Common use of REIT Asset and Income Tests Clause in Contracts

REIT Asset and Income Tests. The failure of PennyMac Mortgage Investment Trust to satisfy any of the following asset or income tests and Buyer has delivered notice of an Event of Default to the Sellers with respect thereto: (1) At the close of each of PennyMac Mortgage Investment Trust’s taxable years, at least 75 percent of PennyMac Mortgage Investment Trust’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (a) “rents from real property” within the meaning of Section 856(c)(3)(A) of the Code, (b) interest on obligations secured by mortgages on real property or on interests in real property, within the meaning of Section 856(c)(3)(B) of the Code, (c) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of the Code, (d) dividends or other distributions on, and gain (other than gain from prohibited transactions) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other REITs, within the meaning of Section 856(c)(3)(D) of the Code, and (e) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the Code. (2) At the close of each of PennyMac Mortgage Investment Trust’s taxable years, at least 95 percent of PennyMac Mortgage Investment Trust’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (a) the items of income described in paragraph (i) hereof (other than those described in Section 856(c)(3)(I) of the Code or the requirements in any successor or replacement provision in the Code), (b) gain realized from the sale or other disposition of stock or securities which are not property described in Section 1221(a)(1) of the Code or the requirements in any successor or replacement provision in the Code, if any, (c) interest and (d) dividends, in each case within the meaning of Section 856(c)(2) of the Code or the requirements in any successor or replacement provision thereto. (3) At the close of each quarter of each of PennyMac Mortgage Investment Trust’s taxable years, at least 75 percent of the value of PennyMac Mortgage Investment Trust’s total assets (as determined in accordance with Treasury Regulations Section 1.856-2(d)) consists of “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code, cash and cash items (including receivables which arise in the ordinary course of PennyMac Mortgage Investment Trust’s operations, but not including receivables purchased from another person), and Government Securities; unless (a) the test described in this paragraph (iii) has been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (b) the failure of such test is the result of the acquisition of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (c) PennyMac Mortgage Investment Trust delivers to Buyer prompt, but in no event more than 30 days after the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (d) such test is satisfied within the 30 day period prescribed by the last sentence of Section 856(c)(4) of the Code for such satisfaction, and (e) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfaction. (4) At the close of each quarter of each of PennyMac Mortgage Investment Trust’s taxable years, (a) not more than 25 percent of the value of PennyMac Mortgage Investment Trust’s total assets is represented by securities (other than those described in paragraph (iii)), (b) not more than 25 percent of the value of PennyMac Mortgage Investment Trust’s total assets is represented by securities of one or more “taxable REIT subsidiaries” (as defined in Section 856(1) of the Code), and (c) (1) not more than 5 percent of the value of PennyMac Mortgage Investment Trust’s total assets is represented by securities of any one issuer (other than Government Securities and securities of taxable REIT subsidiaries), and (2) PennyMac Mortgage Investment Trust does not hold securities possessing more than 10 percent of the total voting power or value of the outstanding securities of any one issuer (other than Government Securities and securities of taxable REIT subsidiaries); unless (aa) the tests described in this paragraph (iv) have been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (bb) the failure of any such test is the result of the acquisition of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (cc) PennyMac Mortgage Investment Trust delivers to Buyer, within 10 days of the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (dd) such test is satisfied within the 30 day period prescribed by the last sentence of Section 856(c)(4) of the Code for such satisfaction, and (ee) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfaction.

