JOINT AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT (FREDDIE MAC MSRS) AND AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT PRICING SIDE LETTER
Exhibit 10.4
[Information indicated with brackets has been excluded from this exhibit because it is not material and would be competitively harmful if publicly disclosed]
JOINT AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT (XXXXXXX MAC MSRS) AND AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT PRICING SIDE LETTER
This Joint Amendment No. 2 to Loan and Security Agreement and Amendment No. 1 to Pricing Side Letter is made as of this 24th day of April, 2020 (this “Amendment”), by and among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the “Administrative Agent”), CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (the “Lender”), PENNYMAC MORTGAGE INVESTMENT TRUST (the “Guarantor”) and PENNYMAC CORP. (“PMC Borrower”) and PENNYMAC HOLDINGS, LLC ( “PMH Borrower” and together with PMC Borrower, the “Borrowers”) amends that certain Loan and Security Agreement, dated as of February 1, 2018 (as amended by Amendment No. 1, dated as of January 29, 2020, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), by and among the Lender, the Guarantor and the Borrowers, and the related Loan and Security Agreement Pricing Side Letter, dated February 1, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Pricing Side Letter” and Pricing Side Letter, together with the Loan Agreement, the “Agreements”), by and among the Borrowers, the Guarantor and the Lender.
WHEREAS, the Administrative Agent, the Lender, the Guarantor and the Borrowers have agreed to amend the Loan Agreement and the Pricing Side Letter as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.Amendments to the Loan Agreement. Effective as of the date hereof:
(a)Section 1.1 of Schedule I of the Loan Agreement is hereby amended by deleting the defined terms “Maturity Date,” “MLRA Pricing Side Letter,” “Default Rate” and “Obligations” in their entirety and replacing such terms with the following:
“Default Rate” means, with respect to any Loan for any Interest Period, and any late payment of fees or other amounts due hereunder, the Base Rate for the related Interest Period (or for all successive Interest Periods during which such fees or other amounts were delinquent), plus [*****] per annum.
“Maturity Date” means October 21, 2020.
“MLRA Pricing Side Letter” means that certain Third Amended and Restated Pricing Side Letter, dated as of March 14, 2019, by and among CSFB, CSCIB, Alpine Securitization Ltd., PMC, Holdings, PMC REO Financing Trust, PMC REO Trust 2015-1, Guarantor and POP with respect to the Roll-Up Agreement and the External Rewarehouse Agreement.
“Obligations” means the Outstanding Aggregate Loan Amount, all accrued and unpaid interest thereon and all other amounts payable by a Borrower to the Lender pursuant to this Agreement, the Note or any other Facility Document or any amounts payable by a Borrower pursuant to Section 11.12 hereof.
(b)Section 1.1 of Schedule I of the Loan Agreement is hereby amended by adding the defined terms “Base Rate,” “Exposure Margin Deficit,” “Financing Documents” and “Other Financing Agreements” in proper alphabetical order:
“Base Rate” has the meaning assigned to the term in the Pricing Side Letter.
“Exposure Margin Deficit” has the meaning assigned to the term in the Pricing Side Letter.
“Financing Documents” means any or all of the “Program Agreements,” “Facility Documents” or any similar term as defined in each Other Financing Agreement.
“Other Financing Agreements” means each of the agreements listed on Schedule II hereto, which may be updated from time to time in a written confirmation signed by the parties to this Agreement.
(c)Section 2.05 of the Loan Agreement is hereby amended by replacing only the first occurrence of the word “LIBOR Rate” therein with “Base Rate.”
(d)Section 2.08(b) of the Loan Agreement is hereby amended by deleting in its entirety and replacing it with the following:
(b)If, on any Business Day (each, a “Borrowing Base Shortfall Day”), (x) the Lender provides written notice to the Borrowers that the Lender has determined in its sole reasonable discretion based on the Borrowing Base Report most recently delivered by the Lender pursuant to Section 2.04 that the Outstanding Aggregate Loan Amount on such day exceeds the lesser of (i) the Borrowing Base and (ii) the Available Facility Amount on such day or (y) as of the last Business Day of the preceding month, the Exposure Margin Deficit exceeds zero (any such circumstance, a “Borrowing Base Deficiency”), the Borrowers (i) on the same day if the Lender notifies Borrowers by 11:00 a.m. (New York time) of such Borrowing Base Deficiency, or (ii) if the notice is received later than 11:00 a.m. (New York time), then within one (1) Business Day after the Borrowing Base Shortfall Day, shall repay outstanding Loans (including accrued interest thereon), in an amount equal to the amount of the Borrowing Base Deficiency specified in the notice provided to the Borrowers by the Lender (such requirement a “Margin Call”).
