UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 001-39432
Rocket Companies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 84-4946470
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1050 Woodward Avenue, Detroit, MI 48226
(Address of principal executive offices) (Zip Code)
(313) 373-7990
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A common stock, par value $0.00001 per share RKT New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☐
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of August 9, 2021, 138,406,108 shares of the registrant's Class A common stock, $0.00001 par value, and 1,848,879,483
shares of the registrant's Class D common stock, $0.00001 par value, were outstanding.
1
Rocket Companies, Inc.
Form 10-Q
For the period ended June 30, 2021
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)................................................................................................................
Condensed Consolidated Balance Sheets.................................................................................................
3
Condensed Consolidated Statements of Income and Comprehensive Income.........................................
4
Condensed Consolidated Statements of Changes in Equity.....................................................................
5
Condensed Consolidated Statements of Cash Flows................................................................................
7
Notes to Condensed Consolidated Financial Statements..........................................................................
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.....................
40
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.....................................................................
63
Item 4.
Controls and Procedures.............................................................................................................................
63
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................................................................................
64
Item 1A. Risk Factors................................................................................................................................................
64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....................................................................
64
Item 5. Other Information.......................................................................................................................................
65
Item 6. Exhibits.......................................................................................................................................................
66
Signatures....................................................................................................................................................................
67
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Rocket Companies, Inc.
Condensed Consolidated Balance Sheets
(In Thousands, Except Shares and Per Share Amounts)
June 30,
2021
December 31,
2020
Assets
(Unaudited)
Cash and cash equivalents.................................................................................................................................................
$ 1,974,997 $ 1,971,085
Restricted cash..................................................................................................................................................................
77,454 83,018
Mortgage loans held for sale, at fair value........................................................................................................................
23,194,843 22,865,106
Interest rate lock commitments (“IRLCs”), at fair value..................................................................................................
907,978 1,897,194
Mortgage servicing rights (“MSRs”), at fair value...........................................................................................................
4,644,172 2,862,685
MSRs collateral for financing liability, at fair value.........................................................................................................
— 205,033
Notes receivable and due from affiliates...........................................................................................................................
10,977 22,172
Property and equipment, net of accumulated depreciation and amortization of $531,281 and $497,812, respectively..
242,599 211,161
Deferred tax asset, net.......................................................................................................................................................
592,909 519,933
Lease right of use assets....................................................................................................................................................
304,593 238,546
Forward commitments, at fair value.................................................................................................................................
22,339 20,584
Loans subject to repurchase right from Ginnie Mae.........................................................................................................
2,769,911 5,696,608
Other assets.......................................................................................................................................................................
876,582 941,477
Total assets..........................................................................................................................................................................
$ 35,619,354 $ 37,534,602
Liabilities and equity
Liabilities
Funding facilities...........................................................................................................................................................
$ 17,221,229 $ 17,742,573
Other financing facilities and debt
Lines of credit.............................................................................................................................................................
75,000 375,000
Senior Notes, net.........................................................................................................................................................
2,975,308 2,973,046
Early buy out facility..................................................................................................................................................
2,148,959 330,266
MSRs financing liability, at fair value...........................................................................................................................
— 187,794
Accounts payable...........................................................................................................................................................
287,533 251,960
Lease liabilities..............................................................................................................................................................
345,930 272,274
Forward commitments, at fair value..............................................................................................................................
91,731 506,071
Investor reserves............................................................................................................................................................
74,202 87,191
Notes payable and due to affiliates................................................................................................................................
76,869 73,896
Tax receivable agreement liability.................................................................................................................................
669,738 550,282
Loans subject to repurchase right from Ginnie Mae......................................................................................................
2,769,911 5,696,608
Other liabilities...............................................................................................................................................................
697,136 605,485
Total liabilities.................................................................................................................................................................
$ 27,433,546 $ 29,652,446
Equity
Class A common stock, $0.00001 par value - 10,000,000,000 shares authorized, 135,978,914 and 115,372,565
shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively. .........................................
$ 1 $ 1
Class B common stock, $0.00001 par value - 6,000,000,000 shares authorized, none issued and outstanding as of
June 30, 2021 and December 31, 2020..........................................................................................................................
— —
Class C common stock, $0.00001 par value - 6,000,000,000 shares authorized, none issued and outstanding as of
June 30, 2021 and December, 31, 2020.........................................................................................................................
— —
Class D common stock, $0.00001 par value - 6,000,000,000 shares authorized, 1,848,879,483 and 1,869,079,483
shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively...........................................
19 19
Additional paid-in capital..............................................................................................................................................
363,916 282,743
Retained earnings...........................................................................................................................................................
261,351 207,422
Accumulated other comprehensive income...................................................................................................................
431 317
Non-controlling interest.................................................................................................................................................
7,560,090 7,391,654
Total equity......................................................................................................................................................................
8,185,808 7,882,156
Total liabilities and equity.................................................................................................................................................
$ 35,619,354 $ 37,534,602
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
3
Rocket Companies, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(In Thousands, Except Shares and Per Share Amounts)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Income
Revenue
Gain on sale of loans
Gain on sale of loans excluding fair value of MSRs, net.......
$ 1,484,378 $ 4,083,661 $ 3,863,656 $ 5,370,351
Fair value of originated MSRs...............................................
857,111 669,923 2,030,275 1,205,342
Gain on sale of loans, net.............................................................
2,341,489 4,753,584 5,893,931 6,575,693
Loan servicing (loss) income
Servicing fee income..............................................................
343,349 249,842 635,710 506,935
Change in fair value of MSRs................................................
(414,745) (552,844) (168,824) (1,544,096)
Loan servicing (loss) income, net................................................
(71,396) (303,002) 466,886 (1,037,161)
Interest income
Interest income.......................................................................
86,645 78,039 181,890 152,081
Interest expense on funding facilities.....................................
(64,378) (53,757) (132,222) (93,216)
Interest income, net......................................................................
22,267 24,282 49,668 58,865
Other income...............................................................................
376,388 560,949 842,500 804,725
Total revenue, net........................................................................
2,668,748 5,035,813 7,252,985 6,402,122
Expenses
Salaries, commissions and team member benefits....................
840,470 854,007 1,682,669 1,537,613
General and administrative expenses........................................
262,815 289,183 554,234 483,257
Marketing and advertising expenses.........................................
306,685 202,198 627,528 420,191
Depreciation and amortization..................................................
20,589 16,189 35,893 32,304
Interest and amortization expense on non-funding debt...........
35,038 33,168 70,609 66,275
Other expenses..........................................................................
142,454 155,538 378,185 276,673
Total expenses.............................................................................
1,608,051 1,550,283 3,349,118 2,816,313
Income before income taxes........................................................
1,060,697 3,485,530 3,903,867 3,585,809
Provision for income taxes..........................................................
(24,047) (21,448) (89,879) (22,680)
Net income...................................................................................
1,036,650 3,464,082 3,813,988 3,563,129
Net income attributable to non-controlling interest.....................
(975,530) (3,464,082) (3,629,166) (3,563,129)
Net income attributable to Rocket Companies............................
$ 61,120 $ — $ 184,822 $ —
Earnings per share of Class A common stock
Basic............................................................................................
$ 0.45 N/A $ 1.47 N/A
Diluted.........................................................................................
$ 0.40 N/A $ 1.46 N/A
Weighted average shares outstanding
Basic............................................................................................
136,139,400 N/A 125,961,094 N/A
Diluted.........................................................................................
1,991,267,972 N/A 132,100,103 N/A
Comprehensive income
Net income...................................................................................
$ 1,036,650 $ 3,464,082 $ 3,813,988 $ 3,563,129
Cumulative translation adjustment..............................................
494 719 801 (1,041)
Unrealized gain on investment securities....................................
527 7,087 163 7,087
Comprehensive income...............................................................
1,037,671 3,471,888 3,814,952 3,569,175
Comprehensive income attributable to non-controlling interest.
(976,486) (3,471,888) (3,630,072) (3,569,175)
Comprehensive income attributable to Rocket Companies.........
$ 61,185 $ — $ 184,880 $ —
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
4
Rocket Companies, Inc.
Condensed Consolidated Statements of Changes in Equity
(In Thousands, Except Shares and Per Share Amounts)
(Unaudited)
Class A
Common
Stock Shares
Class A
Common
Stock
Amount
Class D
Common
Stock Shares
Class D
Common
Stock
Amount
Additional
Paid-in
Capital
Retained
Earnings
Net Parent
Investment
Accumulated Other
Comprehensive
Income (Loss)
Total Non-
controlling
Interest
Total
Equity
Balance, December 31, 2019....
— $ — — $ — $ — $ — $ 3,510,698 $ (151) $ 5,008 $ 3,515,555
Net income (loss)..............
— — — — — — 99,487 — (440) 99,047
Other comprehensive loss.
— — — — — — — (1,439) (321) (1,760)
Net transfers to Parent.......
— — — — — — 21,919 — — 21,919
Share-based
compensation, net.............
— — — — — — 29,049 — 9 29,058
Balance, March 31, 2020..........
— $ — — $ — $ — $ — $ 3,661,153 $ (1,590) $ 4,256 $ 3,663,819
Net income (loss)..............
— — — — — — 3,464,518 — (436) 3,464,082
Other comprehensive
income...............................
— — — — — — — 588 131 719
Net transfers to Parent.......
— — — — — — (1,612,629) — — (1,612,629)
Share-based
compensation, net.............
— — — — — — 31,244 — 9 31,253
Other equity adjustment....
— — — — — — 156 (156) — —
Unrealized gain on
investment securities.........
— — — — — — — 7,087 — 7,087
Non-controlling interest
attributed to dissolution.....
— — — — — — — — (884) (884)
Balance, June 30, 2020.............
— $ — — $ — $ — $ — $ 5,544,442 $ 5,929 $ 3,076 $ 5,553,447
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
5
Rocket Companies, Inc.
Condensed Consolidated Statements of Changes in Equity (Continued)
(In Thousands, Except Shares and Per Share Amounts)
(Unaudited)
Class A
Common
Stock Shares
Class A
Common
Stock
Amount
Class D
Common
Stock Shares
Class D
Common
Stock
Amount
Additional
Paid-in
Capital
Retained
Earnings
Net Parent
Investment
Accumulated Other
Comprehensive
Income (Loss)
Total Non-
controlling
Interest
Total
Equity
Balance, December 31, 2020....
115,372,565 $ 1 1,869,079,483 $ 19 $ 282,743 $ 207,422 $ — $ 317 $ 7,391,654 $ 7,882,156
Net income.........................
— — — — — 123,702 — — 2,653,636 2,777,338
Other comprehensive
income................................
— — — — — — — 14 293 307
Share-based compensation,
net.......................................
2,300 — — — 2,116 — — — 37,033 39,149
Unrealized loss on
investment securities..........
— — — — — — — (21) (343) (364)
Distributions for state taxes
on behalf of unit holders
(members), net....................
— — — — — (281) — — (4,559) (4,840)
Distributions to unit
holders (members) from
subsidiary investment.........
— — — — — — — — (2,242,999) (2,242,999)
Special Dividend to Class
A Shareholders...................
— — — — — (145,903) — — — (145,903)
Increase in controlling
interest of investment, net
of income taxes and Tax
receivable agreement
liability...............................
20,200,000 — (20,200,000) — 85,351 (1) — 55 (84,420) 985
Balance, March 31, 2021..........
135,574,865 $ 1 1,848,879,483 $ 19 $ 370,210 $ 184,939 $ — $ 365 $ 7,750,295 $ 8,305,829
Net income.........................
— — — — — 61,120 — — 975,530 1,036,650
Other comprehensive
income................................
— — — — — — — 29 465 494
Share-based compensation,
net.......................................
4,177 — — — 2,621 — — — 35,622 38,243
Unrealized gain on
investment securities..........
— — — — — — — 36 491 527
Distributions for state taxes
on behalf of unit holders
(members), net....................
— — — — — (1,346) — — (18,255) (19,601)
Distributions to unit
holders (members) from
subsidiary investment.........
— — — — — — — — (1,188,294) (1,188,294)
Special Dividend to Class
A Shareholders...................
— — — — — 211 — — 111 322
Pushdown of dividend
equivalent...........................
— — — — — 16,427 — — (16,427) —
Issuance of Class A
Common Shares under
stock compensation and
benefit plans.......................
896,701 — — — 1,369 — — — 18,582 19,951
Repurchase of Class A
Common Shares.................
(496,829) — — — (8,313) — — — — (8,313)
Increase in controlling
interest of investment, net
of income taxes and Tax
receivable agreement
liability...............................
— — — — (1,971) — — 1 1,970 —
Balance, June 30, 2021.............
135,978,914 $ 1 1,848,879,483 $ 19 $ 363,916 $ 261,351 $ — $ 431 $ 7,560,090 $ 8,185,808
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
6
Rocket Companies, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Six Months Ended June 30,
2021 2020
Operating activities
Net income ...................................................................................................................................................................
$ 3,813,988 $ 3,563,129
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization...............................................................................................................................
35,893 32,304
Provision for deferred income taxes.......................................................................................................................
52,321 —
Origination of mortgage servicing rights................................................................................................................
(2,030,275) (1,205,342)
Change in fair value of MSRs................................................................................................................................
168,824 1,544,096
Gain on sale of loans excluding fair value of MSRs, net.......................................................................................
(3,863,656) (5,370,351)
Disbursements of mortgage loans held for sale......................................................................................................
(187,979,171) (122,056,424)
Proceeds from sale of loans held for sale...............................................................................................................
192,053,145 121,563,404
Share-based compensation expense.......................................................................................................................
83,002 60,312
Change in assets and liabilities
Due from affiliates...............................................................................................................................................
11,195 —
Other assets..........................................................................................................................................................
(15,486) (200,685)
Accounts payable.................................................................................................................................................
35,574 62,343
Due to affiliates...................................................................................................................................................
2,619 24,679
Premium recapture and indemnification losses paid...........................................................................................
980 (738)
Other liabilities....................................................................................................................................................
188,738 72,203
Total adjustments.................................................................................................................................................
$ (1,256,297) $ (5,474,199)
Net cash provided by (used in) operating activities.....................................................................................................
$ 2,557,691 $ (1,911,070)
Investing activities
Proceeds from sale of MSRs.....................................................................................................................................
$ 93,398 $ 185,768
Net decrease in notes receivable from affiliates........................................................................................................
— 60,516
(Increase) decrease in mortgage loans held for investment.......................................................................................
(30,687) 5,130
Net increase in investment securities.........................................................................................................................
— (2,500)
Purchase and other additions of property and equipment, net of disposals...............................................................
(67,665) (48,031)
Net cash (used in) provided by investing activities......................................................................................................
$ (4,954) $ 200,883
Financing activities
Net (payments) borrowings on funding facilities......................................................................................................
$ (521,343) $ 3,643,982
Net payments on lines of credit.................................................................................................................................
(300,000) (5,000)
Net borrowings on early buy out facility...................................................................................................................
1,818,693 45,504
Net borrowings notes payable from unconsolidated affiliates..................................................................................
353 384
Proceeds from MSRs financing liability...................................................................................................................
21,635 14,121
Stock issuance...........................................................................................................................................................
17,591 —
Share repurchase........................................................................................................................................................
(8,313) —
Distributions to other unit holders (members) of Holdings.......................................................................................
(3,583,806) —
Net transfer to parent.................................................................................................................................................
— (1,591,595)
Net cash (used in) provided by financing activities.....................................................................................................
$ (2,555,190) $ 2,107,396
Effects of exchange rate changes on cash and cash equivalents..................................................................................
801 (1,040)
Net (decrease) increase in cash and cash equivalents and restricted cash....................................................................
(1,652) 396,169
Cash and cash equivalents and restricted cash, beginning of period............................................................................
2,054,103 1,455,725
Cash and cash equivalents and restricted cash, end of period......................................................................................
$ 2,052,451 $ 1,851,894
Non-cash activities
Loans transferred to other real estate owned.............................................................................................................
$ 877 $ 688
Supplemental disclosures
Cash paid for interest on related party borrowings....................................................................................................
$ 2,127 $ 2,023
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
7
1. Business, Basis of Presentation and Accounting Policies
Rocket Companies, Inc. (the "Company", and together with its consolidated subsidiaries, "Rocket Companies", "we", "us",
"our") was incorporated in Delaware on February 26, 2020 as a wholly owned subsidiary of Rock Holdings Inc. ("RHI") for
the purpose of facilitating an initial public offering ("IPO") of its Class A common stock, $0.00001 par value (the “Class A
common stock”) and other related transactions in order to carry on the business of RKT Holdings, LLC ("Holdings") and its
wholly owned subsidiaries.
We are a Detroit-based holding company consisting of tech-driven real estate, mortgage and eCommerce businesses. We are
committed to providing an industry-leading client experience powered by our platform. In addition to Rocket Mortgage, the
nation’s largest mortgage lender, we have expanded into complementary industries, such as real estate services, personal
lending, and auto sales where we seek to deliver innovative client solutions leveraging our Rocket platform. Our business
operations are organized into the following two segments: (1) Direct to Consumer and (2) Partner Network, refer to Note 12,
Segments.
Rocket Companies, Inc. is a holding company. Its primary material asset is the equity interest in Holdings which, through its
direct and indirect subsidiaries, conducts all of the Company's operations. Holdings is a Michigan limited liability company
and wholly owns the following entities, with each entity's subsidiaries identified in parentheses: Rocket Mortgage, LLC
(formerly known as Quicken Loans, LLC), Amrock Holdings, LLC (“Amrock”, "Amrock Title Insurance Company" and
"Nexsys Technologies LLC"), LMB HoldCo LLC (“Core Digital Media”), RCRA Holdings LLC (“Rock Connections” and
“Rocket Auto”), Rocket Homes Real Estate LLC (“Rocket Homes”), RockLoans Holdings LLC (“Rocket Loans”), Rock
Central LLC, EFB Holdings Inc. (“Edison Financial”), Lendesk Canada Holdings Inc., RockTech Canada Inc., and
Woodward Capital Management LLC. As used herein, “Rocket Mortgage” refers to either the Rocket Mortgage brand or
platform, or the Quicken Loans business, as the context allows.
Quicken Loans, LLC, changed its name to “Rocket Mortgage, LLC.”, effective as of July 31, 2021, pursuant to the filing of a
Certificate of Amendment to the Articles of Organization with the Michigan Department of Licensing and Regulatory
Affairs, Corporations, Securities & Commercial Licensing Bureau.
Initial Public Offering
On August 10, 2020 we completed the IPO of our common stock pursuant to a Registration Statement on Form S-1 (File No.
333-239726), which closed on August 10, 2020. In the IPO, we sold an aggregate of 115,000,000 shares of Class A common
stock, including 15,000,000 shares purchased by the underwriters on September 9, 2020. Rocket Companies, Inc. received
net proceeds from the IPO of approximately $2,023,000 after deducting underwriting discounts and commissions, all of
which was used to purchase 115,000,000 non-voting membership units of Holdings (the “Holdings Units”) and shares of
Class D common stock from RHI.
Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, is itself generally not subject to U.S.
federal income tax under current U.S. tax laws. Each member of Holdings will be required to take into account for U.S.
federal income tax purposes its distributive share of the items of income, gain, loss and deduction of Holdings. As indicated
in Note 8, Income Taxes, the Company is party to a Tax Receivable Agreement.
Basis of Presentation and Consolidation
Prior to the completion of the initial public offering, RHI, Holdings and its subsidiaries consummated an internal
reorganization in which Rocket Companies, Inc. became the sole managing member of Holdings. Prior to the reorganization,
Rocket Companies, Inc. had no operations.
As the sole managing member of Holdings, the Company operates and controls all of the business affairs of Holdings, and
through Holdings and its subsidiaries, conducts its business. Holdings is considered a variable interest entity (“VIE”) and we
consolidate the financial results of Holdings under the guidance of ASC 810, Consolidation. A portion of our net income is
allocated to the non-controlling interest holders. For further details, refer to Note 13, Variable Interest Entities and Note 14,
Non-controlling Interests.
Rocket Companies, Inc.
Notes to Unaudited Condensed Combined Financial Statements
(Dollars in Thousands, Except Shares and Per Share)
8
Income from Holdings and its subsidiaries prior to the reorganization and IPO has been accounted for as a non-controlling
interest in our Condensed Consolidated Statements of Income and Comprehensive Income. Accumulated net income prior to
the reorganization and IPO is presented in net parent investment in our Condensed Consolidated Statements of Changes in
Equity as the financial statements prior to the reorganization and IPO reflect combined subsidiaries operating as part of RHI.
We have accounted for the reorganization as one of entities under common control and the net parent investment was
allocated between non-controlling interest and additional paid-in capital based on the ownership of Holdings.
Our condensed consolidated financial statements for periods prior to the reorganization and IPO reflect the combined
subsidiaries that historically operated as part of RHI. We have further adjusted the prior period results for the three and six
months ended June 30, 2020, to retrospectively reflect the acquisition of Amrock Title Insurance Company (“ATI”) which
qualified as a common control transaction as discussed further below in the Acquisition Agreement section.
All significant intercompany transactions and accounts between the businesses comprising the Company have been
eliminated in the accompanying condensed consolidated financial statements.
All transactions and accounts between RHI and other related parties with the Company have a history of settlement or will be
settled for cash and are reflected as related party transactions. For further details of the Company’s related party transactions
refer to Note 6, Transactions with Related Parties.
Our condensed consolidated financial statements are unaudited and presented in U.S. dollars. They have been prepared in
accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the
rules and regulations of the Securities and Exchange Commission (“SEC”). The interim financial information should be read
in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2020, as filed with the SEC. In our opinion, these condensed consolidated
financial statements include all normal and recurring adjustments considered necessary for a fair statement of our results of
operations, financial position and cash flows for the periods presented. However, our results of operations for any interim
period are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.
Acquisition Agreement
On August 5, 2020, Rocket Companies, Inc. entered into an acquisition agreement with RHI and its direct subsidiary Amrock
Holdings Inc. pursuant to which we acquired ATI, a title insurance underwriting business, for total aggregate consideration of
$14,400 that consisted of 800,000 Holdings Units and shares of Rocket Companies, Inc. Class D common stock valued at the
initial public offering price of $18.00 per share (the number of shares issued equals the purchase price divided by the price to
the public in our initial public offering), the acquisition closed on August 14, 2020 subsequent to the IPO date on August 10,
2020. ATI's net income for the year ended December 31, 2019 was $4,700. Because the Acquisition was a transaction
between commonly controlled entities, U.S. GAAP requires the retrospective combination of the entities for all periods
presented as if the combination had been in effect since the inception of common control. Accordingly, the Company’s
condensed consolidated financial statements included in this Form 10-Q, including for the three and six months ended
June 30, 2020, reflect the retrospective combination of the entities as if the combination had been in effect since inception of
common control.
Management Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Although management is not currently aware of any factors that would significantly change its estimates
and assumptions, actual results may differ from these estimates.
Subsequent Events
In preparing these condensed consolidated financial statements, the Company evaluated events and transactions for potential
recognition or disclosure through the date these condensed consolidated financial statements were issued. Refer to Note 5,
Borrowings for disclosures on changes to the Company’s debt agreements that occurred subsequent to June 30, 2021.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
9
Subsequent to June 30, 2021, the Company sold MSRs relating to certain single-family mortgage loans with an aggregate
unpaid principal balance of approximately $35.3 billion and a fair market value of approximately $373 million as of June 30,
2021. The sales represented approximately 7.6% of the Company's total single-family mortgage servicing portfolio as of June
30, 2021.
In July 2021, the Company purchased MSRs relating to certain single-family mortgage loans with an aggregate unpaid
principal balance of approximately $3.6 billion and a fair market value of approximately $38 million as of June 30, 2021.
Special Dividend
On February 25, 2021, our board of directors authorized and declared a cash dividend (the "Special Dividend") of $1.11 per
share to the holders of our Class A common stock. The Special Dividend was paid on March 23, 2021 to holders of the Class
A common stock of record as of the close of business on March 9, 2021. The Company funded the Special Dividend from
cash distributions of approximately $2.2 billion by RKT Holdings, LLC to all of its members, including the Company.
Revenue Recognition
Gain on sale of loans, net—Gain on sale of loans, net includes all components related to the origination and sale of mortgage
loans, including (1) net gain on sale of loans, which represents the premium we receive in excess of the loan principal amount
and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points
and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and
loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock
commitments (IRLCs), and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized
at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans
held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any
difference between the proceeds received and the current fair value of the loan is recognized in current period earnings in
Gain on sale of loans, net. Included in Gain on sale of loans, net is the fair value of originated MSRs, which represents the
estimated fair value of MSRs related to loans which we have sold and retained the right to service. Refer to Note 3, Mortgage
Servicing Rights for information related to the gain/(loss) on changes in the fair value of MSRs.
Loan servicing (loss) income, net includes income from servicing, sub-servicing and ancillary fees, and is recorded to income
as earned, which is upon collection of payments from borrowers. This amount also includes the Change in fair value of
MSRs, which is the adjustment for the fair value measurement of the MSRs asset as of the respective balance sheet date.
Interest income, net—Interest income includes interest earned on mortgage loans held for sale and mortgage loans held for
investment net of the interest expense paid on our loan funding facilities. Interest income is recorded as earned and interest
expense is recorded as incurred.
Other income—Other income is derived primarily from lead generation revenue, professional service fees, real estate
network referral fees, contact center revenue, personal loans business, closing fees, net appraisal revenue, and net title
insurance fees.
The following revenue streams fall within the scope of ASC Topic 606—Revenue from Contracts with Customers and are
disaggregated hereunder:
Core Digital Media lead generation revenue—The Company recognizes online consumer acquisition revenue based
on successful delivery of marketing leads to a client at a fixed fee per lead. This service is satisfied at the time the
lead is delivered, at which time revenue for the service is recognized. Online consumer acquisition revenue, net of
intercompany eliminations, were $8,084 and $5,504 for the three months ended June 30, 2021 and 2020,
respectively and $14,764 and $13,064 for the six months ended June 30, 2021 and 2020, respectively.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
10
Professional service fees—The Company recognizes professional service fee revenue based on the delivery of
services (e.g., human resources, technology, training) over the term of a contract. Consideration for the promised
services is received through a combination of a fixed fee for the period and incremental fees paid for optional
services that are available at an incremental rate determined at the time such services are requested. The Company
recognizes the annual fee ratably over the life of the contract, as the performance obligation is satisfied equally over
the term of the contract. For the optional services, revenue is only recognized at the time the services are requested
and delivered and pricing is agreed upon. Professional service fee revenues were $3,198 and $1,920 for the three
months ended June 30, 2021 and 2020, respectively and $6,747 and $3,755 for the six months ended June 30, 2021
and 2020, respectively, and were rendered entirely to related parties.
Rocket Homes real estate network referral fees—The Company recognizes real estate network referral fee revenue
based on arrangements with partner agencies contingent on the closing of a transaction. As this revenue stream is
variable, and is contingent on the successful transaction close, the revenue is constrained until the occurrence of the
transaction. At this point, the constraint on recognizing revenue is deemed to have been lifted and revenue is
recognized for the consideration expected to be received. Real estate network referral fees, net of intercompany
eliminations, were $14,132 and $11,837 for the three months ended June 30, 2021 and 2020, respectively and
$23,709 and $19,825 for the six months ended June 30, 2021 and 2020, respectively.
Rock Connections and Rocket Auto contact center revenue—The Company recognizes contact center revenue for
communication services including client support and sales. Consideration received mainly includes a fixed base fee
and/or a variable contingent fee. The fixed base fee is recognized ratably over the period of performance, as the
performance obligation is considered to be satisfied equally throughout the service period. The variable contingent
fee related to car sales is constrained until the sale of the car is completed. Contact center revenues, net of
intercompany eliminations, were $12,291 and $5,816 for the three months ended June 30, 2021 and 2020,
respectively and $23,922 and $13,157 for the six months ended June 30, 2021 and 2020, respectively.
Amrock closing fees—The Company recognizes closing fees for non-recurring services provided in connection with
the origination of the loan. These fees are recognized at the time of loan closing for purchase transactions or at the
end of a client's three-day rescission period for refinance transactions, which represents the point in time the loan
closing services performance obligation is satisfied. The consideration received for closing services is a fixed fee per
loan that varies by state and loan type. Closing fees were $117,962 and $106,038 for the three months ended
June 30, 2021 and 2020, respectively and $275,128 and $179,525 for the six months ended June 30, 2021 and 2020,
respectively.
Amrock appraisal revenue, net—The Company recognizes appraisal revenue when the appraisal service is
completed. The Company may choose to deliver appraisal services directly to its client or subcontract such services
to a third-party licensed and/or certified appraiser. In instances where the Company performs the appraisal, revenue
is recognized as the gross amount of consideration received at a fixed price per appraisal. The Company is an agent
in instances where a third-party appraiser is involved in the delivery of appraisal services and revenue is recognized
net of third-party appraisal expenses. Appraisal revenue, net was $23,079 and $20,781 for the three months ended
June 30, 2021 and 2020, respectively and $45,570 and $38,399 for the six months ended June 30, 2021 and 2020,
respectively.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash
equivalents. We maintain our bank accounts with a relatively small number of high-quality financial institutions.
Restricted cash as of June 30, 2021 and 2020 consisted of cash on deposit for a repurchase facility and client application
deposits, title premiums collected from the insured that are due to the underwritten insurance company and a $25,000 bond.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
11
June 30,
2021 2020
Cash and cash equivalents........................................................................................................
$ 1,974,997 $ 1,773,527
Restricted cash.........................................................................................................................
77,454 78,367
Total cash, cash equivalents, and restricted cash in the statement of cash flows....................
$ 2,052,451 $ 1,851,894
Loans subject to repurchase right from Ginnie Mae
For certain loans sold to Ginnie Mae, the Company as the servicer has the unilateral right to repurchase any individual loan in
a Ginnie Mae securitization pool if that loan meets defined criteria, including being delinquent more than 90 days. Once the
Company has the unilateral right to repurchase the delinquent loan, the Company has effectively regained control over the
loan and must re-recognize the loan on the Condensed Consolidated Balance Sheets and establish a corresponding finance
liability regardless of the Company's intention to repurchase the loan. The asset and corresponding liability are recorded at
the unpaid principal balance of the loan, which approximates its fair value.
Accounting Standards Issued but Not Yet Adopted
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.
2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope to clarify that Topic 848 is
applicable to many derivative instruments and hedging relationships.
Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract
modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate
(“LIBOR”) by the end of 2022. This guidance is effective upon issuance and allows application to contract changes as early
as January 1, 2020. The Company is in the process of transitioning its funding facilities and financing facilities that utilize
LIBOR as the reference rate by adding alternative base rate language which may include the Secured Overnight Financing
Rate ("SOFR"). For contracts to which ASC Topic 470, Debt applies, we have applied the optional expedients available from
ASU 2020-04 and accounted for the contract modifications related to reference rate reform prospectively. Of the contracts
that have been adjusted for the new reference rate, there has been an immaterial impact on the condensed consolidated
financial statements. The Company is continuing to evaluate the impact that the adoption of this ASU will have on the
condensed consolidated financial statements and related disclosures.
2. Fair Value Measurements
Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an
orderly transaction between willing market participants at the measurement date. Required disclosures include classification
of fair value measurements within a three-level hierarchy (Level 1, Level 2, and Level 3). Classification of a fair value
measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair
value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available
market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions.
Fair value measurements are classified in the following manner:
Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement
date.
Level 2—Valuation is based on either observable prices for identical assets or liabilities in inactive markets,
observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation
to, observable market data at the measurement date.
Level 3—Valuation is based on the Company’s internal models using assumptions at the measurement date that a
market participant would use.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
12
In determining fair value measurement, the Company uses observable inputs whenever possible. The level of a fair value
measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement
as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices
are used in the measurements. If observable market data is not available at the measurement date, judgment is required to
measure fair value.
The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There were no
material items recorded at fair value on a nonrecurring basis as of June 30, 2021 or December 31, 2020.
Mortgage loans held for sale: Loans held for sale that trade in active secondary markets are valued using Level 2
measurements derived from observable market data, including market prices of securities backed by similar
mortgage loans adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the
value attributable to mortgage servicing and credit risk. Loans held for sale for which there is little to no observable
trading activity of similar instruments are valued using Level 3 measurements based upon dealer price quotes.
IRLCs: The fair value of IRLCs is based on current market prices of securities backed by similar mortgage loans (as
determined above under mortgage loans held for sale), net of costs to close the loans, subject to the estimated loan
funding probability, or “pull-through factor”. Given the significant and unobservable nature of the pull-through
factor, IRLCs are classified as Level 3.
MSRs: The fair value of MSRs (including MSRs collateral for financing liability and MSRs financing liability) is
determined using a valuation model that calculates the present value of estimated net future cash flows. The model
includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee
income, and ancillary income among others. These fair value measurements are classified as Level 3.
Forward commitments: The Company’s forward commitments are valued based on quoted prices for similar assets
in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
13
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The table below shows a summary of financial statement items that are measured at estimated fair value on a recurring basis,
including assets measured under the fair value option. There were no material transfers of assets or liabilities recorded at fair
value on a recurring basis between Levels 1, 2 or 3 during the six months ended June 30, 2021 or the year ended
December 31, 2020.
Level 1 Level 2 Level 3 Total
Balance at June 30, 2021
Assets:
Mortgage loans held for sale.................................................
$ — $ 20,615,530 $ 2,579,313 $ 23,194,843
IRLCs....................................................................................
— — 907,978 907,978
MSRs.....................................................................................
— — 4,644,172 4,644,172
Forward commitments..........................................................
— 22,339 — 22,339
Total assets
$ — $ 20,637,869 $ 8,131,463 $ 28,769,332
Liabilities:
Forward commitments..........................................................
$ — $ 91,731 $ — $ 91,731
Total liabilities
$ — $ 91,731 $ — $ 91,731
Balance at December 31, 2020
Assets:
Mortgage loans held for sale.................................................
$ — $ 22,285,440 $ 579,666 $ 22,865,106
IRLCs....................................................................................
— — 1,897,194 1,897,194
MSRs.....................................................................................
— — 2,862,685 2,862,685
MSRs collateral for financing liability (1)............................
— — 205,033 205,033
Forward commitments..........................................................
— 20,584 — 20,584
Total assets
$ — $ 22,306,024 $ 5,544,578 $ 27,850,602
Liabilities:
Forward commitments..........................................................
$ — $ 506,071 $ — $ 506,071
MSRs financing liability (1).................................................
— — 187,794 187,794
Total liabilities
$ — $ 506,071 $ 187,794 $ 693,865
(1) Refer to Note 3, Mortgage Servicing Rights for further information regarding both the MSRs collateral for financing
liability and MSRs financing liability.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
14
The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair
value measurements as of:
June 30, 2021 December 31, 2020
Unobservable Input Range
Weighted
Average Range
Weighted
Average
Mortgage loans held for sale
Dealer pricing.............................................................
87% - 104% 100 % 89% - 105% 99 %
IRLCs
Loan funding probability...........................................
0% - 100% 77 % 0% - 100% 74 %
MSRs, MSRs collateral for financing liability, and
MSRs financing liability
Discount rate..............................................................
9.5% - 12.0% 9.9 % 9.5% - 12.0% 9.9 %
Conditional prepayment rate......................................
6.8% - 57.6% 10.5 % 6.6% - 52.1% 15.8 %
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
15
The table below presents a reconciliation of Level 3 assets measured at fair value on a recurring basis for the three and six
months ended June 30, 2021 and 2020. Mortgage servicing rights (including MSRs collateral for financing liability and
MSRs financing liability) are also classified as a Level 3 asset measured at fair value on a recurring basis and its
reconciliation is found in Note 3, Mortgage Servicing Rights.
Loans Held for Sale IRLCs
Balance at March 31, 2021........................................................................................
$ 990,834 $ 765,215
Transfers in (1).......................................................................................................
2,065,406 —
Transfers out/principal reductions (1)....................................................................
(473,948) —
Net transfers and revaluation gains........................................................................
— 142,763
Total losses included in net income........................................................................
(2,979) —
Balance at June 30, 2021...........................................................................................
$ 2,579,313 $ 907,978
Balance at March 31, 2020..........................................................................................
$ 418,090 $ 1,214,865
Transfers in (1).......................................................................................................
242,904 —
Transfers out/principal reductions (1)....................................................................
(235,617) —
Net transfers and revaluation gains........................................................................
— 1,178,899
Total losses included in net income........................................................................
(9,277) —
Balance at June 30, 2020.............................................................................................
$ 416,100 $ 2,393,764
Balance at December 31, 2020..................................................................................
$ 579,666 $ 1,897,194
Transfers in (1).......................................................................................................
2,783,564 —
Transfers out/principal reductions (1)....................................................................
(781,410) —
Net transfers and revaluation losses.......................................................................
— (989,216)
Total losses included in net income........................................................................
(2,507) —
Balance at June 30, 2021...........................................................................................
$ 2,579,313 $ 907,978
Balance at December 31, 2019....................................................................................
$ 308,793 $ 508,135
Transfers in (1).......................................................................................................
783,763 —
Transfers out/principal reductions (1)....................................................................
(660,986) —
Net transfers and revaluation gains........................................................................
— 1,885,629
Total losses included in net income........................................................................
(15,470) —
Balance at June 30, 2020.............................................................................................
$ 416,100 $ 2,393,764
(1) Transfers in represent loans repurchased from investors or loans originated for which an active market currently
does not exist. Transfers out primarily represent loans sold to third parties and loans paid in full.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
16
Fair Value Option
The following is the estimated fair value and unpaid principal balance (“UPB”) of mortgage loans held for sale that have
contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected
for mortgage loans held for sale as the Company believes fair value best reflects their expected future economic performance:
Fair Value
Unpaid
Principal
Balance Difference (1)
Balance at June 30, 2021.................................................................
$ 23,194,843 $ 22,691,966 $ 502,877
Balance at December 31, 2020.........................................................
$ 22,865,106 $ 21,834,817 $ 1,030,289
(1) Represents the amount of gains included in Gain on sale of loans, net due to changes in fair value of items accounted
for using the fair value option.
Disclosures of the fair value of certain financial instruments are required when it is practical to estimate the value. In cases
where quoted market prices are not available, fair values are based on estimates using present value or other valuation
techniques.
The following table presents the carrying amounts and estimated fair value of financial liabilities that are not recorded at fair
value on a recurring or nonrecurring basis. This table excludes cash and cash equivalents, restricted cash, warehouse
borrowings, and line of credit borrowing facilities as these financial instruments are highly liquid or short-term in nature and
as a result, their carrying amounts approximate fair value:
June 30, 2021 December 31, 2020
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Senior Notes, due 1/15/2028.................................................
$ 996,070 $ 1,060,722 $ 994,986 $ 1,079,629
Senior Notes, due 3/1/2029...................................................
$ 742,448 $ 740,693 $ 741,946 $ 766,365
Senior Notes, due 3/1/2031...................................................
$ 1,236,790 $ 1,253,838 $ 1,236,114 $ 1,298,175
The fair value of Senior Notes was calculated using the observable bond price at June 30, 2021 and December 31, 2020,
respectively. The Senior Notes are classified as Level 2 in the fair value hierarchy.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
17
3. Mortgage Servicing Rights
Mortgage servicing rights are recognized as assets on the Condensed Consolidated Balance Sheets when loans are sold, and
the associated servicing rights are retained. The Company maintains one class of MSRs asset and has elected the fair value
option. These MSRs are recorded at fair value, which is determined using a valuation model that calculates the present value
of estimated future net servicing fee income. The model includes estimates of prepayment speeds, discount rate, cost to
service, float earnings, contractual servicing fee income, and ancillary income and late fees, among others.
The following table summarizes changes to the MSRs assets for the three and six months ended:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Fair value, beginning of period..............................
$ 4,304,762 $ 2,170,638 $ 2,862,685 $ 2,874,972
MSRs originated...............................................
857,111 669,923 2,030,275 1,205,342
MSRs sales........................................................
(83,195) — (99,060) (186,292)
Changes in fair value:
Due to changes in valuation model inputs
or assumptions (1)........................................
(141,073) (272,885) 442,234 (1,078,421)
Due to collection/realization of cash flows..
(293,433) (278,467) (591,962) (526,392)
Total changes in fair value.....................................
(434,506) (551,352) (149,728) (1,604,813)
Fair value, end of period........................................
$ 4,644,172 $ 2,289,209 $ 4,644,172 $ 2,289,209
(1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes
in market interest rates. Does not include the change in fair value of derivatives that economically hedge MSRs
identified for sale.
The total UPB of mortgage loans serviced, excluding subserviced loans, at June 30, 2021 and December 31, 2020 was
$466,444,905 and $371,494,905, respectively. The portfolio primarily consists of high-quality performing agency and
government (FHA and VA) loans. As of June 30, 2021, delinquent loans (defined as 60-plus days past-due) were 2.60% of
our total portfolio. Excluding clients in COVID-19 related forbearance plans, our delinquent loans (defined as 60-plus days
past-due) were 0.71% as of June 30, 2021.
During the first quarter of 2021 and fourth quarter of 2020, the Company sold MSRs with a fair value of $4,885 and
$193,739, respectively, relating to certain single-family mortgage loans. Based on the contract terms, the sale of those MSRs
did not immediately qualify for sale accounting treatment under U.S. GAAP. As a result, the Company was required to retain
the MSRs asset (i.e., MSRs collateral for financing liability, at fair value) and the MSRs liability (i.e., MSRs financing
liability, at fair value) on the balance sheet until certain contractual provisions lapsed during the second quarter of 2021.
These MSRs were reported on the balance sheet at fair value using a valuation methodology consistent with the Company’s
method for valuing MSRs until those contractual provisions lapsed. Additionally, the terms of the agreement require quarterly
adjustments to the sales price for changes in prepayment rates at the time of sale for a period of six months. Furthermore, in
the six months ended June 30, 2021, the Company also sold MSRs with a fair value of $94,175 relating to certain mortgage
loans, which qualified for sale accounting treatment under U.S. GAAP.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
18
During the third quarter of 2019, the Company sold MSRs with a fair value of $340,303 relating to certain single-family
mortgage loans. Based on the contract terms, the sale of those MSRs did not immediately qualify for sale accounting
treatment under U.S. GAAP. As a result, the Company was required to retain the MSRs asset and the MSRs liability on the
balance sheet until certain contractual provisions lapsed after June 2020. These MSRs were reported on the balance sheet at
fair value using a valuation methodology consistent with the Company’s method for valuing MSRs until those contractual
provisions lapsed. In addition, change in FMV of the MSRs asset and liability from this sale is captured within Loan
servicing (loss) income, net in the Condensed Consolidated Statements of Income and Comprehensive Income. The
unrealized gain of $14,911 and $131,061 relating to the MSRs liability and the offsetting unrealized loss of $14,911 and
$131,061 relating to the MSRs asset were recorded in current operations for the three and six months ended June 30, 2020.
Furthermore, in the six months ended June 30, 2020, the Company sold MSRs with a fair value of $186,292 relating to
certain mortgage loans, all of which qualified for sale accounting treatment under U.S. GAAP.
The following is a summary of the weighted average discount rate and prepayment speed assumptions used to determine the
fair value of MSRs as well as the expected life of the loans in the servicing portfolio:
June 30, 2021 December 31, 2020
Discount rate....................................................................................................
9.9 % 9.9 %
Prepayment speeds..........................................................................................
10.5 % 15.8 %
Life (in years)..................................................................................................
6.65 5.05
The key assumptions used to estimate the fair value of MSRs are prepayment speeds and the discount rate. Increases in
prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a
declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the
estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect
on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of
MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows
increase. Increases in the discount rate result in a lower MSRs value and decreases in the discount rate result in a higher
MSRs value. MSRs uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes
in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties.
The following table stresses the discount rate and prepayment speeds at two different data points:
Discount Rate Prepayment Speeds
100 BPS
Adverse
Change
200 BPS
Adverse
Change
10%
Adverse
Change
20%
Adverse
Change
June 30, 2021
Mortgage servicing rights...................................................
$ (193,419) $ (361,577) $ (157,732) $ (314,225)
December 31, 2020
Mortgage servicing rights.....................................................
$ (115,130) $ (212,119) $ (147,420) $ (279,691)
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
19
4. Mortgage Loans Held for Sale
The Company sells substantially all of its originated mortgage loans into the secondary market. The Company may retain the
right to service some of these loans upon sale through ownership of servicing rights. A reconciliation of the changes in
mortgage loans held for sale to the amounts presented on the Condensed Consolidated Statements of Cash Flows is below:
Six Months Ended June 30,
2021 2020
Balance at the beginning of period.............................................................
$ 22,865,106 $ 13,275,735
Disbursements of mortgage loans held for sale..........................................
187,979,171 122,056,424
Proceeds from sales of mortgage loans held for sale (1)............................
(192,043,819) (121,559,129)
Gain on sale of mortgage loans excluding fair value of other financial
instruments, net (2).....................................................................................
4,394,385 3,855,505
Balance at the end of period.......................................................................
$ 23,194,843 $ 17,628,535
(1) The proceeds from sales of loans held for sale on the Condensed Consolidated Statements of Cash Flows includes
amounts related to the sale of consumer loans.
(2) The Gain on sale of loans excluding fair value of MSRs, net on the Condensed Consolidated Statements of Cash
Flows includes amounts related to the sale of consumer loans, interest rate lock commitments, forward
commitments, and provisions for investor reserves.
Credit Risk
The Company is subject to credit risk associated with mortgage loans that it purchases and originates during the period of
time prior to the sale of these loans. The Company considers credit risk and losses associated with these loans to be
insignificant as it holds the loans for a short period of time, which for the six months ended June 30, 2021 is, on average,
approximately 17 days from the date of borrowing, and the market for these loans continues to be highly liquid. The
Company is also subject to credit risk associated with mortgage loans it has repurchased as a result of breaches of
representations and warranties during the period of time between repurchase and resale.
5. Borrowings
The Company maintains various funding facilities and other non-funding debt as shown in the tables below. Interest rates
typically have two main components – a base rate most commonly LIBOR or SOFR, which is sometimes subject to a
minimum floor plus a spread. Some facilities have a commitment fee, which can range from 0.0% to 0.50%. The commitment
fee charged by lenders for each of the facilities is an annual fee and is calculated based on the committed line amount
multiplied by a negotiated rate. The Company is required to maintain certain covenants, including minimum tangible net
worth, minimum liquidity, maximum total debt or liabilities to net worth ratio, pretax net income requirements, and other
customary debt covenants, as defined in the agreements. The Company was in compliance with all covenants as of June 30,
2021.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
20
The amount owed and outstanding on the Company’s loan funding facilities fluctuates greatly based on its origination
volume, the amount of time it takes the Company to sell the loans it originates, and the Company’s ability to use the cash to
self-fund loans. In addition to self-funding, the Company may from time to time use surplus cash to “buy-down” the effective
interest rate of certain loan funding facilities or to self-fund a portion of our loan originations. As of June 30, 2021,
$2,935,563 of the Company’s cash was used to buy-down our funding facilities and self-fund, $500,000 of which are buy-
down funds that are included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets and an estimated
$2,435,563 of which is discretionary self-funding that reduces Cash and cash equivalents on the Condensed Consolidated
Balance Sheets. The Company has the right to withdraw the $500,000 at any time, unless a margin call has been made or a
default has occurred under the relevant facilities. The Company has an estimated $2,435,563 of discretionary self-funded
loans, of which a portion can be transferred to a warehouse line or the early buy out line, provided that such loans meet the
eligibility criteria to be placed on such lines. The remaining portion will be funded in normal course over a short period of
time, generally less than one month. A large unanticipated margin call could also have a material adverse effect on the
Company’s liquidity. Furthermore, refer to Note 3, Mortgage Servicing Rights for additional information regarding the MSRs
financing liability with the MSRs sold during the fourth quarter of 2020.