REIT Asset and Income Tests. The failure of PennyMac Mortgage Investment Trust to satisfy any of the following asset or income tests and Buyer has delivered notice of an Event of Default to the Sellers with respect thereto: (1a) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 75 percent 75% of PennyMac Mortgage Investment TrustParent’s gross income (excluding gross income from “prohibited transactions” as defined described in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) “rents from real property” within the meaning of Section 856(c)(3)(A) of the Code, (bii) interest on obligations secured by mortgages on real property or on interests in real property, within the meaning of Section 856(c)(3)(B) of the Code, (ciii) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of the Code, (div) dividends or other distributions on, and gain (other than gain from “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other REITs, qualifying REITs within the meaning of Section 856(c)(3)(D856(d)(3)(D) of the Code, and (ev) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the Code.; (2b) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 95 percent 95% of PennyMac Mortgage Investment TrustParent’s gross income (excluding gross income from “prohibited transactions” as defined described in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) the items of income described in paragraph (ia) hereof above (other than those described in Section 856(c)(3)(I) of the Code or the requirements in any successor or replacement provision in the Code), (bii) gain realized from the sale or other disposition of stock or securities which are not property described in Section 1221(a)(1) of the Code or the requirements in any successor or replacement provision in the Code, if any(iii) interest, (c) interest and (div) dividends, in each case within the meaning of Section 856(c)(2) of the Code or the requirements in any successor or replacement provision thereto.Code; (3c) At the close of each quarter of each of PennyMac Mortgage Investment TrustParent’s taxable years, at least 75 percent 75% of the value of PennyMac Mortgage Investment TrustParent’s total assets (as determined in accordance with Treasury Regulations Section 1.856-2(d)) consists has consisted of “and will consist of real estate assets” assets within the meaning of Section Sections 856(c)(4) and 856(c)(5)(B) of the Code, cash and cash items (including receivables which arise in the ordinary course of PennyMac Mortgage Investment TrustParent’s operations, but not including receivables purchased from another person), and Government SecuritiesCash Equivalents; unless unless (ai) the test described in this paragraph (iiic) has been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment TrustParent’s taxable year, (bii) the failure of such test is not satisfied as the result of the acquisition of a security or property during the current quarter of PennyMac Mortgage Investment TrustParent’s taxable year to which such failure relatesyear, (ciii) PennyMac Mortgage Investment Trust delivers to Buyer prompt, but in no event more than 30 within 10 days after of the end of the current quarter of PennyMac Mortgage Investment TrustParent’s taxable year Parent delivers a written notice to which such failure relates, notice Buyer that such test is not satisfied, (div) such test is satisfied within the 30 day period prescribed by the last sentence of as provided under Section 856(c)(4) of the Code for such satisfactionCode, and (ev) an officer a Responsible Officer of PennyMac Mortgage Investment Trust Parent certifies as to such satisfaction within such 30 day period, and provides documentation documentation, reasonably satisfactory to Buyer evidencing such satisfaction.; (4d) At the close of each quarter of each of PennyMac Mortgage Investment TrustParent’s taxable years, (ai) not more than 25 percent 25% of the value of PennyMac Mortgage Investment TrustParent’s total assets is asset value will be represented by securities (other than those described in paragraph (iii)c) above), (bii) not more than 25 percent 25% of the value of PennyMac Mortgage Investment TrustParent’s total assets is asset value will be represented by securities of one or more “taxable REIT Parent subsidiaries” (as defined in Section 856(1) of the Code), and (ciii) (1x) not more than 5 percent 5% of the value of PennyMac Mortgage Investment TrustParent’s total assets is will be represented by securities of any one issuer (other than Government Securities Cash Equivalents and securities of taxable REIT subsidiariessubsidiaries and securities of a qualified REIT subsidiary within the meaning of Section 856(i) of the Code), and (2y) PennyMac Mortgage Investment Trust does Parent will not hold securities possessing more than 10 percent 10% of the total voting power or value of the outstanding securities of any one issuer (other than Government Securities and Cash