 12,920 20,167 19,728 17,064 15,657 Total 37,725$ 54,531$ 59,179$ 51,062$ 45,990$ Consumer Direct Locks Conventional Conforming 4,666$ 5,699$ 5,711$ 6,337$ 7,486$ Government 4,281 5,207 7,126 7,047 6,621 Total 8,947$ 10,906$ 12,837$ 13,384$ 14,108$ Broker Direct Locks Conventional Conforming 3,229$ 4,236$ 4,375$ 4,634$ 3,387$ Government 868 1,256 1,341 1,036 1,119 Total 4,097$ 5,492$ 5,716$ 5,671$ 4,503$ Total locks 50,769$ 70,928$ 77,731$ 70,117$ 64,600$
28 CREDIT CHARACTERISTICS BY ACQUISITION/ORIGINATION PERIOD Correspondent Consumer Direct Broker Direct 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 Government-insured 719 715 714 707 702 Government-insured 37 37 36 37 42 Conventional 769 772 768 761 757 Conventional 32 32 33 34 34 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 Government-insured 719 719 720 719 708 Government-insured 41 40 39 39 39 Conventional 752 756 759 757 748 Conventional 33 32 32 32 33 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 Government-insured 738 756 753 743 726 Government-insured 42 45 43 43 43 Conventional 767 770 768 767 760 Conventional 32 32 32 33 34 Weighted Average FICO Weighted Average DTI Weighted Average FICO Weighted Average DTI Weighted Average FICO Weighted Average DTI