The terms of the Senior Notes restrict our ability and the ability of our subsidiary guarantors among other things to: (1) incur
additional debt or issue preferred stock; (2) pay dividends or make distributions in respect of capital stock; (3) purchase or
redeem capital stock; (4) make investments or other restricted payments; (5) sell assets; (6) enter into transactions with
affiliates; (7) effect a consolidation or merger, taken as a whole; (8) designate our subsidiaries as unrestricted subsidiaries,
unless certain conditions are met, as defined in the agreements; (9) merge, consolidate or sell, transfer or lease assets, and;
(10) create liens on assets. Items (1) through (9) apply to the 2028 Senior Notes. Items (9) and (10) apply to the 2029 and
2031 Senior Notes, which have investment grade covenants.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
21
Funding Facilities
Facility Type Collateral Maturity Line Amount
Committed
Line Amount
Outstanding
Balance June
30, 2021
Outstanding
Balance
December 31,
2020
MRA funding:
1) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 10/22/2021 $ 2,000,000 $ 100,000 $ 499,265 $ 999,752
2) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 12/2/2021 1,500,000 500,000 1,414,929 1,320,484
3) Master Repurchase
Agreement (1)(7)..........
Mortgage loans
held for sale (6) 4/22/2022 2,750,000 1,000,000 2,088,280 2,407,156
4) Master Repurchase
Agreement (2)(7)..........
Mortgage loans
held for sale (6) 4/26/2022 1,800,000 1,500,000 1,613,432 1,953,949
5) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 4/20/2023 3,000,000 500,000 2,820,837 2,004,707
6) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 9/5/2022 2,000,000 500,000 1,391,514 1,780,902
7) Master Repurchase
Agreement (3)(7)..........
Mortgage loans
held for sale (6) 9/16/2021 1,750,000 1,137,500 1,164,702 1,343,130
8) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 6/10/2022 500,000 — 349,941 219,786
9) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 9/24/2021 1,500,000 750,000 797,157 983,126
10) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 10/9/2021 500,000 — 488,230 480,544
11) Master Repurchase
Agreement (7)...............
Mortgage loans
held for sale (6) 12/17/2021 1,000,000 500,000 540,109 765,432
$ 18,300,000 $ 6,487,500 $ 13,168,396 $ 14,258,968
Early Funding:
12) Early Funding Facility
(4)(7).............................
Mortgage loans
held for sale (6) (4) $ 4,000,000 $ — $ 2,741,132 $ 2,514,193
13) Early Funding Facility
(5)(7).............................
Mortgage loans
held for sale (6) (5) 3,000,000 — 1,311,701 969,412
7,000,000 — 4,052,833 3,483,605
Total...................................
$ 25,300,000 $ 6,487,500 $ 17,221,229 $ 17,742,573
(1) Subsequent to June 30, 2021, this facility was renewed which extended the maturity date to April 21, 2023.
(2) This facility has a 12-month initial term, which can be extended for 3-months at each subsequent 3-month
anniversary from the initial start date. Subsequent to June 30, 2021, this facility was amended to decrease the total
facility size to $1,700,000 with $1,400,000 committed and was extended to July 26, 2022.
(3) Subsequent to June 30, 2021, this facility was amended to decrease the total facility size to $1,500,000 with
$600,000 committed.
(4) This facility is an evergreen agreement with no stated termination or expiration date. This agreement can be
terminated by either party upon written notice.
(5) This facility will have an overall line size of $3,000,000, which will be reviewed every 90 days. This facility is an
evergreen agreement with no stated termination or expiration date. This agreement can be terminated by either party
upon written notice.
(6) The Company has multiple borrowing facilities in the form of asset sales under agreements to repurchase. These
borrowing facilities are secured by mortgage loans held for sale at fair value as the first priority security interest.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
22
(7) The interest rates charged by lenders on the funding facilities included the applicable base rate plus a spread ranging
from 1.00% to 2.25% for the six months ended June 30, 2021, and the applicable base rate plus a spread ranging
from 0.40% to 2.30% for the year ended December 31, 2020.
Other Financing Facilities
Facility Type Collateral Maturity Line Amount
Committed
Line Amount
Outstanding
Balance June
30, 2021
Outstanding
Balance
December 31,
2020
Line of Credit Financing
Facilities
1) Unsecured line of credit (1).........
— 7/27/2025 $ 2,000,000 $ — $ — $ —
2) Unsecured line of credit (1).........
— 7/31/2025 100,000 — — —
3) Revolving credit facility (2)(4)....
— 8/10/2023 1,000,000 1,000,000 — 300,000
4) MSRs line of credit (4)................
MSRs 10/22/2021 200,000 — — —
5) MSRs line of credit (3)(4)............
MSRs (3) 200,000 200,000 75,000 75,000
$ 3,500,000 $ 1,200,000 $ 75,000 $ 375,000
Early Buy out Financing Facility
6) Early buy out facility (4)..............
Loans/
Advances 3/13/2023 $ 2,600,000 $ — $ 2,148,959 $ 330,266
(1) Refer to Note 6, Transactions with Related Parties for additional details regarding this unsecured line of credit.
(2) Subsequent to June 30, 2021, this facility was renewed, and the maturity date was extended to August 10, 2024.
(3) This MSRs facility can be drawn upon for corporate purposes and is collateralized by GSE MSRs within our
servicing portfolio. This facility has a 5-year total commitment comprised of a 3-year revolving period that expires
on April 30, 2022 followed by a 2-year amortization period that expires on April 30, 2024.
(4) The interest rates charged by lenders on the other funding facilities included the applicable base rate, plus a spread
ranging from 1.45% to 4.00% for the six months ended June 30, 2021, and the applicable base rate plus a spread
ranging from 1.75% to 4.00% for the year ended December 31, 2020.
Unsecured Senior Notes
Facility Type Maturity Interest Rate
Outstanding
Balance June
30, 2021
Outstanding
Balance
December 31,
2020
Unsecured Senior Notes (1).........................................................
1/15/2028 5.250 % $ 1,010,000 $ 1,010,000
Unsecured Senior Notes (2).........................................................
3/1/2029 3.625 % 750,000 750,000
Unsecured Senior Notes (3).........................................................
3/1/2031 3.875 % 1,250,000 1,250,000
Total Senior Notes................................................................
$ 3,010,000 $ 3,010,000
Weighted Average Interest Rate..................................................
4.27 % 4.27 %
(1) The 2028 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing.
Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,010,000
carrying amount on the Condensed Consolidated Balance Sheets by $7,604 and $6,326 as of June 30, 2021,
respectively, and $8,197 and $6,817, as of December 31, 2020, respectively.
(2) The 2029 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing.
Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $750,000
carrying amount on the Condensed Consolidated Balance Sheets by $7,552 and $8,053 as of June 30, 2021 and
December 31, 2020, respectively.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
23
(3) The 2031 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing.
Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,250,000
carrying amount on the Condensed Consolidated Balance Sheets by $13,210 and $13,887 as of June 30, 2021 and
December 31, 2020, respectively.
Refer to Note 2, Fair Value Measurements for information pertaining to the fair value of the Company’s debt as of June 30,
2021 and December 31, 2020.
6. Transactions with Related Parties
The Company has entered into various transactions and agreements with RHI, its subsidiaries, certain other affiliates and
related parties (collectively, “Related Parties”). These transactions include providing financing and services as well as
obtaining financing and services from these Related Parties.
Financing Arrangements
On June 9, 2017, Rocket Mortgage and RHI entered into a $300,000 uncommitted and unsecured line of credit (“RHI Line of
Credit”). On December 24, 2019 the Company amended the RHI Line of Credit and increased the borrowing capacity to
$1,000,000, due on November 1, 2024. On July 24, 2020, the Company amended the RHI Line of Credit and increased the
borrowing capacity to $2,000,000, due on July 27, 2025. Borrowings under the line of credit bear interest at a rate per annum
of one month LIBOR plus 1.25%. The line of credit is uncommitted and RHI has sole discretion over advances. The RHI
Line of Credit also contains negative covenants which restrict the ability of the Company to incur debt and create liens on
certain assets. It also requires Rocket Mortgage to maintain a quarterly consolidated net income before taxes if adjusted
tangible net worth meets certain requirements. As of June 30, 2021 and December 31, 2020, there were no outstanding
amounts due to RHI pursuant to the RHI Line of Credit.
RHI and ATI are parties to a surplus debenture, effective as of December 28, 2015, and as further amended and restated on
December 31, 2019 (the “RHI/ATI Debenture”), pursuant to which ATI is indebted to RHI for an aggregate principal amount
of $21,500. The RHI/ATI Debenture matures on December 31, 2030. Interest under the RHI/ATI Debenture accrues at an
annual rate of 8%. Principal and interest under the RHI/ATI Debenture are due and payable quarterly, in each case subject to
ATI achieving a certain amount of surplus and payments of all interest before principal payments begin. Any unpaid amounts
of principal and interest shall be due and payable upon the maturity of the RHI/ATI Debenture.
On July 31, 2020, Holdings and RHI entered into an agreement for an uncommitted, unsecured revolving line of credit ("RHI
2nd Line of Credit’’), which will provide for financing from RHI to the Company of up to $100,000. The line of credit will
mature on July 31, 2025. Borrowings under the line of credit will bear interest at a rate per annum of one month LIBOR plus
1.25%. The negative covenants of the line of credit restrict the ability of the Company to incur debt and create liens on certain
assets. The line of credit also contains customary events of default. As of June 30, 2021 and December 31, 2020 there were
no amounts outstanding pursuant to the RHI 2nd line of credit.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
24
The amounts receivable from and payable to Related Parties consisted of the following as of:
June 30, 2021 December 31, 2020
Principal Interest Rate Principal Interest Rate
Included in Notes receivable and due from affiliates on the
Condensed Consolidated Balance Sheets
Affiliated receivables and other notes.........................................
$ 10,977 — % $ 22,172 — %
Notes receivable and due from affiliates................................
$ 10,977 $ 22,172
Included in Notes payable and due to affiliates on the
Condensed Consolidated Balance Sheets
RHI/ATI Debenture....................................................................
$ 21,500 8.00 % $ 21,500 8.00 %
Affiliated payables......................................................................
55,369 — % 52,396 — %
Notes payable and due to affiliates........................................
$ 76,869 $ 73,896
Services, Products and Other Transactions
We have entered into transactions and agreements to provide certain services to RHI, its subsidiaries and certain other
affiliates of our majority shareholder. We recognized revenue of $3,369 and $2,594 for the three months ended June 30, 2021
and 2020, respectively and $7,098 and $5,694 for the six months ended June 30, 2021 and 2020 respectively, for the
performance of these services, which was included in Other income. We have also entered into transactions and agreements
to purchase certain services, products and other transactions from certain subsidiaries of RHI and affiliates of our majority
shareholder. We incurred expenses of $33,791 and $78,928 for the three months ended June 30, 2021 and 2020, respectively
and $61,311 and $89,800 for the six months ended June 30, 2021 and 2020 respectively, for these products, services and
other transactions, which are included in General and administrative expenses. We also incurred expenses of $5,646 and
$5,119 for the three months ended June 30, 2021 and 2020, respectively and $11,317 and $10,130 for the six months ended
June 30, 2021 and 2020, respectively, for parking spaces we rent from related parties, or an agent of the related party, which
are included in General and administrative expenses.
The Company has also entered into a Tax Receivable Agreement with RHI and Dan Gilbert, our founder and Chairman (our
"Chairman") as described further in Note 8, Income Taxes. The Company has also guaranteed the debt of a related party as
described further in Note 10, Commitments, Contingencies, and Guarantees.
Promotional Sponsorships
The Company incurred marketing and advertising costs related to the Rocket Mortgage Field House Naming Rights Contract
and other promotional sponsorships, which are related parties. The company incurred expenses of $2,335 and $2,322 for the
three months ended June 30, 2021 and 2020, respectively and $4,670 and $4,645 for the six months ended June 30, 2021 and
2020, respectively, related to these arrangements.
Lease Transactions with Related Parties
The Company is a party to lease agreements for certain offices, including our headquarters in Detroit, with various affiliates
of Bedrock Management Services LLC (“Bedrock”), a related party, and other related parties of the Company. The company
incurred expenses of $17,182 and $17,755 for the three months ended June 30, 2021 and 2020, respectively and $34,811 and
$34,152 for the six months ended June 30, 2021 and 2020, respectively, related to these arrangements.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
25
7. Other Assets
Other assets consist of the following:
June 30, 2021 December 31, 2020
Mortgage production related receivables.........................................................................
$ 370,690 $ 307,282
Disbursement funds advanced..........................................................................................
166,842 80,877
Prepaid expenses..............................................................................................................
123,815 98,529
Goodwill and other intangible assets...............................................................................
45,855 47,230
Non-production-related receivables.................................................................................
45,455 76,595
Ginnie Mae buyouts.........................................................................................................
28,124 40,681
Margin call receivable from counterparty........................................................................
12,059 247,604
Other real estate owned....................................................................................................
627 1,131
Other.................................................................................................................................
83,115 41,548
Total Other assets.............................................................................................................
$ 876,582 $ 941,477
8. Income Taxes
The Company has income tax expense of $24,047 and $21,448 on income before income taxes and non-controlling interest of
$1,060,697 and $3,485,530 for the three months ended June 30, 2021 and 2020, respectively. The Company has income tax
expense of $89,879 and $22,680 on income before income taxes and non-controlling interest of $3,903,867 and $3,585,809
for the six months ended June 30, 2021 and 2020, respectively.
The Company’s income tax expense varies from the expense that would be expected based on statutory rates due principally
to its organizational structure. Prior to the IPO in 2020, the Company was owned by RHI which has elected S corporation
status. When owned by RHI, Quicken Loans, Amrock and several other wholly owned corporations had elected to be treated
as qualified subchapter S subsidiaries. The shareholders of RHI, as shareholders of an S corporation, are responsible for the
federal income tax liabilities. A provision for state income taxes is required for certain jurisdictions that tax S corporations
and their qualified Subchapter S subsidiaries and for states where the Company is taxed as a C Corporation.
During 2020, in a series of transactions occurring along with the IPO, subsidiaries of the Company were contributed to
Holdings by RHI. Several of these subsidiaries, such as Quicken Loans, Amrock and other subsidiaries, are no longer
qualified Subchapter S corporations and are single member LLC entities owned by Holdings. As single member LLCs of
Holdings, all taxable income or loss generated by these subsidiaries will pass through and be included in the income or loss of
Holdings. Other contributed subsidiaries of Holdings, such as Amrock Title Insurance Co., LMB Mortgage Services and
others, are treated as C Corporations and will separately file and pay taxes apart from Holdings in various jurisdictions
including U.S. federal, state, local and Canada.
As part of the IPO, Rocket Companies acquired a portion of the units of Holdings, which is treated as a partnership for U.S.
federal tax purposes and in most applicable jurisdictions for state and local income tax purposes. The remaining portion of
Holdings is owned by RHI and our Chairman ("LLC Members"). As a partnership, Holdings is not subject to U.S. federal and
certain state and local income taxes. Any taxable income or loss generated by Holdings after Rocket Companies acquisition
of its portion of Holdings is passed through and included in the taxable income or loss of its members, including Rocket
Companies, in accordance with the terms of the operating agreement of Holdings (the "Holdings Operating Agreement").
Rocket Companies is a C Corporation and is subject to U.S. federal, state, and local income taxes with respect to its allocable
share of any taxable income of Holdings.
Tax Receivable Agreement
The Company expects to obtain an increase in its share of the tax basis in the net assets of Holdings when Holdings Units are
redeemed from or exchanged by the LLC Members. The Company intends to treat any redemptions and exchanges of
Holdings Units as direct purchases of Holdings Units for U.S. federal income tax purposes. These increases in tax basis may
reduce the amounts that the Company would otherwise pay in the future to various tax authorities. They may also decrease
gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital
assets.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
26
In connection with the IPO, the Company entered into the Tax Receivable Agreement with the LLC Members. The Tax
Receivable Agreement provides for the payment by Rocket Companies of 90% of the amount of any cash tax benefits that
Rocket Companies actually realizes, or in some cases is deemed to realize, as a result of (i) certain increases in Rocket
Companies allocable share of the tax basis in Holdings’ assets resulting from (a) the purchases of Holdings Units (along with
the corresponding shares of our Class D common stock or Class C common stock) from the LLC Members (or their
transferees of Holdings Units or other assignees) using the net proceeds from our initial public offering or in any future
offering, (b) exchanges by the LLC Members (or their transferees of Holdings Units or other assignees) of Holdings Units
(along with the corresponding shares of our Class D common stock or Class C common stock) for cash or shares of our Class
B common stock or Class A common stock, as applicable, or (c) payments under the Tax Receivable Agreement; (ii) tax
benefits related to imputed interest deemed arising as a result of payments made under the Tax Receivable Agreement and
(iii) disproportionate allocations (if any) of tax benefits to Holdings as a result of section 704(c) of the Code that relate to the
reorganization transactions. The Company expects to benefit from the remaining 10% of any cash savings, if any, that it
realizes.
Effective on March 31, 2021, the Company and RHI exchanged 20,200,000 shares of Class A common stock for the
equivalent number of Paired Interests (in this instance, Holdings Units together with a corresponding number of shares of
Class D common stock) which resulted in an increase in the tax basis of assets of Holdings and would be subject to the
provisions of the Tax Receivable Agreement. The Company recorded an increase in its deferred tax asset on investment in
partnership of $123,587, an increase in the valuation allowance of $3,146, and an increase in the Tax receivable agreement
liability of $119,456 with the net offsetting amount of $985 recorded to Additional Paid-in Capital in the Increase in
controlling interest of investment, net of income taxes and Tax receivable agreement liability in the Condensed Consolidated
Statements of Changes in Equity.
During the year ended December 31, 2020, the Company acquired an aggregate of 115,000,000 Holdings Units valued at
$2,070,000 in connection with the exchange of those Holdings Units by the LLC Members, which resulted in an increase in
the tax basis of the assets of Holdings and would be subject to the provisions of the Tax Receivable Agreement.
The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the
amount, character, and timing of the taxable income of Rocket Companies in the future. Any such changes in these factors or
changes in the Company’s determination of the need for a valuation allowance related to the tax benefits acquired under the
Tax Receivable Agreement could adjust the Tax receivable agreement liability recognized and recorded within earnings in
future periods.
Tax Distributions
The holders of Holdings’ Units, including Rocket Companies Inc., incur U.S. federal, state and local income taxes on their
share of any taxable income of Holdings. The Holdings Operating Agreement provides for pro rata cash distributions (“tax
distributions”) to the holders of the Holdings Units in an amount generally calculated to provide each holder of Holdings
Units with sufficient cash to cover its tax liability in respect of the Holdings Units. In general, these tax distributions are
computed based on Holdings’ estimated taxable income, multiplied by an assumed tax rate as set forth in the Holdings
Operating Agreement.
For the three and six months ended June 30, 2021, Holdings paid tax distributions totaling $1,206,549 and $1,406,699,
respectively, to holders of Holdings Units other than Rocket Companies.
9. Derivative Financial Instruments
The Company enters into interest rate lock commitments ("IRLCs"), forward commitments to sell mortgage loans and
forward commitments to purchase loans, which are considered derivative financial instruments. These items are accounted
for as free-standing derivatives and are included in the Condensed Consolidated Balance Sheets at fair value. The Company
treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for
designation as accounting hedges. Changes in the fair value of the IRLCs and forward commitments to sell mortgage loans
are recorded in current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated
Statements of Income and Comprehensive Income. Forward commitments to purchase mortgage loans are recognized in
current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated Statements of Income
and Comprehensive Income.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
27
The Company enters into IRLCs to fund residential mortgage loans with its potential borrowers. These commitments are
binding agreements to lend funds to these potential borrowers at specified interest rates within specified periods of time.
The fair value of IRLCs is derived from the fair value of similar mortgage loans or bonds, which is based on observable
market data. Changes to the fair value of IRLCs are recognized based on changes in interest rates, changes in the probability
that the commitment will be exercised, and the passage of time. The expected net future cash flows related to the associated
servicing of the loan are included in the fair value measurement of rate locks.
IRLCs and uncommitted mortgage loans held for sale expose the Company to the risk that the value of the mortgage loans
held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life
of the commitments. To protect against this risk, the Company uses forward loan sale commitments to economically hedge
the risk of potential changes in the value of the loans. These derivative instruments are recorded at fair value. The Company
expects that the changes in fair value of these derivative financial instruments will either fully or partially offset the changes
in fair value of the IRLCs and uncommitted mortgage loans held for sale. The changes in the fair value of these derivatives
are recorded in gain on sale of loans, net.
MSRs assets (including the MSRs value associated with outstanding IRLCs) that the Company plans to sell expose the
Company to the risk that the value of the MSRs asset may decline due to decreases in mortgage interest rates prior to the sale
of these assets. To protect against this risk, the Company uses forward loan purchase commitments to economically hedge the
risk of potential changes in the value of MSRs assets that have been identified for sale. These derivative instruments are
recorded at fair value. The Company expects that the changes in fair value of these derivative financial instruments will either
fully or partially offset the changes in fair value of the MSRs assets the Company intends to sell. The changes in fair value of
these derivatives are recorded in the change in fair value of MSRs, net.
Forward commitments include To-Be-Announced ("TBA") mortgage-backed securities that have been aggregated at the
counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts
due to and from the same counterparty under legally enforceable master netting agreements to settle with the same
counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to
sell loans to counterparties and to purchase loans from counterparties at determined prices.
The Company uses forward commitments in hedging the interest rate risk exposure on its fixed and adjustable rate
commitments. Utilization of forward commitments involves some degree of basis risk. Basis risk is defined as the risk that
the hedged instrument’s price does not move in parallel with the increase or decrease in the market price of the hedged
financial instrument. The Company calculates an expected hedge ratio to mitigate a portion of this risk. The Company’s
derivative instruments are not designated as accounting hedging instruments, and therefore, changes in fair value are recorded
in current period earnings. Hedging gains and losses are included in Gain on sale of loans, net in the Condensed Consolidated
Statements of Income and Comprehensive Income.
Net hedging gains and losses were as follows:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Hedging (losses) gains (1)...............................
$ (274,289) $ (510,804) $ 1,367,991 $ (1,507,788)
(1) Includes the change in fair value related to derivatives economically hedging MSRs identified for sale.
Refer to Note 2, Fair Value Measurements, for additional information on the fair value of derivative financial instruments.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
28
Notional and Fair Value
The notional and fair values of derivative financial instruments not designated as hedging instruments were as follows:
Notional Value Derivative Asset Derivative Liability
Balance at June 30, 2021:
IRLCs, net of loan funding probability (1)................
$ 31,406,858 $ 907,978 $ —
Forward commitments (2)..........................................
$ 45,016,925 $ 22,339 $ 91,731
Balance at December 31, 2020:......................................
IRLCs, net of loan funding probability (1)................
$ 40,560,544 $ 1,897,194 $ —
Forward commitments (2)..........................................
$ 59,041,900 $ 20,584 $ 506,071
(1) IRLCs are also discussed in Note 10, Commitments, Contingencies, and Guarantees.
(2) Includes the fair value and net notional value related to derivatives economically hedging MSRs identified for sale.
Counterparty agreements for forward commitments contain master netting agreements. The table below presents the gross
amounts of recognized assets and liabilities subject to master netting agreements. The Company had $12,059 and $247,604 of
cash pledged to counterparties related to these forward commitments at June 30, 2021 and December 31, 2020, respectively,
classified in Other assets in the Condensed Consolidated Balance Sheets. As of June 30, 2021 and December 31, 2020, the
Company had $14 and zero, respectively, of cash pledged from counterparties related to these forward commitments.
Margins received by the Company are classified in Other liabilities in the Condensed Consolidated Balance Sheets.
Gross Amount of
Recognized Assets
or Liabilities
Gross Amounts
Offset in the
Condensed
Consolidated
Balance Sheets
Net Amounts
Presented in the
Condensed
Consolidated
Balance Sheets
Offsetting of Derivative Assets
Balance at June 30, 2021:
Forward commitments................................................
$ 37,364 $ (15,025) $ 22,339
Balance at December 31, 2020:
Forward commitments................................................
$ 35,746 $ (15,162) $ 20,584
Offsetting of Derivative Liabilities
Balance at June 30, 2021:
Forward commitments................................................
$ (165,165) $ 73,434 $ (91,731)
Balance at December 31, 2020:
Forward commitments................................................
$ (715,671) $ 209,600 $ (506,071)
Counterparty Credit Risk
Credit risk is defined as the possibility that a loss may occur from the failure of another party to perform in accordance with
the terms of the contract, which exceeds the value of existing collateral, if any. The Company attempts to limit its credit risk
by dealing with creditworthy counterparties and obtaining collateral where appropriate.
The Company is exposed to credit loss in the event of contractual nonperformance by its trading counterparties and
counterparties to its various over-the-counter derivative financial instruments noted in the above Notional and Fair Value
discussion. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong,
spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit
extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
29
Certain counterparties have master netting agreements. The master netting agreements contain a legal right to offset amounts
due to and from the same counterparty. Derivative assets in the Condensed Consolidated Balance Sheets represent derivative
contracts in a gain position, net of loss positions with the same counterparty and, therefore, also represent the Company’s
maximum counterparty credit risk. The Company incurred no credit losses due to nonperformance of any of its counterparties
during the three and six months ended June 30, 2021 and 2020.
10. Commitments, Contingencies, and Guarantees
Interest Rate Lock Commitments
IRLCs are agreements to lend to a client as long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The
Company evaluates each client’s creditworthiness on a case-by-case basis.
The number of days from the date of the IRLC to expiration of fixed and variable rate lock commitments outstanding at
June 30, 2021 and December 31, 2020 was approximately 43 days on average.
The UPB of IRLCs was as follows:
June 30, 2021 December 31, 2020
Fixed Rate Variable Rate Fixed Rate Variable Rate
IRLCs......................................................................
$ 38,217,725 $ 2,539,252 $ 53,736,717 $ 1,065,936
Commitments to Sell Mortgage Loans
In the ordinary course of business, the Company enters into contracts to sell existing mortgage loans held for sale into the
secondary market at specified future dates. The amount of commitments to sell existing loans at June 30, 2021 and
December 31, 2020 was $6,022,664 and $3,139,816, respectively.
Commitments to Sell Loans with Servicing Released
In the ordinary course of business, the Company enters into contracts to sell the MSRs of certain newly originated loans on a
servicing released basis. In the event that a forward commitment is not filled and there has been an unfavorable market shift
from the date of commitment to the date of settlement, the Company is contractually obligated to pay a pair-off fee on the
undelivered balance. There were $2,218,101 and $280,502 in UPB of loans committed to be sold servicing released at
June 30, 2021 and December 31, 2020, respectively.
Investor Reserves
The following presents the activity in the investor reserves:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Balance at beginning of period......................................
$ 93,937 $ 55,667 $ 87,191 $ 54,387
(Benefit from) provision for investor reserves..............
(19,316) 7,786 (13,969) 9,363
Premium recapture and indemnification losses paid.....
(419) (441) 980 (738)
Balance at end of period................................................
$ 74,202 $ 63,012 $ 74,202 $ 63,012
The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and
any premium received on all loans ever sold by the Company, less (i) loans that have already been paid in full by the
mortgagee, (ii) loans that have defaulted without a breach of representations and warranties, (iii) loans that have been
indemnified via settlement or make-whole, or (iv) loans that have been repurchased. Additionally, the Company may receive
relief of certain representation and warranty obligations on loans sold to Fannie Mae or Freddie Mac on or after January 1,
2013 if Fannie Mae or Freddie Mac satisfactorily concludes a quality control loan file review or if the borrower meets certain
acceptable payment history requirements within 12 or 36 months after the loan is sold to Fannie Mae or Freddie Mac.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
30
Property Taxes, Insurance, and Principal and Interest Payable
As a service to its clients, the Company administers escrow deposits representing undisbursed amounts received for payment
of property taxes, insurance and principal, and interest on mortgage loans held for sale. Cash held by the Company for
property taxes and insurance was $4,768,373 and $3,551,400, and for principal and interest was $8,789,110 and $13,065,549
at June 30, 2021 and December 31, 2020, respectively. These amounts are not considered assets of the Company and,
therefore, are excluded from the Condensed Consolidated Balance Sheets. The Company remains contingently liable for the
disposition of these deposits.
Guarantees
As of June 30, 2021 and December 31, 2020, the Company guaranteed the debt of a related party totaling $15,000, consisting
of three separate guarantees of $5,000 each. As of June 30, 2021 and December 31, 2020, the Company did not record a
liability on the Condensed Consolidated Balance Sheets for these guarantees because it was not probable that the Company
would be required to make payments under these guarantees.
Trademark License
The Company has a perpetual trademark license agreement with a third-party entity. This agreement requires annual
payments by the Company based upon the income from the sale of loans generated under the Quicken Loans brand. Total
licensing fees incurred and paid were zero and $1,875 for the three months ended June 30, 2021 and 2020 respectively, and
$625 and $3,750 for the six months ended June 30, 2021 and 2020, respectively, which is classified in other expenses in the
Condensed Consolidated Statements of Income and Comprehensive Income. The Company has entered into an agreement
with Intuit that, among other things, gives the Company full ownership of the “Quicken Loans” brand in 2022 in exchange
for certain agreements, subject to the satisfaction of certain conditions. We have fulfilled our payment obligations pertaining
to the licensing agreement with Intuit in 2021 and no further expenses are expected.
Tax Receivable Agreement
As indicated in Note 8, Income Taxes, the Company is party to a Tax Receivable Agreement.
Legal
Rocket Companies' subsidiaries, among other things, engage in mortgage lending, title and settlement services, and other
financial technology services. Rocket Companies and its subsidiaries operate in highly regulated industries and are routinely
subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of
business, including inquiries, complaints, subpoenas, audits, examinations, investigations and potential enforcement actions
from regulatory agencies and state attorney generals; state and federal lawsuits and putative class actions; and other litigation.
Periodically, we assess our potential liabilities and contingencies in connection with outstanding legal and administrative
proceedings utilizing the latest information available. While it is not possible to predict the outcome of any of these matters,
based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the
aggregate, will have a material adverse effect on our financial position, results of operations or cash flows. However, actual
outcomes may differ from those expected and could have a material effect on our financial position, results of operations, or
cash flows in a future period. Rocket Companies accrues for losses when they are probable to occur and such losses are
reasonably estimable. Legal costs are expensed as they are incurred.
As of June 30, 2021 and December 31, 2020, we recorded reserves related to potential damages in connection with any legal
proceedings of $15,000 and zero, respectively. The ultimate outcome of these or other actions or proceedings, including any
monetary awards against us, is uncertain and there can be no assurance as to the amount of any such potential awards. Rocket
Companies will incur defense costs and other expenses in connection with the lawsuits. Plus, if a judgment for money that
exceeds specified thresholds is rendered against us and we fail to timely pay, discharge, bond or obtain a stay of execution of
such judgment, it is possible that we could be deemed in default of loan funding facilities and other agreements governing
indebtedness. If the final resolution of any such litigation is unfavorable in one or more of these actions, it could have a
material adverse effect on our business, liquidity, financial condition, cash flows and results of operations.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
31
11. Minimum Net Worth Requirements
Certain secondary market investors and state regulators require the Company to maintain minimum net worth and capital
requirements. To the extent that these requirements are not met, secondary market investors and/or the state regulators may
utilize a range of remedies including sanctions, and/or suspension or termination of selling and servicing agreements, which
may prohibit the Company from originating, securitizing or servicing these specific types of mortgage loans.
Rocket Mortgage is subject to the following minimum net worth, minimum capital ratio and minimum liquidity requirements
established by the Federal Housing Finance Agency (“FHFA”) for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie
Mae for single family issuers. Furthermore, refer to Note 5, Borrowings for additional information regarding compliance with
all covenant requirements.
Minimum Net Worth
The minimum net worth requirement for Fannie Mae and Freddie Mac is defined as follows:
• Base of $2,500 plus 25 basis points of outstanding UPB for total loans serviced.
• Adjusted/Tangible Net Worth is defined as total equity less goodwill, intangible assets, affiliate receivables and
certain pledged assets.
The minimum net worth requirement for Ginnie Mae is defined as follows:
• Base of $2,500 plus 35 basis points of the Ginnie Mae total single-family effective outstanding obligations.
• Adjusted/Tangible Net Worth is defined as total equity less goodwill, intangible assets, affiliate receivables and
certain pledged assets. Effective for fiscal year 2020, under the Ginnie Mae MBS Guide, the issuers will no
longer be permitted to include deferred tax assets when computing the minimum net worth requirements.
Minimum Capital Ratio
• For Fannie Mae, Freddie Mac and Ginnie Mae, the Company is also required to hold a ratio of Adjusted/
Tangible Net Worth to Total Assets greater than 6%.
Minimum Liquidity
The minimum liquidity requirement for Fannie Mae and Freddie Mac is defined as follows:
• 3.5 basis points of total Agency servicing.
• Incremental 200 basis points of total nonperforming Agency, measured as 90+ delinquencies, servicing in
excess of 6% of the total Agency servicing UPB.
• Allowable assets for liquidity may include cash and cash equivalents (unrestricted) and available for sale or held
for trading investment grade securities (e.g., Agency MBS, Obligations of GSEs, US Treasury Obligations).
The minimum liquidity requirement for Ginnie Mae is defined as follows:
• Maintain liquid assets equal to the greater of $1,000 or 10 basis points of our outstanding single-family MBS.
The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum
adjusted net worth balance of $2,039,636 and $2,175,968 as of June 30, 2021 and December 31, 2020, respectively. As of
June 30, 2021 and December 31, 2020, the Company was in compliance with this requirement.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
32
12. Segments
The Company’s Chief Executive Officer, who has been identified as its Chief Operating Decision Maker (“CODM”), has
evaluated how the Company views and measures its performance. ASC 280, Segment Reporting establishes the standards for
reporting information about segments in financial statements. In applying the criteria set forth in that guidance, the Company
has determined that it has two reportable segments—Direct to Consumer and Partner Network. The key factors used to
identify these reportable segments are the organization and alignment of the Company’s internal operations and the nature of
its marketing channels, which drive client acquisition into the mortgage platform. This determination reflects how its CODM
monitors performance, allocates capital and makes strategic and operational decisions. The Company’s segments are
described as follows:
Direct to Consumer
In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage online and/or with the
Company’s mortgage bankers. The Company markets to potential clients in this segment through various brand campaigns
and performance marketing channels. The Direct to Consumer segment derives revenue from originating, closing, selling and
servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. The segment also
includes title insurance, appraisals and settlement services complementing the Company’s end-to-end mortgage origination
experience. Servicing activities are fully allocated to the Direct to Consumer segment and are viewed as an extension of the
client experience. Servicing enables Rocket Mortgage to establish and maintain long term relationships with our clients,
through multiple touchpoints at regular engagement intervals.
Revenues in the Direct to Consumer segment are generated primarily from the gain on sale of loans, which includes loan
origination fees, revenues from sales of loans into the secondary market, as well as the fair value of originated MSRs and
hedging gains and losses. Loan servicing (loss) income, net consists of the contractual fees earned for servicing loans and
other ancillary servicing fees, as well as changes in the fair value of MSRs due to changes in valuation assumptions and
realization of cash flows.
Partner Network
The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and
widely recognized brand to grow marketing and influencer relationships, and our mortgage broker partnerships through
Rocket Pro TPO. Our marketing partnerships consist of well-known consumer-focused companies that find value in our
award-winning client experience and want to offer their clients mortgage solutions with our trusted, widely recognized brand.
These organizations connect their clients directly to us through marketing channels and a referral process. Our influencer
partnerships are typically with companies that employ licensed mortgage professionals that find value in our client
experience, technology and efficient mortgage process, where mortgages may not be their primary offering. We also enable
clients to start the mortgage process through the Rocket platform in the way that works best for them, including through a
local mortgage broker.
Revenues in the Partner Network segment are generated primarily from the gain on sale of loans, which includes loan
origination fees, revenues from sales of loans into the secondary market, as well as the fair value of originated MSRs and
hedging gains and losses.
Other Information About Our Segments
The Company measures the performance of the segments primarily on a contribution margin basis. The accounting policies
applied by our segments are the same as those described in Note 1, Business, Basis of Presentation and Accounting Policies
and the decrease in MSRs due to valuation assumptions is consistent with the changes described in Note 3, Mortgage
Servicing Rights. Directly attributable expenses include Salaries, commissions and team member benefits, General and
administrative expenses and Other expenses, such as servicing costs and origination costs.
The Company does not allocate assets to its reportable segments as they are not included in the review performed by the
CODM for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a
consolidated basis and is not used in the context of segment reporting.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
33
The Company also reports an “all other” category that includes operations from Rocket Homes, Rock Connections, Core
Digital Media, Rocket Loans, and includes professional service fee revenues from related parties. These operations are
neither significant individually nor in aggregate and therefore do not constitute a reportable segment.
Key operating data for our business segments for the three and six months ended:
Three Months Ended
June 30, 2021
Direct to
Consumer
Partner
Network
Segments
Total All Other Total
Revenues
Gain on sale..................................................
$ 2,050,639 $ 287,651 $ 2,338,290 $ 3,199 $ 2,341,489
Interest income.............................................
52,489 33,222 85,711 934 86,645
Interest expense on funding facilities...........
(39,409) (24,943) (64,352) (26) (64,378)
Servicing fee income....................................
342,687 — 342,687 662 343,349
Changes in fair value of MSRs....................
(414,745) — (414,745) — (414,745)
Other income................................................
229,860 23,228 253,088 123,300 376,388
Total U.S. GAAP Revenue, net........................
2,221,521 319,158 2,540,679 128,069 2,668,748
Plus: Decrease in MSRs due to valuation
assumptions.................................................
121,312 — 121,312 — 121,312
Adjusted revenue..............................................
2,342,833 319,158 2,661,991 128,069 2,790,060
Directly attributable expenses...........................
907,963 176,065 1,084,028 58,155 1,142,183
Contribution margin..........................................
$ 1,434,870 $ 143,093 $ 1,577,963 $ 69,914 $ 1,647,877
Six Months Ended
June 30, 2021
Direct to
Consumer
Partner
Network
Segments
Total All Other Total
Revenues
Gain on sale..................................................
$ 4,914,239 $ 972,080 $ 5,886,319 $ 7,612 $ 5,893,931
Interest income.............................................
111,157 69,283 180,440 1,450 181,890
Interest expense on funding facilities...........
(81,414) (50,762) (132,176) (46) (132,222)
Servicing fee income....................................
634,339 — 634,339 1,371 635,710
Changes in fair value of MSRs....................
(168,824) — (168,824) — (168,824)
Other income................................................
534,772 51,005 585,777 256,723 842,500
Total U.S. GAAP Revenue, net........................
5,944,269 1,041,606 6,985,875 267,110 7,252,985
Less: Increase in MSRs due to valuation
assumptions.................................................
(423,138) — (423,138) — (423,138)
Adjusted revenue..............................................
5,521,131 1,041,606 6,562,737 267,110 6,829,847
Directly attributable expenses...........................
1,926,460 355,842 2,282,302 128,911 2,411,213
Contribution margin..........................................
$ 3,594,671 $ 685,764 $ 4,280,435 $ 138,199 $ 4,418,634
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
34
Three Months Ended
June 30, 2020
Direct to
Consumer
Partner
Network
Segments
Total All Other Total
Revenues
Gain on sale..................................................
$ 4,020,492 $ 734,662 $ 4,755,154 $ (1,570) $ 4,753,584
Interest income.............................................
51,012 26,376 77,388 651 78,039
Interest expense on funding facilities...........
(35,397) (18,302) (53,699) (58) (53,757)
Servicing fee income....................................
248,873 — 248,873 969 249,842
Changes in fair value of MSRs....................
(552,844) — (552,844) — (552,844)
Other income................................................
206,538 39,859 246,397 314,552 560,949
Total U.S. GAAP Revenue, net........................
3,938,674 782,595 4,721,269 314,544 5,035,813
Plus: Decrease in MSRs due to valuation
assumptions.................................................
274,377 — 274,377 — 274,377
Adjusted revenue..............................................
4,213,051 782,595 4,995,646 314,544 5,310,190
Directly attributable expenses...........................
948,900 139,140 1,088,040 123,494 1,211,534
Contribution margin..........................................
$ 3,264,151 $ 643,455 $ 3,907,606 $ 191,050 $ 4,098,656
Six Months Ended
June 30, 2020
Direct to
Consumer
Partner
Network
Segments
Total All Other Total
Revenues
Gain on sale...................................................
$ 5,631,324 $ 938,109 $ 6,569,433 $ 6,260 $ 6,575,693
Interest income..............................................
98,322 51,947 150,269 1,812 152,081
Interest expense on funding facilities............
(60,782) (32,023) (92,805) (411) (93,216)
Servicing fee income.....................................
504,863 — 504,863 2,072 506,935
Changes in fair value of MSRs......................
(1,544,096) — (1,544,096) — (1,544,096)
Other income.................................................
351,561 59,469 411,030 393,695 804,725
Total U.S. GAAP Revenue, net..........................
4,981,192 1,017,502 5,998,694 403,428 6,402,122
Plus: Decrease in MSRs due to valuation
assumptions...................................................
1,017,704 — 1,017,704 — 1,017,704
Adjusted revenue................................................
5,998,896 1,017,502 7,016,398 403,428 7,419,826
Directly attributable expenses............................
1,729,520 231,084 1,960,604 168,994 2,129,598
Contribution margin...........................................
$ 4,269,376 $ 786,418 $ 5,055,794 $ 234,434 $ 5,290,228
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
35
The following table represents a reconciliation of segment contribution margin to consolidated U.S. GAAP income before
taxes for the three and six months ended:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Contribution margin, excluding change in MSRs due to
valuation assumptions..........................................................
$ 1,647,877 $ 4,098,656 $ 4,418,634 $ 5,290,228
(Decrease) increase in MSRs due to valuation assumptions
(121,312) (274,377) 423,138 (1,017,704)
Contribution margin, including change in MSRs due to
valuation assumptions..........................................................
1,526,565 3,824,279 4,841,772 4,272,524
Less expenses not allocated to segments:
Salaries, commissions and team member benefits...............
232,674 205,100 457,011 403,950
General and administrative expenses...................................
176,125 90,231 370,685 184,827
Depreciation and amortization.............................................
20,589 16,189 35,893 32,304
Interest and amortization expense on non-funding debt......
35,038 33,168 70,609 66,275
Other expenses.....................................................................
1,442 (5,939) 3,707 (641)
Income before income taxes.................................................
$ 1,060,697 $ 3,485,530 $ 3,903,867 $ 3,585,809
13. Variable Interest Entities
Rocket Companies, Inc. is the sole managing member of Holdings with 100% of the management and voting power in
Holdings. In its capacity as managing member, Rocket Companies, Inc. has the sole authority to make decisions on behalf of
Holdings and bind Holdings to signed agreements. Further, Holdings maintains separate capital accounts for its investors as a
mechanism for tracking earnings and subsequent distribution rights. Accordingly, management concluded that Holdings is a
limited partnership or similar legal entity as contemplated in ASC 810, Consolidation.
Furthermore, management concluded that Rocket Companies, Inc. is Holdings’ primary beneficiary. As the primary
beneficiary, Rocket Companies, Inc. consolidates the results and operations of Holdings for financial reporting purposes
under the variable interest consolidation model guidance in ASC 810.
Rocket Companies, Inc.'s relationship with Holdings results in no recourse to the general credit of Rocket Companies, Inc.
Holdings and its consolidated subsidiaries represents Rocket Companies, Inc.'s sole investment. Rocket Companies, Inc.
shares in the income and losses of Holdings in direct proportion to Rocket Companies, Inc.'s ownership percentage. Further,
Rocket Companies, Inc. has no contractual requirement to provide financial support to Holdings.
Rocket Companies, Inc.’s financial position, performance and cash flows effectively represent those of Holdings and its
subsidiaries as of and for the period ended June 30, 2021. Prior to the reorganization and IPO, Rocket Companies, Inc. was
not impacted by Holdings.
14. Non-controlling Interests
The non-controlling interest balance represents the economic interest in Holdings held by our Chairman and RHI. The
following table summarizes the ownership of Holdings Units in Holdings as of June 30, 2021 and December 31, 2020:
June 30, 2021 December 31, 2020
Holdings Units
Ownership
Percentage Holdings Units
Ownership
Percentage
Rocket Companies, Inc.'s ownership of Holdings Units 135,978,914 6.85 % 115,372,565 5.81 %
Holdings Units held by our Chairman............................ 1,101,822 0.06 % 1,101,822 0.06 %
Holdings Units held by RHI........................................... 1,847,777,661 93.09 % 1,867,977,661 94.13 %
Balance at end of period................................................. 1,984,858,397 100.00 % 1,984,452,048 100.00 %
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
36
The non-controlling interest holders have the right to exchange Holdings Units, together with a corresponding number of
shares of our Class D common stock or Class C common stock (together referred to as “Paired Interests”), for, at our option,
(i) shares of our Class B common stock or Class A common stock or (ii) cash from a substantially concurrent public offering
or private sale (based on the price of our Class A common stock). As such, future exchanges of Paired Interests by non-
controlling interest holders will result in a change in ownership and reduce or increase the amount recorded as non-
controlling interest and increase or decrease additional paid-in-capital when Holdings has positive or negative net assets,
respectively. As of June 30, 2021, our Chairman has not exchanged any Paired Interests. As of December 31, 2020, neither
our Chairman or RHI had exchanged any Paired Interests.
Effective on March 31, 2021, the Company and RHI exchanged 20,200,000 shares of Class A common stock for the
equivalent number of Paired Interests (in this instance, Holdings Units together with a corresponding number of shares of
Class D common stock). This transaction resulted in an increase of Rocket Companies' controlling interest and a
corresponding decrease of non-controlling interest of approximately 1%.
15. Share-based Compensation
The Company grants various types of share-based awards, both equity and cash awards, to various team members and
directors of the Company and its affiliates. Included in share-based compensation expense for the Company are RKT and
RHI denominated awards. Share-based compensation expense is included in Salaries, commissions and team member
benefits on the Condensed Consolidated Statements of Income and Comprehensive Income. In connection with the IPO,
equity-based awards were issued under the Rocket Companies, Inc. 2020 Omnibus Incentive Plan including restricted stock
units and stock options to purchase shares of our Class A common stock at an exercise price equal to the price to the public in
the initial public offering. Share-based compensation expense is recognized on a straight-line basis over the requisite service
period based on the fair value of the award on the date of grant.
Team Member Stock Purchase Plan
The Team Member Stock Purchase Plan ("TMSPP") was initiated in December 2020, with the first offering period beginning
in January 2021. Under the TMSPP, the Company is authorized to issue up to 10,526,316 shares of its common stock to
qualifying team members. Eligible team members may direct the Company, during each three-month option period, to
withhold up to 15% of their gross pay, the proceeds from which are used to purchase shares of common stock at a price equal
to 85% of the closing market price on the exercise date. Under ASC 718, the TMSPP is a liability classified compensatory
plan and the Company recognizes compensation expense over the offering period based on the fair value of the purchase
discount. There were 896,701 shares purchased for both the three and six months ended June 30, 2021 under the TMSPP.