Equivalents, securities of taxable REIT subsidiaries, and securities of a qualified REIT subsidiary within the meaning of Section 856(i) of the Code); unless (aaA) the tests described in this paragraph (ivd) have been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment TrustParent’s taxable year, (bbB) any of the failure of any such test is tests described in this paragraph (d) are not satisfied as the result of the acquisition of a security or property during the current quarter of PennyMac Mortgage Investment TrustParent’s taxable year to which such failure relatesyear, (ccC) PennyMac Mortgage Investment Trust delivers to Buyer, within 10 days of the end of the current quarter of PennyMac Mortgage Investment TrustParent’s taxable year Parent delivers written notice to which such failure relates, notice Buyer that such test is not satisfied, (ddD) such test is satisfied within the 30 day period prescribed by the last sentence of as provided under Section 856(c)(4) of the Code for such satisfactionCode, and (eeE) an officer a Responsible Officer of PennyMac Mortgage Investment Trust Parent certifies as to such satisfaction within such 30 day period, and provides documentation documentation, reasonably satisfactory to Buyer evidencing such satisfaction; and (e) Notwithstanding paragraphs (a)-(d) above, if (i) one of the tests described in paragraphs (a)-(d) is failed, but such failure was based upon reasonable reliance on an opinion of nationally recognized tax counsel to the effect that the acquisition of the income security or property or action or omission that gave rise to the failure “would not” or “should not” have caused such failure, which opinion was received prior to such acquisition, action or omission, and (ii) Parent delivers to Buyer within 30 days after one of the tests described in paragraphs (a)-(d) is failed or is asserted to be failed an opinion of counsel to the effect that Parent will qualify for relief under Sections 856(c)(6) or 856(c)(7)(B) of the Code, as applicable, then the tests described in paragraphs (a)-(d) shall not be treated as failed by reason of such failure if the Internal Revenue Service determines that Parent qualifies for relief under Sections 856(c)(6) or 856(c)(7)(B) of the Code, and such tests shall not be treated as failed until the Internal Revenue Service determines that Parent fails to qualify for relief under Sections 856(c)(6) or 856(c)(7)(B) of the Code, in which case Parent shall deliver notice of such event to Buyer as soon as practicable.

REIT Asset and Income Tests. The failure of PennyMac Mortgage Investment Trust to satisfy any In accordance with all applicable laws and requirements for income and asset tests for a REIT, FIC has satisfied all of the following asset or income tests and Buyer has delivered notice of an Event of Default to the Sellers with respect theretotests: (1a) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 75 percent of PennyMac Mortgage Investment Trust’s FIC's gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) “"rents from real property” " within the meaning of Section 856(c)(3)(A) of the Code, (bii) interest on obligations secured by mortgages on real property or on interests in real property, within the meaning of Section 856(c)(3)(B) of the Code, (ciii) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of the Code, (div) dividends or other distributions on, and gain (other than gain from "prohibited transactions" within the meaning of Section 857(b)(6)(B)(iii) of the Code) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other REITs, qualifying REITs within the meaning of Section 856(c)(3)(D856(d)(3)(D) of the Code, and (ev) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the Code. (2b) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 95 percent of PennyMac Mortgage Investment Trust’s FIC's gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) the items of income described in paragraph (i) 1 hereof (other than those described in Section 856(c)(3)(I) of the Code or the requirements in any successor or replacement provision in the Code), (bii) gain realized from the sale or other disposition of stock or securities which are not property described in Section 1221(a)(1) of the Code or the requirements in any successor or replacement provision in the Code, if any(iii) interest, (civ) interest dividends, and (dv) dividendsincome derived from payments to FIC on interest rate swap or cap agreements, options, futures contracts, forward rate agreements and other similar financial instruments entered into to reduce the interest rate risks with respect to any indebtedness incurred or to be incurred to acquire or carry real estate assets, or gain from the sale or other disposition of such an investment as described in section 856(c)(5)(G), in each case within the meaning of Section 856(c)(2) of the Code or the requirements in any successor or replacement provision theretoCode. (3c) At