(e)The Loan Agreement is hereby amended by adding the following section in proper numerical order:
Section 4.06Other Financing Agreements. Borrower hereby delivers an irrevocable instruction to the buyer or lender under any Financing Document that upon receipt of notice of an Event of Default under this Agreement, the buyer or lender thereunder is authorized and instructed to (i) remit to Lender hereunder directly any amounts otherwise payable to Borrower and (ii) deliver to Lender all collateral otherwise deliverable to Borrower, to the extent all obligations then due and owing under such Other Financing Agreement have been paid in full. In furtherance of the foregoing, upon repayment of the outstanding repurchase price or loan amount under any Other Financing Agreement and termination of all obligations of the Borrower thereunder or other termination of the related Financing Documents following repayment of all obligations thereunder, the related buyer or lender under any Financing Document is hereby instructed to deliver to Lender hereunder any collateral (as such term may be defined under the related Financing Documents) then in its possession or control.
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(f)Section 7.01 of the Loan Agreement is hereby amended by deleting subclause (w)(iii) in its entirety and replacing it with the following:
(iii)Reserved.
(g)Section 7.01 of the Loan Agreement is hereby amended by adding the following subclause (cc)(ii):
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(ii) |
On the last Business Day of the month, Borrower shall report to Lender whether, as of the last Business Day of the month, the Exposure Margin Deficit exceeds zero. |
(h)Section 8.03 of the Loan Agreement is hereby amended by deleting “and” at the end of subclause (d)(ii), adding the following subclause (d)(iii) and renumbering subclause (d)(iii) in proper numerical order:
(iii) to the Lender or any Affiliate any amount then due to such Persons pursuant to Section 11.12 that have not been paid by the Borrowers; and
(i)Section 11.12 of the Loan Agreement is hereby amended by adding the language “or any Termination Fee” immediately after “Surplus Proceeds.”
(j)Section 11.15(e) of the Loan Agreement is hereby amended by adding the language “or any Termination Fee” immediately after “Surplus Proceeds.”
(k)Schedule 5.02 of the Loan Agreement is hereby amended by adding the following new subclause (vi) to clause (e) thereto, in proper numerical order:
(vi)Guarantor has maintained profitability of at least $1.00 in Net Income for at least one of the two prior Test Periods.
(l)The Loan Agreement is hereby amended by adding Schedule II in proper order attached hereto as Exhibit A.
SECTION 2.Amendments to the Pricing Side Letter. Effective as of the date hereof:
(a)Section 1 of the Pricing Side Letter is hereby amended by deleting the defined terms “Applicable Margin” and “Available Facility Amount” in their entirety and replacing such terms with the following:
“Applicable Margin” means [*****].
“Available Facility Amount” means: (i) an amount agreed to by the Lender that, when added to the aggregate outstanding repurchase price under the Roll-Up Agreement and CSCIB’s pro rata portion of the FMSR VF1 Repo, would not exceed the Maximum Combined Purchase Price; or (ii) the lesser of: (A) the Borrowing Base or (B) the amount that, when added to the aggregate outstanding repurchase price under the Roll-Up Agreement and CSCIB’s pro rata portion of the FMSR VF1 Repo, would not exceed the Maximum Combined Committed Purchase Price; provided, however, that the Available Facility Amount shall not exceed the positive difference between $375,000,000, minus the Lender’s pro rata share of the aggregate outstanding purchase price under the FMSR VF1 Repo; in each case, as may be modified from time to time in a written confirmation signed by the parties hereto.
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For purposes of this definition, the terms “Maximum Combined Purchase Price,” “Maximum Combined Committed Purchase Price” and “Roll-Up Agreement” shall have the meaning assigned to such terms in the MLRA Pricing Side Letter.
(b)Section 1 of the Pricing Side Letter is hereby amended by adding the following defined terms “Actual Seller Equity,” “Base Rate,” “Exposure Margin Deficit” and “Required Seller Equity,” in proper alphabetical order:
“Actual Seller Equity” means the amount, measured on the last Business Day of each month, equal to the product of (x) the aggregate outstanding purchase price under the Roll-Up Agreement on such day, and (y) [**].
“Base Rate” means the greater of (a) the LIBOR Rate or (b) [*****].
“Exposure Margin Deficit” means, the excess, if any, measured on the last Business Day of each month, of (x) the Required Seller Equity, over (y) the Actual Seller Equity.
“Required Seller Equity” means the amount, measured on the last Business Day of each month, equal to the product of (A) [*****] (B) the sum of (x) CSCIB’s pro rata portion of the aggregate outstanding repurchase price under the FMSR VF1 Repo on such day and (y) the Outstanding Aggregate Loan Amount under the Agreement on such day, and (C) [**].
SECTION 3.Fees and Expenses. For purposes of this Amendment, the following terms shall have the following meanings:
“Structuring Fee” means an amount equal to the product of (i) [*****] and $375,000,000.
“Up-front Fee” means an amount equal to the product of (i) [*****] and $375,000,000.