Share-based Compensation Expense
A summary of share-based compensation expense recognized during the three and six months ended June 30, 2021 and
June 30, 2020 related to RKT-denominated awards is as follows:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
RKT restricted stock units............................................. $ 26,963 $ — $ 54,564 $ —
RKT stock options......................................................... 9,863 — 19,898 —
RKT Team Member Stock Purchase Plan..................... 2,361 — 5,285 —
RKT denominated share-based compensation expense. $ 39,187 $ — $ 79,747 $ —
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
37
A summary of share-based compensation expense recognized during the three and six months ended June 30, 2021 and
June 30, 2020 related to RHI-denominated awards is as follows:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
RHI restricted stock units............................................. $ 1,372 $ 31,206 $ 2,744 $ 60,183
RHI stock options......................................................... — — — 32
RHI cash settled awards............................................... — 13,743 — 26,421
RHI denominated share-based compensation expense. $ 1,372 $ 44,949 $ 2,744 $ 86,636
Including subsidiary share-based compensation plans, total share-based compensation expense for the three months ended
June 30, 2021 and 2020, was $41,036 and $44,997, respectively and $83,020 and $86,733 for the six months ended June 30,
2021 and 2020, respectively.
16. Earnings Per Share
The Company applies the two-class method for calculating and presenting earnings per share by separately presenting
earnings per share for Class A common stock and Class B common stock. In applying the two-class method, the Company
allocates undistributed earnings equally on a per share basis between Class A and Class B common stock. According to the
Company’s certificate of incorporation, the holders of the Class A and Class B common stock are entitled to participate in
earnings equally on a per-share basis, as if all shares of common stock were of a single class, and in dividends as may be
declared by the board of directors. Holders of the Class A and Class B common stock also have equal priority in liquidation.
Shares of Class C and Class D common stock do not participate in earnings of Rocket Companies, Inc. As a result, the shares
of Class C and Class D common stock are not considered participating securities and are not included in the weighted-
average shares outstanding for purposes of earnings per share. Restricted stock units awarded as part of the Company’s
compensation program are included in the weighted-average Class A shares outstanding in the calculation of basic earnings
per share ("EPS") once the units are fully vested.
Basic earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by
the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share
of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average
number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. There was no
Class B common stock outstanding as of June 30, 2021. See Note 14, Non-controlling Interests for a description of Paired
Interests.
Prior to the IPO, Holdings membership structure included equity interests held by RHI. The Company analyzed the
calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be
meaningful to the users of these condensed consolidated financial statements. Therefore, earnings per share information has
not been presented for the three and six months ended June 30, 2020.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
38
The following table sets for the calculation of the basic and diluted earnings per share for the period:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021 2021
Net income.................................................................................................. $ 1,036,650 $ 3,813,988
Net income attributable to non-controlling interest.................................... (975,530) (3,629,166)
Net income attributable to Rocket Companies............................................ 61,120 184,822
Add: Reallocation of Net income attributable to vested, undelivered
stock awards................................................................................................ 30 98
Net income attributable to common shareholders....................................... $ 61,150 $ 184,920
Numerator:
Net income attributable to Class A common shareholders - basic.............. $ 61,150 $ 184,920
Add: Reallocation of net income attributable to dilutive impact of pro-
forma conversion of Class D shares to Class A shares (1).......................... 733,519 —
Add: Reallocation of net income attributable to dilutive impact of share-
based compensation awards (2)................................................................... 2,494 8,411
Net income attributable to Class A common shareholders - diluted........... $ 797,163 $ 193,331
Denominator:
Weighted average shares of Class A common stock outstanding - basic... 136,139,400 125,961,094
Add: Dilutive impact of conversion of Class D shares to Class A shares.. 1,848,879,483 —
Add: Dilutive impact of share-based compensation awards (3)................. 6,249,089 6,139,009
Weighted average shares of Class A common stock outstanding - diluted 1,991,267,972 132,100,103
Earnings per share of Class A common stock outstanding - basic..............
$ 0.45
$ 1.47
Earnings per share of Class A common stock outstanding - diluted...........
$ 0.40
$ 1.46
(1) Net income calculated using the estimated annual effective tax rate of Rocket Companies, Inc.
(2) Reallocation of net income attributable to dilutive impact of share-based compensation awards for the three months ended
June 30, 2021 comprised of $2,448 related to restricted stock units, $11 related to stock options and $35 related to TMSPP.
Reallocation of net income attributable to dilutive impact of share-based compensation awards for the six months ended
June 30, 2021 comprised of $8,286 related to restricted stock units, $20 related to stock options and $105 related to TMSPP.
(3) Dilutive impact of share-based compensation awards for the three months ended June 30, 2021 comprised of 6,134,281
related to restricted stock units, 27,457 related to stock options and 87,351 related to TMSPP. Dilutive impact of share-based
compensation awards for the six months ended June 30, 2021 comprised of 6,048,507 related to restricted stock units, 14,285
related to stock options and 76,217 related to TMSPP.
For the period from January 1, 2021 to June 30, 2021, 1,858,812,080 Holdings Units, each weighted for the portion of the
period for which they were outstanding, together with a corresponding number of shares of our Class D common stock, were
exchangeable, at our option, for shares of our Class A common stock. After evaluating the potential dilutive effect under the
if-converted method, the outstanding Holdings Units for the assumed exchange of non-controlling interests were determined
to be anti-dilutive and thus were excluded from the computation of diluted earnings per share.
Rocket Companies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Except Shares and Per Share Amounts)
39
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis of our financial condition and results of operations should be read in
conjunction with, and is qualified in its entirety by reference to, our unaudited condensed consolidated financial statements
and the related notes and other information included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”)
and our audited consolidated financial statements included in our Annual Report on Form 10-K (the "Form 10-K") filed with
the Securities and Exchange Commission (the “SEC”). This discussion and analysis contains forward-looking statements
that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these
forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Special Note
Regarding Forward-Looking Statements,” and in Part II. Item 1A. “Risk Factors” and elsewhere in this Form 10-Q and in
our Form 10-K.
Special Note Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements, which involve risks and uncertainties. These forward-looking
statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would”
and, in each case, their negative or other various or comparable terminology. All statements other than statements of
historical facts contained in this Form 10-Q, including statements regarding our strategy, future operations, future financial
position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are
forward-looking statements. As you read this Form 10-Q, you should understand that these statements are not guarantees of
performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described
under the heading “Risk Factors” in this Form 10-Q. Although we believe that these forward-looking statements are based
upon reasonable assumptions, you should be aware that many factors, including those described under the heading “Risk
Factors” in this Form 10-Q, could affect our actual financial results or results of operations and could cause actual results to
differ materially from those in the forward-looking statements.
Our forward-looking statements made herein are made only as of the date of this Form 10-Q. We expressly disclaim any
intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our
expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are
based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained in this Form 10-Q.
Executive Summary
We are a Detroit-based holding company consisting of tech-driven real estate, mortgage and eCommerce businesses. We are
committed to providing an industry-leading client experience powered by our platform. In addition to Rocket Mortgage, the
nation’s largest mortgage lender, we have expanded into complementary industries, such as real estate services, personal
lending, and auto sales where we seek to deliver innovative client solutions leveraging our Rocket platform.
Quicken Loans, LLC, changed its name to “Rocket Mortgage, LLC.”, effective as of July 31, 2021, pursuant to the filing of a
Certificate of Amendment to the Articles of Organization with the Michigan Department of Licensing and Regulatory
Affairs, Corporations, Securities & Commercial Licensing Bureau.
Recent Developments
Business Update in Response to COVID-19 Impact
As of June 30, 2021, 54,364 clients, or 2.3% of the total serviced portfolio, were in forbearance plans related to COVID-19.
Since quarter end, we’ve seen positive developments in the number of clients entering into forbearance and as of July 31,
2021, the total number of clients in forbearance plans related to COVID-19 was 49,859 or 2.1% of the portfolio.
40
Three months ended June 30, 2021 summary
For the three months ended June 30, 2021, we originated $83.8 billion in residential mortgage loans, which was an $11.4
billion, or 15.8%, increase from the three months ended June 30, 2020. Our Net income was $1.0 billion for the three months
ended June 30, 2021, compared to Net income of $3.5 billion for the three months ended June 30, 2020. We generated $1.3
billion of Adjusted EBITDA for the three months ended June 30, 2021, which was a decrease of $2.6 billion, or 66.7%,
compared to $3.8 billion for the three months ended June 30, 2020. For more information on Adjusted EBITDA, please see
“Non-GAAP Financial Measures” below.
The decrease in Net income was primarily driven by a decrease of $2.4 billion, or 50.7% in Gain on sale of loans, net which
was driven primarily by the decrease in gain on sale margin, partially offset by an increase in origination volume in the three
months ended June 30, 2021 noted above. Gain on sale margin in 2021 reflects a tighter spread between primary and
secondary mortgage rates and an increase in mix of our Partner Network as a percentage of our total originations. The
primary mortgage rate is the rate at which lenders originate loans with borrowers and the secondary mortgage rate is the rate
at which lenders securitize those loans into mortgage backed securities. Loan servicing (loss) income, net increased $231.6
million, or 76.4%, which was primarily due to the increase in the change in fair value of MSRs. Other income also decreased
$184.6 million, or 33%, due to a decrease in revenues generated from Rocket Loans loan recommendations through the
economic injury disaster loans program offered by the Small Business Administration. During the period expenses increased
$60.4 million, or 3.8%, which was associated with higher production levels in the three months ended June 30, 2021 as
compared to the three months ended June 30, 2020. The increase in production led to an increase in Marketing and
advertising expenses of $104.5 million, or 51.7%, due to the Company's increased investment in brand marketing from new
national campaigns with the reintroduction of many sporting and other live events that were cancelled in 2020 due to the
COVID-19 pandemic. Also, in 2021 the Company’s performance marketing spend increased as compared to the prior period
supporting our increase in loan origination volume.
As of June 30, 2021, our servicing portfolio, including loans subserviced for others, included approximately $507.2 billion of
UPB and 2.4 million client loans. The portfolio primarily consists of high quality performing GSE and government (FHA and
VA) loans. Our delinquent loans (defined as 60-plus days past-due) were 2.60% of our total portfolio. Excluding clients in
COVID-19 related forbearance plans, our delinquent loans (defined as 60-plus days past-due) were 0.71% as of June 30,
2021. We monitor the MSR portfolio on a regular basis seeking to optimize our portfolio by evaluating the risk and return
profile of the portfolio. As part of these efforts we sold the servicing on approximately 20,000 loans with $7.9 billion in UPB
during the three months ended June 30, 2021. These sales were more than offset by new loans that were added to the MSR
portfolio organically during the period.
Six months ended June 30, 2021 summary
For the six months ended June 30, 2021, we originated $187.3 billion in residential mortgage loans, which was a $63.3
billion, or 51.0%, increase from the six months ended June 30, 2020. Our Net income was $3.8 billion for the six months
ended June 30, 2021, compared to Net income of $3.6 billion for the six months ended June 30, 2020. We generated $3.7
billion of Adjusted EBITDA for the six months ended June 30, 2021, which was a decrease of $1.1 billion, or 22.6%,
compared to $4.8 billion for the six months ended June 30, 2020. For more information on Adjusted EBITDA, please see
“Non-GAAP Financial Measures” below.
41
The increase in Net income was primarily driven by an increase in Loan servicing (loss) income, net, which increased $1.5
billion. The change was primarily due to the increase in the change in fair value of MSRs. Other income also increased $37.8
million, or 4.7%, due primarily to revenue generated from Amrock's title insurance services, property valuation and
settlement services. Gain on sale of loans, net decreased $681.8 million, or 10.4% which was driven primarily by the decrease
in gain on sale margin, partially offset by the increase in origination volume in the six months ended June 30, 2021 noted
above. There was an increase in expenses associated with higher production levels in the six months ended June 30, 2021 as
compared to the six months ended June 30, 2020. The increase in production led to an increase in Salaries, commissions and
team member benefits of $145.1 million, or 9.4%, primarily due to variable compensation and an increase in team members
in production roles to support our continued growth. General and administrative expenses also increased by $71.0 million, or
14.7%, during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 driven primarily by
increased technology spend to support the increase in production. Other expenses increased by $172.3 million, or 52.0%, in
the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 driven by expenses incurred to
support the higher level of title insurance services, property valuation and settlement services due to the increased origination
volumes noted above. Other expenses also increased due to an increase in payoff interest expense that resulted from an
increase in the volume of loans paid in full prior to their scheduled maturity from our servicing portfolio in the six months
ended June 30, 2021. When individual loans are paid off, we are required to remit interest for an entire month regardless of
the date of payoff; however, clients are only responsible for interest accrued up to the date of payoff. The difference between
the interest we are required to remit to investors and the interest we collect from the client as a result of an early payoff is
referred to as “payoff interest”.
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Revenue,
Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA as non-GAAP measures which management believes
provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and
should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in
accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.
In first quarter of 2021, we revised our definition of Adjusted Net income and Adjusted EBITDA to exclude a litigation
accrual that does not directly affect what we consider to be our core operating performance. Excluding this cost did not
impact Adjusted Net income or Adjusted EBITDA for the comparative periods presented. From time to time in the future, we
may exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors.
We define “Adjusted Revenue” as total revenues net of the change in fair value of mortgage servicing rights (“MSRs”) due to
valuation assumptions. We define “Adjusted Net Income” as tax-effected earnings before share-based compensation expense,
the change in fair value of MSRs due to valuation assumptions, and a litigation accrual, and the tax effects of those
adjustments. We define “Adjusted Diluted EPS” as Adjusted Net Income divided by the diluted weighted average number of
Class A common stock outstanding for the applicable period, which assumes the pro forma exchange and conversion of all
outstanding Class D common stock for Class A common stock. We define “Adjusted EBITDA” as earnings before interest
and amortization expense on non-funding debt, income tax, and depreciation and amortization, net of the change in fair value
of MSRs due to valuation assumptions (net of hedges), share-based compensation expense, and a litigation accrual. We
exclude from each of these non-GAAP revenues the change in fair value of MSRs due to valuation assumptions (net of
hedges) as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in assumptions
including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, which is not
indicative of our performance or results of operation. Adjusted EBITDA includes interest expense on funding facilities,
which are recorded as a component of “Interest income, net”, as these expenses are a direct cost driven by loan origination
volume. By contrast, interest and amortization expense on non-funding debt is a function of our capital structure and is
therefore excluded from Adjusted EBITDA.
42
We believe that the presentation of Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA
provides useful information to investors regarding our results of operations because each measure assists both investors and
management in analyzing and benchmarking the performance and value of our business. Adjusted Revenue, Adjusted Net
Income, Adjusted Diluted EPS and Adjusted EBITDA provide indicators of performance that are not affected by fluctuations
in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general
operating performance from period to period, and management relies on these measures for planning and forecasting of future
periods. Additionally, these measures allow management to compare our results with those of other companies that have
different financing and capital structures. However, other companies may define Adjusted Revenue, Adjusted Net Income,
Adjusted Diluted EPS and Adjusted EBITDA differently, and as a result, our measures of Adjusted Revenue, Adjusted Net
Income, Adjusted Diluted EPS and Adjusted EBITDA may not be directly comparable to those of other companies.
Although we use Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA as financial
measures to assess the performance of our business, such use is limited because they do not include certain material costs
necessary to operate our business. Additionally, our definitions of each of Adjusted Revenue, Adjusted Net Income, Adjusted
Diluted EPS and Adjusted EBITDA allows us to add back certain non-cash charges and deduct certain gains that are included
in calculating total revenues, net, net income attributable to Rocket Companies or net income (loss). However, these expenses
and gains vary greatly, and are difficult to predict. They can represent the effect of long-term strategies as opposed to short-
term results. Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA should be considered in
addition to, and not as a substitute for, total revenues, net income attributable to Rocket Companies and net income (loss) in
accordance with U.S. GAAP as measures of performance. Our presentation of Adjusted Revenue, Adjusted Net Income,
Adjusted Diluted EPS and Adjusted EBITDA should not be construed as an indication that our future results will be
unaffected by unusual or nonrecurring items.
Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA have limitations as analytical tools,
and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.
Some of these limitations are:
(a) they do not reflect every cash expenditure, future requirements for capital expenditures or contractual
commitments;
(b) Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to
service interest or principal payment on our debt;
(c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced or require improvements in the future, and Adjusted Revenue, Adjusted Net
Income and Adjusted EBITDA do not reflect any cash requirement for such replacements or improvements;
and
(d) they are not adjusted for all non-cash income or expense items that are reflected in our Condensed
Consolidated Statements of Cash Flows.
Because of these limitations, Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA are not
intended as alternatives to total revenue, net income attributable to Rocket Companies or net income (loss) as an indicator of
our operating performance and should not be considered as measures of discretionary cash available to us to invest in the
growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these
limitations by using Adjusted Revenue, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA along with other
comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below
for reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures. Additionally, our U.S.
GAAP-based measures can be found in the condensed consolidated financial statements and related notes included elsewhere
in this Form 10-Q.
43
Reconciliation of Adjusted Revenue to Total Revenue, net
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Total Revenue, net.........................................................
$ 2,668,748 $ 5,035,813 $ 7,252,985 $ 6,402,122
Change in fair value of MSRs due to valuation
assumptions (net of hedges) (1).....................................
121,312 274,377 (423,138) 1,017,704
Adjusted Revenue..........................................................
$ 2,790,060 $ 5,310,190 $ 6,829,847 $ 7,419,826
(1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes
in market interest rates.
Reconciliation of Adjusted Net Income to Net Income Attributable to Rocket Companies
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Net income attributable to Rocket
Companies.......................................
$ 61,120 $ — $ 184,822 $ —
Net income impact from pro forma
conversion of Class D common
shares to Class A common shares
(1).....................................................
976,280 3,464,518 3,630,366 3,564,005
Adjustment to the provision for
income tax (2)..................................
(239,935) (843,768) (881,311) (867,535)
Tax-effected net income (2).............
$ 797,465 $ 2,620,750 $ 2,933,877 $ 2,696,470
Non-cash share-based
compensation expense.....................
40,930 31,254 83,002 60,312
Change in fair value of MSRs due
to valuation assumptions (net of
hedges) (3).......................................
121,312 274,377 (423,138) 1,017,704
Litigation accrual (4).......................
— — 15,000 —
Tax impact of adjustments (5).........
(40,350) (75,857) 80,861 (267,564)
Other tax adjustments (6).................
1,009 — 1,758 —
Adjusted Net Income.......................
$ 920,366 $ 2,850,524 $ 2,691,360 $ 3,506,922
(1) Reflects net income to Class A common stock from pro forma exchange and conversion of corresponding shares of
our Class D common shares held by non-controlling interest holders as of June 30, 2021 and 2020.
(2) Rocket Companies will be subject to U.S. Federal income taxes, in addition to state, local and Canadian taxes with
respect to its allocable share of any net taxable income of Holdings. The adjustment to the provision for income tax
reflects the effective tax rates below, assuming the Issuer owns 100% of the non-voting common interest units of
Holdings.
June 30,
2021 2020
Statutory U.S. Federal Income Tax Rate............................................................................
21.00 % 21.00 %
Canadian taxes....................................................................................................................
0.01 % 0.01 %
State and Local Income Taxes (net of federal benefit)......................................................
3.86 % 3.81 %
Effective Income Tax Rate for Adjusted Net Income........................................................
24.87 % 24.82 %
(3) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes
in market interest rates.
(4) Reflects legal accrual related to a specific legal matter.
44
(5) Tax impact of adjustments gives effect to the income tax related to non-cash share-based compensation expense,
change in fair value of MSRs due to valuation assumptions, and litigation accrual at the above described effective
tax rates for each period.
(6) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from the
purchase of Holdings units, net of payment obligations under Tax Receivable Agreement.
Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares
Outstanding
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands, except shares and per share) 2021 2020 2021 2020
Diluted weighted average Class A Common
shares outstanding .................................................
1,991,267,972 N/A 132,100,103 N/A
Assumed pro forma conversion of Class D shares
(1)...........................................................................
— N/A 1,858,812,080 N/A
Adjusted diluted weighted average shares
outstanding.............................................................
1,991,267,972 N/A 1,990,912,183 N/A
Adjusted Net Income.............................................
$ 920,366 N/A(2) $ 2,691,360 N/A(2)
Adjusted Diluted EPS............................................
$ 0.46 N/A(2) $ 1.35 N/A(2)
(1) Reflects the pro forma exchange and conversion of non-dilutive Class D common stock to Class A common stock.
(2) This non-GAAP measure is not applicable for these periods, as the reorganization transactions had not yet occurred.
Reconciliation of Adjusted EBITDA to Net Income
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Net income................................................................
$ 1,036,650 $ 3,464,082 $ 3,813,988 $ 3,563,129
Interest and amortization expense on non-
funding debt...............................................................
35,038 33,168 70,609 66,275
Income tax provision.................................................
24,047 21,448 89,879 22,680
Depreciation and amortization..................................
20,589 16,189 35,893 32,304
Non-cash share-based compensation expense...........
40,930 31,254 83,002 60,312
Change in fair value of MSRs due to valuation
assumptions (net of hedges) (1)................................
121,312 274,377 (423,138) 1,017,704
Litigation accrual (2).................................................
— — 15,000 —
Adjusted EBITDA.....................................................
$ 1,278,566 $ 3,840,518 $ 3,685,233 $ 4,762,404
(1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes
in market interest rates.
(2) Reflects legal accrual related to a specific legal matter.
45
Key Performance Indicators
We monitor a number of key performance indicators to evaluate the performance of our business operations. Our loan
production key performance indicators enable us to monitor our ability to generate gain on sale revenue as well as understand
how our performance compares to the total mortgage origination market. Our servicing portfolio key performance indicators
enable us to monitor the overall size of our servicing portfolio of business, the related value of our mortgage servicing rights,
and the health of the business as measured by the average MSRs delinquency rate. Other key performance indicators for other
Rocket Companies, besides Rocket Mortgage ("Other Rocket Companies"), allow us to monitor both revenues and unit sales
generated by these businesses. We also include Rockethomes.com average unique monthly visitors, as we believe traffic on
the site is an indicator of consumer interest.
46
The following summarizes key performance indicators of the business:
Three Months Ended June 30, Six Months Ended June 30,
(Units and $ in thousands) 2021 2020 2021 2020
Rocket Mortgage (1)
Loan Production Data
Closed loan origination volume..............................
$ 83,764,238 $ 72,323,981 $ 187,289,376 $ 124,027,813
Direct to Consumer origination volume............
$ 45,231,277 $ 45,792,368 $ 106,655,648 $ 77,552,097
Partner Network origination volume.................
$ 38,532,961 $ 26,531,613 $ 80,633,728 $ 46,475,716
Gain on sale margin (2)..........................................
2.78 % 5.19 % 3.29 % 4.45 %
June 30,
2021 2020
Servicing Portfolio Data
Total serviced UPB (includes subserviced)............
$ 507,167,578 $ 378,156,838
MSRs UPB of loans serviced...............................
$ 466,444,905 $ 346,870,713
UPB of loans subserviced and temporarily
serviced................................................................
$ 40,722,673 $ 31,286,125
Total loans serviced (includes subserviced)...........
2,372.6 1,930.1
Number of MSRs loans serviced..........................
2,247.5 1,818.5
Number of loans subserviced and temporarily
serviced................................................................
125.2 111.7
MSRs fair value multiple (3)..................................
3.46 2.13
Total serviced delinquency rate, excluding loans
in forbearance (60+)...............................................
0.71 % 0.65 %
Total serviced MSRs delinquency rate (60+).........
2.60 % 3.71 %
Net client retention rate (trailing twelve months)...
90 % 93 %
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Other Rocket Companies
Amrock closings (units)..........................................
260.3 240.4 609.1 406.3
Rocket Homes real estate transactions...................
8.3 7.0 14.9 13.0
Rockethomes.com average unique monthly
visitors (4)...............................................................
1,818.6 359.7 1,455.6 315.5
Rocket Loans closed (units) (5)..............................
4.6 1.5 7.2 5.5
Rocket Auto car sales (units) (6)............................
15.6 6.4 29.2 14.7
Core Digital Media client inquiries generated........
1,726.0 1,261.0 3,604.8 2,677.3
Total Other Rocket Companies gross revenue............
$ 513,999 $ 626,560 $ 1,068,424 $ 929,203
Total Other Rocket Companies net revenue (7)..........
$ 392,857 $ 553,868 $ 833,291 $ 779,651
(1) Rocket Mortgage origination volume and gain on sale margins exclude all reverse mortgage activity.
(2) Gain on sale margin is the gain on sale of loans, net divided by net rate lock volume for the period, excluding all
reverse mortgage activity. Gain on sale of loans, net includes the net gain on sale of loans, fair value of originated
MSRs, and fair value adjustment on loans held for sale, divided by the UPB of loans subject to IRLC’s during the
applicable period.
47
(3) MSRs fair market value multiple is a metric used to determine the relative value of the MSRs asset in relation to the
annualized retained servicing fee, which is the cash that the holder of the MSRs asset would receive from the
portfolio as of such date. It is calculated as the quotient of (a) the MSRs fair market value as of a specified date
divided by (b) the weighted average annualized retained servicing fee for our MSRs portfolio as of such date. The
weighted average annualized retained servicing fee for our MSRs portfolio was 0.29% and 0.31% for the three
months ended June 30, 2021 and 2020, respectively, and 0.29% and 0.31% for the six months ended June 30, 2021
and 2020, respectively. The vast majority of our portfolio consists of originated MSRs and consequently, the impact
of purchased MSRs does not have a material impact on our weighted average service fee.
(4) Rockethomes.com average unique monthly visitors is calculated by a third party service that monitors website
activity. This metric doesn't necessarily have a direct correlation to revenues and is used primarily to monitor
consumer interest in the Rockethomes.com site.
(5) During the three and six months ended June 30, 2021, we processed approximately 0.6 million and 3.0 million
unique loan recommendations through the economic injury disaster loans program offered by the Small Business
Administration.
(6) Rocket Auto's Gross Merchandise Value, which represents the vehicle and other vehicle-related sales during the
period, was $484 and $844 for the three and six months ended June 30, 2021, respectively.
(7) Net revenue presented above is calculated as gross revenues less intercompany revenue eliminations. A portion of
the Other Rocket Companies revenues is generated through intercompany transactions. These intercompany
transactions take place with entities that are part of our platform. Consequently, we view gross revenue of individual
Other Rocket Companies as a key performance indicator, and we consider net revenue of Other Rocket Companies
on a combined basis.
Description of Certain Components of Financial Data
Components of revenue
Our sources of revenue include Gain on sale of loans, net, Loan servicing (loss) income, net, Interest income, net, and Other
income.
Gain on sale of loans, net
Gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain
on sale of loans, which represents the premium we receive in excess of the loan principal amount and certain fees charged by
investors upon sale of loans into the secondary market, (2) loan origination fees, credits, points and certain costs,
(3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks (“IRLCs” or “rate lock”)
and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and IRLCs, and (6) the fair
value of originated MSRs.
An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of an estimated pull-through
factor. The pull-through factor is a key assumption and estimates the loan funding probability, as not all loans that reach
IRLC status will result in a closed loan. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are
recognized in current period earnings. When the mortgage loan is sold into the secondary market (i.e., funded), any difference
between the proceeds received and the current fair value of the loan is recognized in current period earnings in gain on sale of
loans.
Loan origination fees generally include underwriting and processing fees. Loan origination costs include lender paid
mortgage insurance, recording taxes, investor fees and other related expenses. Net loan origination fees and costs related to
the origination of mortgage loans are recognized as a component of the fair value of IRLCs.
We establish reserves for our estimated liabilities associated with the potential repurchase or indemnity of purchasers of loans
previously sold due to representation and warranty claims by investors. Additionally, the reserves are established for the
estimated liabilities from the need to repay, where applicable, a portion of the premium received from investors on the sale of
certain loans if such loans are repaid in their entirety within a specified time period after the sale of the loans. The provision
for or benefit from investor reserves is recognized in current period earnings in gain on sale of loans.
48
We enter into derivative transactions to protect against the risk of adverse interest rate movements that could impact the fair
value of certain assets, including IRLCs and loans held for sale. We primarily use forward loan sales commitments to hedge
our interest rate risk exposure. Changes in the value of these derivatives, or hedging gains and losses, are included in gain on
sale of loans.
Included in gain on sale of loans, net is also the fair value of originated MSRs, which represents the estimated fair value of
MSRs related to loans which we have sold and retained the right to service.
Loan servicing (loss) income, net
The value of newly originated MSRs is recognized as a component of the gain on sale of loans, net when loans are sold and
the associated servicing rights are retained. Loan servicing fee income consists of the contractual fees earned for servicing the
loans and includes ancillary revenue such as late fees and modification incentives. Loan servicing fee income is recorded to
income as earned, which is upon collection of payments from borrowers. We have elected to subsequently measure the MSRs
at fair value on a recurring basis. Changes in fair value of MSRs, net primarily due to the realization of expected cash flows
and/or changes in valuation inputs and estimates, are recognized in current period earnings. Furthermore, we also include in
Loan servicing (loss) income, net the gains and losses related to MSRs collateral for financing liability and MSRs financing
liability.
We regularly perform a comprehensive analysis of the MSRs portfolio in order to identify and sell certain MSRs that do not
align with our strategy for retaining MSRs. To hedge against interest rate exposure on these assets, we enter into forward loan
purchase commitments. Changes in the value of derivatives designed to protect against MSRs value fluctuations, or MSRs
hedging gains and losses, are included as a component of servicing fee loss, net.
Interest income, net
Interest income, net is interest earned on mortgage loans held for sale net of the interest expense paid on our loan funding
facilities.
Other income
Other income includes revenues generated from Amrock (title insurance services, property valuation, and settlement
services), Rocket Homes (real estate network referral fees), Rocket Auto (auto sales business revenues), Core Digital Media
(third party lead generation revenues), Rock Connections (third party sales and support revenues), Rocket Loans (personal
loans) and professional service fees. The professional service fees represent amounts received in exchange for professional
services provided to affiliated companies. Services are provided primarily in connection with technology, facilities, human
resources, accounting, training, and security functions. For additional information on such fees, see Note 6, Transactions with
Related Parties in the notes to the unaudited condensed consolidated financial statements included elsewhere in this Form 10-
Q. Other income also includes revenues from investment interest income.
Components of operating expenses
Our operating expenses as presented in the statement of operations data include salaries, commissions and team member
benefits, general and administrative expenses, marketing and advertising expenses, and other expenses.
Salaries, commissions and team member benefits
Salaries, commissions and team member benefits include all payroll, benefits, and share-based compensation expenses for
our team members.
General and administrative expenses
General and administrative expenses primarily include occupancy costs, professional services, loan processing expenses on
loans that do not close or that are not charged to clients on closed loans, commitment fees, fees on loan funding facilities,
license fees, office expenses and other operating expenses.
49
Marketing and advertising expenses
Marketing and advertising expenses are primarily related to performance and brand marketing.
Interest and amortization expense on non-funding debt
Interest and amortization expense on non-funding debt primarily related to expenses in connections with the issuance of our
Senior Notes.
Other expenses
Other expenses primarily consist of depreciation and amortization on property and equipment, mortgage servicing related
expenses, and provision for income taxes.
Income taxes
In calculating the provision for interim income taxes, in accordance with ASC Topic 740 Income Taxes, we apply an
estimated annual effective tax rate to year-to-date ordinary income. At the end of each interim period, we estimate the
effective tax rate expected to be applicable for the full year. Tax-effects of significant, unusual or infrequently occurring
items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they
occur.
Tax Receivable Agreement
In connection with the reorganization completed prior to our IPO in 2020, we entered into a Tax Receivable Agreement with
RHI and our Chairman that will obligate us to make payments to RHI and our Chairman generally equal to 90% of the
applicable cash tax savings that we actually realize or in some cases are deemed to realize as a result of the tax attributes
generated by (i) certain increases in our allocable share of the tax basis in Holdings’ assets resulting from (a) the purchases of
Holdings Units (along with the corresponding shares of our Class D common stock or Class C common stock) from RHI and
our Chairman (or their transferees of Holdings Units or other assignees) using the net proceeds from our initial public
offering or in any future offering, (b) exchanges by RHI and our Chairman (or their transferees of Holdings Units or other
assignees) of Holdings Units (along with the corresponding shares of our Class D common stock or Class C common stock)
for cash or shares of our Class B common stock or Class A common stock, as applicable, or (c) payments under the Tax
Receivable Agreement; (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the
Tax Receivable Agreement and (iii) disproportionate allocations (if any) of tax benefits to Holdings as a result of section
704(c) of the Code that relate to the reorganization transactions. We will retain the benefit of the remaining 10% of these tax
savings.
Share-based compensation
Share-based compensation is comprised of both equity and liability awards and is measured and expensed accordingly under
Accounting Standards Codification (“ASC”) 718 Compensation—Stock Compensation. As indicated above, share-based
compensation expense is included as part of salaries, benefits and team member benefits.
Non-controlling interest
We are the sole managing member of Holdings and consolidate the financial results of Holdings. Therefore, we report a non-
controlling interest based on the Holdings Units of Holdings held by our Chairman and RHI on our Condensed Consolidated
Balance Sheets. Income or loss is attributed to the non-controlling interests based on the weighted average Holdings Units
outstanding during the period and is presented on the Condensed Consolidated Statements of Income and Comprehensive
Income. Refer to Note 14, Non-controlling Interests for more information on non-controlling interests.
50
Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020
Summary of Operations
Condensed Statement of Operations Data Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Revenue
Gain on sale of loans, net.................................
$ 2,341,489 $ 4,753,584 $ 5,893,931 $ 6,575,693
Servicing fee income........................................
343,349 249,842 635,710 506,935
Change in fair value of MSRs..........................
(414,745) (552,844) (168,824) (1,544,096)
Interest income, net..........................................
22,267 24,282 49,668 58,865
Other income....................................................
376,388 560,949 842,500 804,725
Total revenue, net..................................................
2,668,748 5,035,813 7,252,985 6,402,122
Expenses
Salaries, commissions and team member
benefits.............................................................
840,470 854,007 1,682,669 1,537,613
General and administrative expenses...............
262,815 289,183 554,234 483,257
Marketing and advertising expenses................
306,685 202,198 627,528 420,191
Interest and amortization expense on non-
funding-debt.....................................................
35,038 33,168 70,609 66,275
Other expenses.................................................
187,090 193,175 503,957 331,657
Total expenses.......................................................
1,632,098 1,571,731 3,438,997 2,838,993
Net income ...........................................................
$ 1,036,650 $ 3,464,082 $ 3,813,988 $ 3,563,129
Net (income) loss attributable to non-controlling
interest...................................................................
(975,530) (3,464,082) (3,629,166) (3,563,129)
Net income attributable to Rocket Companies......
$ 61,120 $ — $ 184,822 $ —
Gain on sale of loans, net
The components of gain on sale of loans for the periods presented were as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Net gain on sale of loans (1).....................................
$ 1,704,139 $ 3,087,003 $ 4,291,569 $ 4,499,134
Fair value of originated MSRs..................................
857,111 669,923 2,030,275 1,205,342
Benefit from (provision for) investor reserves..........
19,316 (7,786) 13,969 (9,363)
Fair value adjustment gain on loans held for sale
and IRLCs.................................................................
357,026 1,458,539 (1,526,917) 2,393,868
Revaluation loss from forward commitments
economically hedging loans held for sale and
IRLCs........................................................................
(596,103) (454,095) 1,085,035 (1,513,288)
Gain on sale of loans, net..........................................
$ 2,341,489 $ 4,753,584 $ 5,893,931 $ 6,575,693
(1) Net gain on sale of loans represents the premium received in excess of the UPB, plus net origination fees.
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The table below provides details of the characteristics of our mortgage loan production for each of the periods presented:
($ in thousands) Three Months Ended June 30, Six Months Ended June 30,
Loan origination volume by type 2021 2020 2021 2020
Conventional Conforming.....................................
$ 63,849,712 $ 58,938,294 $ 144,960,644 $ 96,853,179
FHA/VA................................................................
12,986,323 11,014,894 31,392,944 21,803,679
Non-Agency...........................................................
6,928,203 2,370,793 10,935,788 5,370,955
Total mortgage loan origination volume...............
$ 83,764,238 $ 72,323,981 $ 187,289,376 $ 124,027,813
Portfolio metrics
Average loan amount.............................................
$ 281 $ 274 $ 278 $ 275
Weighted average loan-to-value ratio....................
68.37 % 70.64 % 67.83 % 71.60 %
Weighted average credit score...............................
749 754 752 751
Weighted average loan rate...................................
2.88 % 3.22 % 2.78 % 3.36 %
Percentage of loans sold........................................
To GSEs and government......................................
92.96 % 93.87 % 94.84 % 93.09 %
To other counterparties..........................................
7.04 % 6.13 % 5.16 % 6.91 %
Servicing-retained..................................................
94.10 % 94.23 % 95.99 % 94.76 %
Servicing-released..................................................
5.90 % 5.77 % 4.01 % 5.24 %
Net rate lock volume (1)........................................
$ 83,586,479 $ 91,977,659 $ 178,702,224 $ 148,027,603
Gain on sale margin (2).........................................
2.78 % 5.19 % 3.29 % 4.45 %
(1) Net rate lock volume includes the UPB of loans subject to IRLCs, net of the pull-through factor as described in the
“Description of Certain Components of Financial Data” section above.
(2) Gain on sale margin is a ratio of gain on sale of loans, net to the net rate lock volume for the period as described
above. Gain on sale of loans, net includes the net gain on sale of loans, fair value of originated MSRs, fair value
adjustment gain on loans held for sale and IRLC’s, and revaluation loss from forward commitments economically
hedging loans held for sale and IRLCs. This metric is a measure of profitability for our on-going mortgage business
and therefore excludes revenues from Other Rocket Companies and reverse mortgage activity. See the table above
for each of the components of gain on sale of loans, net.
Gain on sale of loans, net was $2.3 billion for the three months ended June 30, 2021, a decrease of $2.4 billion, or 50.7%, as
compared with $4.8 billion for the three months ended June 30, 2020. The decrease in gain on sale of loans, net was primarily
driven by a decrease in gain on sale margin to 2.78% from 5.19%, partially offset by an increase in mortgage loan origination
volume of $11.4 billion, or 15.8%, for the three months ended June 30, 2021 and 2020, respectively. The decrease in gain on
sale margin in 2021 reflects a tighter spread between primary and secondary mortgage rates and an increase in mix of our
Partner Network as a percentage of our total originations. The primary mortgage rate is the rate at which lenders originate
loans with borrowers and the secondary mortgage rate is the rate at which lenders securitize those loans into mortgage backed
securities.
Gain on sale of loans, net was $5.9 billion for the six months ended June 30, 2021, a decrease of $0.7 billion, or 10.4%, as
compared with $6.6 billion for the six months ended June 30, 2020. The decrease in gain on sale of loans, net was primarily
driven by a decrease in gain on sale margin to 3.29% from 4.45%, partially offset by an increase in mortgage loan origination
volume of $63.3 billion, or 51.0%, for the six months ended June 30, 2021 and 2020, respectively. The decrease in gain on
sale margin in 2021 reflects a tighter spread between primary and secondary mortgage rates and an increase in mix of our
Partner Network as a percentage of our total originations. The primary mortgage rate is the rate at which lenders originate
loans with borrowers and the secondary mortgage rate is the rate at which lenders securitize those loans into mortgage backed
securities.
Net gain on sales of loans decreased $1.4 billion, or 44.8%, to $1.7 billion in the three months ended June 30, 2021 compared
to $3.1 billion in the three months ended June 30, 2020. This was driven by a decrease in gain on sale margin, partially offset
by an increase in mortgage loan origination volume, noted above.
52
Net gain on sales of loans decreased $207.6 million, or 4.6%, to $4.3 billion in the six months ended June 30, 2021 compared
to $4.5 billion in the six months ended June 30, 2020. This was driven by a decrease in gain on sale margin, partially offset
by an increase in mortgage loan origination volume, noted above.
The fair value of MSRs originated was $857.1 million for the three months ended June 30, 2021, an increase of $187.2
million, or 27.9%, as compared with $669.9 million during the three months ended June 30, 2020. The increase was primarily
due to an increase to funded loan volume of $12.5 billion, or 18.8%, from $66.5 billion for the three months ended June 30,
2020 to $79.0 billion for the three months ended June 30, 2021. MSR assets are created at the time Mortgage Loans Held for
Sale are securitized and sold to investors for cash, while the Company retains the MSR. The increase in funded loan volume
was partially offset by a decrease in the weighted average servicing fee during the three months ended June 30, 2021 as
compared to the three months ended June 30, 2020.
The fair value of MSRs originated was $2.0 billion for the six months ended June 30, 2021, an increase of $824.9 million, or
68.4%, as compared with $1.2 billion during the six months ended June 30, 2020. The increase was primarily due to an
increase in funded loan volume of $67.2 billion, or 57.2%, from $117.5 billion for the six months ended June 30, 2020 to
$184.8 billion for the six months ended June 30, 2021. MSR assets are created at the time Mortgage Loans Held for Sale are
securitized and sold to investors for cash, while the Company retains the MSR. The increase in funded loan volume was
partially offset by a decrease in the weighted average servicing fee during the six months ended June 30, 2021 as compared to
the six months ended June 30, 2020.
Loan servicing (loss) income, net
For the periods presented, Loan servicing (loss) income, net consisted of the following:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Retained servicing fee...........................
$ 335,494 $ 244,125 $ 619,103 $ 491,727
Subservicing income.............................
2,465 1,963 4,994 3,555
Ancillary income...................................
5,390 3,754 11,613 11,653
Servicing fee income.............................
343,349 249,842 635,710 506,935
Change in valuation model inputs or
assumptions...........................................
(141,073) (272,885) 442,234 (1,078,421)
Change in fair value of MSRs hedge....
19,761 (1,492) (19,096) 60,717
Collection / realization of cash flows....
(293,433) (278,467) (591,962) (526,392)
Change in fair value of MSRs...............
(414,745) (552,844) (168,824) (1,544,096)
Loan servicing (loss) income, net.........
$ (71,396) $ (303,002) $ 466,886 $ (1,037,161)
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June 30,
($ in thousands) 2021 2020
MSRs UPB of loans serviced............................................................................
$ 466,444,905 $ 346,870,713
Number of MSRs loans serviced......................................................................
2,247,454 1,818,462
UPB of loans subserviced and temporarily serviced........................................
$ 40,722,673 $ 31,286,125
Number of loans subserviced and temporarily serviced...................................
125,161 111,670
Total serviced UPB...........................................................................................
$ 507,167,578 $ 378,156,838
Total loans serviced..........................................................................................
2,372,615 1,930,132
MSRs fair value................................................................................................
$ 4,644,172 $ 2,289,209
Total serviced delinquency rate, excluding loans in forbearance (60+)...........
0.71 % 0.65 %
Total serviced delinquency count (60+) as % of total......................................
2.60 % 3.71 %
Weighted average credit score..........................................................................
741 736
Weighted average LTV.....................................................................................
70.87 % 74.47 %
Weighted average loan rate...............................................................................
3.21 % 3.88 %
Weighted average service fee...........................................................................
0.29 % 0.31 %
Loan servicing (loss) income, net was $71.4 million for the three months ended June 30, 2021, which compares to Loan
servicing (loss) income, net of $303.0 million for the three months ended June 30, 2020. The reduction of the loss was driven
primarily by an increase in servicing fee income to $343.3 million in 2021 as compared to $249.8 million in 2020, as a result
of the increase in the UPB of loans serviced for the period.
Loan servicing (loss) income, net was $466.9 million for the six months ended June 30, 2021, which compares to Loan
servicing (loss) income, net of $1,037.2 million for the six months ended June 30, 2020. The increase was driven primarily by
a smaller decrease in fair market value of MSRs of $168.8 million in 2021 as compared to a reduction in fair market value of
MSRs of $1,544.1 million in 2020.
The change in MSRs fair value was a net loss of $414.7 million for the three months ended June 30, 2021, as compared with
a net loss of $552.8 million for the three months ended June 30, 2020. The change in fair value during the three months ended
June 30, 2021 included $293.4 million of loss due to collection/realization of cash flows and a decrease in fair value due to
change in valuation assumptions (net of hedges) of $121.3 million primarily driven by a decrease in prepayment speeds from
10.9% at March 31, 2021 to 10.5% at June 30, 2021. The prepayment speed valuation assumption represents the annual rate
at which serviced clients are estimated to repay their UPB. The decrease in fair value during the three months ended June 30,
2020 included $278.5 million of due to collection/realization of cash flows and a decrease in fair value due to changes in
valuation model inputs or assumptions (net of hedges) of $274.4 million. The overall prepayment assumptions decreased
from 19.7% at March 31, 2020 to 19.2% at June 30, 2020, driven primarily by MSR new adds during the quarter. Excluding
the addition of new MSRs, the prepayment speeds increased at June 30, 2020 relative to March 31, 2020 resulting in the
decrease in fair value due to changes in valuation assumptions noted above.
The change in MSRs fair value was a net loss of $168.8 million for the six months ended June 30, 2021, as compared with a
net loss of $1,544.1 million for the six months ended June 30, 2020. The change in fair value during the six months ended
June 30, 2021 included $592.0 million of loss due to collection/realization of cash flows and an increase in fair value due to
change in valuation assumptions (net of hedges) of $423.1 million primarily driven by a decrease in prepayment speeds from
15.8% at December 31, 2020 to 10.5% at June 30, 2021. The decrease in fair value during the six months ended June 30,
2020 included $526.4 million of due to collection/realization of cash flows and a decrease in fair value due to changes in
valuation model inputs or assumptions (net of hedges) of $1.0 billion primarily driven by an increase in prepayment speeds
from 14.5% at December 31, 2019 to 19.2% at June 30, 2020.
54
Interest income, net
The components of Interest income, net for the periods presented were as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Interest income................................................................
$ 86,645 $ 78,039 $ 181,890 $ 152,081
Interest expense on funding facilities..............................
(64,378) (53,757) (132,222) (93,216)
Interest income, net..........................................................
$ 22,267 $ 24,282 $ 49,668 $ 58,865
Interest income, net was $22.3 million for the three months ended June 30, 2021, a decrease of $2.0 million, or 8.3%, as
compared to $24.3 million for the three months ended June 30, 2020. The decrease was driven by an increase in interest
expense that was a result of increased production volume, as well as a decrease in mortgage rates.
Interest income, net was $49.7 million for the six months ended June 30, 2021, a decrease of $9.2 million, or 15.6%, as
compared to $58.9 million for the six months ended June 30, 2020. The decrease was driven by an increase in interest
expense that was a result of increased production volume, as well as a decrease in note rates.
Other income
Other income decreased $184.6 million, or 33%, to $376.4 million for the three months ended June 30, 2021 as compared to
$560.9 million for the three months ended June 30, 2020. The decrease was driven by a decrease in revenues generated from
Rocket Loans loan recommendations through the economic injury disaster loans program offered by the Small Business
Administration.
Other income increased $37.8 million, or 5%, to $842.5 million for the six months ended June 30, 2021 as compared to
$804.7 million for the six months ended June 30, 2020. The increase was driven by revenues generated from Amrock's title
insurance services, property valuation and settlement services that were also driven by the increase in origination volume
noted above, partially offset by the decrease in revenues generated from Rocket Loans loan recommendations through the
economic injury disaster loans program offered by the Small Business Administration.
Expenses
Expenses for the periods presented were as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Salaries, commissions and team member benefits.....
$ 840,470 $ 854,007 $ 1,682,669 $ 1,537,613
General and administrative expenses.........................