the close of each quarter of each of PennyMac Mortgage Investment Trust’s FIC's taxable years, at least 75 percent of the value of PennyMac Mortgage Investment Trust’s FIC's total assets (as determined in accordance with Treasury Regulations Section 1.856-2(d)) consists has consisted of “and will consist of real estate assets” assets within the meaning of Section Sections 856(c)(4) and 856(c)(5)(B) of the Code, cash and cash items (including receivables which arise in the ordinary course of PennyMac Mortgage Investment Trust’s FIC's operations, but not including receivables purchased from another person), and Government Securities; unless (a) the test described in this paragraph (iii) has been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (b) the failure of such test is the result of the acquisition of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (c) PennyMac Mortgage Investment Trust delivers to Buyer prompt, but in no event more than 30 days after the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (d) such test is satisfied within the 30 day period prescribed by the last sentence of Section 856(c)(4) of the Code for such satisfaction, and (e) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfaction. (4d) At the close of each quarter of each of PennyMac Mortgage Investment Trust’s FIC's taxable years, (a) not more than 25 percent of the FIC's total asset value of PennyMac Mortgage Investment Trust’s total assets is will be represented by securities (other than those described in paragraph (iii)3), (b) not more than 25 20 percent of the FIC's total asset value of PennyMac Mortgage Investment Trust’s total assets is will be represented by securities of one or more “taxable REIT subsidiaries” (as defined in Section 856(1) of the Code), and (c) (1i) not more than 5 percent of the value of PennyMac Mortgage Investment Trust’s FIC's total assets is will be represented by securities of any one issuer (other than Government Securities and securities of taxable REIT subsidiaries), and (2ii) PennyMac Mortgage Investment Trust does FIC will not hold securities possessing more than 10 percent of the total voting power or value of the outstanding securities of any one issuer (other than Government Securities and Securities, securities of taxable REIT subsidiaries); unless (aa) the tests described in this paragraph (iv) have been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (bb) the failure of any such test is the result of the acquisition and securities of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (cc) PennyMac Mortgage Investment Trust delivers to Buyer, within 10 days of the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (dd) such test is satisfied qualified REIT subsidiary within the 30 day period prescribed by the last sentence meaning of Section 856(c)(4856(i) of the Code for such satisfaction, and (ee) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfactionCode).

REIT Asset and Income Tests. The On and after the REIT Event, the failure of PennyMac Mortgage Investment Trust ECC to satisfy any of the following asset or income tests and Buyer has delivered notice of an Event of Default to the Sellers with respect thereto: (1) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 75 percent of PennyMac Mortgage Investment TrustECC’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) “rents from real property” within the meaning of Section 856(c)(3)(A) of the Code, (bii) interest on obligations secured by mortgages on real property or on interests in real property, within the meaning of Section 856(c)(3)(B) of the Code, (ciii) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of the Code, (div) dividends or other distributions on, and gain (other than gain from “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other REITs, qualifying REITs within the meaning of Section 856(c)(3)(D856(d)(3)(D) of the Code, and (ev) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the Code. (2) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 95 percent of PennyMac Mortgage Investment TrustECC’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) the items of income described in paragraph (i) 1 hereof (other than those described in Section 856(c)(3)(I) of the Code or the requirements in any successor or replacement provision in the Code), (bii) gain realized from the sale or other disposition of stock or securities which are not property described in Section 1221(a)(1) of the Code or the requirements in any successor or replacement provision in the Code, if any, (ciii) interest and (div) dividends, in each case within the meaning of Section 856(c)(2) of the Code or the requirements in any successor or replacement provision thereto. (3) At the close of each quarter of each of PennyMac Mortgage Investment TrustECC’s taxable years, at least 75 percent of the value of PennyMac Mortgage Investment TrustECC’s total assets (as determined in