The Borrowers agree to pay to the Lender all fees and out of pocket expenses incurred by the Lender in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to the Lender incurred in connection with this Amendment, in accordance with Section 3.03 of the Loan Agreement. On the date hereof, the Borrowers shall pay to the Lender the Up-front Fee and the Structuring Fee. The Up-front Fee and the Structuring Fee shall be fully earned on the date hereof and nonrefundable when paid.
SECTION 4.Defined Terms. Any terms capitalized but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement or the Pricing Side Letter, as applicable.
SECTION 5.Limited Effect. Except as amended hereby, each Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Agreements or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreements, any reference in any of such items to the Agreements being sufficient to refer to the Agreements as amended hereby.
SECTION 6.Representations. In order to induce the Lender and the Administrative Agent to execute and deliver this Amendment, each of PMC Borrower, PMH Borrower and the Guarantor hereby represents to the Administrative Agent and the Lender that as of the date hereof, (i) each of PMC Borrower, PMH Borrower and the Guarantor is in full compliance with all of the terms and conditions of the Facility Documents and remains bound by the terms thereof, and (ii) no default or event of default has occurred and is continuing under the Facility Documents.
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SECTION 7.Governing Law. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5‑1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 8.Counterparts. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
SECTION 9.Miscellaneous.
(a)This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
(b)The various headings and sub-headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
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IN WITNESS WHEREOF, the Lender, the Administrative Agent, the Guarantor and the Borrowers have each caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
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CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, |
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as Administrative Agent |
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By: |
/s/ Xxxxxxx Xxxxxxxx |
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Name: |
Xxxxxxx Xxxxxxxx |
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Title: |
Vice President |
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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, |
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As Lender |
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By: |
/s/ Xxxxxxx Xxxxxxxx |
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Name: |
Xxxxxxx Xxxxxxxx |
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Title: |
Authorized Signatory |
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By: |
/s/ Xxxxxxxx Xxxxxxxxx |
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Name: |
Xxxxxxxx Xxxxxxxxx |
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Title: |
Authorized Signatory |
[Joint Amendment No. 2 to Loan and Security Agreement and
Amendment No. 1 to Pricing Side Letter (CS-PMC-PMH)]
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PENNYMAC CORP., |
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as a Borrower |
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By: |
/s/ Xxxxxx Xxxxx using an electronic signature |
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Name: |
Xxxxxx Xxxxx |
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Title: |
Senior Managing Director and Treasurer |
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PENNYMAC HOLDINGS, LLC, |
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as a Borrower |
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By: |
/s/ Xxxxxx Xxxxx using an electronic signature |
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Name: |
Xxxxxx Xxxxx |
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Title: |
Senior Managing Director and Treasurer |
[Joint Amendment No. 2 to Loan and Security Agreement and
Amendment No. 1 to Pricing Side Letter (CS-PMC-PMH)]
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as a Guarantor |
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By: |
/s/ Xxxxxx Xxxxx using an electronic signature |
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Name: |
Xxxxxx Xxxxx |
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Title: |
Senior Managing Director and Treasurer |
[Joint Amendment No. 2 to Loan and Security Agreement and
Amendment No. 1 to Pricing Side Letter (CS-PMC-PMH)]
EXHIBIT A
SCHEDULE II
OTHER FINANCING AGREEMENTS
Third Amended and Restated Master Repurchase Agreement, dated as of March 14, 2019 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Roll-Up Agreement”), by and among Credit Suisse First Boston Mortgage Capital LLC, as administrative agent, Credit Suisse AG, Cayman Islands Branch, as committed buyer and a buyer, Alpine Securitization Ltd., as a buyer, PennyMac Corp, as a seller, PennyMac Holdings, LLC, as a seller, PennyMac Operating Partnership, L.P., as a seller, PMC REO Financing Trust, as an asset subsidiary, PMC REO Trust 2015-1, as an asset subsidiary, PennyMac Mortgage Investment Trust, as a guarantor, and PennyMac Operating Partnership, L.P., as a seller and as a guarantor.
Second Amended and Restated Master Repurchase Agreement, dated as of April 28, 2017 (as nay be further amended, restated, supplemented or otherwise modified from time to time, the “External Rewarehouse Agreement”), by and among Credit Suisse First Boston Mortgage Capital LLC, as administrative agent, Credit Suisse AG, Cayman Islands Branch, as committed buyer and a buyer, Alpine Securitization Ltd., as a buyer, PennyMac Operating Partnership, L.P., as a seller, and, PennyMac Mortgage Investment Trust, as a guarantor.
Master Repurchase Agreement, dated as of December 20, 2017 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “FMSR VF1 Repo”), by and among Credit Suisse First Boston Mortgage Capital LLC, as administrative agent, Credit Suisse AG, Cayman Islands Branch, as repo buyer, and PennyMac Corp, as repo seller.
EXHIBIT A