262,815 289,183 554,234 483,257
Marketing and advertising expenses..........................
306,685 202,198 627,528 420,191
Interest and amortization expense on non-funding
debt.............................................................................
35,038 33,168 70,609 66,275
Other expenses...........................................................
187,090 193,175 503,957 331,657
Total expenses............................................................
$ 1,632,098 $ 1,571,731 $ 3,438,997 $ 2,838,993
Total expenses were $1.6 billion for the three months ended June 30, 2021, an increase of $60.4 million or 3.8%, as
compared with $1.6 billion for the three months ended June 30, 2020. This was driven primarily by an increase in marketing
and advertising expenses, partially offset by decreases in salaries, commissions and team member benefits, general and
administrative expenses, and other expenses as described below.
55
Total expenses were $3.4 billion for the six months ended June 30, 2021, an increase of $0.6 billion or 21.1%, as compared
with $2.8 billion for the six months ended June 30, 2020. This was driven primarily by increases in salaries, commissions and
team member benefits, general and administrative expenses, marketing and advertising, and other expenses as described
below.
Salaries, commissions and team member benefits were $840.5 million for the three months ended June 30, 2021, a decrease
of $13.5 million, or 1.6%, as compared with $854.0 million for the three months ended June 30, 2020. The decrease was
primarily due to a decrease in variable compensation related to a decrease in rate lock volume.
Salaries, commissions and team member benefits were $1.7 billion for the six months ended June 30, 2021, an increase of
$145.1 million, or 9.4%, as compared with $1.5 billion for the six months ended June 30, 2020. The increase was primarily
due to an increase in team members to support increased production.
General and administrative expenses were $262.8 million for the three months ended June 30, 2021, a decrease of $26.4
million, or 9.1%, as compared with $289.2 million for the three months ended June 30, 2020. The decreased expense was
driven primarily by decreases in loan processing costs.
General and administrative expenses were $554.2 million for the six months ended June 30, 2021, an increase of $71.0
million, or 14.7%, as compared with $483.3 million for the six months ended June 30, 2020. The increased expense was
driven primarily by increased technology spend to support the increase in production.
Marketing and advertising expenses were $306.7 million for the three months ended June 30, 2021, an increase of $104.5
million, or 51.7% as compared with $202.2 million for the three months ended June 30, 2020. In 2021, the Company’s brand
marketing spend increased from new national campaigns with the reintroduction of many sporting and other live events that
were cancelled in 2020 due to the COVID-19 pandemic. Also, in 2021 the Company’s performance marketing spend
increased as compared to the prior period supporting our increase in loan origination volume.
Marketing and advertising expenses were $627.5 million for the six months ended June 30, 2021, an increase of $207.3
million, or 49.3% as compared with $420.2 million for the six months ended June 30, 2020. In 2021, the Company’s brand
marketing spend increased from new national campaigns with the reintroduction of many sporting and other live events that
were cancelled in 2020 due to the COVID-19 pandemic. Also, in 2021 the Company’s performance marketing spend
increased as compared to the prior period supporting our increase in loan origination volume.
Other expenses were $187.1 million for the three months ended June 30, 2021, a decrease of $6.1 million, or 3.1%, as
compared with $193.2 million for the three months ended June 30, 2020. The decrease was due to a decrease in expenses
incurred from the sale of MSRs associated with prepayment provisions within the sales agreement.
Other expenses were $504.0 million for the six months ended June 30, 2021, an increase of $172.3 million, or 52.0%, as
compared with $331.7 million for the six months ended June 30, 2020. The increased expense was driven primarily by an
increase in expenses incurred to support the higher level of title insurance services, property valuation and settlement services
due to the increased origination volumes noted above, an increase in payoff interest expense, expenses incurred from the sale
of MSRs associated with prepayment provisions within the sales agreement, and an increase in our provision for income
taxes as a result of higher income before income taxes and a higher effective tax rate for six months ended June 30, 2021.
Summary Results by Segment for the Three and Six Months Ended June 30, 2021 and 2020
Our operations are organized by distinct marketing channels which promote client acquisition into our platform and include
two reportable segments: Direct to Consumer and Partner Network. In the Direct to Consumer segment, clients have the
ability to interact with the Rocket Mortgage app and/or with our Rocket Cloud Force, consisting of sales team members
across our platform. We market to potential clients in this segment through various performance marketing channels. The
Direct to Consumer segment derives revenue from originating, closing, selling and servicing predominantly agency-
conforming loans, which are pooled and sold to the secondary market. This also includes providing title insurance services,
appraisals and settlement services to these clients as part of our end-to-end mortgage origination experience. Servicing
activities are fully allocated to the Direct to Consumer segment as they are viewed as an extension of the client experience
with the primary objective to establish and maintain positive, regular touchpoints with our clients, which positions us to have
high retention and recapture the clients’ next refinance, purchase, personal loan, and auto sales transactions. These activities
position us to be the natural choice for clients’ next refinance or purchase transaction.
56
The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and
widely recognized brand to grow marketing and influencer relationships, and our mortgage broker partnerships through
Rocket Pro TPO. Our marketing partnerships consist of well-known consumer-focused companies that find value in our
award-winning client experience and want to offer their clients mortgage solutions with our trusted, widely recognized brand.
These organizations connect their clients directly to us through marketing channels and a referral process. Our influencer
partnerships are typically with companies that employ licensed mortgage professionals that find value in our client
experience, technology and efficient mortgage process, where mortgages may not be their primary offering. We also enable
clients to start the mortgage process through the Rocket platform in the way that works best for them, including through a
local mortgage broker. Rocket Pro TPO works exclusively with mortgage brokers, community banks and credit unions.
Rocket Pro TPO’s partners provide the face-to-face service their clients desire, while tapping into the expertise, technology
and award-winning process of Rocket Mortgage.
We measure the performance of the segments primarily on a contribution margin basis. Contribution margin is intended to
measure the direct profitability of each segment and is calculated as Adjusted Revenue less directly attributable expenses.
Adjusted Revenue is a non-GAAP financial measure described above. Directly attributable expenses include Salaries,
commissions and team member benefits, Marketing and advertising expenses, General and administrative expenses and Other
expenses, such as direct servicing costs and origination costs. For segments, we measure gain on sale margin of funded loans
and refer to this metric as ‘funded loan gain on sale margin.’ A loan is considered funded when it is sold to investors on the
secondary market. Funded loan gain on sale margin represents revenues on loans that have been funded divided by the funded
UPB amount. Funded loan gain on sale margin is used specifically in the context of measuring the gain on sale margins of
our Direct to Consumer and Partner Network segments. Funded loan gain on sale margin is an important metric in evaluating
the revenue generating performance of our segments as it allows us to measure this metric at a segment level with a high
degree of precision. By contrast, ‘gain on sale margin’, which we use outside of the segment discussion, measures the gain on
sale revenue generation of our combined mortgage business. See below for our overview and discussion of segment results
for the three and six months ended June 30, 2021 and 2020. For additional discussion, see Note 12, Segments of the notes to
the unaudited condensed consolidated financial statements of this Form 10-Q.
Direct to Consumer Results
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Funded Loan Volume................................
$ 48,902,086 $ 46,776,841 $ 113,930,523 $ 78,467,954
Funded Loan Gain on Sale Margin...........
4.66 % 5.09 % 5.06 % 4.93 %
Revenue
Gain on sale...............................................
$ 2,050,639 $ 4,020,492 $ 4,914,239 $ 5,631,324
Interest income..........................................
52,489 51,012 111,157 98,322
Interest expense on funding facilities........
(39,409) (35,397) (81,414) (60,782)
Service fee income....................................
342,687 248,873 634,339 504,863
Changes in fair value of MSRs..................
(414,745) (552,844) (168,824) (1,544,096)
Other income.............................................
229,860 206,538 534,772 351,561
Total Revenue, net.....................................
$ 2,221,521 $ 3,938,674 $ 5,944,269 $ 4,981,192
Decrease (increase) in MSRs due to
valuation assumptions (net of hedges)......
121,312 274,377 (423,138) 1,017,704
Adjusted Revenue......................................
$ 2,342,833 $ 4,213,051 $ 5,521,131 $ 5,998,896
Less: Directly Attributable Expenses (1)..
907,963 948,900 1,926,460 1,729,520
Contribution Margin..................................
$ 1,434,870 $ 3,264,151 $ 3,594,671 $ 4,269,376
(1) Direct expenses attributable to operating segments exclude corporate overhead, depreciation and amortization, and
interest and amortization expense on non-funding debt.
57
For the three months ended June 30, 2021, Direct to Consumer Adjusted Revenue decreased $1.9 billion, or 44.4% to $2.3
billion from $4.2 billion for the three months ended June 30, 2020. The decrease was driven by a decline in Direct to
Consumer mortgage net rate lock volume and margins resulting in a decrease in Gain on sale revenue of $2.0 billion, or 49%,
in 2021. On a funded loan basis, the Direct to Consumer segment generated $48.9 billion in volume during the three months
ended June 30, 2021, an increase of $2.1 billion, or 4.5% as compared to the three months ended June 30, 2020. In addition,
funded loan gain on sale margin was 4.7% during the three months ended June 30, 2021 as compared to 5.1% during the
three months ended June 30, 2020, driven primarily by a compression in primary-secondary spreads which led to margin
suppression during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020.
For the three months ended June 30, 2021, Direct to Consumer Attributable Expenses decreased $40.9 million, or 4.3%, to
$908.0 million during the three months ended June 30, 2021 compared to $948.9 million during the three months ended
June 30, 2020. The decrease was primarily due to a decrease in variable compensation and loan processing costs, as well as a
decrease in expenses incurred due to lower levels of title insurance services, valuation, and settlement services and a decrease
in payoff interest expense associated with the decrease in rate lock volume.
For the three months ended June 30, 2021, Direct to Consumer Contribution Margin decreased $1.8 billion, or 56.0%, to $1.4
billion, compared to $3.3 billion during the three months ended June 30, 2020. The decrease in Contribution Margin was
driven primarily by the decrease in Direct to Consumer net rate lock volume and net rate lock gain on sale margin noted
above.
For the six months ended June 30, 2021, Direct to Consumer Adjusted Revenue decreased $0.5 billion, or 8.0% to $5.5
billion from $6.0 billion for the six months ended June 30, 2020. The decrease was driven by a decline in Direct to Consumer
net rate lock margins. On a funded loan basis, the Direct to Consumer segment generated $113.9 billion in volume for the six
months ended June 30, 2021, an increase of $35.5 billion, or 45.2% as compared to the six months ended June 30, 2020. In
addition, funded loan gain on sale margin was 5.06% for the six months ended June 30, 2021 as compared to 4.93% for the
six months ended June 30, 2020.
For the six months ended June 30, 2021, Direct to Consumer Attributable Expenses increased $0.2 billion, or 11.4%, to $1.9
billion for the six months ended June 30, 2021 compared to $1.7 billion for the six months ended June 30, 2020. The increase
was primarily due to an increase in variable compensation and an increase in team members in production roles needed to
support growth. The increase also reflects greater loan processing costs due to higher origination volumes and an increase in
expenses incurred to support the higher level of title insurance services, valuation, and settlement services due to the
increased origination volumes noted above, as well as a decrease in payoff interest expense.
For the six months ended June 30, 2021, Direct to Consumer Contribution Margin decreased $0.7 billion, or 15.8%, to $3.6
billion, compared to $4.3 billion for the six months ended June 30, 2020. The decrease in Contribution Margin was driven
primarily by a decrease in net rate lock gain on sale margins.
58
Partner Network Results
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2021 2020 2021 2020
Funded Loan Volume................................
$ 30,119,969 $ 19,732,169 $ 70,848,564 $ 39,064,260
Funded Loan Gain on Sale Margin............
1.16 % 2.10 % 1.60 % 1.45 %
Revenue
Gain on sale...............................................
$ 287,651 $ 734,662 $ 972,080 $ 938,109
Interest income...........................................
33,222 26,376 69,283 51,947
Interest expense on funding facilities........
(24,943) (18,302) (50,762) (32,023)
Other income.............................................
23,228 39,859 51,005 59,469
Total Revenue, net.....................................
$ 319,158 $ 782,595 $ 1,041,606 $ 1,017,502
Decrease (increase) in MSRs due to
valuation assumptions (net of hedges).......
— — — —
Adjusted Revenue......................................
$ 319,158 $ 782,595 $ 1,041,606 $ 1,017,502
Less: Directly Attributable Expenses........
176,065 139,140 355,842 231,084
Total Contribution Margin.........................
$ 143,093 $ 643,455 $ 685,764 $ 786,418
For the three months ended June 30, 2021, Partner Network Adjusted Revenue decreased $463.4 million, or 59.2% to $319.2
million, from $782.6 million for the three months ended June 30, 2020. The decrease was driven by lower Partner Network
net rate lock gain on sale margins resulting in a decrease in gain on sale revenue of $447.0 million, or 60.8%, in for the three
months ended June 30, 2021. On a funded loan basis, the Partner Network segment generated $30.1 billion in volume for the
three months ended June 30, 2021, an increase of $10.4 billion, or 52.6% as compared to the three months ended June 30,
2020. In addition, funded loan gain on sale margin was 1.2% in 2021 as compared to 2.1% in 2020.
For the three months ended June 30, 2021, Partner Network Directly Attributable Expenses increased $36.9 million, or
26.5%, to $176.1 million in the three months ended June 30, 2021 compared to $139.1 million for the three months ended
June 30, 2020. The increase was primarily due to an increase in variable compensation and an increase in team members in
production roles needed to support growth.
For the three months ended June 30, 2021, Partner Network Contribution Margin decreased $500.4 million, or 77.8%, to
$143.1 million in the three months ended June 30, 2021 compared to $643.5 million for the three months ended June 30,
2020. The decrease in Contribution Margin was driven primarily by the decrease in Partner Network net rate lock gain on
sale margin noted above; this was offset partially by an increase in Partner Network originations.
For the six months ended June 30, 2021, Partner Network Adjusted Revenue increased $24.1 million, or 2.4% to $1,041.6
million, from $1,017.5 million for the six months ended June 30, 2020. The increase was driven by growth in Partner
Network mortgage originations resulting in an increase in gain on sale revenue of $34.0 million, or 3.6%, for the six months
ended June 30, 2021. On a funded loan basis, the Partner Network segment generated $70.8 billion in volume for the six
months ended June 30, 2021, an increase of $31.8 billion, or 81.4% as compared to the six months ended June 30, 2020. In
addition, funded loan gain on sale margin was 1.60% for the six months ended June 30, 2021 as compared to 1.45% for the
six months ended June 30, 2020.
For the six months ended June 30, 2021, Partner Network Directly Attributable Expenses increased $124.8 million, or 54.0%,
to $355.8 million in 2021 compared to $231.1 million for the six months ended June 30, 2020. The increase was primarily
due to an increase in variable compensation and an increase in team members in production roles needed to support growth.
For the six months ended June 30, 2021, Partner Network Contribution Margin decreased $100.7 million, or 12.8%, to $685.8
million in 2021 compared to $786.4 million for the six months ended June 30, 2020. The decrease in Contribution Margin
was driven primarily by a decrease in net rate lock gain on sale margins and an increase in directly attributable expenses,
offset partially by an increase in Partner Network originations.
59
Liquidity and Capital Resources
Historically, our primary sources of liquidity have included:
• borrowings, including under our loan funding facilities and other secured and unsecured financing facilities;
• cash flow from our operations, including:
• sale of whole loans into the secondary market;
• sale of mortgage servicing rights into the secondary market;
• loan origination fees;
• servicing fee income; and
• interest income on loans held for sale; and
• cash and marketable securities on hand.
Historically, our primary uses of funds have included:
• origination of loans;
• payment of interest expense;
• prepayment of debt;
• payment of operating expenses; and
• distributions to RHI including those to fund distributions for payment of taxes by its ultimate shareholders.
We are also subject to contingencies which may have a significant impact on the use of our cash.
In order to originate and aggregate loans for sale into the secondary market, we use our own working capital and borrow or
obtain money on a short-term basis primarily through committed and uncommitted loan funding facilities established with
large global banks.
Our loan funding facilities are primarily in the form of master repurchase agreements. We also have loan funding facilities
directly with the GSEs. Loans financed under these facilities are generally financed at approximately 97% to 99% of the
principal balance of the loan (although certain types of loans are financed at lower percentages of the principal balance of the
loan), which requires us to fund the balance from cash generated from operations. Once closed, the underlying residential
mortgage loan that is held for sale is pledged as collateral for the borrowing or advance that was made under these loan
funding facilities. In most cases, the loans will remain in one of the loan funding facilities for only a short time, generally less
than one month, until the loans are pooled and sold. During the time the loans are held for sale, we earn interest income from
the borrower on the underlying mortgage loan. This income is partially offset by the interest and fees we have to pay under
the loan funding facilities.
When we sell a pool of loans in the secondary market, the proceeds received from the sale of the loans are used to pay back
the amounts we owe on the loan funding facilities. We rely on the cash generated from the sale of loans to fund future loans
and repay borrowings under our loan funding facilities. Delays or failures to sell loans in the secondary market could have an
adverse effect on our liquidity position.
60
As discussed in Note 5, Borrowings, of the notes to the unaudited condensed consolidated financial statements included in
this Form 10-Q, as of June 30, 2021, we had 19 different funding facilities in different amounts and with various maturities
together with the 5.250% Senior Notes due 2028, 3.625% Senior Notes due 2029, and 3.875% Senior Notes due 2031. At
June 30, 2021, the aggregate available amount under our facilities was $31.4 billion, with combined outstanding balances of
$19.4 billion and unutilized capacity of $12.0 billion.
The amount of financing actually advanced on each individual loan under our loan funding facilities, as determined by agreed
upon advance rates, may be less than the stated advance rate depending, in part, on the market value of the mortgage loans
securing the financings. Each of our loan funding facilities allows the bank providing the funds to evaluate the market value
of the loans that are serving as collateral for the borrowings or advances being made. If the bank determines that the value of
the collateral has decreased, the bank can require us to provide additional collateral or reduce the amount outstanding with
respect to those loans (e.g., initiate a margin call). Our inability or unwillingness to satisfy the request could result in the
termination of the facilities and possible default under our other loan funding facilities. In addition, a large unanticipated
margin call could have a material adverse effect on our liquidity.
The amount owed and outstanding on our loan funding facilities fluctuates significantly based on our origination volume, the
amount of time it takes us to sell the loans it originates, and the amount of loans being self-funded with cash. We may from
time to time use surplus cash to “buy-down” the effective interest rate of certain loan funding facilities or to self-fund a
portion of our loan originations. As of June 30, 2021, $2.9 billion of our cash was used to buy-down our funding facilities
and self-fund, $500.0 million of which are buy-down funds that are included in Cash and cash equivalents on the Condensed
Consolidated Balance Sheets and an estimated $2.4 billion of which is discretionary self-funding that reduces Cash and cash
equivalents on the Condensed Consolidated Balance Sheets. We have the ability to withdraw the $500.0 million at any time,
unless a margin call has been made or a default has occurred under the relevant facilities. The Company has an estimated
$2.4 billion of discretionary self-funded loans, of which a portion can be transferred to a warehouse line or the early buy out
line, provided that such loans meet the eligibility criteria to be placed on such lines. The remaining portion will be funded in
normal course over a short period of time, generally less than one month. In addition to the $2.4 billion of corporate cash
used for discretionary self-funding of loans as of June 30, 2021, we had an additional $2.0 billion of cash on-hand, for a total
of $4.4 billion of available cash.
Our loan funding facilities, early buy out facilities, MSRs facility and unsecured lines of credit also generally require us to
comply with certain operating and financial covenants and the availability of funds under these facilities is subject to, among
other conditions, our continued compliance with these covenants. These financial covenants include, but are not limited to,
maintaining (1) a certain minimum tangible net worth, (2) minimum liquidity, (3) a maximum ratio of total liabilities or total
debt to tangible net worth and (4) pre-tax net income requirements. A breach of these covenants can result in an event of
default under these facilities and as such allows the lenders to pursue certain remedies. In addition, each of these facilities, as
well as our unsecured lines of credit, includes cross default or cross acceleration provisions that could result in all facilities
terminating if an event of default or acceleration of maturity occurs under any facility. We were in compliance with all
covenants as of June 30, 2021 and 2020.
As disclosed in further detail Item 5. Other Information of this Quarterly Report on Form 10-Q, on August 10, 2021, we
refinanced, and extended the maturity of, our revolving credit agreement.
June 30, 2021 compared to June 30, 2020
Cash Flows
Our Cash and cash equivalents and Restricted cash were $2.1 billion at June 30, 2021, an increase of $200.6 million, or
10.8%, compared to $1.9 billion at June 30, 2020. The increase in the Cash and cash equivalents and Restricted cash balance
was mainly impacted by a net increase from earnings for the period adjusted for non-cash items. The increase was partially
offset by distributions made to other unit holders (member) of Holdings.
Equity
Equity was $8.2 billion as of June 30, 2021, an increase of $2.6 billion, or 47.4%, as compared to $5.6 billion as of June 30,
2020. The change was primarily the result of net income of $9.7 billion and share-based compensation of $153.3 million. The
increase was partially offset by transfers and distributions made to the parent company and to other unit holders (member) of
Holdings.
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Distributions
On February 25, 2021, our board of directors authorized and declared a cash dividend (the "Special Dividend") of $1.11 per
share to the holders of our Class A common stock. The Special Dividend was paid on March 23, 2021 to holders of the Class
A common stock of record as of the close of business on March 9, 2021. The Company funded the Special Dividend from
cash distributions of approximately $2.2 billion by RKT Holdings, LLC to all of its members, including the Company.
In addition to the $2.2 billion Special Dividend, we had $1.4 billion in tax distributions, for a total of $3.6 billion of
distributions during the six months ended June 30, 2021. During the six months ended June 30, 2020, we had net transfers to
the parent company of $1.6 billion. Except for tax distributions, these distributions are at the discretion of our board of
directors.
Contractual Obligations, Commercial Commitments, and Other Contingencies
There were no material changes outside the ordinary course of business to our outstanding contractual obligations as of
June 30, 2021 from information and amounts previously disclosed as of December 31, 2020 in our Annual Report on Form
10-K under the caption “Contractual Obligations, Commercial Commitments, and Other Contingencies”. Refer to Notes 5,
Borrowings, and 10, Commitments, Contingencies and Guarantees, of the notes to the condensed consolidated financial
statements for further discussion of contractual obligations, commercial commitments, and other contingencies, including
legal contingencies.
New Accounting Pronouncements Not Yet Effective
See Note 1, Business, Basis of Presentation and Accounting Policies of the notes to the unaudited condensed consolidated
financial statements for details of recently issued accounting pronouncements and their expected impact on our condensed
consolidated financial statements.
62
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to the Company's exposure to market risks since what was disclosed in the Company's
December 31, 2020 Annual Report on Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as of the end of the period covered by this Form 10-Q. Based on such evaluation, our CEO and CFO have
concluded that as of June 30, 2021, our disclosure controls and procedures are designed at a reasonable assurance level and
are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and
forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and
CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in our management’s evaluation pursuant to
Rules 13a-15(d) and 15d-15(d) of the Exchange Act during the period covered by this Form 10-Q that materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. Because of inherent limitations, internal controls over financial
reporting may not prevent or detect misstatements. In addition, the design of disclosure controls and procedures must reflect
the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of
possible controls and procedures relative to their costs.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we may from time to time be involved in various pending or threatened legal actions. The
litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse
effect upon our financial condition and/or results of operations. However, in the opinion of our management, matters
currently pending or threatened against us are not expected to have a material adverse effect on our business, financial
condition and results of operations.
Item 1A. Risk Factors
There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those
anticipated. In “Part I – Item 1A. – Risk Factors” of our 2020 Form 10-K, as filed with the U.S. Securities and Exchange
Commission on March 24, 2021, and available at www.sec.gov or at www.rocketcompanies.com, we included a detailed
discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in our 2020 Form 10-K.
These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-
looking statements and other information contained in this Quarterly Report on Form 10-Q. Any of the risks described in our
2020 Form 10-K could materially affect our business, condensed consolidated financial condition or future results and the
actual outcome of matters as to which forward-looking statements are made. The risk factors described in our 2020 Form 10-
K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be
immaterial, also may materially adversely affect our business, condensed consolidated financial condition and/or future
results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchase Authorization
On November 10, 2020, our board of directors approved a share repurchase program of up to $1.0 billion of our Common
Stock, including both Class A and Class D, which repurchases may be made, from time to time, in privately negotiated
transactions or in the open market, in accordance with applicable securities laws (the “Share Repurchase Program”). The
Share Repurchase Program will remain in effect for a two-year period. The Share Repurchase Program authorizes but does
not obligate the Company to make any repurchases at any specific time. The timing and extent to which the Company
repurchases its shares will depend upon, among other things, market conditions, share price, liquidity targets, regulatory
requirements and other factors.
The following table shows the Share Repurchase Program activity during the three months ended June 30, 2021:
Period
Number of Shares
Repurchased
Average Repurchase
Price Per Share
Total Repurchase
Amount
4/1/2021 to 4/30/2021 — $ — $ —
5/1/2021 to 5/31/2021 496,829 16.73 8,312,921
6/1/2021 to 6/30/2021 — — —
Total for the three months ended June 30, 2021 496,829 $ 16.73 $ 8,312,921
There were no shares repurchased under the Share Repurchase Program prior to May of 2021. Approximately $991.7 million
of the Share Repurchase Program remained available as of June 30, 2021.
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Item 5. Other Information
On August 10, 2021 (the “Closing Date”), Rocket Mortgage, LLC (the “Rocket Mortgage”), a Michigan limited liability
company, as borrower, entered into a new Revolving Credit Agreement (the “2021 Credit Agreement”), by and among
Rocket Mortgage, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative
Agent”), with an initial aggregate commitment of $1.0 billion, maturing on August 10, 2024.
Proceeds of the borrowings under the 2021 Credit Agreement will be used for general corporate purposes. Borrowings under
the 2021 Credit Agreement are unsecured and will bear interest at a rate equal to, at Rocket Mortgage’s option, either (a) a
Eurodollar rate determined by reference to adjusted LIBOR for the interest period, plus an applicable margin (determined
based on Rocket Mortgage’s credit rating) or (b) a base rate determined by reference to the highest of (i) the federal funds
rate plus 0.50% per annum, (ii) the rate last quoted by the Wall Street Journal as the US prime rate and (iii) the one-month
adjusted LIBOR plus 1.00% per annum, in each case, plus an applicable margin (determined based on Rocket Mortgage’s
credit rating). In addition, the 2021 Credit Agreement requires Rocket Mortgage to pay a commitment fee (determined based
on Rocket Mortgage’s corporate credit rating) in respect of the unused commitments under the 2021 Credit Agreement.
The 2021 Credit Agreement contains certain customary events of default, including relating to a change of control, and
certain covenants and restrictions that limit Rocket Mortgage’s and its subsidiaries’ ability to, among other things, incur
additional debt; create liens on certain assets; pay dividends on or make distributions in respect of their capital stock or make
other restricted payments; consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; and enter
into certain transactions with their affiliates.
Rocket Mortgage is also subject to certain financial maintenance covenants under the 2021 Credit Agreement, which require
Rocket Mortgage and its subsidiaries to not exceed specified leverage and corporate debt ratios at the end of each fiscal
quarter, and to maintain minimum liquidity and tangible net worth.
If Rocket Mortgage fails to perform its obligations under these and other covenants, or should any event of default occur, the
revolving loan commitments under the 2021 Credit Agreement could be terminated and any outstanding borrowings, together
with accrued interest, under the 2021 Credit Agreement could be declared immediately due and payable.
The foregoing description of the 2021 Credit Agreement does not purport to be complete and is subject to, and qualified in its
entirety by reference to the full text of the 2021 Credit Agreement, a copy of which is filed as Exhibit 10.8 hereto and
incorporated by reference herein.
On the Closing Date, Rocket Mortgage terminated the Revolving Credit Agreement, dated as of August 10, 2020 (the “2020
Credit Agreement”), among Rocket Mortgage, the lenders party thereto and JPMorgan Chase Bank, N.A.. No early
termination penalties or prepayment premium were incurred by Rocket Mortgage in connection with the termination of the
2020 Credit Agreement.
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Item 6. Exhibits
Exhibit
Number Description
3.1
Amended and Restated Certificate of Incorporation of Rocket Companies, Inc. (incorporated herein by
reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed on September 2, 2020)
3.2
Amended and Restated Bylaws of Rocket Companies, Inc. (incorporated herein by reference to Exhibit 3.2 to
the Company’s Quarterly Report on Form 10-Q, filed on September 2, 2020)
31.1* Certification of CEO, pursuant to SEC Rule 13a-14(a) and 15d-14(a)
31.2* Certification of CFO, pursuant to SEC Rule 13a-14(a) and 15d-14(a)
32.1*
Certification by the CEO, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2*
Certification by the CFO, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
10.1*
Amendment No. 11 to Master Repurchase Agreement, dated April 22, 2021, by and between Bank of America,
N.A., as buyer, and Quicken Loans, LLC, as seller
10.2*
Amendment No. 12 to Amended and Restated Master Repurchase Agreement, dated April 14, 2021, by and
between UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York, as
buyer, and Quicken Loans, LLC, as seller
10.3*
Amendment No. 13 to Amended and Restated Master Repurchase Agreement, dated May 28, 2021, by and
between UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York, as
buyer, and Quicken Loans, LLC, as seller
10.4*
Amendment No. 1 to Master Repurchase Agreement, dated as of May 25, 2021, by and among Nomura
Corporate Funding Americas, LLC, as a buyer and as agent, Oakdale Secured Funding Trust Quartz, as a buyer,
other buyers from time to time party thereto and Quicken Loans, LLC, as Seller
10.5*
Amended and Restated Master Repurchase Agreement, dated June 29, 2021, among Bank of America, N.A., as
buyer, RCKT Mortgage SPE-A, LLC, as seller, and Quicken Loans, LLC, as guarantor
10.6*
Eighteenth Amendment to Master Repurchase Agreement, dated July 16, 2021, by and among JPMorgan Chase
Bank, N.A., as buyer and administrative agent for the buyers, the other Buyers from time to time party thereto,
and Quicken Loans, LLC, as seller
10.7*
Amendment Number Four to Master Repurchase Agreement, dated August 2, 2021, by and among Morgan
Stanley Bank, N.A., as buyer, Morgan Stanley Mortgage Capital Holdings LLC, as agent, and Rocket
Mortgage, LLC, as seller
10.8*
Revolving Credit Agreement, dated as of August 10, 2021, by and among Rocket Mortgage, LLC as Borrower,
the Lenders Party Thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith.
66
Signatures
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 thereunto duly authorized.
Rocket Companies, Inc.
August 13, 2021 By: /s/ Julie Booth
Date Name: Julie Booth
Chief Financial Officer and Treasurer
(Principal Financial Officer)
67
AMENDMENT NO. 11
TO MASTER REPURCHASE AGREEMENT
Amendment No. 11 to Master Repurchase Agreement, dated as of April 22, 2021 (this
“Amendment”), by and between Bank of America, N.A. (“Buyer”) and Quicken Loans, LLC
(“Seller”).
RECITALS
Buyer and Seller are parties to that certain Master Repurchase Agreement, dated as of
October 16, 2015 (as amended, restated, supplemented or otherwise modified from time to time,
the “Existing Master Repurchase Agreement”; and as further amended by this Amendment, the
“Master Repurchase Agreement”).
Buyer and Seller have agreed, subject to the terms and conditions of this Amendment,
that the Existing Master Repurchase Agreement be amended to reflect certain agreed upon
revisions to the terms of the Existing Master Repurchase Agreement.
Accordingly, Buyer and Seller hereby agree, in consideration of the mutual promises and
mutual obligations set forth herein, that the Existing Master Repurchase Agreement is hereby
amended as follows:
Section 1. Regulation W. Article 10 of the Existing Master Repurchase
Agreement is hereby amended by adding the following new section to the end thereof:
10.11 Regulation W. Seller shall not use the proceeds from the transfer of funds from
Buyer to Seller to effect transactions with any affiliate (as defined in 12 CFR
§223.2 or 12 USC §371c) of Buyer.
Section 2. Fees and Expenses. Seller hereby agrees to pay to Buyer, on
demand, any and all reasonable fees, costs and expenses (including reasonable fees and expenses
of counsel) incurred by Buyer in connection with the development, preparation and execution of
this Amendment, irrespective of whether any transactions hereunder are executed.
Section 3. Conditions Precedent. This Amendment shall become effective as
of the date hereof upon Buyer’s receipt of this Amendment, executed and delivered by a duly
authorized officer of Buyer and Seller.
Section 4. Limited Effect. Except as expressly amended and modified by this
Amendment, the Existing Master Repurchase Agreement shall continue to be, and shall remain,
in full force and effect in accordance with its terms.
Section 5. Counterparts. This Amendment and any document, amendment,
approval, consent, information, notice, certificate, request, statement, disclosure or authorization
related to this Amendment (each a “Communication”) may be in the form of an Electronic
Record and may be executed using Electronic Signatures (including, without limitation, facsimile
Exhibit 10.1
EXECUTION COPY
LEGAL02/40111325v2
and .pdf) and shall be considered an original, and shall have the same legal effect, validity and
enforceability as a paper record. This Amendment may be executed simultaneously in as many
counterparts as necessary or convenient, including both paper and electronic counterparts, but
each counterpart shall be deemed to be an original and all such counterparts shall constitute one
and the same agreement. For the avoidance of doubt, the authorization under this paragraph may
include, without limitation, use or acceptance by Buyer of a manually signed paper
Communication which has been converted into electronic form (such as scanned into PDF
format), or an electronically signed Communication converted into another format, for
transmission, delivery and/or retention. Electronic Signatures and facsimile signatures shall be
deemed valid and binding to the same extent as the original. For purposes hereof, “Electronic
Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by
15 USC §7006, as it may be amended from time to time.
Section 6. 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.
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).
[SIGNATURE PAGE FOLLOWS]
2
LEGAL02/40111325v2
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the day and year first above
written.
BANK OF AMERICA, N.A., as Buyer
By: /s/ Adam Robitshek
Name: Adam Robitshek
Title: Director
QUICKEN LOANS, LLC, as Seller
DocuSigned by:
/s/ Robert P. Wilson
CC8E1688430845
Name: Robert Wilson
Title: Treasurer
Signature Page to Amendment No. 11 to Master Repurchase Agreement (BANA/Quicken)
AMENDMENT NO. 12
TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Amendment No. 12 to Amended and Restated Master Repurchase Agreement (the
“Amendment”), dated as of April 14, 2021, between UBS AG, by and through its branch office
at 1285 Avenue of the Americas, New York, New York (the “Buyer”) and QUICKEN LOANS,
LLC (the “Seller”).
RECITALS
The Buyer and Seller are parties to that certain (a) Amended and Restated Master
Repurchase Agreement, dated as of April 10, 2015 (as amended by Amendment No. 1, dated as
of June 24, 2015, Amendment No. 2, dated as of January 29, 2016, Amendment No. 3, dated as
of October 6, 2016, Amendment No. 4, dated as of April 14, 2017, Amendment No. 5, dated as
of December 6, 2018, Amendment No. 6, dated as of April 25, 2019, Amendment No. 7, dated as
of June 26, 2019, Amendment No. 8, dated as of September 16, 2019, Amendment NO. 9, dated
as of December 5, 2019 Amendment No. 10, dated as of April 20, 2020 and Amendment No. 11,
dated as of December 3, 2020, the “Existing Repurchase Agreement”; and as further amended by
this Amendment, the “Repurchase Agreement”) and (b) Pricing Letter, dated as of April 10, 2015
(as amended, restated, supplemented or otherwise modified from time to time, the “Pricing
Letter”). Capitalized terms used but not otherwise defined herein shall have the meanings given
to them in the Existing Repurchase Agreement or Pricing Letter, as applicable.
The Buyer and Seller have agreed, subject to the terms and conditions of this
Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon
revisions to the terms of the Existing Repurchase Agreement.
Accordingly, the Buyer and Seller hereby agree, in consideration of the mutual
promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is
hereby amended as follows:
Section 1. Definitions. Section 2 of the Existing Repurchase Agreement is
hereby amended by:
1.1 adding the following definition in its proper alphabetical order:
“Jumbo Low FICO/High LTV Mortgage Loans” shall mean a Jumbo Mortgage
Loan for which (a) the related Mortgaged Property has a LTV in excess of 80% but not greater
than 90%; and/or (b) has a FICO score of at least 680 but not greater than 700.
1.2 deleting the definition of “Jumbo High LTV Mortgage Loan” and any and all
references thereto.
Section 2. Conditions Precedent. This Amendment shall become effective as
of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following
conditions precedent:
Exhibit 10.2
EXECUTION
1
1 = 1 LEGAL02/40562494v5 LEGAL02/40562494v5
(a) Buyer shall have received this Amendment, executed and delivered by
duly authorized officers of the Buyer and Seller;
(b) Amendment No. 28 to the Pricing Letter, executed and delivered by duly
authorized officers of the Buyer and Seller; and
(c) such other documents as the Buyer or counsel to the Buyer may
reasonably request.
Section 3. Ratification of Agreement. As amended by this Amendment, the
Existing Repurchase Agreement is in all respects ratified and confirmed and the Existing
Repurchase Agreement as so modified by this Amendment shall be read, taken, and construed as
one and the same instrument.
Section 4. Representations and Warranties. Seller hereby represents and
warrants to the Buyer that, giving effect to this Amendment, it is in compliance with all the terms
and provisions set forth in the Repurchase Agreement on its part to be observed or performed,
and that no Default or Event of Default has occurred or is continuing, and hereby confirms and
reaffirms the representations and warranties contained in Section 11 of the Repurchase
Agreement. Seller hereby represents and warrants that this Amendment has been duly and
validly executed and delivered by it, and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
Section 5. Limited Effect. Except as expressly amended and modified by this
Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full
force and effect in accordance with its terms.
Section 6. 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.
Section 7. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Amendment by signing any such counterpart. The parties
agree that this Amendment, any documents to be delivered pursuant to this Amendment and any
notices hereunder may be transmitted between them by email and/or by facsimile. Delivery of
an executed counterpart of a signature page of this Amendment in Portable Document Format
(PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart
of this Amendment. The parties agree that this Amendment, any addendum or amendment
hereto or any other document necessary for the consummation of the transaction contemplated by
this Amendment may be accepted, executed or agreed to through the use of an electronic
signature in accordance with the E-Sign, the UETA 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 providers, as long as such service
2
0 = 1 LEGAL02/40562494v5
providers use system logs and audit trails that establish a temporal and process link between the
presentation of identity documents and the electronic signing, together with identifying
information that can be used to verify the electronic signature and its attribution to the signer’s
identity and evidence of the signer’s agreement to conduct the transaction electronically and of
the signer’s execution of each electronic signature. The original documents shall be promptly
delivered, if requested.
Section 8. Binding Effect. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.
Section 9. GOVERNING LAW. THIS AMENDMENT AND ANY
CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS
AMENDMENT, THE RELATIONSHIP OF THE PARTIES TO THIS AMENDMENT,
AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND
DUTIES OF THE PARTIES TO THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW
RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AMENDMENT. NOTWITHSTANDING ANYTHING TO THE
CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF
ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND
ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC
TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-
SIGN.
[SIGNATURE PAGE FOLLOWS]
3
0 = 1 LEGAL02/40562494v5
IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first above written.
UBS AG, BY AND THROUGH ITS
BRANCH OFFICE AT 1285 AVENUE
OF THE AMERICAS, NEW YORK,
NEW YORK, as Buyer
By: /s/ Gary Timmerman
Name: Gary Timmerman
Title: Managing Director
By: /s/ Chi Ma
Name: Chi Ma
Title: Director
QUICKEN LOANS, LLC, as Seller
DocuSigned by:
/s/ Robert P. Wilson
CC8E1688430845
Name: Robert Wilson
Title: Treasurer
Signature Page to Amendment No. 12 to Master Repurchase Agreement
AMENDMENT NO. 13
TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Amendment No. 13 to Amended and Restated Master Repurchase Agreement (the
“Amendment”), dated as of May 28, 2021, between UBS AG, by and through its branch office at
1285 Avenue of the Americas, New York, New York (the “Buyer”) and QUICKEN LOANS,
LLC (the “Seller”).
RECITALS
The Buyer and Seller are parties to that certain (a) Amended and Restated Master
Repurchase Agreement, dated as of April 10, 2015 (as amended by Amendment No. 1, dated as
of June 24, 2015, Amendment No. 2, dated as of January 29, 2016, Amendment No. 3, dated as
of October 6, 2016, Amendment No. 4, dated as of April 14, 2017, Amendment No. 5, dated as
of December 6, 2018, Amendment No. 6, dated as of April 25, 2019, Amendment No. 7, dated as
of June 26, 2019, Amendment No. 8, dated as of September 16, 2019, Amendment NO. 9, dated
as of December 5, 2019 Amendment No. 10, dated as of April 20, 2020, Amendment No. 11 and
Amendment No. 12, dated as of April 14, 2021, dated as of December 3, 2020, the “Existing
Repurchase Agreement”; and as further amended by this Amendment, the “Repurchase
Agreement”) and (b) Pricing Letter, dated as of April 10, 2015 (as amended, restated,
supplemented or otherwise modified from time to time, the “Pricing Letter”). Capitalized terms
used but not otherwise defined herein shall have the meanings given to them in the Existing
Repurchase Agreement or Pricing Letter, as applicable.
The Buyer and Seller have agreed, subject to the terms and conditions of this
Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon
revisions to the terms of the Existing Repurchase Agreement.
Accordingly, the Buyer and Seller hereby agree, in consideration of the mutual
promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is
hereby amended as follows:
Section 1. Definitions. Section 2 of the Existing Repurchase Agreement is
hereby amended by:
1.1 deleting the definitions of “Agency-Required eNote Legend”, “Control
Failure” and “eVault” in their entirety and replacing them with the following:
“Agency Required eNote Legend” shall mean the legend or paragraph required by
Fannie Mae, Freddie Mac or Ginnie Mae, as applicable, to be set forth in the text of an eNote,
which includes the provisions set forth on Exhibit I to the Custodial Agreement, as may be
amended from time to time by Fannie Mae, Freddie Mac or Ginnie Mae, as applicable.
“Control Failure” shall mean, with respect to an eNote, (a) if the Controller status
of the eNote shall not have been transferred to (i) other than with respect to a Ginnie Mae eNote
Pooled Loan, Buyer and (ii) with respect to a Ginnie Mae eNote Pooled Loan, Seller, (b) (i) other
Exhibit 10.3
EXECUTION
1
LEGAL02/40575999v6
than with respect to a Ginnie Mae eNote Pooled Loan, Buyer shall otherwise not be designated
as the Controller of such eNote in the MERS eRegistry (other than pursuant to a Bailee Letter)
and (ii) with respect to a Ginnie Mae eNote Pooled Loan, Seller shall otherwise not be
designated as the Controller of such eNote in the MERS eRegistry, (c) if the eVault shall have
released the Authoritative Copy of an eNote in contravention of the requirements of the
Custodial Agreement, or (d) if the Custodian initiated any changes on the MERS eRegistry in
contravention of the terms of the Custodial Agreement.
“eVault” shall mean an electronic repository established and maintained by the
Custodian for delivery and storage of eNotes.
1.2 adding the following definitions in their proper alphabetical order:
“eNote Secured Party” shall mean, with respect to a Ginnie Mae eNote Pooled
Loan, the party designated in the MERS eRegistry as the “Secured Party”.
“eNote Secured Party Failure” shall mean, with respect to a Ginnie Mae eNote
Pooled Loan, (a) if the eNote Secured Party status of the eNote shall not have been transferred to
Ginnie Mae within one (1) Business Day of certification thereof, (b) Ginnie Mae shall otherwise
not be designated as the eNote Secured Party in the MERS eRegistry, (c) if the eVault shall have
released the Authoritative Copy of such eNote in contravention of the requirements of the
Custodial Agreement, or (d) if the Custodian initiated any changes on the MERS eRegistry in
contravention of the terms of the Custodial Agreement.
“Ginnie Mae eNote Pooled Loan” shall mean an eMortgage Loan that is a part of
a pool of Mortgage Loans certified to by a custodian to Ginnie Mae and that is eligible to be
placed into the Ginnie Mae Mortgage-Backed Securities Program, as described in the Ginnie
Mae Guide.
“Ginnie Mae Guide” shall mean the Ginnie Mae Mortgage-Backed Securities
Guide I or II, as such guide may hereafter from time to time be amended.
1.3 deleting the definition of “eVault Provider”, in its entirety and any and all
references thereto.
Section 2. Initiation. Section 3 of the Existing Repurchase Agreement is
hereby amended by deleting paragraph (c)(ii) in its entirety and replacing it with the following:
(ii) Seller shall deliver to Custodian the Mortgage File with respect to each
Mortgage Loan subject to the requested Transaction (A) which is not a Wet Loan, in accordance
with the timeframes set forth in the Custodial Agreement, and (B) with respect to each Wet
Loan, on or prior to the Wet Delivery Deadline; provided that, with respect to any eMortgage
Loan, Seller shall deliver to Custodian each of Buyer’s and Seller’s MERS Org IDs, and shall
cause (i) the Authoritative Copy of the related eNote to be delivered to the eVault via a secure
electronic file, (ii) other than with respect to a Ginnie Mae eNote Pooled Loan, the Controller
status of the related eNote to be transferred to Buyer, (iii) with respect to a Ginnie Mae eNote
2
Pooled Loan, the Controller status of the related eNote to reflect the MERS Org ID of Seller and
the eNote Secured Party status of the related eNote to reflect the MERS Org ID of Ginnie Mae,
(iv) the Location status of the related eNote to be transferred to Custodian, (v) other than with
respect to a Ginnie Mae eNote Pooled Loan, the Delegatee status of the related eNote to be
transferred to Custodian, in each case using MERS eDelivery and the MERS eRegistry, (vi) the
Master Servicer Field status of the related eNote to be transferred to Seller and (vii) the
Subservicer Field status of the related eNote to be (x) if there is a third-party subservicer, such
subservicer’s MERS Org ID or (y) if there is not a subservicer, blank (collectively, the “eNote
Delivery Requirements”).