accordance with Treasury Regulations Section 1.856-2(d)) consists will consist of “real estate assets” assets within the meaning of Section Sections 856(c)(4) and 856(c)(5)(B) of the Code, cash and cash items (including receivables which arise in the ordinary course of PennyMac Mortgage Investment TrustECC’s operations, but not including receivables purchased from another person), and Government Securities; unless (a) the test described in this paragraph (iii3) has been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment TrustECC’s taxable year, (b) the failure of such test is not satisfied as the result of the acquisition of a security or property during the current quarter of PennyMac Mortgage Investment TrustECC’s taxable year to which such failure relatesyear, (c) PennyMac Mortgage Investment Trust ECC delivers to Buyer prompt, but in no event more than 30 within 10 days after the end of the current quarter of PennyMac Mortgage Investment TrustECC’s taxable year to which such failure relates, Buyer notice that such test is not satisfied, (d) such test is satisfied within the 30 day period prescribed by the last sentence of Section as provided under section 856(c)(4) of the Code for such satisfaction), and (e) an officer of PennyMac Mortgage Investment Trust ECC certifies as to such satisfaction within such 30 day period, and provides documentation documentation, reasonably satisfactory to Buyer evidencing such satisfaction. For purposes of the certifications in paragraphs (3) and (4): (i) ECC’s assets will include (x) the assets owned by any qualified REIT subsidiaries within the meaning of Section 856(i) of the Code (“Qualified REIT Subsidiaries”) and any other disregarded entities for U.S. federal income tax purposes in which ECC owns an interest; and (y) ECC’s allocable share (based on ECC’s proportionate capital interest) of the assets owned by any entity treated as a partnership for U.S. federal income tax purposes (a “Partnership”) in which ECC owns an interest; and (ii) ECC’s direct or indirect ownership of the stock of any Qualified REIT Subsidiaries and the equity interests in any disregarded entities or Partnerships shall be disregarded, provided, however, for purposes of the 10% asset test described in 4(ii)(y) below, ECC’s interest in the assets of a Partnership shall be determined in accordance with Section 856(m)(3) of the Code. (4) At the close of each quarter of each of PennyMac Mortgage Investment TrustECC’s taxable years, (a) not more than 25 percent of the value of PennyMac Mortgage Investment TrustECC’s total assets is will be represented by securities (other than those described in paragraph (iii)3), (b) not more than 25 20 percent of the value of PennyMac Mortgage Investment TrustECC’s total assets is will be represented by securities of one or more “taxable REIT subsidiaries” (as defined in subsidiaries within the meaning of Section 856(1856(i) of the CodeCode (“Taxable REIT Subsidiaries”), and (c) (1i) not more than 5 percent of the value of PennyMac Mortgage Investment TrustECC’s total assets is will be represented by securities of any one issuer (other than Government Securities and securities of taxable Taxable REIT subsidiariesSubsidiaries), and (2ii) PennyMac Mortgage Investment Trust does (x) ECC will not hold securities possessing more than 10 percent of the total voting power or value of the outstanding securities of any one issuer (other than Government Securities and securities of taxable Taxable REIT subsidiariesSubsidiaries and (y) ECC will not hold securities having a value of more than 10 percent of total value of the outstanding securities of any one issuer (other than Government Securities, securities of Taxable REIT Subsidiaries, and securities described in Section 856(m)(1) of the Code); unless (aad) the tests described in this paragraph (iv4) have been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment TrustECC’s taxable year, (bbe) any of the failure of any such test is tests described in this paragraph (4) are not satisfied as the result of the acquisition of a security or property during the current quarter of PennyMac Mortgage Investment TrustECC’s taxable year, (f) ECC delivers within 10 days after the end of the current quarter of ECC’s taxable year to which such failure relates, (cc) PennyMac Mortgage Investment Trust delivers to Buyer, within 10 days of the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, Buyer notice that such test is not satisfied, (ddg) such test is satisfied within the 30 day period prescribed by the last sentence of Section as provided under section 856(c)(4) of the Code for such satisfaction), and (eeh) an officer of PennyMac Mortgage Investment Trust ECC certifies as to such satisfaction within such 30 day period, and provides documentation documentation, reasonably satisfactory to Buyer evidencing such satisfaction. An Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing.