Section 3. Covenants. Section 12 of the Existing Repurchase Agreement is
hereby amended by deleting paragraph (c)(iv) in its entirety and replacing it with the following:
(iv) as soon as reasonably possible, notice of any of the following events: (A) a
change in the insurance coverage required of Seller Party pursuant to any Program Document,
with a copy of evidence of same attached; (B) any material change in accounting policies or
financial reporting practices of Seller Party; (C) promptly upon receipt of notice or knowledge of
any Lien or security interest (other than security interests created hereby or under any other
Program Document) on, or claim asserted against, any of the Repurchase Assets; (D) the
termination or nonrenewal of any debt facilities of Seller Party which have a maximum principal
amount (or equivalent) available of more than the Facility Termination Threshold; (E) any
Change in Control; (F) any other event, circumstance or condition that has resulted, or is
reasonably expected to result, in a Material Adverse Effect; and (G) upon Seller becoming aware
of any Control Failure or eNote Secured Party Failure with respect to a Purchased Mortgage
Loan that is an eMortgage Loan or any eNote Replacement Failure or any Unauthorized
Servicing Modification; and
Section 4. Representations and Warranties. Schedule 1 to the Existing
Repurchase Agreement is hereby amended by deleting paragraph (zzz) in its entirety and
replacing it with the following:
(zzz) eNotes. With respect to each eMortgage Loan, the related eNote satisfies all
of the following criteria:
(i) the eNote bears a digital or electronic signature;
(ii) the Hash Value of the eNote indicated in the MERS eRegistry matches the
Hash Value of the eNote as reflected in the eVault;
(iii) there is a single Authoritative Copy of the eNote, within the meaning of
Section 9-105 of the UCC or Section 16 of the UETA, that is held in the
eVault;
3
(iv) the Location status of the eNote on the MERS eRegistry reflects the MERS
Org ID of the Custodian;
(v) other than with respect to a Ginnie Mae eNote Pooled Loan, the Controller
status of the eNote on the MERS eRegistry reflects the MERS Org ID of
Buyer
(vi) with respect to a Ginnie Mae eNote Pooled Loan, the Controller status of the
eNote on the MERS eRegistry reflects the MERS Org ID of Seller;
(vii) with respect to a Ginnie Mae eNote Pooled Loan, the eNote Secured Party
status of the eNote on the MERS eRegistry reflects the MERS Org ID of
Ginnie Mae;
(viii) other than with respect to a Ginnie Mae eNote Pooled Loan, the Delegatee
status of the eNote on the MERS eRegistry reflects the MERS Org ID of
Custodian;
(ix) with respect to a Ginnie Mae eNote Pooled Loan, the Delegatee status of the
eNote on the MERS eRegistry is blank;
(x) the Master Servicer Field status of the eNote on the MERS eRegistry reflects
the MERS Org ID of Seller;
(xi) the Subservicer Field status of the eNote on the MERS eRegistry (i) reflects, if
there is a third-party subservicer, such subservicer’s MERS Org ID or (ii) if
there is not a subservicer, is blank;
(xii) there is no Control Failure, eNote Secured Party Failure, eNote Replacement
Failure or Unauthorized Servicing Modification with respect to such eNote;
(xiii) the eNote is a valid and enforceable Transferable Record or is a valid and
enforceable “general intangible” or “payment intangible” within the meaning
of the UCC;
(xiv) other than with respect to a Ginnie Mae eNote Pooled Loan, there is no defect
with respect to the eNote that would result in Buyer having less than full
rights, benefits and defenses of “Control” (within the meaning of the UETA or
the UCC, as applicable) of the Transferable Record; and
(xv) there is no paper copy of the eNote in existence nor has the eNote been
papered-out.
4
Section 5. Conditions Precedent. This Amendment shall become effective as
of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following
conditions precedent:
(a) Buyer shall have received this Amendment, executed and delivered by
duly authorized officers of the Buyer and Seller;
(b) Buyer shall have received that certain Third Amended and Restated
Custodial Agreement, executed and delivered by duly authorized officers of the
Custodian, Buyer and Seller; and
(c) such other documents as the Buyer or counsel to the Buyer may
reasonably request.
Section 6. Ratification of Agreement. As amended by this Amendment, the
Existing Repurchase Agreement is in all respects ratified and confirmed and the Existing
Repurchase Agreement as so modified by this Amendment shall be read, taken, and construed as
one and the same instrument.
Section 7. Representations and Warranties. Seller hereby represents and
warrants to the Buyer that, giving effect to this Amendment, it is in compliance with all the terms
and provisions set forth in the Repurchase Agreement on its part to be observed or performed,
and that no Default or Event of Default has occurred or is continuing, and hereby confirms and
reaffirms the representations and warranties contained in Section 11 of the Repurchase
Agreement. Seller hereby represents and warrants that this Amendment has been duly and
validly executed and delivered by it, and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
Section 8. Limited Effect. Except as expressly amended and modified by this
Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full
force and effect in accordance with its terms.
Section 9. 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.
Section 10. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Amendment by signing any such counterpart. The parties
agree that this Amendment, any documents to be delivered pursuant to this Amendment and any
notices hereunder may be transmitted between them by email and/or by facsimile. Delivery of
an executed counterpart of a signature page of this Amendment in Portable Document Format
(PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart
of this Amendment. The parties agree that this Amendment, any addendum or amendment
hereto or any other document necessary for the consummation of the transaction contemplated by
this Amendment may be accepted, executed or agreed to through the use of an electronic
5
signature in accordance with the E-Sign, the UETA 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 providers, as long as such service
providers use system logs and audit trails that establish a temporal and process link between the
presentation of identity documents and the electronic signing, together with identifying
information that can be used to verify the electronic signature and its attribution to the signer’s
identity and evidence of the signer’s agreement to conduct the transaction electronically and of
the signer’s execution of each electronic signature. The original documents shall be promptly
delivered, if requested.
Section 11. Binding Effect. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.
Section 12. GOVERNING LAW. THIS AMENDMENT AND ANY
CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS
AMENDMENT, THE RELATIONSHIP OF THE PARTIES TO THIS AMENDMENT,
AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND
DUTIES OF THE PARTIES TO THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW
RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AMENDMENT. NOTWITHSTANDING ANYTHING TO THE
CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF
ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND
ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC
TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-
SIGN.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first above written.
UBS AG, BY AND THROUGH ITS
BRANCH OFFICE AT 1285 AVENUE
OF THE AMERICAS, NEW YORK,
NEW YORK, as Buyer
By: /s/ Gary Timmerman
Name: Gary Timmerman
Title: Managing Director
By: /s/ Chi Ma
Name: Chi Ma
Title: Director
QUICKEN LOANS, LLC, as Seller
DocuSigned by:
/s/ Robert P. Wilson
CC8E1688430845
Name: Robert Wilson
Title: Treasurer
Signature Page to Amendment No. 13 to Master Repurchase Agreement
AMENDMENT NO. 1
TO MASTER REPURCHASE AGREEMENT
This Amendment No. 1 to Master Repurchase Agreement, dated as of May 25,
2021 (this “Amendment”), by and among Quicken Loans, LLC (“Seller”), Nomura Corporate
Funding Americas, LLC, in its capacity as a buyer (“NCFA Buyer”), Oakdale Secured Funding
Trust Quartz, acting with respect to Series 2020-1, in its capacity as a buyer (“SPV Buyer”, and,
together with NCFA Buyer, each, a “Buyer”, and collectively, the “Buyers”), and Nomura
Corporate Funding Americas, LLC, as agent (in such capacity, “Agent”).
RECITALS
Agent, Buyers and Seller are parties to that certain Master Repurchase
Agreement, dated as of December 18, 2020 (the “Existing Repurchase Agreement”; and as
amended by this Amendment, the “Repurchase Agreement”). Capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Existing Repurchase
Agreement.
Agent, Buyers and Seller have agreed, subject to the terms and conditions of this
Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon
revisions to the terms of the Existing Repurchase Agreement.
Accordingly, Agent, Buyers and Seller hereby agree, in consideration of the
mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement
is hereby amended as follows:
Section 1. Amendment to the Existing Repurchase Agreement. Effective as
of the date hereof, the Existing Repurchase Agreement is hereby amended to delete the stricken
text (indicated textually in the same manner as the following example: stricken text) and to add
the double-underlined text (indicated textually in the same manner as the following example:
double-underlined text) as set forth in Exhibit A hereto. The parties hereto further acknowledge
and agree that Exhibit A constitutes the Repurchase Agreement as amended and modified by the
terms set forth herein.
Section 2. Conditions Precedent. This Amendment shall become effective as
of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following
conditions precedent:
2.1 Delivered Documents. On the Amendment Effective Date, Agent shall
have received this Amendment, executed and delivered by Agent, Buyers and Seller.
Exhibit 10.4
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT
IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE
REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.
EXECUTION
LEGAL02/40509503v2
Section 3. Limited Effect. Except as expressly amended and modified by this
Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full
force and effect in accordance with its terms and the execution of this Amendment.
Section 4. Counterparts. This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an original and all
of which taken together shall constitute one and the same instrument. Counterparts may be
delivered electronically. Facsimile, documents executed, scanned and transmitted electronically
and electronic signatures shall be deemed original signatures for purposes of this Amendment
and all matters related thereto, with such facsimile, scanned and electronic signatures having the
same legal effect as original signatures. The parties agree that this Amendment, any addendum
or amendment hereto or any other document necessary for the consummation of the transaction
contemplated by 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, Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic
Transaction Act 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 providers, as long as such service providers use system logs and audit
trails that establish a temporal and process link between the presentation of identity documents
and the electronic signing, together with identifying information that can be used to verify the
electronic signature and its attribution to the signer’s identity and evidence of the signer’s
agreement to conduct the transaction electronically and of the signer’s execution of each
electronic signature.
Section 5. 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.
Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER
THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, WHICH SHALL GOVERN.
[SIGNATURE PAGES FOLLOW]
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LEGAL02/40509503v2
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the day and year first above
written.
NOMURA CORPORATE FUNDING
AMERICAS, LLC, as Agent and as a Buyer
By:/s/ Sanil Patel
Name: Sanil Patel
Title: Managing Director
Signature Page to Amendment No. 1 to Master Repurchase Agreement
LEGAL02/40509503v2
OAKDALE SECURED FUNDING TRUST
QUARTZ, acting with respect to Series 2020-1,
as a Buyer
By: Wilmington Savings Fund Society, FSB, not in
its individual capacity but solely as owner
By: /s/ Mary Emily Pagano
Name: Mary Emily Pagano
Title: Assistant Vice President
Signature Page to Amendment No. 1 to Master Repurchase Agreement
LEGAL02/40509503v2
QUICKEN LOANS, LLC, as Seller
DocuSigned by:
/s/ Robert P. Wilson
CC8E1688430845
Name: Robert Wilson
Title: Treasurer
Signature Page to Amendment No. 1 to Master Repurchase Agreement
LEGAL02/40509503v2
Exhibit A
CONFORMED AGREEMENT
(See attached)
LEGAL02/40509503v2
CONFORMED THROUGH AMENDMENT NO.1
MASTER REPURCHASE AGREEMENT
Dated as of December 18, 2020
Among:
NOMURA CORPORATE FUNDING AMERICAS, LLC,
as a Buyer, OAKDALE SECURED FUNDING TRUST QUARTZ, acting with respect to
Series 2020-1, as a Buyer, and the other Buyers from time to time party hereto
NOMURA CORPORATE FUNDING AMERICAS, LLC, as Agent
and
QUICKEN LOANS, LLC, as Seller
LEGAL02/40509503v2
TABLEOFCONTENTS
1. APPLICABILITY ................................................................................................................................1
2. DEFINITIONS AND ACCOUNTING MATTERS ............................................................................1
3. THE TRANSACTIONS .....................................................................................................................22
4. PAYMENTS; COMPUTATION .......................................................................................................26
5. TAXES; TAX TREATMENT ........................................................................................................... 27
6. MARGIN MAINTENANCE ............................................................................................................. 28
7. INCOME PAYMENTS ......................................................................................................................29
8. SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT .......................29
9. CONDITIONS PRECEDENT ........................................................................................................... 33
10. RELEASE OF PURCHASED ASSETS ...........................................................................................36
11. RELIANCE .......................................................................................................................................36
12. REPRESENTATIONS AND WARRANTIES .................................................................................37
13. COVENANTS OF SELLER .............................................................................................................42
14. REPURCHASE DATE PAYMENTS ...............................................................................................48
15. REPURCHASE OF PURCHASED ASSETS ...................................................................................48
16. SUBSTITUTION ...............................................................................................................................48
17. RESERVED .......................................................................................................................................49
18. EVENTS OF DEFAULT ...................................................................................................................49
19. REMEDIES ........................................................................................................................................52
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE ..........................................................55
21. NOTICES AND OTHER COMMUNICATIONS .............................................................................55
22. USE OF EMPLOYEE PLAN ASSETS .............................................................................................56
23. INDEMNIFICATION AND EXPENSES. ........................................................................................ 56
24. WAIVER OF DEFICIENCY RIGHTS ..............................................................................................58
25. REIMBURSEMENT .......................................................................................................................... 58
26. FURTHER ASSURANCES ............................................................................................................... 58
27. TERMINATION ................................................................................................................................ 58
28. SEVERABILITY ............................................................................................................................... 58
29. BINDING EFFECT; GOVERNING LAW ........................................................................................ 58
30. AMENDMENTS ................................................................................................................................ 59
31. SUCCESSORS AND ASSIGNS ....................................................................................................... 59
32. CAPTIONS ........................................................................................................................................ 59
33. COUNTERPARTS ............................................................................................................................ 59
34. SUBMISSION TO JURISDICTION; WAIVERS ............................................................................. 59
35. WAIVER OF JURY TRIAL .............................................................................................................. 60
36. ACKNOWLEDGEMENTS ............................................................................................................... 60
37. HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS. ....................................................... 60
38. ASSIGNMENTS. ............................................................................................................................... 61
39. SINGLE AGREEMENT .................................................................................................................... 61
40. INTENT ............................................................................................................................................. 62
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LEGAL02/40509503v2
41. CONFIDENTIALITY ........................................................................................................................ 63
42. SERVICING ...................................................................................................................................... 64
43. PERIODIC DUE DILIGENCE REVIEW ......................................................................................... 65
44. SET-OFF ............................................................................................................................................ 66
45. ENTIRE AGREEMENT .................................................................................................................... 66
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Loans
SCHEDULE 2 Subsidiaries
SCHEDULE 12(c) Litigation
SCHEDULE 13(i) Related Party Transactions
EXHIBITS
EXHIBIT A Form of Quarterly Certification
EXHIBIT B Form of Instruction Letter
EXHIBIT C Agent’s Wire Instructions
EXHIBIT D Form of Security Release Certification
EXHIBIT E Form of Non-Disclosure Agreement
EXHIBIT F Third Party Wire Instructions
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LEGAL02/40509503v2
MASTER REPURCHASE AGREEMENT, dated as of December 18, 2020, among Quicken
Loans, LLC, a Michigan limited liability company (the “Seller”), Nomura Corporate Funding Americas,
LLC, a Delaware limited liability company, in its capacity as a buyer (together with its permitted
successors and assigns in such capacity hereunder, the “NCFA Buyer”), Oakdale Secured Funding Trust
Quartz, acting with respect to Series 2020-1, in its capacity as a buyer (together with its permitted
successors and assigns in such capacity hereunder, “SPV Buyer” or the “Trust”, and together with NCFA
Buyer and each other entity that may be subsequently added as a party to this Agreement in the capacity
of Buyer pursuant to a joinder agreement and subject to the prior written consent of the Seller, each, a
“Buyer”, and collectively, the “Buyers”), and Nomura Corporate Funding Americas, LLC (“Nomura”), as
agent pursuant hereto (together with its permitted successors and assigns in such capacity hereunder, the
“Agent”).
1. APPLICABILITY
A Buyer shall, with respect to the Committed Amount, and may agree in its sole and absolute
discretion to, with respect to the Uncommitted Amount, from time to time enter into transactions in which
the Seller sells to such Buyer Eligible Loans against the transfer of funds by such Buyer, with a
simultaneous agreement by such Buyer to sell to the Seller Purchased Assets by a date certain, against the
transfer of funds by the Seller. Each such transaction shall be referred to herein as a “Transaction”, and,
unless otherwise agreed in writing, shall be governed by this Agreement. The Purchased Assets will be
allocated to a Buyer by the Agent as more particularly described in the Administration Agreement. For
the avoidance of doubt, the Agent shall be the nominee and secured party for the benefit of Buyers
hereunder.
2. DEFINITIONS AND ACCOUNTING MATTERS
(a) Defined Terms. As used herein, the following terms have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
“Ability to Repay Rule” shall mean 12 C.F.R. § 1026.43(c), or any successor rule or regulation,
including all applicable official staff commentary.
“Accepted Servicing Practices” shall mean, with respect to any Loan, those accepted mortgage
servicing practices (including collection procedures) of prudent mortgage lending institutions which
service mortgage loans, as applicable, of the same type as the Loans in the jurisdiction where the related
Mortgaged Property is located, and which are in accordance with applicable Agency servicing practices
and procedures for Agency mortgage backed securities pool mortgages, as defined in the Agency
Guidelines including future updates.
“Adjustable Rate Loan” shall mean a Loan which provides for the adjustment of the Mortgage
Interest Rate payable in respect thereto.
“Adjusted Tangible Net Worth” shall mean, with respect to any Person at any date, the excess of
the total assets over the total liabilities of such Person on such date, each to be determined in accordance
with GAAP consistent with those applied in the preparation of the Seller’s financial statements less the
sum of the following (without duplication): (a) the book value of all investments in non-consolidated
subsidiaries, and (b) any other assets of the Seller and consolidated Subsidiaries that would be treated as
intangibles under GAAP including, without limitation, goodwill, research and development costs,
LEGAL02/40509503v2
trademarks, trade names, copyrights, patents, rights to refunds and indemnification and unamortized debt
discount and expenses. Notwithstanding the foregoing, servicing rights shall be included in the
calculation of total assets.
“Adjustment Date” shall mean, with respect to each Adjustable Rate Loan, the date set forth in
the related Note on which the Mortgage Interest Rate on the Loan is adjusted in accordance with the terms
of the Note.
“Administration Agreement” shall mean that certain Master Administration Agreement, dated as
of the date hereof, by and among Nomura Corporate Funding Americas, LLC, as Agent for the Buyers (as
defined therein), NCFA Buyer, SPV Buyer, and each other Buyer (as defined therein), each as a Buyer, as
it may be amended, restated, supplemented or otherwise modified from time to time.
“Affiliate” shall mean, with respect to any Person, any other Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person, and which shall include any
Subsidiary of such Person. For purposes of this definition, “control” (together with the correlative
meanings of “controlled by” and “under common control with”) means possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise.
“Agency” shall mean Fannie Mae, Ginnie Mae, Freddie Mac or RHS, as the context may require.
“Agency Approval” shall have the meaning provided in Section 13(aa).
“Agency Audit” shall mean any Agency, HUD, FHA, VA or RHS audits, examinations,
evaluations, monitoring reviews and reports of its origination and servicing operations (including those
prepared on a contract basis for any such Agency).
“Agency Eligible Loan” shall mean a Loan that is (i) originated in compliance with the applicable
Agency Guidelines (other than for exceptions to the Agency Guidelines provided by the applicable
Agency to Seller and is eligible for sale to or securitization by (or guaranty of securitization by) an
Agency or (ii) (a) an FHA Loan; (b) a VA Loan; (c) an RHS Loan, or (d) otherwise eligible for inclusion
in a Ginnie Mae mortgage-backed security pool.
“Agency Guidelines” shall mean the Ginnie Mae Guide, the Fannie Mae Guide and/or the
Freddie Mac Guide, the FHA Regulations, the VA Regulations and/or the Rural Housing Service
Regulations, as the context may require, in each case as such guidelines have been or may be amended,
supplemented or otherwise modified from time to time by Ginnie Mae, Fannie Mae, Freddie Mac, FHA,
VA or RHS, as applicable.
“Agency Security” shall mean a mortgage-backed security issued or guaranteed by an Agency.
“Agent” shall have the meaning set forth in the preamble.
“Agreement” shall mean this Master Repurchase Agreement (including all exhibits, schedules
and other addenda hereto or thereto), as supplemented by the Pricing Side Letter, as it may be amended,
restated, further supplemented or otherwise modified from time to time.
“ALTA” shall mean the American Land Title Association.
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LEGAL02/40509503v2
“Anti-Money Laundering Laws” shall have the meaning provided in Section 12(ee) hereof.
“Applicable Margin” shall have the meaning set forth in the Pricing Side Letter.
“Applicable Percentage” shall have the meaning assigned thereto in the Pricing Side Letter.
“Appraised Value” shall mean, with respect to any Loan, the lesser of (i) the value set forth on the
appraisal made in connection with the origination of the related Loan as the value of the related
Mortgaged Property, or (ii) the purchase price paid for the Mortgaged Property, provided, however, that
in the case of a Loan the proceeds of which are not used for the purchase of the Mortgaged Property, such
value shall be based solely on the appraisal made in connection with the origination of such Loan.
“Approvals” shall mean, with respect to the Seller, the approvals granted by the applicable
Agency or HUD, as applicable, designating the Seller as a Ginnie Mae-approved issuer, a Ginnie Mae-
approved servicer, an FHA-approved mortgagee, a VA-approved lender, an RHS lender, an RHS servicer,
a Fannie Mae-approved seller/servicer or a Freddie Mac-approved seller/servicer, as applicable, in good
standing to the extent necessary for Seller to conduct its business in all material respects as it is then being
conducted.
“Assignment and Acceptance” shall have the meaning provided in Section 38(a) hereof.
“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage
to Agent (for the benefit of Buyers).
“ATR Checklist” shall have the meaning assigned to such term in paragraph (ggg) of Schedule 1
hereto.
“Authoritative Copy” shall mean with respect to an eNote, the unique copy of such eNote that is
within the Control of the Controller.
“Bankruptcy Code” shall mean Title 11 of the United States Code, Section 101 et seq., as
amended from time to time.
“Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which the
New York Stock Exchange, the Federal Reserve Bank of New York, the Custodian’s offices, banking and
savings and loan institutions in the State of New York, Michigan or Delaware, the City of New York or
the State of California are required to be closed, or (iii) a day on which trading in securities on the New
York Stock Exchange or any other major securities exchange in the United States is not conducted.
“Capital Lease Obligations” shall mean, 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.
“Cash Equivalents” shall mean (a) securities with maturities of ninety (90) days or less from the
date of acquisition issued or fully guaranteed or insured by the United States government or any agency
thereof, (b) certificates of deposit and Eurodollar time deposits with maturities of ninety (90) days or less
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LEGAL02/40509503v2
from the date of acquisition and overnight bank deposits of any commercial bank having capital and
surplus in excess of [***], (c) repurchase obligations of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities
issued or fully guaranteed or insured by the United States government, (d) commercial paper of a
domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor’s Ratings Group
(“S&P”) or P-1 or the equivalent thereof by Moody’s Investors Service, Inc. (“Moody’s”) and in either
case maturing within ninety (90) days after the day of acquisition, (e) securities with maturities of ninety
(90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody’s, (f) securities with maturities of ninety (90) days or less from the date of
acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements
of clause (b) of this definition, (g) shares of money market mutual or similar funds, (h) [***] of the
unencumbered marketable securities in Seller’s accounts (or the account of Seller’s Affiliates), or (i) the
aggregate amount of unused capacity available (taking into account applicable haircuts) under committed
and uncommitted mortgage loan and mortgage-backed securities warehouse and servicing and servicer
advance facilities, or lines of credit collateralized by mortgage or mortgage servicing rights assets for
which the seller or borrower thereunder has adequate eligible collateral pledged or to pledge thereunder,
or under unsecured lines of credit available to Seller.
“CEMA Consolidated Note” shall mean the original executed consolidated promissory note or
other evidence of the consolidated indebtedness of a mortgagor/borrower with respect to a CEMA Loan
and a Consolidation, Extension and Modification Agreement.
“CEMA Loan” shall mean a Loan originated in connection with a refinancing subject to a
Consolidation, Extension and Modification Agreement and with respect to which the related Mortgaged
Property is located in the State of New York.
“Change of Control” shall mean, with respect to the Seller, the acquisition by any other Person, or
two or more other Persons acting as a group, of beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of
outstanding shares of voting stock of the Seller at any time if after giving effect to such acquisition
Rocket Companies, Inc. ceases to own, directly or indirectly, at least fifty percent (50%) of the voting
power of Seller’s outstanding equity interests.
“Closing Date” shall mean December 18, 2020.
“Closing Agent” shall mean, with respect to any Wet-Ink Transaction, an entity satisfactory to
Agent (which may be a title company or its agent, escrow company, attorney or other closing agent in
accordance with local law and practice in the jurisdiction where the related Wet-Ink Loan is being
originated) to which the proceeds of such Wet-Ink Transaction are to be wired pursuant to the related wire
instructions set forth on Exhibit F hereto. Unless Agent notifies Seller (electronically or in writing) that a
Closing Agent is unsatisfactory, each Closing Agent utilized by Seller shall be deemed initially
satisfactory; provided, that each of Amrock LLC and its Subsidiaries shall be deemed satisfactory to
Agent while it is an Affiliate of Seller and eligible to act as a closing agent under applicable Agency
Guidelines, and provided further that Agent shall instruct Custodian that no funds shall be transferred to
the account of any Closing Agent after the date that is five (5) Business Days following the date that
notice is delivered to Seller that such Closing Agent is unsatisfactory, and provided, further, that the
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LEGAL02/40509503v2
Market Value shall be deemed to be zero with respect to each Loan, for so long as such Loan is a Wet-Ink
Loan, as to which the proceeds of such Loan were wired to a Closing Agent with respect to which Agent
has notified Seller at least five (5) Business Days before funds are transferred to the account of such
Closing Agent that such Closing Agent is not satisfactory.
“COBRA” shall have the meaning assigned thereto in Section 12(p) hereof.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Committed Amount” shall have the meaning assigned thereto in the Pricing Side Letter.
“Confirmation” shall have the meaning assigned thereto in Section 3(a) hereof.
“Consolidation, Extension and Modification Agreement” shall mean the original executed
consolidation, extension and modification agreement executed by a mortgagor/borrower in connection
with a CEMA Loan.
“Contractual Obligation” shall mean as to any Person, any material provision of any agreement,
instrument or other undertaking to which such Person is a party or by which it or any of its property is
bound or any material provision of any security issued by such Person.
“Control” shall mean, with respect to an eNote, the “control” of such eNote within the meaning of
UETA and/or, as applicable, E-SIGN, which is established by reference to the MERS eRegistry and any
party designated therein as the Controller.
“Control Failure” shall mean, with respect to an eNote, (i) if the Controller status of the eNote
shall not have been transferred to Agent, (ii) Agent shall otherwise not be designated as the Controller of
such eNote in the MERS eRegistry, (iii) if the eVault shall have released the Authoritative Copy of an
eNote in contravention of the requirements of the Custodial Agreement, or (iv) if the Custodian initiated
any changes on the MERS eRegistry in contravention of the terms of the Custodial Agreement.
“Controller” shall mean, with respect to an eNote, the party designated in the MERS eRegistry as
the “Controller”, and who in such capacity shall be deemed to be “in control” or to be the “controller” of
such eNote within the meaning of UETA or E-SIGN, as applicable.
“Cooperative Corporation” shall mean the cooperative apartment corporation that holds legal title
to a Cooperative Project and grants occupancy rights to units therein to stockholders through Proprietary
Leases or similar arrangements.
“Cooperative Loan” shall mean a Loan that is secured by a First Lien perfected security interest
in Cooperative Shares and the related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
“Cooperative Loan Documents” shall have the meaning assigned thereto in the Custodial
Agreement.
“Cooperative Note” shall mean the original executed promissory note or other evidence of the
indebtedness of a Mortgagor with respect to a Cooperative Loan.
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LEGAL02/40509503v2
“Cooperative Project” shall mean all real property owned by a Cooperative Corporation including
the land, separate dwelling units and all common elements.
“Cooperative Shares” shall mean the shares of stock issued by a Cooperative Corporation and
allocated to a Cooperative Unit and represented by a stock certificate.
“Cooperative Unit” shall mean a specific unit in a Cooperative Project.
“Costs” shall have the meaning provided in Section 23(a) hereof.
“COVID-19 Pandemic” shall mean the global pandemic caused by the COVID-19 coronavirus,
which commenced in December of 2019.
“COVID Responsive Change” shall mean any change in applicable law, Agency Guidelines,
Accepted Servicing Practices, or Underwriting Guidelines that occurs in response to the COVID-19
Pandemic, whether temporary or permanent, and including but not limited to the Coronavirus Aid, Relief,
and Economic Security Act and responsive actions taken by any Agency or Governmental Authority
relating thereto.
“Custodial Agreement” shall mean the Custodial Agreement, dated as of the date hereof, among
the Seller, Agent, and Custodian, as the same may be amended, restated, supplemented or otherwise
modified and in effect from time to time.
“Custodian” shall mean Deutsche Bank National Trust Company, or its successors and permitted
assigns, or such other custodian as may be mutually agreed to by Agent and the Seller.
“Custodial Loan Transmission” shall have the meaning assigned thereto in the Custodial
Agreement.
“Default” shall mean an Event of Default or any event that, with the giving of notice or the
passage of time or both, would become an Event of Default.
“Delegatee” shall mean, with respect to an eNote, the party designated in the MERS eRegistry as
the “Delegatee” or “Delegatee for Transfers”, who in such capacity is authorized by the Controller to
perform certain MERS eRegistry transactions on behalf of the Controller such as Transfers of Control and
Transfers of Control and Location.
“Document Deficient Loan” shall mean any closed Loan for which the Custodian has not
received a complete Mortgage File from the Seller.
“Documentation Capsule” shall have the meaning assigned to such term in paragraph (ggg) of
Schedule 1 hereto.
“Dollars” and “$” shall mean lawful money of the United States of America.
“Due Date” shall mean the day of the month on which the Monthly Payment is due on a Loan,
exclusive of any days of grace.
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“Due Diligence Review” shall mean the performance by Agent and/or Buyers of any or all of the
reviews permitted under Section 43 hereof with respect to any or all of the Loans or the Seller or related
parties, as desired by Agent and/or Buyers from time to time.
“eCommerce Laws” shall mean E-SIGN, UETA, any applicable state or local equivalent or
similar laws and regulations, and any rules, regulations and guidelines promulgated under any of the
foregoing.
“Effective Date” shall mean the date upon which the conditions precedent set forth in Section 9(a)
hereof have been satisfied.
“Electronic Agent” shall mean MERSCORP Holdings, Inc., or its successor in interest or assigns.
“Electronic Record” shall mean (i) “Record” and “Electronic Record,” each as defined in E-
SIGN, and shall include but not be limited to, recorded telephone conversations, fax copies or electronic
transmissions and (ii) with respect to an eMortgage Loan, the related eNote and all other documents
comprising the Mortgage File electronically created and that are stored in an electronic format, if any.
“Electronic Security Failure” shall mean as such term is defined in the Custodial Agreement.
“Electronic Tracking Agreement” shall mean the electronic tracking agreement among Agent, the
Seller, MERSCORP Holdings, Inc. and MERS, in form and substance acceptable to Agent to be entered
into in the event that any of the Loans become MERS Loans, as the same may be amended, restated,
supplemented or otherwise modified from time to time; provided that if no Loans are or will be MERS
Loans, all references herein to the Electronic Tracking Agreement shall be disregarded.
“Electronic Transmission” shall mean the delivery of information in an electronic format
acceptable to the applicable recipient thereof, including transactions conducted using Electronic Records
and/or Electronic Signatures or fax copies of signatures. An Electronic Transmission shall be considered
written notice for all purposes hereof (except when a request or notice by its terms requires execution).
“Eligible Loan” shall mean a Loan (i) as to which the representations and warranties in
Sections 12(t) and 12(u) and Schedule 1 of this Agreement are true and correct in all material respects, (ii)
that was originated in all material respects in accordance with the applicable Underwriting Guidelines or
Agency Guidelines and (iii) contains all required Loan Documents without Exceptions unless otherwise
waived electronically or in writing by Agent. Unless otherwise permitted in the Pricing Side Letter, no
Loan shall be an Eligible Loan if:
1. Agent determines, in its good faith, reasonable discretion is not eligible for sale
in the secondary market or for securitization without unreasonable credit enhancement;
2. as to which the related Mortgage File has been released from the possession of
the Custodian under Section 5 of the Custodial Agreement to the Seller or its bailee for a period
in excess of ten (10) Business Days;
3. as to which the related Mortgage File has been released from the possession of
the Custodian under Section 5(a) of the Custodial Agreement under any Transmittal Letter in
excess of the longer of sixty (60) calendar days and the time period stated in such Transmittal
Letter for release;
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LEGAL02/40509503v2
4. in respect of which (a) the related Mortgaged Property is the subject of a
foreclosure proceeding or (b) the related Note has been extinguished under relevant state law in
connection with a judgment of foreclosure or foreclosure sale or otherwise;
5. (a) the related Note or the related Mortgage is not genuine or is not the legal,
valid, binding and enforceable obligation of the maker thereof, subject to no right of rescission,
set-off, counterclaim or defense, or (b) such Mortgage, is not a valid, subsisting, enforceable and
perfected Lien on the Mortgaged Property;
6. in respect of which the related Mortgagor is the subject of a bankruptcy
proceeding;
7. such Loan is thirty (30) or more days past due;
8. the Purchase Price of such Loan, when added to the aggregate outstanding
Purchase Price of all Purchased Assets that are then subject to Transactions, exceeds the
Maximum Aggregate Purchase Price;
9. such Loan is secured by real property improved by manufactured housing;
10. such Loan is not an Agency Eligible Loan;
11. such Loan is a Wet-Ink Loan and the Purchase Price of such Wet-Ink Loan, when
added to the aggregate outstanding Purchase Price of all other Wet-Ink Loans that are then
subject to outstanding Transactions hereunder, exceeds (i) during the first five (5) or last five (5)
Business Days of any month, [***], or (ii) at any other time, [***], in each case of the greater of
the (x) then-outstanding aggregate Purchase Price of all Loans subject to Transactions or (y) the
Committed Amount;
12. such Loan is a Jumbo Loan and the Purchase Price of such Jumbo Loan, when
added to the aggregate outstanding Purchase Price of all other Jumbo Loans that are then subject
to outstanding Transactions hereunder, exceeds [***], of the then outstanding aggregate Purchase
Price of all Loans subject to Transactions;
13. such Loan is a Permitted Non-Qualified Mortgage Loan and the Purchase Price
of such Permitted Non-Qualified Mortgage Loan, when added to the aggregate outstanding
Purchase Price of all other Permitted Non-Qualified Mortgage Loans that are then subject to
outstanding Transactions hereunder, exceeds [***], of the then outstanding aggregate Purchase
Price of all Loans subject to Transactions;
14. such Loan is an eMortgage Loan unless approved in writing by Buyer; or
15. to the extent applicable, such Loan was subject to a financing facility prior to
such Purchase Date, a release letter from the applicable lender, agent or buyer party thereto has
not been delivered to the Custodian as part of the Mortgage File.
“eMortgage Loan” shall mean a Loan with respect to which there is an eNote and as to which
some or all of the other documents comprising the related Mortgage File may be created electronically
and not by traditional paper documentation with a pen and ink signature.
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LEGAL02/40509503v2
“eNote” shall mean, with respect to any eMortgage Loan, the electronically created and stored
Note that is a Transferable Record.
“EO13224” shall have the meaning provided in Section 12(dd) hereof.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and administrative rulings issued thereunder.
“ERISA Affiliate” shall mean any entity, whether or not incorporated, that is a member of any
group of organizations described in Section 414(b) or (c) of the Code (or Section 414) (m) or (o) of the
Code for purposes of Section 412 of the Code) of which the Seller is a member.
“Escrow Payments” shall mean, with respect to any Loan, the amounts constituting ground rents,
taxes, assessments, water charges, sewer rents, municipal charges, mortgage insurance premiums, fire and
hazard insurance premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the Mortgagee pursuant to the terms of any Note or Mortgage or any other document.
“E-SIGN” shall mean the Electronic Signatures in Global and National Commerce Act, 15 U.S.C.
§ 7001 et seq.
“Eurodollar” shall mean Dollars on deposit in a bank outside the United States of America, its
territories and possessions, which are available for transfer to and from the United States of America, its
territories and possessions.
“eVault” shall have the meaning assigned to it in the Custodial Agreement.
“Event of Default” shall have the meaning provided in Section 18 hereof.
“Exception” shall have the meaning assigned thereto in the Custodial Agreement.
“Exception Report” shall mean the report of Exceptions included as part of the Custodial Loan
Transmission.
“Fannie Mae” shall mean the Federal National Mortgage Association, or any successor thereto.
“Fannie Mae Guide” shall mean the Fannie Mae MBS Selling and Servicing Guide, as the same
may hereafter from time to time be amended.
“FDIA” shall have the meaning provided in Section 40(c) hereof.
“FDICIA” shall have the meaning provided in Section 40(d) hereof.
“FHA” shall mean the Federal Housing Administration, an agency within HUD, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of HUD where appropriate
under the FHA Regulations.
“FHA Act” shall mean the Federal Housing Administration Act, codified in 24 Code of Federal
Regulations.
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LEGAL02/40509503v2
“FHA Loan” shall mean a Loan that is eligible to be the subject of an FHA Mortgage Insurance
Contract.
“FHA Mortgage Insurance” shall mean mortgage insurance authorized under Sections 203(b),
213, 221(d), 222, and 235 of the FHA Act and provided by the FHA.
“FHA Mortgage Insurance Contract” shall mean the contractual obligation of the FHA to insure a
Loan.
“FHA Regulations” shall mean regulations promulgated by HUD under the FHA Act, and other
HUD issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee
letters.
“First Lien” shall mean, with respect to each Mortgaged Property, the lien of the mortgage, deed
of trust or other instrument securing a mortgage note which creates a first lien on the Mortgaged Property.
“Foreign Buyer” shall have the meaning set forth in Section 5(c) hereof.
“Freddie Mac” shall mean Federal Home Loan Mortgage Corporation,, or any successor thereto.
“Freddie Mac Guide” shall mean the Freddie Mac Single-Family Seller/Servicer Guide, as the
same may hereafter from time to time be amended.
“GAAP” shall mean generally accepted accounting principles in effect from time to time in the
United States of America.
“Ginnie Mae” shall mean the Government National Mortgage Association and its successors in
interest, a wholly-owned corporate instrumentality of the government of the United States of America.
“Ginnie Mae Guide” shall mean the Ginnie Mae Mortgage-Backed Securities Guide I or II, as
applicable, as the same may hereafter from time to time be amended.
“Governmental Authority” shall mean, with respect to any Person, any nation or government, any
state or other political subdivision, agency or instrumentality thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over such Person, any of its Subsidiaries or any of its properties.
“Guarantee” shall mean, 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 the amount of the
corresponding liability shown on such Person’s consolidated balance sheet calculated in accordance with
GAAP as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as
verbs shall have correlative meanings.
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LEGAL02/40509503v2
“H.15 (519)” shall mean the weekly statistical release designated as such at http://
www.federalreserve.gov/releases/h15/update/default.htm, or any successor publication, published by the
Board of Governors of the Federal Reserve System.
“HARP Loan” shall mean a Loan that is eligible (including pursuant to exceptions or variances
provided to Seller) for sale to, or securitization by, Fannie Mae or Freddie Mac that are (a) refinance
mortgage loans originated pursuant to Fannie Mae’s Home Affordable Refinance Program as announced
in Fannie Mae Announcement SEL-2011-12, as set forth in subsequent Announcements, FAQs, Selling
Guide updates and Servicing Guide updates issued by Fannie Mae in connection with such program
(“HARP 2.0”), or (b) refinance mortgage loans originated pursuant to HARP 2.0 as it applies to the Refi
Plus option applicable to “same servicers”, as amended by the applicable variances delivered by Fannie
Mae to Quicken Loans, or (c) refinance mortgage loans originated pursuant to Freddie Mac’s Home
Affordable Refinance Program (as such program is amended, supplemented or otherwise modified, from
time to time) and referred to by Freddie Mac as a “Relief Refinance Mortgage”.
“Hash Value” shall mean with respect to an eNote, the unique, tamper-evident digital signature of
such eNote that is stored with MERS.
“Hedging Arrangement” shall mean any forward sales contract, forward trade contract, interest
rate swap agreement, interest rate cap agreement or other contract pursuant to which Seller has protected
itself from the consequences of a loss in the value of a Loan or its portfolio of Loans because of changes
in interest rates or in the market value of mortgage loan assets.
“High Cost Loan” shall mean a Loan (a) classified as a “high cost” loan under the Home
Ownership and Equity Protection Act of 1994, as amended; (b) classified as a “high cost,” “threshold,”
“covered,” or “predatory” loan under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law, regulation or ordinance imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates,
points and/or fees); or (c) having a percentage listed under the Indicative Loss Severity Column (the
column that appears in the S&P Anti-Predatory Lending Law Update Table, included in the then-current
S&P’s LEVELS® Glossary of Terms on Appendix E).
“HUD” shall mean the U.S. Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions thereof with regard to
FHA Mortgage Insurance. The term “HUD,” for purposes of this Agreement, is also deemed to include
subdivisions thereof such as the FHA and Ginnie Mae.
“Income” shall mean, with respect to any Purchased Asset at any time until such Loan is
repurchased by Seller in accordance with the terms of this Agreement, any principal and/or interest
thereon and all dividends, sale proceeds (including, without limitation, any proceeds from the liquidation
or securitization of such Purchased Asset or other disposition thereof) and other collections and
distributions thereon (including, without limitation, any proceeds received in respect of mortgage
insurance), but not including any commitment fees, origination fees and/or third-party servicing fees
accrued in respect of periods on or after the initial Purchase Date with respect to such Purchased Asset.
“Indebtedness” shall mean, 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
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LEGAL02/40509503v2
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; (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 account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of
such Person under repurchase agreements or like arrangements; (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) any other indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument, provided that, for purposes of this definition, the following shall not be included as
“Indebtedness”: loan loss reserves, deferred taxes arising from capitalized excess service fees, operating
leases, liabilities associated with Seller’s or its Subsidiaries’ securitized Home Equity Conversion
Mortgage (HECM) loan inventory where such securitization does not meet the GAAP criteria for sale
treatment, obligations under Hedging Arrangements, obligations related to treasury management,
brokerage or trading-related arrangements, or transactions for the sale and/or repurchase of Loans treated
as a purchase or sale for GAAP purposes, or transactions related to the financing of recoverable servicing
advances.
“Indemnified Party” shall have the meaning provided in Section 23(a) hereof.
“Instruction Letter” shall mean a letter agreement between the Seller and each Subservicer
substantially in the form of Exhibit B hereto.
“Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of
April 4, 2012, by and among the Seller, One Reverse Mortgage, LLC, Credit Suisse First Boston
Mortgage Capital LLC, UBS AG, by and through its branch office at 1285 Avenue of the Americas, New
York, New York, JPMorgan Chase Bank, National Association, Royal Bank of Canada, Bank of America,
N.A., Citibank N.A., Morgan Stanley Bank, N.A., Jefferies Funding LLC, and Morgan Stanley Mortgage
Capital Holdings LLC, as joined by Agent, as the same shall be further amended, restated, supplemented
or otherwise modified and in effect from time to time, and, as the context requires, the Joint Account
Control Agreement and the Joint Securities Account Control Agreement.
“Investment Company Act” shall mean the Investment Company Act of 1940, as amended,
including all rules and regulations promulgated thereunder.
“IRS” shall have the meaning set forth in Section 5(c) hereof.
“Joint Account Control Agreement” shall mean the Joint Account Control Agreement, dated as of
April 4, 2012, among the Seller, One Reverse Mortgage, LLC, Credit Suisse First Boston Mortgage
Capital LLC, UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York,
New York, JPMorgan Chase Bank, National Association, Royal Bank of Canada, Bank of America, N.A.,
Citibank N.A., Morgan Stanley Bank, N.A., Morgan Stanley Mortgage Capital Holdings LLC, Jefferies
Funding LLC and Deutsche Bank National Trust Company, as paying agent, as joined by Agent, as the
same shall be further amended, restated, supplemented or modified and in effect from time to time.
“Joint Securities Account Control Agreement” shall mean the Joint Securities Account Control
Agreement, dated as of April 4, 2012, among the Seller, Credit Suisse First Boston Mortgage Capital
LLC, UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York,
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JPMorgan Chase Bank, National Association, Royal Bank of Canada, Bank of America, N.A., Morgan
Stanley Bank, N.A., Morgan Stanley Mortgage Capital Holdings LLC, Jefferies Funding LLC, One
Reverse Mortgage, LLC, Citibank N.A. and Deutsche Bank National Trust Company, as securities
intermediary, as amended, as joined by Agent, as the same shall be further amended, restated,
supplemented or modified and in effect from time to time.
“Jumbo Loan” shall mean a Loan that (x) has an original principal balance which exceeds
Agency Guidelines for maximum general conventional loan amount and (y) complies with the applicable
Underwriting Guidelines.
“LIBOR Rate” shall mean:
(i) the rate of interest (calculated on a per annum basis) equal to the ICE Benchmark
Administration (or any successor institution or replacement institution used to administer the
LIBOR Rate) as reported on the display designated as “US0001M Index” on Bloomberg (or such
other display as may replace “US0001M Index” on Bloomberg), and if such rate is not available
at such time for any reason, then the LIBOR Rate shall be the rate at which Dollar deposits are
offered in immediately available funds by the principal London office of at least three major
banks in the London interbank market, selected by Buyer in its reasonable discretion, at
approximately 11:00 a.m. (London time) on that day; or
(ii) if the rate referenced in the preceding subsection (i) is not available, the rate per
annum determined by Agent shall be as provided in Section 3(e) hereof;
in each case, adjusted on each Business Day that a Transaction is outstanding.
“Lien” shall mean any mortgage, lien, pledge, charge, security interest or similar encumbrance.
“Loan” shall mean a First Lien mortgage loan (including an eMortgage Loan) together with the
Servicing Rights thereon, which the Custodian has been instructed to hold for Agent pursuant to the
Custodial Agreement, and which Loan includes, without limitation, (i) a Note, the related Mortgage and
all other Loan Documents and (ii) all right, title and interest of the Seller in and to the Mortgaged
Property covered by such Mortgage.
“Loan Documents” shall mean, with respect to a Loan, the documents comprising the Mortgage
File for such Loan, including any Cooperative Loan Documents.
“Loan Schedule” shall mean a list in electronic format setting forth as to each Eligible Loan the
fields mutually agreed to by Agent and Seller, any other information reasonably required by Agent and
any other additional applicable information to be provided in the Loan Schedule pursuant to the Custodial
Agreement.
“Loan-to-Value Ratio” and “LTV” shall mean, with respect to any Loan, the ratio of the
outstanding principal amount of such Loan at the time of origination to the Appraised Value of the related
Mortgaged Property at origination of such Loan.
“Location” shall mean, with respect to an eNote, the location of such eNote which is established
by reference to the MERS eRegistry.
“Margin Call” shall have the meaning assigned thereto in Section 6(a) hereof.
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“Margin Deficit” shall have the meaning assigned thereto in Section 6(a) hereof.
“Market Value” shall mean, with respect to any Purchased Asset as of any date of determination,
the fair market value of such Purchased Asset on such date as determined in good faith by Agent (based
on the pricing that Agent (or an Affiliate thereof) uses for comparable mortgage loans and similarly
situated counterparties), taking into account such factors as Agent deems appropriate, including, without
limitation, available objective indications of value, to the extent deemed by Agent to be reliable and
applicable to the related Purchased Asset and the Seller. Agent’s good faith determination of Market
Value will be conclusive and binding on the parties absent manifest error; provided, that the Market
Value of a Purchased Asset shall be capped at the outstanding principal balance of such Purchased Asset;
provided, further, that any Purchased Asset that is not an Eligible Loan shall automatically have a Market
Value of zero Dollars ($0).
“Material Adverse Effect” shall mean (i) a material adverse effect on Seller’s consolidated
financial condition or business operations or Property, or (ii) any other event which in the case of this
clause (ii) adversely affects the Seller’s ability to perform under the Program Documents to which it is a
party or satisfy, in all material respects, its obligations, representations, warranties and covenants under
the Program Documents to which it is a party, taken as a whole.
“Maturity Date” shall have the meaning assigned to such term in the Pricing Side Letter.
“Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in the Pricing
Side Letter.
“Maximum Leverage Ratio” shall have the meaning assigned thereto in the Pricing Side Letter.
“MERS” shall mean Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or
any successor in interest thereto.
“MERS eDelivery” shall mean the transmission system operated by the Electronic Agent that is
used to deliver eNotes, other Electronic Records and data from one MERS eRegistry member to another
using a system-to-system interface and conforming to the standards of the MERS eRegistry.
“MERS eRegistry” shall mean the electronic registry operated by the Electronic Agent that acts
as the legal system of record that identifies the Controller, Delegatee and Location of the Authoritative
Copy of registered eNotes.
“MERS Identification Number” shall mean the number permanently assigned to each MERS
Loan.
“MERS System” shall mean the mortgage electronic registry system operated by the Electronic
Agent that tracks changes in Mortgage ownership, mortgage servicers and servicing rights ownership.
“MERS Loan” shall mean any Loan as to which the related Mortgage or Assignment of Mortgage
has been recorded in the name of MERS, as agent for the holder from time to time of the Note.
“Minimum Adjusted Tangible Net Worth” shall have the meaning assigned to such term in the
Pricing Side Letter.
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“Minimum Liquidity Amount” shall have the meaning assigned to such term in the Pricing Side
Letter.
“Monthly Payment” shall mean the scheduled monthly payment of principal and interest on a
Loan as adjusted in accordance with changes in the Mortgage Interest Rate pursuant to the provisions of
the Note for an Adjustable Rate Loan.
“Mortgage” shall mean, with respect to a Loan, the mortgage, deed of trust or other instrument,
which creates a First Lien on the fee simple or leasehold estate in such real property, which secures the
Note.
“Mortgage File” shall have the meaning assigned thereto in the Custodial Agreement.
“Mortgage Interest Rate” shall mean the annual rate of interest borne on a Note, which shall be
adjusted from time to time with respect to Adjustable Rate Loans.
“Mortgaged Property” shall mean the real property (including all improvements, buildings and
fixtures thereon and all additions, alterations and replacements made at any time with respect to the
foregoing) securing repayment of the debt evidenced by a Note or, in the case of any Cooperative Loan,
the Cooperative Shares and the Proprietary Lease.
“Mortgagee” shall mean the record holder of a Note secured by a Mortgage.
“Mortgagor” shall mean the obligor or obligors on a Note, including any person who has assumed
or guaranteed the obligations of the obligor thereunder.
“Net Income” shall mean, for any period, the net income of the applicable Person for such period
as determined in accordance with GAAP.
“Netting Agreement” shall mean that certain Margin, Setoff and Netting Agreement, to be entered
into among Agent, Seller and Nomura Securities International, Inc., as may be amended, restated,
supplemented or otherwise modified from time to time.
“Non-Affiliate Buyer” shall have the meaning set forth in Section 39 hereof.
“Non-Affiliate MRA” shall have the meaning set forth in Section 39 hereof.
“Non-Affiliate Transactions” shall have the meaning set forth in Section 39 hereof.
“Non-Disclosure Agreement” shall mean a non-disclosure agreement substantially in the form of
Exhibit E hereto, or as otherwise reasonably agreed to by Seller and the applicable Buyer.
“Note” shall mean, with respect to any Loan, the related promissory note, including an eNote,
together with all riders thereto and amendments thereof or other evidence of such indebtedness of the
related Mortgagor. For the avoidance of doubt, with respect to any Loan which is a CEMA Loan, the
“Note” with respect to such Loan shall be the CEMA Consolidated Note.
“Obligations” shall mean (a) the Seller’s obligation to pay the Repurchase Price on the
Repurchase Date and other obligations and liabilities of the Seller to Agent, Buyers, its Affiliates, or the
Custodian arising under, or in connection with, the Program Documents, whether now existing or
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LEGAL02/40509503v2
hereafter arising; (b) any and all sums paid by Agent and/or Buyers or on behalf of Agent and/or Buyers
pursuant to the Program Documents in order to preserve any Purchased Asset or its interest therein; (c) in
the event of any proceeding for the collection or enforcement of the Seller’s indebtedness, obligations or
liabilities referred to in clause (a), the reasonable out-of-pocket expenses of retaking, holding, collecting,
preparing for sale, selling or otherwise disposing of or realizing on any Purchased Asset, or of any
exercise by Agent and/or Buyers or any Affiliate of Agent or any Buyer of its rights under the Program
Documents, including without limitation, reasonable attorneys’ fees and disbursements and court costs;
and (d) the Seller’s indemnity obligations to Agent and/or Buyers pursuant to the Program Documents.
“OFAC” shall have the meaning provided in Section 12(dd) hereof.
“Other Taxes” shall mean any and all present or future stamp, court or documentary, intangible,
recording, filing or similar Taxes or any excise, sales, goods and services or transfer taxes, charges or
similar levies arising from any payment made hereunder or from the execution, delivery, performance,
assignment, enforcement or registration of, from the receipt or perfection of a security interest under, or
otherwise with respect to, any Program Document.
“Permitted Non-Qualified Mortgage Loan” shall have the meaning assigned to such term in the
Pricing Side Letter.
“Person” shall mean any individual, corporation, company, voluntary association, partnership,
joint venture, limited liability company, trust, unincorporated association or government (or any agency,
instrumentality or political subdivision thereof).
“Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2)
of ERISA), including any single-employer plan or multiemployer plan (as such terms are defined in
Section 400(a)(15) and in Section 4001(a)(3) of ERISA, respectively), that is subject to Title IV of
ERISA or Section 412 of the Code.
“PMI Policy” and “Primary Insurance Policy” shall mean a policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
“Post-Default Rate” shall mean, in respect of the Repurchase Price for any Transaction or any
other amount under this Agreement, or any other Program Document that is not paid when due to Buyer
(whether at stated maturity, by acceleration or mandatory prepayment or otherwise), a rate per annum
during the period from and including the due date to but excluding the date on which such amount is paid
in full equal to [***] per annum, plus the Pricing Rate otherwise applicable to such Loan.
“Power of Attorney” shall mean a power of attorney in form and substance acceptable to Agent.
“Price Differential” shall mean, with respect to each Transaction as of any date of determination,
the aggregate amount obtained by daily application of the Pricing Rate (or during the continuation of an
Event of Default, by daily application of the Post-Default Rate) for such Transaction to the Purchase Price
for such Transaction on a 360-day-per-year basis for the actual number of days elapsed during the period
commencing on (and including) the Purchase Date and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential in respect of such period previously paid
by the Seller to Buyer with respect to such Transaction).
“Price Differential Payment Amount” shall have the meaning provided in Section 4(c) hereof.
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“Price Differential Payment Date” shall have the meaning provided in Section 4(c) hereof.
“Pricing Rate” shall mean, as of any date of determination, an amount equal to the sum of (a) the
greater of (i) the applicable LIBOR Rate (reset daily) as of such date of determination and (ii) [***] plus
(b) the Applicable Margin. The Pricing Rate is calculated on the basis of a 360-day year and the actual
number of days elapsed between the Purchase Date and the Repurchase Date.
“Pricing Side Letter” shall mean the most recently executed pricing side letter, between the Seller
and Agent referencing this Agreement and setting forth the pricing terms and certain additional terms
with respect to this Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time, and the terms of which are incorporated herein as if fully set forth.
“Program Documents” shall mean this Agreement, the Custodial Agreement, any Servicing
Agreement, the Pricing Side Letter, the Netting Agreement, any Instruction Letter, the Intercreditor
Agreement, the Joint Securities Account Control Agreement, the Joint Account Control Agreement, the
Electronic Tracking Agreement, the Power of Attorney, and any other agreement entered into by the
Seller, on the one hand, and Agent, any Buyer and/or any of its respective Affiliates or Subsidiaries (or
Custodian on its behalf) on the other, in connection herewith or therewith.
“Prohibited Person” shall have the meaning provided in Section 12(dd) hereof.
“Property” shall mean any right or interest in or to property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible.
“Proprietary Lease” shall mean a lease on (or occupancy agreement with respect to) a
Cooperative Unit evidencing the possessory interest of the owner of the Cooperative Shares or Seller in
such Cooperative Unit.
“Purchase Date” shall mean, with respect to each Transaction, the date on which Purchased
Assets are sold by the Seller to Agent for the benefit of Buyers or its designee hereunder.
“Purchase Price” shall mean, with respect to a Purchased Asset, the price at which such
Purchased Asset is transferred by the Seller to Agent for the benefit of Buyers in a Transaction, which
shall be equal to the product of (i) the Applicable Percentage and (ii) the lesser of (A) the outstanding
principal amount of the related Purchased Asset and (B) the Market Value of the related Purchased Asset.
“Purchased Assets” shall mean any of the following assets sold by the Seller to Agent for the
benefit of Buyers in a Transaction on a servicing-released basis: the Loans purchased by Agent for the
benefit of Buyers on the related Purchase Date, together with the related Servicing Records, the related
Servicing Rights (which were sold by the Seller and purchased by Agent for the benefit of Buyers on the
related Purchase Date), and with respect to each Loan, such other property, rights, titles or interest as are
specified on a related Transaction Notice, and all instruments, chattel paper, and general intangibles
comprising or relating to all of the foregoing. The term “Purchased Assets” with respect to any
Transaction at any time shall also include Substitute Assets delivered pursuant to Section 16 hereof.
“Purchased Items” shall have the meaning assigned thereto in Section 8(a) hereof.
“QM Rule” shall mean 12 C.F.R. § 1026.43(d) or (e), or any successor rule or regulation,
including all applicable official staff commentary.
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“Qualified Insurer” shall mean an insurance company duly qualified as such under the laws of
each applicable state in which Mortgaged Property it insures is located, duly authorized and licensed in
each such state to transact the applicable insurance business and to write the insurance provided, and
approved as an insurer by Fannie Mae, Ginnie Mae, FHA, VA, RHS and Freddie Mac, if required, and
which is approved by Agent.
“Qualified Mortgage” shall mean a Loan that satisfies the criteria for a “qualified mortgage” as
set forth in the QM Rule.
“Qualified Originator” shall mean an originator of Loans which is acceptable under the Agency
Guidelines.
“Reacquired Assets” shall have the meaning assigned thereto in Section 16 hereof.
“Recognition Agreement” shall mean, with respect to a Cooperative Loan, an agreement executed
by a Cooperative Corporation which, among other things, acknowledges the lien of the Mortgage on the
Mortgaged Property in question.
“Records” shall mean all instruments, agreements and other books, records, and reports and data
generated by other media for the storage of information maintained by the Seller or any other person or
entity with respect to a Purchased Asset. Records shall include, without limitation, the Notes, any
Mortgages, the Mortgage Files, the Servicing File, and any other instruments necessary to document or
service a Loan that is a Purchased Asset, including, without limitation, the complete payment and
modification history of each Loan that is a Purchased Asset.
“Register” shall have the meaning provided in Section 38(e) hereof.
“Related Security” shall have the meaning assigned thereto in Section 8(a) hereof.
“Repurchase Date” shall mean the date on which the Seller is to repurchase the Purchased Assets
subject to a Transaction from Agent for the benefit of Buyers which shall be the earliest of (i) the
Termination Date, (ii) the date set forth in the applicable Confirmation, or (iii) any date determined by
application of the provisions of Sections 3(f), 15 or 19 hereof
“Repurchase Price” shall mean, the sum of (i) the outstanding Purchase Price and (ii) the
outstanding Price Differential as of such date of determination.
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Required Delivery Item” shall have the meaning assigned thereto in Section 3(a) hereof.
“Required Delivery Time” shall have the meaning assigned thereto in Section 3(a) hereof.
“Required Purchase Time” shall have the meaning assigned thereto in Section 3(c) hereof.
“Required Recipient” shall have the meaning assigned thereto in Section 3(a) hereof.
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“Rescission” shall mean the right of a Mortgagor to rescind the related Note and related
documents pursuant to applicable law.
“Responsible Officer” shall mean, as to any Person, the chief executive officer, general counsel
or, with respect to financial matters, the chief financial officer of such Person and in the case of Seller, in
addition to such officers, any other manager, director or officer responsible for the administration or
maintenance of this Agreement and the other Program Documents; provided, that in the event any such
officer is unavailable at any time he or she is required to take any action hereunder, Responsible Officer
shall mean any officer authorized to act on such matter.
“RHS Loan” shall mean a Loan originated in accordance with the Rural Housing Service Section
502 Single Family Housing Guaranteed Loan Program, which Loan is subject to a Rural Housing Service
Guaranty commitment and eligible for delivery to an Agency for sale or inclusion in a mortgage backed
securities loan pool.
“Rural Housing Service” and “RHS” shall mean the Rural Housing Service of the U.S.
Department of Agriculture or any successor.
“Rural Housing Service Approved Lender” shall mean a lender which is approved by Rural
Housing Service to act as a lender in connection with the origination of RHS Loans.
“Rural Housing Service Guaranty” shall mean with respect to a RHS Loan, the agreements
evidencing the guaranty of such Loan by the Rural Housing Service.
“Rural Housing Service Regulations” shall mean the regulations, guidelines, instructions, policies
and procedures adopted and implemented by the Rural Housing Service and applicable to (i) the
origination and servicing of RHS Loans and (ii) the issuance and validity of Rural Housing Service
Guaranties, in each case as such regulations, guidelines, instructions, policies and procedures may be
revised or modified and in effect from time to time.
“Scheduled Unavailability Date” shall have the meaning assigned thereto in Section 3(e) hereof.
“Section 404 Notice” shall mean the notice required pursuant to Section 404 of the Helping
Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. §§ 1641 et seq., to be
delivered by a creditor that is an owner or an assignee of a Loan to the related Mortgagor within thirty
(30) days after the date on which such Loan is sold or assigned to such creditor.
“Security” shall mean a fully-modified pass-through mortgage-backed security, including a
participation certificate, that is (i) (a) guaranteed by Ginnie Mae or (b) issued by Fannie Mae or Freddie
Mac and (ii) backed or collateralized by, or representing an interest in, a pool of Loans.
“Security Agreement” shall mean the specific security agreement creating a security interest on
and pledge of the Cooperative Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.
“Security Release Certification” shall mean a security release certification in substantially the
form set forth in Exhibit D attached hereto.
“Seller Termination” shall have the meaning assigned thereto in Section 3(g) hereof.
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“Servicer” shall mean the Seller in its capacity as servicer or master servicer of such Loans or
such other servicer as mutually acceptable to Agent and the Seller.
“Servicing Agent” shall mean, with respect to an eNote, the field entitled, “Servicing Agent” in
the MERS eRegistry.
“Servicing Agreement” shall have the meaning provided in Section 42© hereof.
“Servicing File” shall mean, with respect to each Loan, the file retained by the Seller (in its
capacity as Servicer) consisting of all documents that a prudent servicer would have, including copies of
all documents necessary to service the Loans.
“Servicing Records” shall have the meaning assigned thereto in Section 42(b) hereof.
“Servicing Rights” shall mean contractual, possessory or other rights of the Seller or any other
Person, whether arising under the Servicing Agreement, the Custodial Agreement or otherwise, to
administer or service a Purchased Asset or to possess related Servicing Records.
“Servicing Transmission” shall mean a computer-readable magnetic or other electronic format
transmission acceptable to the parties containing the information mutually agreed to by Agent and Seller.
“Similar Law” shall have the meaning provided in Section 12(cc) hereof.
“Subservicer” shall have the meaning provided in Section 42(c) hereof.
“Subsidiary” shall mean, 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.
“Substitute Assets” shall have the meaning assigned thereto in Section 16 hereof.
“Successor Rate” shall have the meaning assigned thereto in Section 3(e) hereof.
“Successor Rate Conforming Changes” shall mean, with respect to any proposed Successor Rate,
any spread adjustments or other conforming changes to the timing and frequency of determining rates and
making payments of interest and other administrative matters as may be appropriate, in the commercially
reasonable good faith discretion of Agent and consented to by the Seller (such consent not to be
unreasonably withheld), to reflect the adoption of such Successor Rate and to permit the administration
thereof by Agent in a manner substantially consistent with market practice.
“Takeout Commitment” shall mean, with respect to any Loan, (i) a commitment issued by a
Takeout Investor in favor of the Seller pursuant to which such Takeout Investor agrees to purchase such
Loan or a Security at a specific price on a forward delivery basis, (ii) an assignable commitment (where
available) issued by an Agency in favor of the Seller pursuant to which such Agency, as applicable,
agrees to (a) purchase such Loan at a specific or formula price on a forward delivery basis or (b) swap,
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exchange or sell one or more identified Loans with an Agency for a Security, and (iii) an assignable
commitment (where available) issued by a Takeout Investor in favor of the Seller pursuant to which the
Takeout Investor, as applicable, agrees to purchase a Security from Seller.
“Takeout Investor” shall mean a third party which has agreed to purchase Loans or Securities
pursuant to a Takeout Commitment; provided that to the extent Purchased Assets are sent pursuant to a
bailee letter with a third party bailee that is not a nationally known bank prior to purchase, such third-
party bailee must be approved by Agent in its good faith discretion.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” shall mean the earliest of (i) the Maturity Date, (ii) a Seller Termination, (iii)
at the option of Agent, the date determined by application of Section 19 hereof, or (iv) such date on which
this Agreement shall terminate in accordance with the provisions hereof or by operation of law.
“TILA-RESPA Integrated Disclosure Rule” shall mean the Truth-in-Lending Act and Real Estate
Settlement Procedures Act Integrated Disclosure Rule, adopted by the Consumer Finance Protection
Bureau, which is effective for residential mortgage loan applications received on or after October 3, 2015.
“Transaction” shall have the meaning assigned thereto in Section 1 hereof.
“Transaction Notice” shall mean a written or electronic request by the Seller delivered to Agent to
enter into a Transaction hereunder, which may be delivered electronically in the form of a Loan Schedule.
“Transfer” shall have the meaning provided in Section 13(m) hereof.
“Transfer of Control” shall mean, with respect to an eNote, a MERS eRegistry transfer
transaction used to request a change to the current Controller of such eNote.
“Transfer of Control and Location” shall mean, with respect to an eNote, a MERS eRegistry
transfer transaction used to request a change to the current Controller and Location of such eNote.
“Transfer of Location” shall mean, with respect to an eNote, a MERS eRegistry transfer
transaction used to request a change to the current Location of such eNote.
“Transferable Record” shall mean an Electronic Record under E-SIGN and UETA that (i) would
be a note under the Uniform Commercial Code if the Electronic Record were in writing, (ii) the issuer of
the Electronic Record has expressly agreed is a “transferable record”, and (iii) for purposes of E-SIGN,
relates to a loan secured by real property.
“Trust Receipt” shall have the meaning provided in the Custodial Agreement.
“UETA” shall mean the 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.
“UG Change Notice” shall have the meaning assigned to such term in Section 13(b) hereof.
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“Unauthorized Servicing Agent Modification” shall have the meaning set forth in the Custodial
Agreement.
“Uncommitted Amount” shall have the meaning assigned thereto in the Pricing Side Letter.
“Underwriting Guidelines” shall mean any underwriting guidelines (in addition to the Agency
Guidelines) of the Seller applicable to the Loans, in effect as of the date of this Agreement including any
amendments or modifications thereto (each of which shall have been and continue to be delivered by
Seller to Buyer), as the same may be amended, restated, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
“Uniform Commercial Code” and “UCC” shall mean the Uniform Commercial Code as in effect
on the date hereof in the State of New York; provided that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection of the security interest in any Purchased Items
is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-
perfection.
“USC” shall mean the United States Code, as amended.
“U.S. Treasury Securities” shall mean securities not subject to prepayment, call or early
redemption which are direct obligations of, or obligations fully guaranteed as to timely payment by, the
United States of America issued by the U.S. Department of the Treasury, the obligations of which are
backed by the full faith and credit of the United States of America, which qualify under Section
1.860G-2(a)(8) of the regulations promulgated by the U.S. Department of the Treasury.
“VA” shall mean the U.S. Department of Veterans Affairs, an agency of the United States of
America, or any successor thereto including the Secretary of Veterans Affairs.
“VA Loan” shall mean a Loan that is eligible to be the subject of a VA Loan Guaranty
Agreement as evidenced by a VA Loan Guaranty Agreement.
“VA Loan Guaranty Agreement” shall mean the obligation of the United States to pay a specific
percentage of a Loan (subject to a maximum amount) upon default of the Mortgagor pursuant to the
Servicemen’s Readjustment Act, as amended.
“Wet Aged Report” shall have the meaning assigned thereto in Section 3(a)(ii) hereof.
“Wet-Ink Loan” shall mean a Loan that is closed in part, either directly or indirectly, with the
Purchase Price paid by Agent for the benefit of Buyers for such Loan and for which Custodian has not yet
received a complete Mortgage File. A Loan shall cease to be a Wet-Ink Loan on the date on which Agent
for the benefit of Buyers has received a Trust Receipt and a Loan Schedule and Exception Report from
Custodian with respect to such Loan confirming that Custodian has physical possession of the related
Mortgage File (as defined in the Custodial Agreement) and that there are no Exceptions (as defined in the
Custodial Agreement) with respect to such Loan.
“Wet-Ink Transaction” shall mean a Transaction in which a Wet-Ink Loan is the Purchased Asset.
A Wet-Ink Transaction shall cease to be a Wet-Ink Transaction on the date that the underlying Wet-Ink
Loan ceases to be a Wet-Ink Loan (in accordance with the definition thereof).
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“Yield Protection Notice” shall have the meaning assigned thereto in Section 5(f) hereof.
(b) Accounting Terms and Determinations. Except as otherwise expressly provided herein,
all accounting terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to Agent hereunder
shall be prepared, in accordance with GAAP.
(c) Interpretation. The following rules of this subsection c apply unless the context requires
otherwise. A gender includes all genders. Where a word or phrase is defined, its other
grammatical forms have a corresponding meaning. A reference to a subsection, Section,
Annex or Exhibit is, unless otherwise specified, a reference to a Section of, or annex or
exhibit to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes or
assigns. A reference to an agreement or document (including any Program Document) is
to the agreement or document as amended, modified, novated, supplemented or replaced,
except to the extent prohibited thereby or by any Program Document and in effect from
time to time in accordance with the terms thereof. A reference to legislation or to a
provision of legislation includes a modification or re-enactment of it, a legislative
provision substituted for it and a regulation or statutory instrument issued under it. A
reference to writing includes a facsimile transmission, electronic mail and any means of
reproducing words in a tangible and visible form. A reference to conduct includes,
without limitation, an omission, statement or undertaking, whether or not in writing. The
words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement. The term “including” is not
limiting and means “including without limitation”. In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from and
including”, the words “to” and “until” each mean “to but excluding”, and the word
“through” means “to and including”.
A reference to a document includes an agreement (as so defined) in writing or a certificate,
notice, instrument or document, or any information recorded in computer disk form.
This Agreement is the result of negotiations between, and has been reviewed by counsel to,
Agent, Buyers and the Seller, and is the product of all parties. In the interpretation of this Agreement, no
rule of construction shall apply to disadvantage one party on the ground that such party proposed or was
involved in the preparation of any particular provision of this Agreement or this Agreement itself. Except
where otherwise expressly stated, Agent may give or withhold, or give conditionally, approvals and
consents and may form opinions and make determinations at its absolute discretion. Any requirement of
discretion or judgment by Agent shall not be construed to require Agent to request or await receipt of
information or documentation not immediately available from or with respect to the Seller, a servicer of
the Purchased Assets, any other Person or the Purchased Assets themselves.
3. THE TRANSACTIONS
(a) Subject to the terms and conditions of the Program Documents, Agent on behalf of
Buyers shall, with respect to the Committed Amount, and may in its sole discretion, with
respect to the Uncommitted Amount, from time to time, enter into Transactions with an
aggregate Purchase Price for all Purchased Assets acquired by Agent on behalf of Buyers
and subject to outstanding Transactions at any one time not to exceed the Maximum
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Aggregate Purchase Price. Subject to the terms and conditions of the Program
Documents, Agent on behalf of Buyers shall have the obligation to enter into
Transactions with an aggregate outstanding Purchase Price of up to the Committed
Amount and shall have no obligation to enter into Transactions with respect to the
Uncommitted Amount; provided that Agent shall provide Seller with at least ten (10)
Business Days’ prior written notice before exercising its discretion to cease entering into
Transactions with Seller for all or any portion of the Uncommitted Amount. Unless
otherwise agreed to between Agent and the Seller in writing, all purchases of Eligible
Loans subject to outstanding Transactions at any one time shall be first deemed
committed up to the Committed Amount and then the remainder, if any, shall be deemed
uncommitted up the Uncommitted Amount. Except as otherwise expressly set forth in
this Agreement, neither Agent nor any Buyer shall have the right, however, to terminate
any Transactions with respect to the Uncommitted Amount after the Purchase Date until
the related Repurchase Date. Unless otherwise agreed, with respect to any Loan other
than a Wet-Ink Loan, the Seller shall request that Agent on behalf of Buyers enter into a
Transaction with respect to any Purchased Asset by delivering to the indicated required
parties (each, a “Required Recipient”) the required delivery items (each, a “Required
Delivery Item”) set forth in the table below by the corresponding required delivery time
(the “Required Delivery Time”):
Purchased
Asset Type
Required Delivery Items
Required Delivery
Time
Required
Recipient
Required
Purchase Time
Eligible Loans
(i) a Transaction Notice,
appropriately completed,
and (ii) a Loan Schedule
No later than 11:00
a.m. (Eastern time) on
the Business Day of
the requested Purchase
Date
Agent
No later than 4:30
p.m. (Eastern time)
on the requested
Purchase Date
(i) a Loan Schedule and (ii)
the Mortgage File for each
Loan proposed to be
included in such
Transaction
No later than 2:00 p.m.
(Eastern time) on the
Business Day of the
requested Purchase
Date
Custodian
At the Seller’s option, the Seller may provide an estimate of the next day Loan funding to be delivered to
the Agent and Disbursement Agent.
In addition to the foregoing, with respect to each eNote the Seller shall cause (on or prior to 11:00 a.m.
(Eastern time) on the requested Purchase Date), (i) the Authoritative Copy of the related eNote to be
delivered to the eVault via a secure electronic file, (ii) the Controller status of the related eNote to be
transferred to Agent, (iii) the Location status of the related eNote to be transferred to Custodian, and (iv)
the Delegatee status of the related eNote to be transferred to Custodian, in each case using MERS
eDelivery and the MERS eRegistry.
Each Transaction Notice shall include a Loan Schedule. Agent will confirm the terms of such
Transaction, including the proposed Purchase Date, Purchase Price and Pricing Rate, by sending to the
Seller, in electronic or other format, a “Confirmation”, no later than 12:30 p.m. (Eastern time) on the
requested Purchase Date, which will be confirmed electronically (by email or otherwise) by Seller prior to
Agent on behalf of Buyers entering into such Transaction. Any such Transaction Notice and the related
Confirmation, together with this Agreement, shall constitute conclusive evidence, absent manifest error,
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of the terms agreed to between Agent on behalf of Buyers and the Seller with respect to the Transaction to
which the Transaction Notice and Confirmation, if any, relates. By entering in to a Transaction with
Agent on behalf of Buyers, the Seller consents to the terms set forth in any related Confirmation.
(b) Pursuant to the Custodial Agreement, the Custodian shall review the applicable
documents in the applicable Mortgage Files delivered prior to 2:00 p.m. (Eastern time) by
the Seller on any Business Day on the same day. Not later than 3:00 p.m. (Eastern time)
on each Business Day, the Custodian shall deliver to Agent, via Electronic Transmission
acceptable to Agent, the Custodial Loan Transmission showing the status of all Loans
then held by the Custodian, including but not limited to an Exception Report showing all
Loans which are subject to Exceptions, and the time the related Loan Documents have
been released pursuant to Section 5(a) or 7(a) of the Custodial Agreement. In addition, in
accordance with the Custodial Agreement the Custodian shall deliver to Agent upon the
initial Transaction, a Trust Receipt with a Custodial Loan Transmission attached thereto.
Each Custodial Loan Transmission subsequently delivered by the Custodian to Agent
shall supersede and cancel the Custodial Loan Transmission previously delivered by the
Custodian to Agent under the Custodial Agreement, and shall replace the Custodial Loan
Transmission that is then appended to the Trust Receipt and shall control and be binding
upon Agent, Seller, and the Custodian. The Trust Receipt shall be delivered in
accordance with the terms of the Custodial Agreement.
(c) Upon the Seller’s request to enter into a Transaction pursuant to Section 3(a) hereof,
Agent on behalf of Buyers shall with respect to the Committed Amount and may in its
sole and absolute discretion with respect to the Uncommitted Amount, assuming all
conditions precedent set forth in this Section 3 and in Sections 9(a) and 9(b) hereof have
been met, and provided no Default or Event of Default shall have occurred and be
continuing, not later than the required time on the requested Purchase Date set forth in the
table above (the “Required Purchase Time”) purchase the Eligible Loans included in the
related Transaction Notice by transferring, via wire transfer (pursuant to the related wire
transfer instructions set forth on Exhibit F hereto) in immediately available funds, the
Purchase Price. The Seller acknowledges and agrees that the Purchase Price paid in
connection with any Purchased Asset that is purchased in any Transaction includes a
premium allocable to the portion of such Purchased Asset that constitutes the related
Servicing Rights. The Servicing Rights and other servicing provisions under this
Agreement are not severable from or to be separated from the Purchased Assets under
this Agreement, and such Servicing Rights and other servicing provisions of this
Agreement constitute (a) “related terms” under this Agreement within the meaning of
section 101(47)(A)(i) of the Bankruptcy Code and/or (b) a security agreement or other
arrangement or other credit enhancement related to this Agreement within the meaning of
section 101(47)(A)(v) of the Bankruptcy Code.
(d) With respect to any request for a Wet-Ink Transaction, the provisions of this Section 3(d)
shall be applicable.
(i) Unless otherwise agreed, Seller shall request that Agent on behalf of Buyers enter into a
Wet-Ink Transaction with respect to any Purchased Asset that is a Wet-Ink Loan by
delivering to Agent a Transaction Notice, appropriately completed, and to Agent and
Custodian a Loan Schedule by 4:00 p.m. (Eastern time) on the Business Day of the
requested Purchase Date.
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(ii) On the requested Purchase Date for a Wet-Ink Transaction, Seller may deliver to Agent
with a copy to Custodian, no more than five (5) transmissions. The latest transmission
must be received by Agent no later than 4:00 p.m. (Eastern time), on such Purchase Date.
Such Transaction Notice shall specify the requested Purchase Date.
(iii) Seller shall deliver (or cause to be delivered) and release to Custodian the Mortgage File
pertaining to each such Wet-Ink Loan subject to the requested Transaction on or before
the date that is twelve (12) Business Days following the applicable Purchase Date in
accordance with the terms and conditions of the Custodial Agreement. Subject to the
terms of the Custodial Agreement, on the applicable Purchase Date and on each Business
Day following the applicable Purchase Date, no later than 5:00 p.m. (Eastern time)
pursuant to the Custodial Agreement, Custodian shall deliver to Agent and Seller by
email a schedule listing each Wet-Ink Loan subject to a Transaction with respect to which
the complete Mortgage File has not been received by Custodian (the “Wet-Aged
Report”). Agent may confirm that the information in the Wet-Aged Report is consistent
with the information provided to Agent pursuant to Section 3(d)(i).
(iv) Upon Seller’s request for a Transaction pursuant to Section 3(d)(i), Agent on behalf of
Buyers shall (with respect to the Committed Amount) and may in its sole and absolute
discretion (with respect to the Uncommitted Amount), upon satisfaction of all conditions
precedent set forth in this Section 3 and in Sections 9(a) and 9(b), and provided that no
Default or Event of Default shall have occurred and be continuing, enter into a
Transaction with Seller on the requested Purchase Date, in the amount so requested.
(v) Subject to this Section 3 and Sections 9(a) and 9(b), such Purchase Price will then be
made available by Custodian transferring at the direction of Agent on behalf of Buyers,
via wire transfer, the amount of such Purchase Price from the account of Agent on behalf
of Buyers maintained with Custodian to the account of the designated Closing Agent
pursuant to disbursement instructions provided by Seller on the electronic system
maintained by Custodian; provided, however, that (i) Agent has been provided such
disbursement instructions and shall not have rejected, in its reasonable discretion, any
wiring location, (ii) Custodian shall not, in any event, (A) transfer funds to Seller or any
Affiliate of Seller (other than Amrock LLC or one of its Subsidiaries in its capacity as
Closing Agent) or (B) transfer funds in excess of the original principal balance of the
related Wet-Ink Loan. Upon notice from the Closing Agent to Seller that the related
Wet-Ink Loan was not originated, the Wet-Ink Loan shall be removed from the list of
Eligible Loans and the Closing Agent shall immediately return the funds via wire transfer
to the account of Agent on behalf of Buyers maintained with Custodian. Seller shall
notify Agent if a Wet-Ink Loan was not originated and has been removed from the list of
Eligible Loans.
(e) Anything herein to the contrary notwithstanding, if Agent determines in its commercially
reasonable discretion that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining any LIBOR Rate, LIBOR
Rates are no longer in existence, or a Governmental Authority having jurisdiction over
Agent or any Buyer has made a public statement identifying a specific date after which
any LIBOR Rate shall no longer be made available or used for determining the interest
rate of loans (such specific date, the “Scheduled Unavailability Date”), Agent shall give
prompt notice thereof to Seller, whereupon the Applicable Pricing Rate from the date
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LEGAL02/40509503v2
specified in such notice (and Agent shall use good faith efforts to ensure that such date
specified is at least ninety (90) days (but in no event less than forty-five (45) days) prior
to such anticipated Scheduled Unavailability Date), until such time as the notice has been
withdrawn by Agent, shall be an alternative benchmark rate (including any mathematical
or other adjustments to the benchmark rate (if any) incorporated therein) (any such rate, a
“Successor Rate”), together with any proposed Successor Rate Conforming Changes, as
determined by Agent in its commercially reasonable discretion and consented to by the
Seller (such consent not to be unreasonably withheld) prior to such Scheduled
Unavailability Date. The Successor Rate will be determined by Agent (subject to the
consent of the Seller) with due consideration to the then prevailing market practice for
determining a rate of interest for newly originated commercial loans in the United States
and in a manner and format consistent with Agent or the applicable Buyer’s established
business practices relating to entities similar to Agent or such Buyer, as applicable, and to
purchased assets similar to the Loans, and may reflect appropriate mathematical or other
adjustments to account for the transition from the One-Month LIBOR Rate to the
Successor Rate (including any Successor Rate Conforming Changes); provided, further,
that the foregoing shall only apply to repurchase transactions that are under the
supervision of the New York structured finance group of Agent or such Buyer, as
applicable. If Seller and Agent are unable to mutually agree upon a Successor Rate and
Successor Rate Conforming Changes by the Scheduled Unavailability Date, then Agent’s
determination of Successor Rate and Successor Rate Conforming Changes shall govern;
provided that Seller, by delivery of written notice to the Agent, within forty five (45)
days following the Scheduled Unavailability Date, may terminate the Program
Documents, effective upon repurchase of all (but not a portion) of the aggregate
Purchased Assets by repayment of the Repurchase Price therefor and payment of all other
Obligations outstanding under the Program Documents.
(f) The Seller shall repurchase, and Agent on behalf of Buyers shall sell, Purchased Assets
from Agent on behalf of Buyers on each related Repurchase Date. Each obligation to
repurchase exists without regard to any prior or intervening liquidation or foreclosure
with respect to any Purchased Asset (but liquidation or foreclosure proceeds received by
Agent on behalf of Buyers shall be applied to reduce the Repurchase Price for such
Purchased Asset). Upon receipt of the Repurchase Price in full therefor and provided that
no Default or Event of Default shall have occurred and be continuing, Agent on behalf of
Buyers is obligated to deliver (or cause its designee to deliver) physical possession of the
Purchased Assets (or Control with respect to eMortgage Loans) to Seller or its designee
on the related Repurchase Date. Upon such transfer of the Loans back to Seller,
ownership of each Loan, including each document in the related Mortgage File and
Records, is vested in Seller. Notwithstanding the foregoing, if such release and
termination gives rise to or perpetuates a Margin Deficit, Agent shall notify the Seller of
the amount thereof and the Seller shall thereupon satisfy the Margin Call in the manner
specified in Section 6(b), following which Agent shall promptly perform its obligations
as set forth above in this Section 3(f). Notwithstanding anything herein to the contrary,
Seller shall have the right to repurchase any or all of the Purchased Assets at any time
upon one (1) Business Days’ prior notice to Agent, without incurring breakage fees.
(g) On any Repurchase Date, the Seller may, without cause and for any reason whatsoever,
terminate this Agreement and effectuate a repurchase of all Purchased Assets then subject
to Transactions at the related aggregate Repurchase Price (a “Seller Termination”);
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provided that Seller shall (i) exercise such termination rights in good faith, and (ii) remit
the Repurchase Price for such Purchased Assets and satisfy all other outstanding
Obligations within one (1) Business Day of such Repurchase Date. The Seller hereby
acknowledges and agrees that upon the occurrence of a Seller Termination, the Seller
shall not be entitled to repayment or reimbursement of any fees, costs or expenses paid by
the Seller to Agent or any Buyer under this Agreement or any other Program Document,
unless otherwise expressly provided for under this Agreement; provided that as a
condition to such Seller Termination, Seller shall remit to NCFA Buyer all unpaid
installments of the Commitment Fee.
4. PAYMENTS; COMPUTATION
(a) Payments. Except to the extent otherwise provided herein, all payments to be made by
the Seller under this Agreement shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to Agent or any Buyer in accordance with the
wire instructions set forth on Exhibit C hereto, not later than 2:00 p.m. (Eastern time) on
the date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding Business
Day).
(b) Prepayment: Seller may remit to Agent for the benefit of Buyers funds up to the
then outstanding Purchase Price to be applied as of the date such funds are received by Agent for the
benefit of Buyers towards the aggregate outstanding Purchase Price of Purchased Assets subject to
outstanding Transactions on a pro rata basis or as otherwise designated by (x) unless an Event of Default
has occurred and is continuing, the Seller or (y) if an Event of Default has occurred and is continuing, the
Agent. The Price Differential shall be applied, and shall accrue on the Purchase Price then outstanding,
after such application of such funds as provided in the preceding sentence, subject to Section 4(c) below.
Agent for the benefit of Buyers shall credit the entire amount of such prepayment to the outstanding
Purchase Price and not to any accrued Price Differential if such prepayment of Repurchase Price is made
by Seller on a day other than the Termination Date.
(c) Computations. The Price Differential shall be computed on the basis of a 360-day year
for the actual days elapsed (including the first day but excluding the last day) occurring in
the period for which payable.
(d) Price Differential Payment Amount. Seller hereby promises to pay to Agent for
the benefit of Buyers, Price Differential on the unpaid Repurchase Price of each Purchased Asset subject
to a Transaction for the period from and including the Purchase Date of such Purchased Asset to but
excluding the Repurchase Date of such Purchased Asset; provided, that in no event shall the Pricing Rate
used to calculate the Price Differential exceed the maximum rate permitted by law. Accrued and unpaid
Price Differential on each Transaction shall be payable monthly on the sixth (6
th
) calendar day of each
month (or if such day is not a Business Day, the immediately following Business Day) and for the last
month of this Agreement on the Termination Date (each such date, a “Price Differential Payment Date”).
On a calendar monthly basis and on the Termination Date, Agent shall determine the total accrued and
unpaid Price Differential (the “Price Differential Payment Amount”) during the preceding calendar month
for all Purchased Assets subject to all outstanding Transactions during such period (or with respect to the
initial period, from the Effective Date through the end of the calendar month in which the Effective Date
occurs, and with respect to the Termination Date, during the period from the date through which the last
Price Differential Payment Amount calculation was made to the Termination Date). Agent shall provide
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written notice to Seller after the end of the applicable calendar month or the Termination Date, as
applicable, of the Price Differential Payment Amount and of its calculation of such Price Differential
Payment Amount. Following such written notice from Agent, Seller shall have five (5) calendar days (or
if such fifth (5
th
) calendar day is not a Business Day, until the immediately following Business Day) to
review Agent’s calculation of the Price Differential Payment Amount. On the sixth (6
th
) calendar day (or
if such day is not a Business Day, the immediately following Business Day) following Agent’s written
notice of its calculation of the Price Differential Payment Amount, Seller shall pay the Price Differential
Payment Amount to Agent for the benefit of Buyers. All payments shall be made to Agent for the benefit
of Buyers in Dollars, in immediately available funds.
5. TAXES; TAX TREATMENT; REQUIREMENTS OF LAW
(a) All payments made by the Seller to any Buyer and/or Agent or a Buyer or Agent assignee
under this Agreement or under any Program Document shall be made free and clear of,
and without deduction or withholding for or on account of any Taxes, (excluding income
taxes, branch profits taxes, franchise taxes or any other tax imposed on net income by the
United States, a state or a foreign jurisdiction under the laws of which any Buyer and/or
Agent is organized or of its applicable lending office, or any political subdivision
thereof), all of which shall be paid by the Seller for its own account not later than the date
when due. If the Seller is required by law or regulation to deduct or withhold any Taxes
or Other Taxes from or in respect of any amount payable to any Buyer and/or Agent or
any Buyer and/or Agent assignee, the Seller shall: (i) make such deduction or
withholding; (ii) pay the full amount so deducted or withheld to the appropriate
Governmental Authority in accordance with the requirements of the applicable law or
regulation not later than the date when due; (iii) deliver to such Buyer and/or Agent or
such Buyer or Agent assignee, promptly, original tax receipts and other evidence
satisfactory to Buyer of the payment when due of the full amount of such Taxes or Other
Taxes; and (iv) pay to such Buyer and/or Agent or such Buyer or Agent assignee such
additional amounts as may be necessary so that after making all required deductions and
withholdings (including deductions and withholding applicable to additional sums
payable under this Section 5), such Buyer, Agent or such Buyer or Agent assignee
receives, free and clear of all Taxes and Other Taxes, an amount equal to the amount it
would have received under this Agreement, as if no such deduction or withholding had
been made.
(b) The Seller agrees to indemnify Agent, each Buyer or any Buyer or Agent assignee,
promptly on reasonable demand, for the full amount of Taxes (including additional
amounts with respect thereto) and Other Taxes, and the full amount of Taxes and Other
Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 5,
and any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto.
(c) To the extent a Buyer or a Buyer assignee is not organized under the laws of the United
States, any State thereof, or the District of Columbia (a “Foreign Buyer”), such Foreign
Buyer shall provide the Seller whichever of the following is applicable: (I) in the case of
such Foreign Buyer or Foreign Buyer assignee claiming the benefits of an income tax
treaty to which the United States is a party, a properly completed United States Internal
Revenue Service (“IRS”) Form W-8BEN or W-8BEN-E or any successor form
prescribed by the IRS, certifying that such Foreign Buyer is entitled to a zero percent or
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LEGAL02/40509503v2
reduced rate of U.S. federal income withholding tax on payments made hereunder or (II)
a properly completed IRS Form W-8ECI or any successor form prescribed by the IRS,
certifying that the income receivable pursuant to this Agreement is effectively connected
with the conduct of a trade or business in the United States. Each Foreign Buyer or
Foreign Buyer assignee will deliver the appropriate IRS form on or prior to the date on
which such person becomes a Foreign Buyer or Foreign Buyer assignee under this
Agreement. Each Foreign Buyer or Foreign Buyer assignee further agrees that upon
learning that the information on any tax form or certification it previously delivered is
inaccurate or incorrect in any respect, it shall update such form or certification or
promptly notify the Seller in writing of its legal inability to do so. For any period with
respect to which a Foreign Buyer has failed to provide the Seller with the appropriate
form or other relevant document pursuant to this Section 5(c) (unless such failure is due
to a change in treaty, law, or regulation occurring subsequent to the date on which a form
originally was required to be provided), such Foreign Buyer shall not be entitled to any
“gross-up” of Taxes or indemnification under Section 5(b) with respect to Taxes imposed
by the United States; provided, however, that should a Foreign Buyer, which is otherwise
exempt from a withholding tax, become subject to Taxes because of its failure to deliver
a form required hereunder, the Seller shall take such steps as such Foreign Buyer shall
reasonably request to assist such Foreign Buyer to recover such Taxes.
(d) Without prejudice to the survival or any other agreement of the Seller hereunder, the
agreements and obligations of the Seller contained in this Section 5 shall survive the
termination of this Agreement and any assignment of rights by, or the replacement of,
Agent, a Buyer or a Buyer or Agent assignee, and the repayment, satisfaction or
discharge of all obligations under any Program Document. Nothing contained in this
Section 5 shall require Agent or any Buyer to make available any of its tax returns or
other information that it deems to be confidential or proprietary.
(e) Each party to this Agreement acknowledges that it is its intent for purposes of U.S.
federal, state and local income and franchise taxes to treat each Transaction as
indebtedness of the Seller that is secured by the Purchased Assets and that the Purchased
Assets are owned by Seller in the absence of an Event of Default by the Seller. All
parties to this Agreement agree to such treatment and agree to take no action inconsistent
with this treatment, unless required by law.
(f) If any Requirement of Law or any change in the interpretation or application thereof or
compliance by Agent or any 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 date hereof:
(a) shall subject Agent or any Buyer to any Tax or increased Tax of any kind whatsoever
with respect to this Agreement or any Transaction or change the basis of taxation of
payments to Agent or any Buyer in respect thereof;
i.shall impose, modify or hold applicable 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
Agent or any Buyer which is not otherwise included in the determination of the LIBOR Rate or a
Successor Rate hereunder; or
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ii.shall impose on Agent or any Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Agent or any Buyer, by an amount
which Agent or such Buyer, as applicable, deems to be material, of effecting or maintaining
purchases hereunder, or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, Agent or such Buyer, as applicable, shall promptly notify Seller by delivering to
Seller a notice with reasonable detail as to any additional amounts payable pursuant to this
Section 5(f) as calculated by Agent or such Buyer, as applicable, in a commercially reasonable
manner (a “Yield Protection Notice”). Seller shall, within five (5) Business Days of receipt of the
Yield Protection Notice, advise Agent or such Buyer, as applicable, of its intent to either
terminate this Agreement (without the imposition of any form of penalty, breakage costs or exit
fees (excluding all outstanding Obligations, including all unpaid fees and expenses)) or pay Agent
or such Buyer, as applicable, such additional amount or amounts as will compensate Agent or
such Buyer, as applicable, for such increased cost or reduced amounts receivable thereafter
incurred (provided that Seller shall only be obligated to pay those amounts pursuant to this
Section 5(f) to the extent incurred by the Agent or such Buyer, as applicable, (i) within ninety
(90) days prior to delivery of the Yield Protection Notice to Seller and (ii) on or after delivery of
the Yield Protection Notice to Seller). In the event that Seller elects to terminate this Agreement
in accordance with the foregoing and provided that no intervening Event of Default has occurred
that would otherwise permit the acceleration of this Agreement, it shall pay the outstanding
Obligations, including all unpaid fees and expenses due to Agent or such Buyer, as applicable,,
within sixty (60) days of receipt of the Yield Protection Notice; provided, that if Seller elects to
terminate this Agreement, in no event shall Seller pay (i) any increased costs specified in the
Yield Protection Notice or (ii) any increased costs accrued during the ninety (90) days prior to
receipt of such Yield Protection Notice.