REIT Asset and Income Tests. The failure of PennyMac Mortgage Investment Trust the Guarantor to satisfy any of the following asset or income tests and the Buyer has delivered notice of an Event of Default to the Sellers Guarantor with respect thereto: (1) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 75 percent of PennyMac Mortgage Investment Trustthe Guarantor’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) “rents from real property” within the meaning of Section 856(c)(3)(A) of the Code, (bii) interest on obligations secured by mortgages on real property or on interests in real property, within the meaning of Section 856(c)(3)(B) of the Code, (ciii) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in Section 1221(a)(1) of the Code, within the meaning of Section 856(c)(3)(C) of the Code, (div) dividends or other distributions on, and gain (other than gain from “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other REITs, qualifying REITs within the meaning of Section 856(c)(3)(D856(d)(3)(D) of the Code, and (ev) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the Code. (2) At the close of each of PennyMac Mortgage Investment Trust’s taxable yearsyear, at least 95 percent of PennyMac Mortgage Investment Trustthe Guarantor’s gross income (excluding gross income from “prohibited transactions” as defined in Section 857(b)(6)(iii) of the Code and taking into account Section 856(c)(5)(G) of the Code) consists of (ai) the items of income described in paragraph (i) 1 hereof (other than those described in Section 856(c)(3)(I) of the Code or the requirements in any successor or replacement provision in the Code), (bii) gain realized from the sale or other disposition of stock or securities which are not property described in Section 1221(a)(1) of the Code or the requirements in any successor or replacement provision in the Code, if any(iii) interest, (civ) interest dividends, and (dv) dividendsincome derived from payments to the Guarantor on interest rate swap or cap agreements, options, futures contracts, forward rate agreements and other similar financial instruments entered into to reduce the interest rate risks with respect to any indebtedness incurred or to be incurred to acquire or carry real estate assets, or gain from the sale or other disposition of such an investment as described in section 856(c)(5)(G), in each case within the meaning of Section 856(c)(2) of the Code or the requirements in any successor or replacement provision theretoCode. (3) At the close of each quarter of each of PennyMac Mortgage Investment Trustthe Guarantor’s taxable years, at least 75 percent of the value of PennyMac Mortgage Investment Trustthe Guarantor’s total assets (as determined in accordance with Treasury Regulations Section 1.856-2(d)) consists has consisted of “and will consist of real estate assets” assets within the meaning of Section Sections 856(c)(4) and 856(c)(5)(B) of the Code, cash and cash items (including receivables which arise in the ordinary course of PennyMac Mortgage Investment Trustthe Guarantor’s operations, but not including receivables purchased from another person), and Government Securities; unless (a) the test described in this paragraph (iii) has been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (b) the failure of such test is the result of the acquisition of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (c) PennyMac Mortgage Investment Trust delivers to Buyer prompt, but in no event more than 30 days after the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (d) such test is satisfied within the 30 day period prescribed by the last sentence of Section 856(c)(4) of the Code for such satisfaction, and (e) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfaction. (4) At the close of each quarter of each of PennyMac Mortgage Investment Trustthe Guarantor’s taxable years, (a) not more than 25 percent of the value of PennyMac Mortgage Investment TrustGuarantor’s total assets is asset value will be represented by securities (other than those described in paragraph (iii)3), (b) not more than 25 20 percent of the value of PennyMac Mortgage Investment TrustGuarantor’s total assets is asset value will be represented by securities of one or more “taxable REIT subsidiaries” (as defined in Section 856(1) of the Code), and (c) (1i) not more than 5 percent of the value of PennyMac Mortgage Investment Trustthe Guarantor’s total assets is will be represented by securities of any one issuer (other than Government Securities and securities of taxable REIT subsidiaries), and (2ii) PennyMac Mortgage Investment Trust does the Guarantor will not hold securities possessing more than 10 percent of the total voting power or value of the outstanding securities of any one issuer (other than Government Securities and Securities, securities of taxable REIT subsidiaries); unless (aa) the tests described in this paragraph (iv) have been satisfied as of the end of the immediately preceding quarter of PennyMac Mortgage Investment Trust’s taxable year, (bb) the failure of any such test is the result of the acquisition and securities of a security or property during the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, (cc) PennyMac Mortgage Investment Trust delivers to Buyer, within 10 days of the end of the quarter of PennyMac Mortgage Investment Trust’s taxable year to which such failure relates, notice that such test is not satisfied, (dd) such test is satisfied qualified REIT subsidiary within the 30 day period prescribed by the last sentence meaning of Section 856(c)(4856(i) of the Code for such satisfaction, and (ee) an officer of PennyMac Mortgage Investment Trust certifies as to such satisfaction within such 30 day period, and provides documentation reasonably satisfactory to Buyer evidencing such satisfactionCode).