If Agent or Buyer, as applicable, shall have determined in its sole discretion acting in
good faith that there is a change in a Requirement of Law and such change shall have the effect of
reducing the rate of return on Agent’s or Buyer’s (as applicable) or such corporation’s capital to a level
below that which Agent or such Buyer or such corporation (taking into consideration Agent’s or Buyer’s
(as applicable) or such corporation’s policies with respect to capital adequacy) by an amount deemed in
good faith by Agent or Buyer (as applicable) to be material, then Agent or Buyer (as applicable) shall
promptly notify Seller by delivering to Seller a certificate with reasonable detail as to any additional
amounts payable pursuant to this Section 5(f) as calculated by Buyer in good faith (a “Capital Adequacy
Notice”). Seller shall, within five (5) Business Days of receipt of the Capital Adequacy Notice, advise
Agent or Buyer (as applicable) of its intent to either terminate this Agreement (without the imposition of
any form of penalty, breakage costs or exit fees (excluding all outstanding Obligations, including all
unpaid fees and expenses)) or pay Agent or Buyer (as applicable) such additional amount or amounts as
will compensate Agent or Buyer (as applicable) for such increased cost or reduced amounts receivable
thereafter incurred (provided that Seller shall only be obligated to pay those amounts pursuant to this
Section 5(f) to the extent incurred by Buyer (i) within ninety (90) days prior to delivery of the Yield
Protection Notice to Seller and (ii) on or after delivery of the Capital Adequacy Notice to Seller). In the
event that Seller elects to terminate this Agreement in accordance with the foregoing, it shall pay the
outstanding Obligations, including all unpaid fees and expenses due to Agent or Buyer (as applicable),
within sixty (60) days of receipt of the Capital Adequacy Notice; provided, that if Seller elects to
terminate this Agreement, in no event shall Seller pay (i) any increased costs specified in the Capital
Adequacy Notice or (ii) any increased costs accrued during the ninety (90) days prior to receipt of such
Capital Adequacy Notice Additionally, if the Seller elects to terminate this Agreement in accordance with
this Section 5(f), following such date that is five (5) Business Days after receipt of the Capital Adequacy
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Notice, the Seller shall not be permitted to effect additional Transactions whereby additional Loans are
made subject to such Transaction.
6. MARGIN MAINTENANCE
(a) Agent determines the Market Value of the Purchased Assets at such intervals as
determined by Agent in its good faith sole discretion; provided, however, that the Seller may request that
the Agent provide reasonable detail regarding its determination of Market Value, as well as to
demonstrate that such Market Value has been determined in accordance with the definition thereof.
(b) If at any time the aggregate Purchase Price for all Purchased Assets subject to
outstanding Transactions is greater than the product of (a) the Applicable Percentage and (b) the Market
Value of all Purchased Assets (such excess, a “Margin Deficit”), then subject to the last sentence of this
paragraph, Agent may, by notice to Seller (a “Margin Call”), require Seller to transfer to Agent for the
benefit of Buyers cash or Substitute Assets approved by Agent in its sole discretion in an amount
sufficient to cure such Margin Deficit. If Agent delivers a Margin Call to Seller on or prior to 10:00 a.m.
(New York City time) on any Business Day, then Seller shall transfer the required amount of cash or
Substitute Assets to Agent for the benefit of Buyers no later than 5:00 p.m. (New York City time) on the
date that is the Business Day after Seller’s receipt of such Margin Call. In the event Agent delivers a
Margin Call to a Seller after 10:00 a.m. (New York City time) on any Business Day, Seller will be
required to transfer the required amount of cash or Substitute Assets no later than 5:00 p.m. (New York
City time) on the date that is the second (2
nd
) Business Day after Seller’s receipt of such Margin Call.
Notwithstanding the foregoing, provided that no Default or Event of Default shall have occurred and be
continuing, Agent shall not require the Seller to satisfy a Margin Call and no Margin Call shall be
required to be made unless the Margin Deficit shall equal or exceed [***], as determined by Agent in its
reasonable, good faith discretion.
(c) Agent’s election, in its sole and absolute discretion, not to make a Margin Call at any
time there is a Margin Deficit will not in any way limit or impair its right to make a Margin Call at any
time a Margin Deficit exists.
(d) Any cash transferred to Agent for the benefit of Buyers pursuant to Section 6(b) above
will be applied to the repayment of the Repurchase Price of outstanding Transactions pursuant to Section
4(b) and any Substitute Assets will be deemed to be Purchased Assets.
7. INCOME PAYMENTS
(a) Where a particular term of a Transaction extends over the date on which Income is paid
in respect of any Purchased Asset subject to that Transaction, such Income shall be the property of Agent
for the benefit of Buyers. The Seller shall (i) segregate all Income collected by or on behalf of the Seller
on account of the Purchased Assets and shall hold such Income in trust for the benefit of Agent for the
benefit of Buyers that is clearly marked as such in the Seller’s records and (ii) upon an Event of Default
that has occurred and is continuing, the Seller shall directly remit such Income to the Agent for the benefit
of Buyers; provided that any Income received by the Seller while the related Transaction is outstanding
shall be deemed to be held by the Seller solely in trust for Agent for the benefit of Buyers pending the
repurchase on the related Repurchase Date.
(b) Notwithstanding anything to the contrary set forth herein, upon receipt by Seller of any
prepayment of principal in full with respect to a Purchased Asset, Seller shall (i) provide prompt written
notice to Agent of such prepayment, and (ii) remit such amount to Agent for the benefit of Buyers and
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Agent for the benefit of Buyers shall apply such amount received by Agent for the benefit of Buyers plus
accrued Price Differential on such amount against the Repurchase Price of such Purchased Asset pursuant
to Sections 4(a)(i) and 6(d).
8. SECURITY INTEREST; AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT
(a) On each Purchase Date, Seller hereby sells, assigns and conveys to Agent for the benefit
of Buyers all rights and interests in the Purchased Items (as defined below) related to the Purchased
Assets identified on the related Loan Schedule. The Seller, Agent and Buyers intend that the Transactions
hereunder be sales to Agent for the benefit of Buyers of the Purchased Assets (other than for accounting
and tax purposes) and not loans from Agent for the benefit of Buyers to the Seller secured by the
Purchased Assets. However, in order to preserve Agent’s (for the benefit of Buyers) rights under this
Agreement in the event that a court or other forum characterizes the Transactions hereunder as other than
sales, and as security for the Seller’s performance of all of its Obligations, and in any event, the Seller
hereby grants Agent for the benefit of Buyers a fully perfected first priority security interest in all of the
Seller’s rights, title and interest in and to the following property, whether now existing or hereafter
acquired, until the related Purchased Assets are repurchased by the Seller:
(i) all Purchased Assets, including all related cash and Substitute Assets provided
pursuant to Section 6 and held by or under the control of Agent for the benefit of
Buyers;
(ii) any Agency Security or right to receive such Agency Security when issued in
each case only to the extent specifically backed by any of the Purchased Assets;
(iii) the Program Documents (to the extent such Program Documents and Seller’s
rights thereunder relate to the Purchased Assets);
(iv) any other collateral pledged to secure, or otherwise specifically relating to, such
Purchased Assets, together with all files, material documents, instruments,
surveys (if available), certificates, correspondence, appraisals, computer records,
computer storage media, Loan accounting records and other books and records
relating thereto;
(v) the related Records, the related Servicing Records, and the related Servicing
Rights relating to such Purchased Assets;
(vi) all rights of the Seller to receive from any third party or to take delivery of any
Servicing Records or other documents which constitute a part of the related
Mortgage File or Servicing File;
(vii) all rights of the Seller to receive from any third party or to take delivery of any
Records or other documents which constitute a part of the related Mortgage File
or Servicing File;
(viii) all Income relating to such Purchased Assets;
(ix) all mortgage guaranties and insurance (including FHA Mortgage Insurance
Contracts, VA Loan Guaranty Agreements and any related Rural Housing
Service Guaranties (if any)) and any mortgage insurance certificate or other
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document evidencing such mortgage guaranties or insurance relating to any
Purchased Assets and all claims and payments thereunder and all rights of the
Seller to receive from any third party or to take delivery of any of the foregoing;
(x) all interests in real property collateralizing any Purchased Assets;
(xi) all other insurance policies and insurance proceeds relating to any Purchased
Assets or the related Mortgaged Property and all rights of the Seller to receive
from any third party or to take delivery of any of the foregoing;
(xii) any purchase agreements or other agreements, contracts or Takeout
Commitments to the extent specifically related to Purchased Assets subject to a
Transaction (including the rights to receive the related takeout price and the
portion of the Security related to Purchased Assets subject to a Transaction as
evidenced by such Takeout Commitments) to the extent relating to or
constituting any or all of the foregoing and all rights to receive copies of
documentation relating thereto;
(xiii) all “accounts”, “chattel paper”, “commercial tort claims”, “deposit accounts”,
“documents”, “equipment”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “letter of credit rights”, and “securities’
accounts” as each of those terms are defined in the Uniform Commercial Code
and all cash and Cash Equivalents and all products and proceeds, all to the
extent specifically relating to or constituting any or all of the foregoing; and
(xiv) any and all replacements, substitutions, distributions on or proceeds of any or all
of the foregoing (collectively the “Purchased Items”).
The Seller acknowledges that it has no rights to the Servicing Rights related to the Purchased
Assets, until the related Purchased Assets are repurchased by the Seller. Without limiting the generality
of the foregoing and for the avoidance of doubt, in the event that the Seller is deemed to retain any
residual Servicing Rights, the Seller grants, assigns and pledges to Agent for the benefit of Buyers a first
priority security interest in all of its rights, title and interest in and to the Servicing Rights as indicated
hereinabove. In addition, the Seller, in its capacity as Servicer, further grants, assigns and pledges to
Agent for the benefit of Buyers a first priority security interest in and to all documentation and rights to
receive documentation related to the Servicing Rights and the servicing of each of the Purchased Assets,
and all Income related to the Purchased Assets received by the Seller, in its capacity as Servicer, and all
rights to receive such Income, and all products, proceeds and distributions relating to or constituting any
or all of the foregoing (collectively, and together with the pledge of Servicing Rights in the immediately
preceding sentence, the “Related Security”). The Related Security is hereby pledged as further security
for the Seller’s Obligations to Agent and Buyers hereunder.
The foregoing provisions are intended to constitute a security agreement, securities contract or
other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as
defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.
The Seller acknowledges and agrees that its rights with respect to the Purchased Items (including
without limitation, any security interest the Seller may have in the Purchased Assets and any other
collateral granted by the Seller to Agent for the benefit of Buyers pursuant to any other agreement) are
and shall continue to be at all times junior and subordinate to the rights of Agent and Buyers hereunder.
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(b) At any time and from time to time, upon the written request of Agent, and at the sole
expense of the Seller, the 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 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, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to
the Purchased Items and the liens created hereby. The Seller also hereby authorizes Agent for the benefit
of Buyers to file any such financing or continuation statement to the extent permitted by applicable law.
This Agreement shall constitute a security agreement under applicable law.
(c) Seller shall not (i) change its name or corporate structure (or the equivalent), or (ii)
reincorporate or reorganize under the laws of another jurisdiction unless it shall have given Agent at least
thirty (30) days’ prior written notice thereof and shall have delivered to Agent all Uniform Commercial
Code financing statements and amendments thereto as Agent shall request and taken all other actions
deemed reasonably necessary by Agent for the benefit of Buyers to continue its perfected status in the
Purchased Items with the same or better priority.
(d) The Seller hereby irrevocably constitutes and appoints Agent for the benefit of Buyers
and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the Seller and in the name of the Seller
or in its own name, from time to time in Agent’s discretion, for the purpose of protecting, preserving and
realizing upon the Purchased Items, carrying out the terms of this Agreement, taking any and all
appropriate action and executing any and all documents and instruments which may be necessary or
desirable to protect, preserve and realize upon the Purchased Items, accomplishing the purposes of this
Agreement, and filing such financing statement or statements relating to the Purchased Items as Agent for
the benefit of Buyers at its option may deem appropriate, and, without limiting the generality of the
foregoing, the Seller hereby gives Agent for the benefit of Buyers the power and right, on behalf of the
Seller, without assent by, but with notice to, the Seller, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Seller, or in its own name, or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any Purchased Items
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by Agent for the purpose of
collecting any and all such moneys due with respect to any Purchased Items
whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or threatened against the
Purchased Items;
(iii) (A) to direct any party liable for any payment under any Purchased Items to
make payment of any and all moneys due or to become due thereunder directly
to Agent or as Agent shall direct, including, without limitation, to send
“goodbye” letters on behalf of the Seller and any applicable Servicer and
Section 404 Notices; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of any Purchased Items; (C) to sign and
endorse any invoices, assignments, verifications, notices and other documents in
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connection with any Purchased Items; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent jurisdiction
to collect the Purchased Items or any proceeds thereof and to enforce any other
right in respect of any Purchased Items; (E) to defend any suit, action or
proceeding brought against the Seller with respect to any Purchased Items; (F)
to settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or releases as
Agent may deem appropriate; and (G) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any Purchased Items
as fully and completely as though Agent for the benefit of Buyers were the
absolute owner thereof for all purposes, and to do, at Agent’s option and the
Seller’s expense, at any time, and from time to time, all acts and things which
Agent deems necessary to protect, preserve or realize upon the Purchased Items
and Agent’s (for the benefit of Buyers) Liens thereon and to effect the intent of
this Agreement, all as fully and effectively as the Seller might do.
The Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. In addition to
the foregoing, Seller agrees to execute a Power of Attorney to be delivered on the date hereof.
Notwithstanding the foregoing, the power of attorney hereby granted may be exercised only during the
occurrence and continuance of any Event of Default hereunder.
The Seller also authorizes Agent for the benefit of Buyers, if an Event of Default shall have
occurred and be continuing, from time to time, to execute, in connection with any sale provided for in
Section 19 hereof, any endorsements, assignments or other instruments of conveyance or transfer with
respect to the Purchased Items.
(e) The powers conferred on Agent for the benefit of Buyers hereunder are solely to protect
Agent’s (for the benefit of Buyers) interests in the Purchased Items and shall not impose any duty upon it
to exercise any such powers. Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to the Seller for any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.
(f) If the Seller fails to perform or comply with any of its agreements contained in the
Program Documents and Agent and each Buyer may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable out-of-pocket expenses of Agent and
Buyers incurred in connection with such performance or compliance, together with interest thereon at a
rate per annum equal to the Post-Default Rate, shall be payable by the Seller to Agent and Buyers on
demand and shall constitute Obligations.
(g) All authorizations and agencies herein contained with respect to the Purchased Items are
irrevocable and powers coupled with an interest.
9. CONDITIONS PRECEDENT
(a) As conditions precedent to the initial Transaction, Agent on behalf of Buyers shall have
received on or before the date on which such initial Transaction is consummated the following, in form
and substance satisfactory to Agent and duly executed by each party thereto (as applicable):
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(i) Program Documents. The Program Documents (excluding the Netting
Agreement) duly executed and delivered by the Seller thereto and being in full
force and effect, free of any modification, breach or waiver.
(ii) Organizational Documents. A good standing certificate and certified copies of
the limited liability company agreement (or equivalent documents) of the Seller,
in each case, dated as of a recent date, but in no event more than ten (10) days
prior to the date of such initial Transaction and resolutions or other corporate
authority for the Seller with respect to the execution, delivery and performance
of the Program Documents and each other document to be delivered by the
Seller from time to time in connection herewith (and Agent and Buyers may
conclusively rely on such certificate until it receives notice in writing from the
Seller, as the context may require to the contrary), together with an incumbency
certificate of the manager, member, director or other similar officer of Seller
certifying the names and titles of the representatives duly authorized to request
transactions hereunder and to execute the Program Documents to which it is a
part.
(iii) Filings, Registrations, Recordings. (i) Any documents (including, without
limitation, financing statements) required to be filed, registered or recorded in
order to create, in favor of Agent for the benefit of Buyers, a perfected, first-
priority security interest in the Purchased Items and Related Security, subject to
no Liens other than those created hereunder and under the Intercreditor
Agreement, shall have been properly prepared and executed for filing (including
the applicable county(ies) if Agent determines such filings are necessary in its
reasonable discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are required to
perfect such first-priority security interest; and (ii) Uniform Commercial Code
lien searches, dated as of a recent date, in no event more than fourteen (14) days
prior to the date of such initial Transaction, in such jurisdictions as shall be
applicable to the Seller and the Purchased Items, the results of which shall be
satisfactory to Agent.
(iv) Fees and Expenses. Agent and Buyers shall have received all fees and expenses
required to be paid by the Seller on or prior to the initial Purchase Date, which
fees and expenses may be netted out of any purchase proceeds paid by Agent for
the benefit of Buyers hereunder.
(v) Financial Statements. Agent shall have received the financial statements
referenced in Section 13(a).
(vi) Consents, Licenses, Approvals, etc. Agent shall have received copies certified
by the Seller of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by the Seller of, and
the validity and enforceability of, the Loan Documents, which consents, licenses
and approvals shall be in full force and effect.
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(vii) Insurance. Agent shall have received evidence in form and substance
satisfactory to Agent showing compliance by the Seller as of such initial
Purchase Date with Section 13(s) hereof.
(viii) Other Documents. Agent shall have received such other documents as Agent or
its counsel may reasonably request, including the Trust Receipt.
(b) The obligation of Agent on behalf of Buyers to enter into each Transaction with respect
to the Committed Amount pursuant to this Agreement (including the initial Transaction) is subject to the
further conditions precedent set forth below, both immediately prior to any Transaction and also after
giving effect thereto and to the intended use thereof. Agent on behalf of Buyers has no obligation to enter
into any Transaction on account of the Uncommitted Amount, however, to the extent Agent on behalf of
Buyers elects to do so in its sole discretion, such Transaction is subject to the conditions precedent set
forth below, both immediately prior to any Transaction and also after giving effect thereto and to the
intended use thereof:
(i) No Default or Event of Default shall have occurred and be continuing.
(ii) Both immediately prior to entering into such Transaction and also after giving
effect thereto and to the intended use of the proceeds thereof, the representations
and warranties made by the Seller in Section 12 and Schedule 1 hereof, and in
each of the other Program Documents, shall be true and complete on and as of
the Purchase Date in all material respects (in the case of the representations and
warranties in Section 12(t), Section 12(u), and Schedule 1 hereof, solely with
respect to Loans which have not been repurchased by the Seller) 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).
(iii) If the Transaction is with respect to the Committed Amount, the aggregate
outstanding Purchase Price for all Purchased Assets then subject to Transactions
with respect to the Committed Amount, when added to the Purchase Price for
the requested Transaction with respect to the Committed Amount, shall not
exceed the Committed Amount as of such date. If the Transaction is with
respect to the Uncommitted Amount, the aggregate outstanding Purchase Price
for all Purchased Assets then subject to Transactions with respect to the
Uncommitted Amount, when added to the Purchase Price for the requested
Transaction with respect to the Uncommitted Amount, shall not exceed the
Uncommitted Amount as of such date.
(iv) Subject to Agent and each Buyer’s right to perform one or more Due Diligence
Reviews pursuant to Section 43 hereof, in the event of outstanding due diligence
issues or breaches of any Loan level representations or warranties with respect
to the Loans subject to such Transaction, Buyer shall have completed its Due
Diligence Review of the Mortgage File for each Loan subject to such
Transaction and such other documents, records, agreements, instruments,
Mortgaged Properties or information relating to such Loans as Agent and each
Buyer in its reasonable discretion deems appropriate to review and such review
shall be satisfactory to Agent and each Buyer in its reasonable discretion.
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(v) Agent or its designee shall have received on or before the day of a Transaction
with respect to any Purchased Assets (unless otherwise specified in this
Agreement) the following, in form and substance satisfactory to Agent and (if
applicable) duly executed:
(A) The Transaction Notice and Loan Schedule with respect to such
Purchased Assets, delivered pursuant to Section 3(a);
(B) a Custodial Loan Transmission with respect to such Purchased Assets,
that is then appended to the Trust Receipt; and
(C) If any of the Loans that are proposed to be sold will be serviced by a
Servicer (which is not the Seller hereunder), Buyer shall have received
an Instruction Letter in the form attached hereto as Exhibit B executed by
the Seller and such Servicer, together with a completed Schedule 1
thereto and the related Servicing Agreement, or, if an Instruction Letter
executed by such Servicer shall have been delivered to Buyer in
connection with a prior Transaction, the Seller shall instead deliver to
such Servicer and Buyer an updated Schedule 1 thereto.
(vi) Reserved.
(vii) None of the following shall have occurred and be continuing:
(A) an event or events resulting in the inability of any Buyer to finance its
purchases of residential mortgage assets with traditional counterparties at
rates which would have been reasonable prior to the occurrence of such
event or events or a material adverse change in the financial condition of
any Buyer which affects (or can reasonably be expected to affect)
materially and adversely the ability of any Buyer to fund its obligations
under or otherwise comply with the terms of this Agreement; or
(B) any other event beyond the control of any Buyer which Agent reasonably
determines would likely result in such Buyer’s inability to perform its
obligations under this Agreement including, without limitation, acts of
God, strikes, lockouts, riots, acts of war or terrorism, epidemics,
nationalization, expropriation, currency restrictions, fire, communication
line failures, computer viruses, power failures, earthquakes, or other
disasters of a similar nature to the foregoing.
provided that (x) no Buyer shall invoke subclause (A) or subclause (B) with
respect to the Seller unless such Buyer generally invokes substantially similar
clauses contained in other similar agreements between such Buyer and other
persons that are similar to the Seller, and involving substantially similar assets
and (y) such Buyer shall base its decision to invoke subclause (A) and/or
subclause (B) on factors it deems relevant in its good faith discretion; provided,
further, that the foregoing shall only apply to repurchase transactions that are
under the supervision of the New York structured finance group of such Buyer.
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(viii) Agent shall have determined that all actions necessary or, in the good faith, reasonable
opinion of Agent, desirable to maintain Agent’s (for the benefit of Buyers) perfected
interest in the Purchased Assets and other Purchased Items have been taken, including,
without limitation, duly filed Uniform Commercial Code financing statements on Form
UCC-1.
(ix) the Seller shall have paid to Agent and Buyers all fees and expenses then due and payable
to Agent and Buyers in accordance with this Agreement and any other Program
Document.
(x) There is no unpaid Margin Call (that is then due and payable) at the time immediately
prior to entering into a new Transaction.
Agent shall notify the Seller as soon as practicable on the date of a purchase if any of the
conditions in this Section 9 has not been satisfied and Buyer is not making the purchase.
10. RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other Obligations (if any) then owing
with respect to a Purchased Asset, unless a Default or Event of Default shall have occurred and be
continuing, then (a) Agent for the benefit of Buyers shall be deemed to have terminated and released any
security interest that Agent for the benefit of Buyers may have in such Purchased Asset and any
Purchased Items solely related to such Purchased Asset and (b) with respect to such Purchased Asset,
Agent for the benefit of Buyers shall direct Custodian to release such Purchased Asset and any Purchased
Items solely related to such Purchased Asset to the Seller unless such release and termination would give
rise to or perpetuate a Margin Deficit. Such release, if requested by Seller, shall be in the form of Exhibit
D attached hereto. Except as set forth in Section 16, the Seller shall give at least one (1) Business Day’s
prior written notice to Agent if such repurchase shall occur on any date other than the Repurchase Date as
set forth in Section 3(f).
If such release and termination gives rise to or perpetuates a Margin Call that is not paid when
due, Agent shall notify the Seller of the amount thereof and the Seller shall thereupon satisfy the Margin
Call in the manner specified in Section 6(b), following which Agent shall promptly perform its
obligations as set forth above in this Section 10.
11. RELIANCE
With respect to any Transaction, Agent and each Buyer may conclusively rely, absent manifest
error, upon, and shall incur no liability to the Seller in acting upon, any request or other communication
that Agent or such Buyer, as applicable, reasonably believes to have been given or made by a person
authorized to enter into a Transaction on the Seller’s behalf.
12. REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to Agent and Buyers on each day throughout the term of this
Agreement:
(a) Existence. Seller (a) is a limited liability company validly existing and in good standing
under the laws of the State of Michigan, (b) has all requisite company power, and has all governmental
licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as
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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, (c) is qualified
to do business and is in good standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect, and (d) is in
compliance in all material respects with all Requirements of Law.
(b) Financial Condition. Seller has heretofore furnished to Agent a copy of its audited
consolidated balance sheets as at December 31, 2019 with the opinion thereon of Ernst & Young LLP, a
copy of which has been provided to Agent. Seller has also heretofore furnished to Agent the related
consolidated statements of income, of changes in Shareholders’ Equity and of cash flows for the year
ended December 31, 2019. All such financial statements are complete and correct in all material respects
and fairly present the consolidated financial condition of Seller and its Subsidiaries and the consolidated
results of their operations for the year ended on said date, all in accordance with GAAP.
(c) Litigation. Except as set forth in Schedule 12(c) as of the Closing Date and approved by
the Buyer in writing thereafter, there are no actions, suits, arbitrations, investigations or proceedings
pending or, to its knowledge, threatened against Seller or any of its Subsidiaries or affecting any of the
property thereof or the Purchased Items before any Governmental Authority, (i) as to which individually
or in the aggregate there is a reasonable likelihood of an adverse decision which would be reasonably
likely to result in a decrease in excess of ten percent (10%) of Seller’s Adjusted Tangible Net Worth or
(ii) which challenges the validity or enforceability of any of the Program Documents.
(d) No Breach. Neither (a) the execution and delivery of the Program Documents, nor (b) the
consummation of the transactions therein contemplated in compliance with the terms and provisions
thereof will result in a breach of the charter or by-laws (or equivalent documents) of Seller, or violate any
applicable law, rule or regulation, or violate any order, writ, injunction or decree of any Governmental
Authority applicable to Seller, or result in a breach of other material agreement or instrument to which
Seller, or any of its Subsidiaries, is a party or by which any of them or any of their property is bound or to
which any of them or their property is subject, or constitute a default under any such material agreement
or instrument, or (except for the Liens created pursuant to this Agreement) result in the creation or
imposition of any Lien upon any property of Seller or any of its Subsidiaries, pursuant to the terms of any
such agreement or instrument.
(e) Action. Seller has all necessary company power, authority and legal right to execute,
deliver and perform its obligations under each of the Program Documents to which it is a party; the
execution, delivery and performance by Seller of each of the Program Documents to which it is a party
has been duly authorized by all necessary corporate action on its part; and each Program Document has
been duly and validly executed and delivered by Seller and constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability
may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.
(f) Approvals. No authorizations, approvals or consents of, and no filings or registrations
with, any Governmental Authority, or any other Person, are necessary for the execution, delivery or
performance by Seller of the Program Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the Liens created pursuant to this
Agreement.
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(g) Taxes. Seller and its Subsidiaries have filed all federal income tax returns and all other
material tax returns that are required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any such taxes, if any, that 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. Any taxes, fees and other governmental charges payable by Seller in connection with a
Transaction and the execution and delivery of the Program Documents have been or will be paid when
due. There are no Liens for Taxes, except for statutory liens for Taxes not yet delinquent.
(h) Investment Company Act. Neither the 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. Seller is not subject to any federal or state statute or regulation which limits its
ability to incur any indebtedness provided in the Program Documents.
(i) No Legal Bar. The execution, delivery and performance of this Agreement, the other
Program Documents, the sales hereunder and the use of the proceeds thereof will not violate any
Requirement of Law applicable to Seller or Contractual Obligation of Seller or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation.
(j) Compliance with Law. Except as set forth in Schedule 12(c) as of the Closing Date and
approved by the Buyer in writing thereafter, no practice, procedure or policy employed or proposed to be
employed by Seller in the conduct of its business violates any law, regulation, judgment, agreement,
regulatory consent, order or decree applicable to it which, if enforced, would result in a Material Adverse
Effect with respect to Seller.
(k) No Default. Neither the Seller nor any of its Subsidiaries is in default under or with
respect to any of its Contractual Obligations in any respect which should reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
(l) Chief Executive Office; Chief Operating Office; Jurisdiction of Incorporation. The
Seller’s chief executive and chief operating office on the Effective Date are located at 1050 Woodward
Avenue, Detroit, Michigan 48226. Seller’s jurisdiction of incorporation on the Effective Date is
Michigan.
(m) Location of Books and Records. The location where Seller keeps its books and records
including all computer tapes and records relating to the Purchased Items is its chief executive office or
chief operating office or the offices of the Custodian.
(n) True and Complete Disclosure. The information, reports, financial statements, exhibits,
schedules and certificates furnished in writing by or on behalf of Seller to Agent and/or Buyers in
connection with the negotiation, preparation, delivery or performance of this Agreement and the other
Program Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a
whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to
make the statements herein or therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by or on behalf of Seller to Agent and/
or Buyers in connection with this Agreement and the other Program Documents and the transactions
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contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the
case of projections) based on reasonable estimates, on the date as of which such information is stated or
certified.
(o) Financial Covenants. The Seller’s consolidated Adjusted Tangible Net Worth is not less
than the Minimum Adjusted Tangible Net Worth. The ratio of the Seller’s consolidated Indebtedness to
Adjusted Tangible Net Worth is not greater than the Maximum Leverage Ratio. The Seller has, on a
consolidated basis, cash, Cash Equivalents and unused borrowing capacity that could be drawn against
(taking into account required haircuts) under warehouse and repurchase facilities and under other
financing arrangements in an amount equal to not less than the Minimum Liquidity Amount. If as of the
last day of any calendar month within the mostly recently ended fiscal quarter of the Seller, the Seller’s
consolidated Adjusted Tangible Net Worth was less than [***], and the Seller, on a consolidated basis,
had cash and Cash Equivalents in an amount that was less than [***], then Seller’s consolidated Net
Income for such fiscal quarter before income taxes for such fiscal quarter shall not be less than [***].
(p) ERISA. Except as would not reasonably be expected to have a Material Adverse Effect,
neither the Seller nor any of its ERISA Affiliates, sponsors, maintains, contributes or has any potential
liability or obligation to any Plan.
(q) True Sales. Any and all interest of a Qualified Originator in, to and under any Mortgage
funded in the name of or acquired by such Qualified Originator which is a Subsidiary of Seller has been
sold, transferred, conveyed and assigned to Seller pursuant to a legal sale and such Qualified Originator
retains no interest in such Loan.
(r) No Burdensome Restrictions. No change in any Requirement of Law or Contractual
Obligation of Seller or any of its Subsidiaries after the date of this Agreement has a Material Adverse
Effect.
(s) Subsidiaries. All of the Subsidiaries of Seller are listed on Schedule 2 to this Agreement.
(t) Origination and Acquisition of Loans. The Loans were originated or acquired by Seller,
and the origination and collection practices used by Seller or Qualified Originator, as applicable, with
respect to the Loans have been, in all material respects, legal, proper, prudent and customary in the
residential mortgage loan origination and servicing business, and in accordance with the applicable
Underwriting Guidelines or the Agency Guidelines. With respect to Loans acquired by Seller, all such
Loans are in conformity with the applicable Agency Guidelines. Each of the Loans complies in all
material respects with the representations and warranties listed in Schedule 1 to this Agreement.
(u) No Adverse Selection. Seller used no selection procedures that identified the Loans as
being less desirable or valuable than other comparable Loans owned by Seller.
(v) Seller Solvent; Fraudulent Conveyance. As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of Seller is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities if and to the extent required to be recorded
as a liability on the financial statements of Seller in accordance with GAAP) of Seller and Seller is and
will be solvent, is and will be able to pay its debts as they mature and, after giving effect to the
transactions contemplated by this Agreement and the other Program Documents, will not be rendered
insolvent or left with an unreasonably small amount of capital with which to conduct its business and
perform its obligations. Seller does not intend to incur, or believe that it has incurred, debts beyond its
ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency,
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bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Seller or any of its assets. Seller is not transferring
any Loans with any intent to hinder, delay or defraud any of its creditors.
(w) No Broker. Seller has not dealt with any broker, investment banker, agent, or other
person, except for Agent and Buyers, who may be entitled to any commission or compensation in
connection with the sale of Purchased Assets pursuant to this Agreement, or if Seller has dealt with any
broker, investment banker, agent, or other person, except for Agent and Buyers, who may be entitled to
any commission or compensation in connection with the sale of Purchased Assets pursuant to this
Agreement, such commission or compensation shall have been paid in full by Seller.
(x) MERS. Seller is a member of MERS in good standing.
(y) Agency Approvals. Seller has all requisite Approvals and is in good standing with each
Agency, HUD, FHA and VA, to the extent necessary to conduct its business as then being conducted,
with no event having occurred which would make Seller unable to comply with the eligibility
requirements for maintaining all such applicable Approvals.
(z) No Adverse Actions. Seller has not received from any Agency, HUD, FHA or VA a
notice of extinguishment or a notice terminating any of Seller’s material Approvals.
(aa) Servicing. Seller has adequate financial standing, servicing facilities, procedures and
experienced personnel necessary for the sound servicing of mortgage loans of the same types as may from
time to time constitute Loans and in accordance with Accepted Servicing Practices.
(ab) No Reliance. Seller has made its own independent decisions to enter into the Program
Documents and each Transaction and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors (including without limitation, legal
counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Agent or
any Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax
treatment of such Transactions.
(ac) Plan Assets. Seller is not (i) an “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) subject to Title I of ERISA; (ii) any “plan” defined in and subject to Section 4975
of the Code; or (iii) any entity or account whose assets include or are deemed to include “plan
assets” (within the meaning of 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA) of one or
more such employee benefit plans or plans. The Transactions either (a) are not 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 that is substantially similar to Section 406(a) of ERISA or
Section 4975(c)(1)(A) – (D) of the Code (“Similar Law”), or (b) do not violate any such Similar Law.
(ad) No Prohibited Persons. Neither Seller nor any of its Affiliates, officers, directors, partners
or members, is an entity or person (or to 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 U.S. Department of the Treasury’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
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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”).
(ae) Anti-Money Laundering Laws. Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA PATRIOT Act of 2001
(collectively, the “Anti-Money Laundering Laws”); Seller has established an anti-money laundering
compliance program as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets
used by the said Mortgagor to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the Anti-Money Laundering
Laws.
(af) Assessment and Understanding. Seller is capable of assessing the merits of (on its own
behalf or through independent professional advice), and understands and accepts, the terms, conditions
and risks associated with this Agreement and the Transactions associated therewith. In addition, Seller is
capable of assuming and does assume the risks of this Agreement, the other Program Documents and the
Transactions associated herewith and therewith.
(ag) Status of Parties. Seller agrees that none of Agent or any Buyer is acting as a fiduciary
for Seller or as an advisor to Seller in respect of this Agreement, the other Program Documents or the
Transactions associated therewith.
13. COVENANTS OF SELLER
The Seller covenants and agrees with Agent and Buyers that during the term of this Agreement:
(a) Financial Statements and Other Information; Financial Covenants.
Subject to the provisions of Section 41 hereof, Seller shall deliver to Agent:
(i) As soon as available and in any event within forty-five (45) days after the end of
each of the first three quarterly fiscal periods of each fiscal year of the Seller, a
certification in the form of Exhibit A attached hereto to [***]; [***]; and [***]
together with the unaudited consolidated balance sheet of the Seller and its
consolidated Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income, and of cash flows for the Seller and its
consolidated Subsidiaries for such period and the portion of the fiscal year
through the end of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a certificate of a Responsible
Officer of Seller, which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Seller and its Subsidiaries in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end adjustments and the absence of footnotes);
(ii) As soon as available and in any event within ninety (90) days after the end of
each fiscal year of the Seller, the consolidated balance sheet of the Seller and its
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and of cash flows for the Seller and its
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consolidated Subsidiaries for such year and including all footnotes thereto,
setting forth in each case 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 shall not be qualified as to scope
of audit or going concern and shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Seller and its consolidated Subsidiaries
at the end of, and for, such fiscal year in accordance with GAAP;
(iii) From time to time, copies of all documentation in connection with the
underwriting and origination of any Purchased Asset (other than a Purchased
Asset that is an Agency Eligible Loan) that evidences compliance with the QM
Rule or the Ability to Repay Rule, as applicable, including without limitation all
necessary third-party records that demonstrate such compliance, in each case as
Agent may reasonably request; provided that (A) any such request shall be made
in writing and shall provide the Seller at least ten (10) Business Days to provide
such requested information, and (B) if the Seller objects to the provision to
Agent of any such requested information, Agent and the Seller shall work in
good faith to resolve any such objection; and
(iv) Promptly, from time to time, such other information regarding the business
affairs, operations and financial condition of Seller as Agent and/or Buyers may
reasonably request:
The Seller will furnish to Agent, at the time it furnishes each set of financial statements pursuant
to paragraphs (i) or (ii) above, a certificate of a Responsible Officer of Seller on behalf of Seller in the
form of Exhibit A hereto (each a “Compliance Certificate”) stating that, to the best of such Responsible
Officer’s knowledge, as of the last day of the fiscal quarter or fiscal year for which financial statements
are being provided with such certification, Seller is in compliance in all material respects with all
provisions and terms of this Agreement and the other Program Documents and no Default or Event of
Default has occurred under this Agreement which has not previously been waived, except as specified in
such certificate (and, if any Default or Event of Default has occurred and is continuing, describing the
same in reasonable detail and describing the action Seller has taken or proposes to take with respect
thereto).
(b) Changes to Underwriting Guidelines. Seller agrees that with respect to any material
modifications to the Underwriting Guidelines that are applicable to any Loan (except for modifications to
align with the Agency Guidelines), Seller shall provide notice to the Buyer within ten (10) Business Days
following such modifications (each, a “UG Change Notice”). Buyer shall use its good faith efforts to
respond to such UG Change Notice within five (5) Business Days of receipt of such UG Change Notice.
If Buyer approves of such modifications, then the modified guidelines shall constitute the Underwriting
Guidelines hereunder. If Buyer disapproves of such modifications (or fails to approve of such
modifications within five (5) Business Days of receipt of the UG Change Notice), then the unmodified
guidelines shall constitute the Underwriting Guidelines for purposes of this Agreement.
(c) Existence, Etc. The Seller will:
(i) preserve and maintain its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business;
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(ii) comply with the requirements of all applicable laws, rules, regulations and
orders of Governmental Authorities (including, without limitation, truth in
lending, real estate settlement procedures and all environmental laws), whether
now in effect or hereinafter enacted or promulgated in all material respects;
(iii) keep or cause to be kept in reasonable detail records and books of account
necessary to produce financial statements that fairly present, in all material
respects, the consolidated financial condition and results of operations of the
Seller in accordance with GAAP consistently applied;
(iv) not move its chief executive office or its jurisdiction of incorporation from the
locations referred to in Section 12(l) unless it shall have provided Agent five (5)
Business Days written notice following such change;
(v) 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;
and
(vi) permit representatives of Agent, during normal business hours upon three (3)
Business Days’ prior written notice at a mutually desirable time, provided that
no notice shall be required at any time during the continuance of an Event of
Default, to examine, copy and make extracts from its books and records, to
inspect any of its Properties, and to discuss its business and affairs with its
officers, all to the extent relating to Loans subject to Transactions.
(d) Prohibition of Fundamental Changes. Seller shall not at any time, directly or indirectly,
(i) 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) without Agent’s prior consent, unless
(1) such merger, consolidation or amalgamation would not result in a Change of Control, and (2) no
Event of Default would result therefrom or (ii) form or enter into any partnership, joint venture, syndicate
or other combination which would have a Material Adverse Effect with respect to Seller.
(e) Margin Deficit. If at any time there exists a Margin Deficit, Seller shall cure the same in
accordance with Section 6(b) hereof.
(f) Notices. Seller shall give notice to Agent in writing within ten (10) calendar days of
knowledge by any Responsible Officer) of any of the following:
(i) any occurrence of any Default or Event of Default;
(ii) any litigation or proceeding that is pending against Seller in any federal or state court or
before any Governmental Authority except for those set forth in Schedule 12(c) and those
otherwise disclosed in writing to Buyer, which, (i) if adversely determined, would
reasonably be expected to result in a levy on Seller’s assets in excess of ten percent
(10%) of Seller’s Adjusted Tangible Net Worth, or (ii) that questions or challenges the
validity or enforceability of any of the Program Documents;
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(iii) any non-ordinary course material investigation or audit (in each case other than those
that, pursuant to a legal requirement, may not be disclosed), in each case, by any Agency
or Governmental Authority, relating to the origination, sale or servicing or Loans by
Seller or the business operations of Seller, which if adversely determined, would
reasonably be expected to result in a Material Adverse Effect with respect to Seller; and
(iv) any material penalties, sanctions or charges levied against Seller or any adverse change in
any material Approval status.
(g) Servicing. Except as provided in Section 42, Seller shall not permit any Person other
than the Seller to service Loans without the prior written consent of Agent, which consent shall not be
unreasonably withheld or delayed.
(h) Lines of Business. Seller shall not materially change the nature of its business from that
generally carried on by it as of the Effective Date.
(i) Transactions with Affiliates. The Seller shall not enter into any transaction, including,
without limitation, the purchase, sale, lease or exchange of property or assets or the rendering or
accepting of any service with any Affiliate, officer, director, senior manager, owner or guarantor unless
(i) such transaction is with any Person listed in Schedule 2, so long as such Person is directly or indirectly
100% owned by the Seller and included in consolidated financial statements of Seller, (ii) such
transaction is upon fair and reasonable terms no less favorable to the Seller than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate, officer, director, senior
manager, owner or guarantor, (iii) in the ordinary course of the Seller’s business, (iv) such transaction is
listed on Schedule 13(i) hereto, or (v) such transaction is a loan, guaranty or other transaction that would
have been permitted under Section 13(n) if it had been made as a distribution.
(j) Defense of Title. Subject to the terms of the Intercreditor Agreement, Seller warrants and
will defend the right, title and interest of Agent for the benefit of Buyers in and to all Purchased Items
against all adverse claims and demands of all Persons whomsoever (other than any claim or demand
related to any act or omission of Agent or Buyers, which claim or demand does not arise out of or relate
to any breach or potential breach of a representation or warranty by Seller under this Agreement).
(k) Preservation of Purchased Items. Except as otherwise set forth under the Intercreditor
Agreement, Seller shall do all things necessary to preserve the Purchased Items so that such Purchased
Items remain subject to a first priority perfected security interest hereunder.
(l) No Assignment. Except as permitted by this Agreement, Seller shall not sell, assign,
transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant or
suffer to exist a security interest in or lien on or otherwise encumber (except pursuant to the Program
Documents), any of the Purchased Items or any interest therein, provided that this Section 13(l) shall not
prevent any contribution, assignment, transfer or conveyance of Purchased Items in accordance with the
Program Documents.
(m) Limitation on Sale of Assets. Seller shall not convey, sell, lease, assign, transfer or
otherwise dispose of (collectively, “Transfer”), all or substantially all of its Property, business or assets
(including, without limitation, receivables and leasehold interests) whether now owned or hereafter
acquired outside of the ordinary course of its business unless, following such Transfer, Seller shall be in
compliance with all of the other representations, warranties and covenants set forth in this Agreement.
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(n) Limitation on Distributions. Without Agent’s consent, if an Event of Default has
occurred and is continuing and (i) a Margin Deficit is outstanding, (ii) such Event of Default is due to the
Seller’s failure to comply with Section 13(o), Section 13(p) or Section 13(q), or (iii) due to an Event of
Default under Section 18(a)(i), Section 18(a)(ii) or Section 18(a)(iii) but only to the extent that such Event
of Default under Sections 18(a)(ii) or Section 18(a)(iii) is with respect to a material amount due under
such section, then the Seller shall not make any payment on account of, or set apart assets for a sinking or
other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any
stock of Seller, 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 the Seller, provided however
that Seller shall be able to make any distributions at any time to its shareholders required for purposes of
meeting such shareholder’s tax liability related to its, his or hers ownership of Seller.
(o) Maintenance of Liquidity. Seller shall insure that, as of the end of each calendar month,
Seller has, on a consolidated basis, cash and Cash Equivalents in an amount equal to not less than the
Minimum Liquidity Amount.
(p) Maintenance of Adjusted Tangible Net Worth. Seller shall maintain, as of the end of
each calendar month, a consolidated Adjusted Tangible Net Worth not less than the Minimum Adjusted
Tangible Net Worth.
(q) Other Financial Covenants.
(i) Maintenance of Leverage. Seller shall not, as of the end of each calendar
month, permit the ratio of the Seller’s consolidated Indebtedness to consolidated
Adjusted Tangible Net Worth to be greater than the Maximum Leverage Ratio.
(ii) Minimum Net Income. If as of the last day of any calendar month within a
fiscal quarter of the Seller, the Seller’s consolidated Adjusted Tangible Net
Worth is less than [***] or the Seller, on a consolidated basis, has cash and Cash
Equivalents in an amount that is less than [***], in either case, the Seller’s
consolidated Net Income for that fiscal quarter before income taxes for such
fiscal quarter shall equal or exceed [***].
(r) Servicing Transmission. Seller shall provide to Agent on a monthly basis no later than
11:00 a.m. (Eastern time) five (5) Business Days following the last day of the preceding calendar month
(i) the Servicing Transmission, on a loan-by-loan basis and in the aggregate, with respect to the Loans
serviced hereunder by Seller which were funded prior to the first day of the current month, summarizing
Seller’s delinquency and loss experience with respect to such Loans serviced by Seller (including, in the
case of such Loans, the following categories: current, 30-59, 60-89, 90-119, 120-180 and 180+) and (ii)
any other information reasonably requested by Agent and/or Buyers with respect to the Loans.
(s) Insurance. The Seller or its Affiliates, will continue to maintain, for the Seller, insurance
coverage with respect to employee dishonesty, forgery or alteration, theft, disappearance and destruction,
robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate
amount acceptable to Fannie Mae and Freddie Mac. Seller shall notify Agent as soon as reasonably
possible after knowledge of any material change in the terms of any such insurance coverage.
(t) Certificate of a Responsible Officer of Seller. At the time that Seller delivers financial
statements to Agent in accordance with Section 13(a) hereof, Seller shall forward to Agent a certificate of
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a Responsible Officer of Seller which demonstrates that the Seller is in compliance with the covenants set
forth in Sections 13(o), (p) and (q) of this Agreement.
(u) Maintenance of Licenses. Seller shall (i) maintain all licenses, permits or other approvals
necessary for Seller to conduct its business and to perform its obligations under the Program Documents,
(ii) remain in good standing with respect to such licenses, permits or other approvals, under the laws of
each state in which it conducts material business, and (iii) conduct its business in accordance with
applicable law in all material respects.
(v) Taxes, Etc. Seller shall timely pay and discharge, or cause to be paid and discharged, on
or before the date they become delinquent, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income and profits or upon any of its property, real, personal or mixed
(including without limitation, the Purchased Assets ) or upon any part thereof, as well as any other lawful
claims which, if unpaid, become a Lien upon Purchased Assets that have not been repurchased, except for
any such taxes, assessments and governmental charges, levies or claims as are appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves
are provided. Seller shall file on a timely basis all federal, and material state and local tax and
information returns, reports and any other information statements or schedules required to be filed by or
in respect of it.
(w) Takeout Payments. With respect to each Purchased Asset and the portion of each
Security related to Purchased Assets subject to a Transaction, in each case that is subject to a Takeout
Commitment, the Seller shall ensure that the related portion of the purchase price and all other payments
under such Takeout Commitment to the extent related to Purchased Assets subject to a Transaction or
such portion of each Security related to Purchased Assets subject to a Transaction shall be paid to Agent
for the benefit of Buyers (or its designee) in accordance with the Joint Account Control Agreement or the
Joint Securities Account Control Agreement, as applicable. Unless subject to the Joint Account Control
Agreement or Joint Securities Account Control Agreement, with respect to any Takeout Commitment
with an Agency, if applicable, (1) with respect to the wire transfer instructions as set forth in Freddie Mac
Form 987 (Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer instructions
are identical to Agent’s wire instructions or Agent has approved such wire transfer instructions in writing
in its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068 (Fixed-Rate,
Graduated-Payment, or Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069
(Adjustable-Rate Mortgage Loan Schedule), as applicable, will be identical to the Payee Number that has
been identified by Agent in writing as Agent’s Payee Number or Agent will have previously approved the
related Payee Number in writing in its sole discretion; with respect to any Takeout Commitment with an
Agency, the applicable agency documents will list Agent for the benefit of Buyers as sole subscriber,
unless otherwise agreed to in writing by Agent, in Agent’s sole discretion.
(x) Delivery of Servicing Rights and Servicing Records. With respect to the Servicing
Rights of each Purchased Asset, Seller shall deliver (or shall cause the related Servicer or Subservicer to
deliver) such Servicing Rights to Agent for the benefit of Buyers on the related Purchase Date. Seller
shall deliver (or cause the related Servicer or Subservicer to deliver) the Servicing Records and the
physical and contractual servicing of each Purchased Asset, to Agent for the benefit of Buyers or its
designee upon the termination of Seller or Servicer as the servicer pursuant to Section 42.
(y) Agency Audit. Seller shall at all times maintain copies of relevant portions of all Agency
Audits in which there are material adverse findings, including without limitation notices of defaults,
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notices of termination of approved status, notices of imposition of supervisory agreements or interim
servicing agreements, and notices of probation, suspension, or non-renewal.
(z) Illegal Activities. Seller shall not engage in any conduct or activity that is reasonably
likely to subject a material portion of its assets to forfeiture or seizure or reasonably likely to result in a
Material Adverse Effect.
(aa) Agency Approvals; Servicing. To the extent previously approved and necessary for
Seller to conduct its business in all material respects as it is then being conducted, Seller shall maintain its
status with Fannie Mae and Freddie Mac as an approved seller/servicer, with Ginnie Mae as an approved
issuer and an approved servicers, FHA as an approved mortgagee and as an RHS lender and an RHS
Servicer in each case in good standing (each such approval, an “Agency Approval”); provided, that
should Seller decide to no longer maintain an Agency Approval (as opposed to an Agency withdrawing
an Agency Approval, but including an Agency ceasing to exist), (i) Seller shall notify Agent in writing,
and (ii) Seller shall provide Agent with written or electronic evidence that the Eligible Loans are eligible
for sale to another Agency. Should Seller, for any reason, cease to possess all such applicable Agency
Approvals to the extent necessary, Seller shall so notify Agent promptly in writing. Notwithstanding the
preceding sentence and to the extent previously approved, Seller shall take all necessary action to
maintain all of its applicable Agency Approvals at all times during the term of this Agreement and each
outstanding Transaction.
(ab) Quality Control Report. At the time that Seller delivers financial statements to Agent in
accordance with Section 13(a) hereof, Seller shall forward to Agent a report on its internal quality control
program that evaluates and monitors, on a regular basis, the overall quality of its loan origination and
servicing activities and that: ensures that the Loans are serviced in accordance with Accepted Servicing
Practices; guards against dishonest, fraudulent, or negligent acts; and guards against errors and omissions
by officers, employees, or other authorized persons.
14. REPURCHASE DATE PAYMENTS
On each Repurchase Date, the Seller shall remit or shall cause to be remitted to Agent for the
benefit of Buyers the Repurchase Price together with any other Obligations then due and payable.
15. REPURCHASE OF PURCHASED ASSETS
Upon discovery by the Seller of a breach in any material respect of any of the representations and
warranties set forth on Schedule 1 to this Agreement, the Seller shall give prompt written notice thereof to
Agent. Upon any such discovery by Agent, Agent will notify the Seller. It is understood and agreed that
the representations and warranties set forth in Schedule 1 to this Agreement with respect to the Purchased
Assets shall survive delivery of the respective Mortgage Files to the Custodian and shall inure to the
benefit of Agent for the benefit of Buyers. The fact that Agent or any Buyer has conducted or has failed
to conduct any partial or complete due diligence investigation in connection with its purchase of any
Purchased Asset shall not affect Agent’s (for the benefit of Buyers) right to demand repurchase as
provided under this Agreement. The Seller shall, within [***] Business Days of the earlier of the Seller’s
discovery or the Seller receiving notice with respect to any Purchased Asset of (i) any breach of a
representation or warranty contained in Schedule 1 to this Agreement any material respect, or (ii) any
failure to deliver any of the items required to be delivered as part of the Mortgage File within the time
period required for delivery pursuant to the Custodial Agreement, promptly cure such breach or delivery
failure in all material respects. If within [***] Business Days after the earlier of the Seller’s discovery of
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such breach or delivery failure or the Seller receiving notice thereof, such breach or delivery failure has
not been remedied by the Seller in all material respects, the Seller shall promptly upon receipt of written
instructions from Agent, at Agent’s option, either (i) repurchase such Purchased Asset at a purchase price
equal to the Repurchase Price with respect to such Purchased Asset by wire transfer to the account set
forth on Exhibit C hereto, or (ii) transfer comparable Substitute Assets to Agent for the benefit of Buyers,
as provided in Section 16 hereof.
16. SUBSTITUTION
Seller may, subject to written agreement with and acceptance by Agent (for the benefit of Buyers)
in its sole discretion upon one (1) Business Day’s notice, substitute other assets, including U.S. Treasury
Securities, which are substantially the same as the Purchased Assets (the “Substitute Assets”) for any
Purchased Assets. Such substitution shall be made by transfer to Agent (for the benefit of Buyers) of
such Substitute Assets and transfer to the Seller of such Purchased Assets (the “Reacquired Assets”)
along with the other information to be provided with respect to the applicable Substitute Asset as
described in the form of Transaction Notice. Upon substitution, the Substitute Assets shall be deemed to
be Purchased Assets, the Reacquired Assets shall no longer be deemed Purchased Assets, Agent (for the
benefit of Buyers) shall be deemed to have terminated any security interest that Agent (for the benefit of
Buyers) may have had in the Reacquired Assets and any Purchased Items solely related to such
Reacquired Assets to the Seller unless such termination and release would give rise to or perpetuate an
unpaid, due and payable Margin Call. Concurrently with any termination and release described in this
Section 16, Agent (for the benefit of Buyers) shall execute and deliver to the Seller upon request and
Agent (for the benefit of Buyers) hereby authorizes the Seller to file and record such documents as the
Seller may reasonably deem necessary or advisable in order to evidence such termination and release.
17. APPOINTMENT AND AUTHORITY OF AGENT
(a) Except as expressly set forth in this Agreement to the contrary, each Buyer has appointed
and designated the Agent under the Administration Agreement for the purpose of performing any action
hereunder and under the other Program Documents and authorizes Agent to take such actions on its behalf
and to exercise such powers as are delegated to Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. It is understood and agreed that the use of the
term “agent” (or any other similar term) herein or in any other Program Document with reference to
Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is
intended to create or reflect only an administrative relationship between contracting parties.
(b) Seller, on behalf of itself and its Affiliates, hereby authorizes Agent and each Buyer to do
any of the following: (a) instruct the remittance of, or remit, proceeds by Agent to any Buyer as agreed to
by Buyers, and the Seller waives any right which it may have to direct such remittance.
(c) Agent, or any agent or agents hereafter appointed, at any time may resign by giving thirty
(30) days’ prior written notice of resignation to the Seller and Buyer Entities (as defined in the
Administration Agreement) and complying with the applicable provisions of this paragraph (c); provided,
however, that such resignation is not effective until such time that a replacement is appointed. A
successor Agent shall be promptly appointed by all Required Buyers (as defined in the Administration
Agreement) and consented to by the Seller, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Agent and one copy to the successor Agent; provided that, if
no successor Agent shall have been so appointed and have accepted appointment within thirty (30) days
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after the giving of such notice of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(d) Any successor Agent appointed as provided in paragraph (c) of this Section 17 shall
execute and deliver to the Seller, Buyer Entities (as defined in the Administration Agreement) and to its
predecessor Agent an instrument accepting such appointment, and thereupon the resignation or removal
of the predecessor Agent shall become effective and such successor Agent, without any further act, deed
or conveyance, shall become vested with all the rights and obligations of its predecessor, with like effect
as if originally named as Agent (the predecessor Agent shall be discharged from its duties and obligations
as Agent hereunder and under the other Program Documents); provided that upon the written request of
the Seller, Required Buyers (as defined in the Administration Agreement) or the successor Agent, Agent
ceasing to act shall execute and deliver (a) an instrument transferring to such successor Agent all of the
rights of Agent so ceasing to act and (b) to such successor Agent such instruments as are necessary to
transfer the Collateral (as defined in the Administration Agreement) to such successor Agent (including
assignments of all Collateral (as defined in the Administration Agreement) or Program Documents). Upon
the request of any such successor Agent made from time to time, the Seller shall execute any and all
papers which the successor Agent shall reasonably request to more fully and certainly vest in and confirm
to such successor Agent all such rights. In furtherance of the foregoing, upon replacement of the Agent as
contemplated herein, the Agent authorizes the successor Agent to file such financing statements as the
successor Agent deems appropriate to further evidence the assumption by such successor Agent of the
role as Agent hereunder. Any releases, limitations on liability and other exculpatory provisions from time
to time granted to or otherwise provided for the benefit of a successor Agent or any of its successors or
assigns in such capacity shall, in addition to inuring to the benefit of such Person, also inure to the benefit
of Nomura in its capacity as the predecessor Agent. Any releases, limitations on liability and other
exculpatory provisions applicable to the Agent set forth in this Agreement or any Program Document
shall continue in effect for the benefit of the predecessor Agent in respect of any actions taken or omitted
to be taken by it in its capacity as and while was the Agent under this Agreement and the other Program
Documents.
(e) Any Person into which Agent may be merged or converted or with which it may be
consolidated, or any Person surviving or resulting from any merger, conversion or consolidation to which
Agent shall be a party or any Person succeeding to the commercial banking business of Agent, shall be
the successor Agent (in each case, absent an Event of Default, with the consent of Seller) without the
execution or filing of any paper or any further act on the part of any of the parties.
18. EVENTS OF DEFAULT
Each of the following events shall constitute an Event of Default (an “Event of Default”)
hereunder, subject to any applicable cure periods to the extent such event is susceptible to being cured:
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(a) Payment Default. Seller defaults in the payment of (i) any payment of Margin Deficit,
Price Differential or Repurchase Price hereunder or under any other Program Document; provided, that,
with respect to this clause (i), if the Seller provides Agent with written evidence reasonably satisfactory to
Agent that such failure is solely the result of an administrative error, such failure shall only be deemed an
Event of Default if such failure to comply shall continue unremedied for a period of [***] Business Day,
(ii) expenses or fees and amounts due and owing to the Custodian and such failure to pay expenses or fees
and amounts due and owing to the Custodian continues for more than [***] days after receipt by a
Responsible Officer of notice of such default, or (iii) any other Obligations, with respect to this
clause (iii), within [***] Business Days following the earlier to occur of (x) receipt by a Responsible
Officer of Seller of written notice from Buyer of such default or (y) Seller’s knowledge of such default;
(b) Representation and Covenant Defaults.
(i) The failure of the Seller to perform, comply with or observe any term, representation,
covenant or agreement applicable to the Seller in any material respect, in each case, after
the expiration of the applicable cure period, if any, as specified in such covenant,
contained in:
(A) Section 13(c) (Existence) only to the extent relating to maintenance of
existence and compliance with the requirements of all applicable material
laws, rules, regulations and orders of Governmental Authorities,
provided, that if the Seller provides Buyer with written evidence
reasonably satisfactory to Buyer that such failure is solely the result of an
administrative error, such failure shall only be deemed an Event of
Default if such failure to comply shall continue unremedied for a period
of five (5) Business Days or such failure shall be determined by Buyer in
its good faith discretion to result in a Material Adverse Effect,
(B) Section 13(d) (Prohibition of Fundamental Change),
(C) Section 13(o) (Maintenance of Liquidity), provided Seller shall be
entitled to five (5) Business Days to cure any such default from the
earlier of notice or knowledge of such failure,
(D) Section 13(p) (Maintenance of Adjusted Tangible Net Worth), provided
Seller shall be entitled to [***] Business Days to cure any such default
from the earlier of notice or knowledge of such failure,
(E) Section 13(q) (Other Financial Covenants), provided Seller shall be
entitled to [***] Business Days to cure any such default from the earlier
of notice or knowledge of such failure,
(F) Section 13(w) (Takeout Payments); provided that if the Seller provides
Buyer with written evidence reasonably satisfactory to Buyer that such
failure is solely the result of an administrative error, such failure shall
only be deemed an Event of Default if such failure to comply shall
continue unremedied for a period of [***] Business Days or if such
failure results in a Material Adverse Effect,
(G) Section 13(z) (Illegal Activities),
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(ii) (A) Any representation, warranty or certification made herein or in any other Program
Document by Seller or any certificate furnished to Agent and/or Buyers pursuant to the
provisions hereof or thereof shall prove to have been untrue or misleading in any material
respect as of the time made or furnished and such breach is not cured within [***]
Business Days after knowledge thereof by, or notice thereof to, a Responsible Officer, or
(B) any representation or warranty made by Seller in Schedule 1 to this Agreement shall
prove to have been untrue or misleading in any material respect as of the time made or
furnished and the Seller shall have made any such representations and warranties with
actual knowledge by a Responsible Officer that they were materially false or misleading
at the time made; provided that each such breach of a representation or warranty made in
Schedule 1 hereto that is not made with such knowledge shall be considered solely for the
purpose of determining the Market Value of the Loans affected by such breach, and shall
not be the basis for declaring an Event of Default under this Agreement; and
(iii) Seller fails to observe or perform, in any material respect, any other covenant or
agreement contained in this Agreement (and not identified in clause (a) or (b)(i) or any
other clause of this Section) or any other Program Document and such failure to observe
or perform is not cured within [***] Business Days after knowledge thereof by, or notice
thereof to, a Responsible Officer.
(c) Judgments. Any final, judgment or judgments or order or orders for the payment of
money is rendered against the Seller in excess of [***] of Seller’s Adjusted Tangible Net Worth in the
aggregate shall be rendered against the Seller by one or more courts, administrative tribunals or other
bodies having jurisdiction over the Seller and the same shall not be discharged (or provisions shall not be
made for such discharge), satisfied, or bonded, or a stay of execution thereof shall not be procured, within
sixty (60) days from the date of entry thereof and the Seller shall not, within said period of sixty (60)
days, or such longer period during which execution of the same has been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
(d) Insolvency Event. The Seller (i) discontinues or abandons operation of its business; (ii)
fails generally to, or admits in writing its inability to, pay its debts as they become due; (iii) files a
voluntary petition in bankruptcy, seeks relief under any provision of any bankruptcy, reorganization,
moratorium, delinquency, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction whether now or subsequently in effect; (iv) consents to the filing of any petition against it
under any such law; (v) consents to the appointment of or taking possession by a custodian, receiver,
conservator, trustee, liquidator, sequestrator or similar official for the Seller, or of all or any substantial
part of its respective Property; (vi) makes an assignment for the benefit of its creditors; or (vii) has a
proceeding instituted against it in a court having jurisdiction in the premises seeking (A) a decree or order
for relief in respect of Seller in an involuntary case under any applicable bankruptcy, insolvency,
liquidation, reorganization or other similar law now or hereafter in effect, or (B) the appointment of a
receiver, liquidator, trustee, custodian, sequestrator, conservator or other similar official of Seller, or for
any substantial part of its property, or for the winding-up or liquidation of its affairs (provided, however,
if such proceeding or appointment is the result of the commencement of involuntary proceedings or the
filing of an involuntary petition against such Person no Event of Default shall be deemed to have occurred
under this clause (d)(vii) unless such proceeding or appointment is not stayed or dismissed within sixty
(60) days after the initial date thereof;
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(e) Change of Control. A Change of Control of the Seller shall have occurred without the
prior consent of Agent, unless (i) waived by Buyer in writing, or (ii) the Seller shall have repurchased all
Purchased Assets subject to Transactions within thirty (30) days thereof;
(f) Liens. Except for the Liens contemplated under the Intercreditor Agreement, the Seller
shall grant, or suffer to exist, any Lien on any Purchased Item that has not been repurchased except the
Liens permitted under this Agreement and under the Intercreditor Agreement; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Purchased Items that have not been
repurchased in favor of Agent (for the benefit of Buyers) or shall be Liens in favor of any Person other
than Agent (for the benefit of Buyers) or this Agreement shall for any reason cease to create a valid, first
priority security interest or ownership interest upon transfer in any of the Purchased Assets or Purchased
Items purported to be covered hereby and that have not been repurchased, in each case in each case (i) to
the extent such Lien or failure is not cured within [***] Business Days following the earlier to occur of
(x) written notice from Buyer to a Responsible Officer of Seller of such Lien or failure or (y) Seller’s
knowledge of such Lien or failure and (ii) subject to the terms of the Intercreditor Agreement;
(g) Going Concern. The Seller’s audited financial statements delivered to Agent shall
contain an audit opinion that is qualified or limited by reference to the status of Seller as a “going
concern” or reference of similar import;
(h) Third Party Cross Default. Any “event of default” or any other default by Seller under
any Indebtedness to which Seller is a party (after the expiration of any applicable grace or cure period
under any such agreement) individually in excess of [***] outstanding, which has resulted in the
acceleration of the maturity of such other Indebtedness, provided that such default or “event of default”
shall be deemed automatically cured and without any action by Agent, any Buyer or Seller, if, within
[***] calendar days after Seller’s receipt of notice of such acceleration, (A) the Indebtedness that was the
basis for such default is discharged in full, (B) the holder of such Indebtedness has rescinded, annulled or
waived the acceleration, notice or action giving rise to such default, or (C) such default has been cured
and no “event of default” or any other default continues under such other Indebtedness; or
(i) Enforceability. For any reason, this Agreement or any other Program Document 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 Person (other than Buyers or Agent for the benefit of
Buyers) shall contest the validity, enforceability or perfection of any Lien granted pursuant thereto, or any
party thereto (other than Buyers or Agent for the benefit of Buyers) shall seek to disaffirm, terminate,
limit or reduce its obligations hereunder; or
19. REMEDIES
(a) Upon the occurrence of an Event of Default, Agent on behalf of Buyers, at its option
(which option shall be deemed to have been exercised immediately upon the occurrence of an Event of
Default pursuant to Section 18(d), shall have the right to exercise any or all of the following rights and
remedies:
(i) Agent has the right to cause the Repurchase Date for each Transaction
hereunder, if it has not already occurred, to be deemed immediately to occur
(provided that, in the event that the Purchase Date for any Transaction has not
yet occurred as of the date of such exercise or deemed exercise, such
Transaction may be deemed immediately canceled). Agent shall (except for
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deemed exercises) give written notice to Seller of the exercise of such option as
promptly as practicable.
(A) The Seller’s obligations hereunder to repurchase all Purchased Assets at
the Repurchase Price therefor on the Repurchase Date (determined in accordance with the
preceding sentence) in such Transactions shall thereupon become immediately due and
payable; all Income paid after such exercise or deemed exercise shall be remitted to and
retained by Agent and applied to the aggregate Repurchase Price and any other amounts
owing by the Seller hereunder; the Seller shall immediately deliver to Agent or its
designee any and all Purchased Assets, original papers, Servicing Records and files
relating to the Purchased Assets subject to such Transaction then in the Seller’s
possession and/or control; and all right, title and interest in and entitlement to such
Purchased Assets and Servicing Rights thereon shall be deemed transferred to Agent or
its designee; provided, however, in the event that the Seller repurchases any Purchased
Asset pursuant to this Section 19(a)(i), Agent shall deliver to Seller any and all original
papers, records and files relating to such Purchased Asset then in its possession and/or
control.
(B) To the extent permitted by applicable law, the Repurchase Price with
respect to each such Transaction shall be increased by the aggregate amount obtained by
daily application of, on a 360 day per year basis for the actual number of days during the
period from and including the date of the exercise or deemed exercise of such option to
but excluding the date of payment of the Repurchase Price as so increased, (x) the
Post□ Default Rate in effect following an Event of Default to (y) the Repurchase Price
for such Transaction as of the Repurchase Date as determined pursuant to subsection
(a)(i)(A) of this Section (decreased as of any day by (i) any amounts actually in the
possession of Agent pursuant to clause (C) of this subsection, (ii) any proceeds from the
sale of Purchased Assets applied to the Repurchase Price pursuant to subsection (a)(ii) of
this Section, and (iii) any other Purchased Items, Related Security or other assets of Seller
held by Agent and applied to the Obligation.
(C) All Income actually received by Agent pursuant to Section 7 or otherwise
shall be applied to the aggregate unpaid Repurchase Price and any other amounts owed
by Seller.
(ii) Agent shall have the right to, at any time on or following the Business Day
following the date on which the Repurchase Price became due and payable
pursuant to Section 19(a)(i), (A) immediately sell, without notice or demand of
any kind, at a public or private sale and at such price or prices as Agent may
deem to be appropriate in its good faith discretion and in accordance with
applicable Requirements of Law for cash or for future delivery without
assumption of any credit risk, any or all or portions of the Purchased Assets and
Purchased Items on a servicing released basis and apply the proceeds thereof to
the aggregate unpaid Repurchase Prices and any other amounts owing by Seller
hereunder or (B) in its good faith discretion and in accordance with applicable
Requirements of Law elect, in lieu of selling all or a portion of such Purchased
Assets, to give Seller credit for such Purchased Assets, Purchased Items, Related
Security or other assets of Seller held by Agent in an amount equal to the
Market Value of the Purchased Assets (provided that Agent shall solicit at least
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three (3) third party bids) against the aggregate unpaid Repurchase Price and
any other amounts owing by Seller hereunder. The proceeds of any disposition
of Purchased Assets and the Purchased Items will be applied to the Obligations
and Agent and Buyers’ related expenses as determined by Agent in its good
faith discretion and in accordance with applicable Requirements of Law. Agent
on behalf of Buyers may purchase any or all of the Purchased Assets at any
public or private sale.
(iii) The Seller shall remain liable to Agent and Buyers for any amounts that remain
owing to Agent and Buyers following a sale and/or credit under the preceding
section. Seller will be liable to Agent and Buyers for (A) the amount of all
reasonable legal or other expenses (including, without limitation, all costs and
expenses of Agent and Buyers in connection with the enforcement of this
Agreement or any other agreement evidencing a Transaction, whether in action,
suit or litigation or bankruptcy, insolvency or other similar proceeding affecting
creditors’ rights generally, further including but not limited to, the reasonable
fees and expenses of counsel (including the allocated costs of internal counsel of
Agent and Buyers)) incurred in connection with or as a result of an Event of
Default, (B) damages in an amount equal to the reasonable documented, out-of-
pocket cost of Agent and Buyers (including all fees, expenses, and
commissions) of entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result of an Event of
Default, and (C) any other out-of-pocket loss, damage, cost or expense directly
arising or resulting from the occurrence of an Event of Default in respect of a
Transaction.
(iv) Agent shall have the right to terminate this Agreement and declare all
obligations of the Seller to be immediately due and payable, by a notice in
accordance with Section 21 hereof.
(v) The parties recognize that it may not be possible to purchase or sell all of the
Purchased Assets on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Assets
may not be liquid. In view of the nature of the Purchased Assets, the parties
agree that liquidation of a Transaction or the underlying Purchased Assets does
not require a public purchase or sale and that a good faith private purchase or
sale shall be deemed to have been made in a commercially reasonable manner.
Accordingly, Agent may elect the time and manner of liquidating any Purchased
Asset and nothing contained herein shall obligate Agent to liquidate any
Purchased Asset on the occurrence of an Event of Default or to liquidate all
Purchased Assets in the same manner or on the same Business Day or shall
constitute a waiver of any right or remedy of Agent. Notwithstanding the
foregoing, the parties to this Agreement agree that the Transactions have been
entered into in consideration of and in reliance upon the fact that all
Transactions hereunder constitute a single business and contractual obligation
and that each Transaction has been entered into in consideration of the other
Transactions.
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(vi) To the extent permitted by applicable law, the Seller waives all claims, damages
and demands it may acquire against Agent or any Buyer arising out of the
exercise by Agent or any Buyer of any of its rights hereunder after an Event of
Default, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of Agent. If any notice of a proposed sale or
other disposition of Purchased Items shall be required by law, such notice shall
be deemed reasonable and proper if given at least two (2) Business Days before
such sale or other disposition.
(b) The Seller hereby acknowledges, admits and agrees that the Seller’s obligations under
this Agreement are recourse obligations of the Seller.
(c) Agent shall have the right to obtain physical possession of the Servicing Records and all
other files of the Seller relating to the Purchased Assets and Purchased Items and all documents relating
to the Purchased Assets and Purchased Items which are then or may thereafter come into the possession
of the Seller or any third party acting for the Seller and the Seller shall deliver to Agent such assignments
as Agent shall request; provided that if such records and documents also relate to mortgage loans other
than the Purchased Assets, Agent shall have a right to obtain copies of such records and documents, rather
than originals.
(d) Agent shall have the right to direct all Persons servicing the Purchased Assets to take
such action with respect to the Purchased Assets as Agent determines appropriate and as is consistent with
the Servicer’s obligations and applicable law.
(e) In addition to all the rights and remedies specifically provided herein, Agent shall have
all other rights and remedies provided by applicable federal, state, foreign, and local laws, whether
existing at law, in equity or by statute, including, without limitation, all rights and remedies available to a
purchaser or a secured party, as applicable, under the Uniform Commercial Code.
(f) Except as otherwise expressly provided in this Agreement or by applicable law, Agent
shall have the right to exercise any of its rights and/or remedies immediately upon the occurrence and
during the continuance of an Event of Default, and at any time thereafter, with notice to Seller, without
presentment, demand, protest or further notice of any kind other than as expressly set forth herein, all of
which are hereby expressly waived by the Seller. All rights and remedies arising under this Agreement as
amended from time to time hereunder are cumulative and not exclusive of any other rights or remedies
which Agent may have.
(g) Agent may enforce its and each Buyer’s rights and remedies hereunder without prior
judicial process or hearing, and the Seller hereby expressly waives, to the extent permitted by law, any
right the Seller might otherwise have to require Agent to enforce its rights by judicial process. The Seller
also waives, to the extent permitted by law (and absent any willful misconduct or gross negligence of
Agent), any defense (other than a defense of payment or performance) the Seller might otherwise have
arising from use of nonjudicial process, enforcement and sale of all or any portion of the Purchased
Assets and any other Purchased Items or from any other election of remedies. The Seller recognizes that
nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length.
(h) The Seller shall cause all sums received by the Seller after and during the continuance of
an Event of Default with respect to the Purchased Assets to be deposited with such Person as Agent may
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direct after receipt thereof. To the extent permitted by applicable law, Seller shall be liable to Agent and
Buyers for interest on any amounts owing by Seller hereunder, from the date Seller becomes liable for
such amounts hereunder until such amounts are (i) paid in full by Seller or (ii) satisfied in full by the
exercise of Agent and each Buyer’s rights hereunder. Interest on any sum payable by Seller to Agent and
Buyers under this Section 19(h) is at a rate equal to the Post-Default Rate and all reasonable costs and
expenses incurred in connection with hedging or covering transactions related to the Purchased Assets,
conduit advances and payments for mortgage insurance.
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Agent or any Buyer to exercise, and no delay in exercising, and no
course of dealing with respect to, any right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise by Agent or any Buyer of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All
rights and remedies of Agent and Buyers provided for herein are cumulative and in addition to any and all
other rights and remedies provided by law, the Program Documents and the other instruments and
agreements contemplated hereby and thereby, and are not conditional or contingent on any attempt by
Agent or any Buyer to exercise any of its rights under any other related document. Agent and Buyers
may exercise at any time after the occurrence of an Event of Default one or more remedies, as it so
desires, and may thereafter at any time and from time to time exercise any other remedy or remedies. An
Event of Default will be deemed to be continuing unless expressly waived by Agent in writing.
21. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Agreement, all notices, requests and other
communications provided for herein and under the Custodial Agreement (including, without limitation,
any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in
writing (including, without limitation, by Electronic Transmission, telecopy or email) delivered to the
intended recipient at the address of such Person set forth in this Section 21 below; or, as to any party, at
such other address as shall be designated by such party in a written notice to each other party. Except as
otherwise provided in this Agreement and except for notices given by the Seller under Section 3(a)
(which shall be effective only on receipt), all such communications shall be deemed to have been duly
given when transmitted by Electronic Transmission, telecopier or email or delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid. In all cases, to the extent that
the related individual set forth in the respective “Attention” line is no longer employed by the respective
Person, such notice may be given to the attention of a Responsible Officer of the respective Person or to
the attention of such individual or individuals as subsequently notified in writing by a Responsible Officer
of the respective Person.
If to Agent and/or NCFA Buyer:
Nomura Corporate Funding Americas, LLC
[***]
With copies to:
Nomura Corporate Funding Americas, LLC
[***]
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Alston & Bird LLP
[***]
If to SPV Buyer:
Nomura Corporate Funding Americas, LLC
Oakdale Secured Funding Trust Quartz, acting with respect to Series
2020-1
[***]
With copies to:
Nomura Corporate Funding Americas, LLC
Oakdale Secured Funding Trust Quartz, acting with respect to Series
2020-1
[***]
Alston & Bird LLP
[***]
If to the Seller:
Quicken Loans, LLC
1050 Woodward Ave.
Detroit, Michigan 48226
[***]
With a copy to:
Quicken Loans, LLC
1050 Woodward Ave,
Detroit, Michigan 48226
[***]
22. USE OF EMPLOYEE PLAN ASSETS
No assets of any Plan subject to any provision of ERISA or Similar Law shall be used by either
party hereto in a Transaction.
23. INDEMNIFICATION AND EXPENSES.
(a) The Seller agrees to hold Agent, each Buyer, and their respective Affiliates and their
officers, directors, employees, agents and advisors (each an “Indemnified Party”) harmless from and
indemnify any Indemnified Party against all liabilities, losses, damages, judgments, and documented and
out-of-pocket costs and expenses of any kind (including reasonable fees of counsel) which may be
imposed on, incurred by or asserted against such Indemnified Party (collectively, the “Costs”) relating to
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or arising out of this Agreement, any other Program Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect
of, this Agreement, any other Program Document or any transaction contemplated hereby or thereby, that,
in each case, results from anything other than any Indemnified Party’s gross negligence or willful
misconduct or a claim by one Indemnified Party against another Indemnified Party. Without limiting the
generality of the foregoing, the Seller agrees to hold any Indemnified Party harmless from and indemnify
such Indemnified Party against all Costs with respect to all Loans relating to or arising out of any
violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws,
including without limitation laws with respect to unfair or deceptive lending practices and predatory
lending practices, the Truth in Lending Act and/or the Real Estate Settlement Procedures Act, that, in
each case, results from anything other than such Indemnified Party’s gross negligence or willful
misconduct or a claim by one Indemnified Party against another Indemnified Party. In any suit,
proceeding or action brought by an Indemnified Party in connection with any Purchased Asset for any
sum owing thereunder, or to enforce any provisions of any Purchased Asset, the Seller will save,
indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage
suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the Seller of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from the Seller. The Seller also agrees to reimburse an
Indemnified Party promptly after billed by such Indemnified Party for all such Indemnified Party’s
reasonable documented, actual, out-of-pocket costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party’s rights under this Agreement, any other
Program Document or any transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. The Seller hereby acknowledges that, the obligations of
the Seller under this Agreement are recourse obligations of the Seller.
(b) The Seller agrees to pay all of the documented out-of-pocket costs and expenses
reasonably incurred by Agent and Buyers in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, any other Program Document or
any other documents prepared in connection herewith or therewith. The Seller agrees to pay all of the
documented out-of-pocket costs and expenses reasonably incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including, without limitation, (i)
filing fees and all the reasonable fees, disbursements and expenses of counsel to Agent and Buyers
incurred and (ii) all the due diligence, inspection, testing and review costs and expenses incurred by
Agent and Buyers with respect to Purchased Items under this Agreement, including, but not limited to,
those costs and expenses incurred by Agent and Buyers pursuant to this Section 23 and Section 43 hereof
but excluding pre-closing upfront diligence (including legal and credit diligence); provided, however, that
(x) the aggregate amount of such costs and expenses referred to in clause (i) of this sentence shall not
exceed $[***] (exclusive of amendments hereto and subject to the last sentence of this subsection (b)),
and (y) the aggregate amount of such costs and expenses referred to in clause (ii) of this sentence and
incurred after the Effective Date shall not exceed $[***] per annum; provided that after the occurrence of
an Event of Default, such caps referred to in clause (y) shall not be applicable. Agent shall deliver to the
Seller copies of documentation supporting any of the foregoing demands on the Seller’s request. The
Seller, Agent, each Buyer, and each Indemnified Party also agree not to assert any claim against the
others or any of their Affiliates, or any of their respective officers, directors, members, managers,
employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Program Documents, the actual or proposed use of the
proceeds of the Transactions, this Agreement or any of the transactions contemplated hereby or thereby.
THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
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APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES. The [***] cap referred to in subsection
(b)(ii)(x)(i) shall only apply to the original documentation in respect of the facility evidenced by the
Program Documents.
(c) If the Seller fails to pay when due any costs, expenses or other amounts payable by it
under this Agreement, including, without limitation, reasonable fees and expenses of counsel and
indemnities, such amount may be paid on behalf of the Seller by Agent for the benefit of Buyers
(including without limitation by Agent for the benefit of Buyers netting such amount from the proceeds of
any Purchase Price paid by Agent for the benefit of Buyers to the Seller hereunder), in its sole discretion
and the Seller shall remain liable for any such payments by Agent for the benefit of Buyers (except those
that are paid by Seller, including by netting against any Purchase Price). No such payment by Agent for
the benefit of Buyers shall be deemed a waiver of any of Agent or any Buyer’s rights under the Program
Documents (except those that are paid by Seller, including by netting against any Purchase Price).
(d) Without prejudice to the survival of any other agreement of Seller hereunder, the
covenants and obligations of Seller contained in this Section 23 shall survive the payment in full of the
Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Agent
for the benefit of Buyers against full payment therefor.
(e) The obligations of Seller from time to time to pay the Repurchase Price and all other
amounts due under this Agreement are full recourse obligations of Seller.
24. WAIVER OF DEFICIENCY RIGHTS
Seller hereby expressly waives, to the fullest extent permitted by law, any right that it may have
to direct the order in which any of the Purchased Items shall be disposed of in the event of any disposition
pursuant hereto.
25. REIMBURSEMENT
All sums reasonably expended by Agent and/or Buyers in connection with the exercise of any
right or remedy provided for herein shall be and remain Seller’s obligation (unless and to the extent that
Seller is the prevailing party in any dispute, claim or action relating thereto or Agent, a Buyer or an
Indemnified Party is grossly negligent or engages in willful misconduct relating thereto). The Seller
agrees to pay, with interest at the Post-Default Rate to the extent that an Event of Default has occurred,
the documented out-of-pocket expenses and reasonable attorneys’ fees reasonably incurred by Agent,
Buyers and/or Custodian in connection with the preparation, negotiation, enforcement (including any
waivers), administration and amendment of the Program Documents (regardless of whether a Transaction
is entered into hereunder), the reasonable taking of any action, including legal action, required or
permitted to be taken by Agent and/or Buyers (without duplication to Agent and/or Buyers) and/or
Custodian pursuant thereto, subject to Section 23(b), any due diligence, inspection, testing and review
costs and expenses in connection with any “due diligence” or loan agent reviews conducted by Agent or
on its behalf or by refinancing or restructuring in the nature of a “workout” all pursuant to the terms of
this Agreement.
26. FURTHER ASSURANCES
The Seller agrees to do such further acts and things and to execute and deliver to Agent such
additional assignments, acknowledgments, agreements, powers and instruments as are reasonably
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required by Agent to carry into effect the intent and purposes of this Agreement and the other Program
Documents, to grant, preserve, protect and perfect the interests of Agent for the benefit of Buyers in the
Purchased Items or to better assure and confirm unto Agent for the benefit of Buyers its rights, powers
and remedies hereunder and thereunder.
27. TERMINATION
This Agreement shall remain in effect until the Termination Date. However, no such termination
shall affect the Seller’s outstanding obligations to Agent or any Buyer at the time of such termination.
The Seller’s obligations under Section 5, Section 12, Section 23, and Section 25 and any other
reimbursement or indemnity obligation of the Seller to Agent or any Buyer pursuant to this Agreement or
any other Program Documents shall survive the termination hereof.
28. SEVERABILITY
If any provision of any Program Document is declared invalid by any court of competent
jurisdiction, such invalidity shall not affect any other provision of the Program Documents, and each
Program Document shall be enforced to the fullest extent permitted by law.
29. BINDING EFFECT; GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Seller may not assign or transfer any of its rights or obligations
under this Agreement or any other Program Document without the prior written consent of Agent. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 AS WELL AS 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).
30. AMENDMENTS
Except as otherwise expressly provided in this Agreement, any provision of this Agreement may
be modified or supplemented only by an instrument in writing signed by the Seller, Agent and Buyers and
any provision of this Agreement imposing obligations on the Seller or granting rights to Agent or Buyers
may be waived by Agent.
31. 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.
32. CAPTIONS
The table of contents and captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this
Agreement.
33. COUNTERPARTS
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This Agreement may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts shall together constitute but
one and the same instrument. The parties agree that this Agreement, any documents to be delivered
pursuant to this Agreement and any notices hereunder may be transmitted between them by email and/or
facsimile. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files
shall constitute original signatures and are binding on all parties. Documents executed, scanned and
transmitted electronically, and electronic signatures, shall be deemed original signatures for purposes of
this Agreement and any related documents and all matters related thereto, with such scanned and
electronic signatures having the same legal effect as original signatures. The parties agree that this
Agreement and any related document may be accepted, executed or agreed to through use of an electronic
signature in accordance with applicable eCommerce Laws. Any document accepted, executed or agreed
to in conformity with such eCommerce Laws, by one or both parties, will be binding on both parties the
same as if it were physically executed. Each party consents to the commercially reasonable use of third
party electronic signature capture service providers and record storage providers.
34. SUBMISSION TO JURISDICTION; WAIVERS
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND/OR ANY OTHER PROGRAM
DOCUMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS
OF THE STATE OF MICHIGAN, THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA FOR THE EASTERN DISTRICT OF MICHIGAN, AND APPELLATE COURTS
FROM ANY THEREOF;
(B) 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;
(C) 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 IN SECTION 21 OR AT SUCH OTHER ADDRESS
OF WHICH AGENT SHALL HAVE BEEN NOTIFIED; AND
(D) 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.
35. WAIVER OF JURY TRIAL
SELLER, AGENT AND BUYERS HEREBY IRREVOCABLY WAIVE, 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
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AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
36. ACKNOWLEDGEMENTS
The Seller hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Program Documents;
(b) Agent and each Buyer has no fiduciary relationship to the Seller; and
(c) no joint venture exists among Agent, Buyers and the Seller.
37. HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS.
Subject to the terms set forth below, Agent or Buyers shall have free and unrestricted use of all
Purchased Assets and nothing in this Agreement shall preclude Agent or Buyers from engaging in
repurchase transactions with the Purchased Assets or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Purchased Assets (each of the foregoing, a “Repledge
Transaction”) to a third party (each, a “Repledgee”). Notwithstanding the foregoing, no such Repledge
Transaction under this Section 37 shall relieve Agent or a Buyer of its obligations under the Program
Documents, including, without limitation, Agent’s or Buyer's (as applicable) obligation to transfer
Purchased Assets to Seller pursuant to the terms of the Program Documents, and its obligation to return to
Seller the exact Purchased Assets and the related Purchased Items and not substitutes therefor.
Additionally, (i) with respect to any Repledge Transaction that constitutes a securitization of the
Purchased Assets or Agent’s or Buyers’(as applicable) interests therein (the “Securitization Collateral”),
the party that ultimately receives a security interest in such Securitization Collateral (the “Securitization
Secured Party”) shall enter into a side letter, in form and substance acceptable to Agent and Seller,
whereby the Securitization Secured Party agrees that (x) upon an event of default (or term of similar
significance) pursuant to the related securitization documents such that the Securitization Secured Party is
able to take possession of or otherwise realize upon the Securitization Collateral, the Securitization
Secured Party shall provide notice thereof to Seller, and Seller shall have the right to then purchase
Purchased Loans from the Securitization Secured Party at the Repurchase Price for such Purchased Loans
within thirty (30) days of the receipt of such notice and (y) upon remittance of the applicable Repurchase
Price, the Seller shall automatically become the owner of the Purchased Loans and the servicing rights
related thereto and all Obligations of Seller under this Agreement shall cease to exist other than those that
by their express terms survive and (z) the Securitization Secured Party shall automatically cease to have
any right, title or interest in such Purchased Loans and the servicing rights related thereto, (ii) the
Purchased Assets shall not be transferred from the Custodian except pursuant to the terms of the Custodial
Agreement, (iii) regardless of the form of Repledge Transaction, the applicable certificates or other form
of collateral representing the Repledgee’s interest in the Purchased Assets (the “Repledged Collateral”)
shall initially be held by Deutsche Bank National Trust Company as custodian, or such other custodian as
the Agent or Buyers (as applicable) notify the Seller shall serve as the initial custodian with respect to
such Repledged Collateral in the applicable Repledge Transaction (which notice shall be no less than five
(5) Business Days prior to the applicable Repledged Collateral being transferred to such other initial
custodian, along with key contact information for such custodian) (the “Repledge Custodian”), and (iv)
the Agent or Buyers (as applicable) shall provide the Seller with no less than five (5) Business Days prior
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written notice before any Repledged Collateral is transferred from the Repledge Custodian to an
alternative custodian, along with key contact information at the applicable alternative custodian.
38. ASSIGNMENTS
(a) The Seller may assign any of its rights or obligations hereunder only with the prior
written consent of Agent and Buyers. Each Buyer may from time to time, with the consent of Seller which
shall not be unreasonably withheld, continued or delayed, assign all or a portion of its rights and its
obligations under this Agreement and the Program Documents (provided that no obligations of NCFA
Buyer shall be assignable) to any party pursuant to an executed assignment and acceptance by such Buyer
and the applicable assignee in form and substance acceptable to such Buyer and Seller (“Assignment and
Acceptance”), specifying the percentage or portion of such rights and obligations assigned. On the
effective date of any such assignment, (A) such assignee will be a party hereto and to each Program
Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and will
succeed to the related rights and obligations of such Buyer hereunder, and (B) such Buyer will, to the
extent of such rights and obligations so assigned, be released from its obligations (but not its rights to the
extent such rights are intended to survive any such assignment) hereunder and under the Program
Documents. Any assignee of a Buyer hereunder shall be subject to the terms and conditions of the
Administration Agreement. Any assignment or transfer by a Buyer of rights or obligations under this
Agreement that does not comply with this Section 38 shall be treated for purposes hereof as a sale by such
Buyer of a participation in such rights and obligations in accordance with Section 38(d) hereof.
(b) Reserved.
(c) Upon the Seller’s consent to an assignment, the Seller agrees to reasonably cooperate
with Agent and Buyers in connection with any such assignment, to execute and deliver replacement notes,
and to enter into such restatements of, and amendments, supplements and other modifications to, this
Agreement and the other Program Documents in order to give effect to such assignment.
(d) A Buyer may sell participations to one (1) or more Persons in or to all or a portion of its
rights under this Agreement to any Person; provided, however, that (i) such Buyer’s obligations under this
Agreement shall remain unchanged, (ii) such Buyer shall remain solely responsible to the other parties
hereto for the performance of such obligations; and (iii) 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
other Program Documents except as provided in Section 5 hereof; provided that no such restrictions shall
apply if an Event of Default has occurred and is continuing.
(e) Agent, solely for this purpose as Seller’s non-fiduciary agent, shall maintain a register
(the “Register”) on which it will record each assignment and participation hereunder and each
Assignment and Acceptance. The Register will include the name and address of Agent and Buyers
(including all assignees, participants and successors) and the percentage or portion of such rights and
obligations assigned. The entries in the Register will be conclusive absent manifest error. Seller shall
treat each Person whose name is recorded in the Register as a Buyer for all purposes of this Agreement;
provided however, that any failure to make any such recordation, or any error in such recordation shall
not affect Seller’s obligations in respect of such rights. This Section 38(e) is intended to comprise a book
entry system within the meaning of section 5f.103-1(c) of the regulations promulgated by the U.S.
Department of the Treasury that is the exclusive way for Buyers (or any of its assignees or successors) to
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transfer an interest under this Agreement and these provisions shall be interpreted in a manner consistent
with and so as to effect such intent.
39. SINGLE AGREEMENT
The Seller, Agent and Buyers acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in consideration
of each other. Accordingly, the Seller, Agent and Buyers each agree (i) to perform all of its obligations in
respect of each Transaction hereunder, and that a default in the performance of any such obligations shall
constitute a default by it in respect of all Transactions hereunder; (ii) that payments, deliveries and other
transfers made by any of them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfers in respect of any other Transaction hereunder,
and the obligations to make any such payments, deliveries and other transfers may be applied against each
other and netted; and (iii) to promptly notice to the other after any such set off or application.
40. INTENT
(a) The Seller, Agent and Buyers recognize that this Agreement and each Transaction
hereunder is a “repurchase agreement as that term is defined in Section 101(47)(A)(i) of the Bankruptcy
Code, a “securities contract” as that term is defined in Section 741(7)(A)(i) of the Bankruptcy Code, and a
“master netting agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy Code, that
all payments hereunder are deemed “margin payments” or “settlement payments” as defined in the
Bankruptcy Code, and that the pledge of the Related Security in Section 8(a) hereof is intended to
constitute a “security agreement,” “securities contract” or “other arrangement or other credit
enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of
Sections 101(38A)(A), 101(47)(a)(v) and 741(7)(A)(xi) of the Bankruptcy Code. The Seller, Agent and
Buyers recognize that the Agent and Buyers shall be entitled to, without limitation, the liquidation,
termination, acceleration and non-avoidability rights afforded to parties to “repurchase agreements”
pursuant to, without limitation, Sections 559, 362(b)(7) and 546(f) of the Bankruptcy Code, “securities
contracts” pursuant to, without limitation, Sections 555, 362(b)(6) and 546(e) of the Bankruptcy Code and
“master netting agreements” pursuant to, without limitation, Sections 561, 362(b)(27) and 546(j) of the
Bankruptcy Code. Seller, Agent and Buyers further recognize and intend that this Agreement is an
agreement to provide financial accommodations and is not subject to assumption or assignment pursuant
to Bankruptcy Code Section 365(a).
(b) It is understood that Agent and Buyers’ right to liquidate the Purchased Items delivered to
it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise
exercise any other remedies pursuant to Section 19 hereof is a contractual right to liquidate, accelerate or
terminate such Transaction as described in, without limitation, Sections 555, 559 and 561 of the
Bankruptcy Code; any payments or transfers of property made with respect to this Agreement or any
Transaction to satisfy a Margin Deficit is considered a “margin payment” as such term is defined in
Bankruptcy Code Section 741(5).
(c) The parties hereby agree that all Servicing Agreements and any provisions hereof or in
any other document, agreement or instrument that is related in any way to the servicing of the Purchased
Assets shall be deemed “related to” this Agreement within the meaning of Sections 101(38A)(A),
101(47)(a)(v) and 741(7)(A)(xi) of the Bankruptcy Code and part of the “contract” as such term is used in
Section 741 of the Bankruptcy Code.
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(d) The parties further agree 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 the FDIA, and any rules, orders or
policy statement thereunder.
(e) 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, as amended
(“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.
41. CONFIDENTIALITY
(a) Agent, Buyers and Seller hereby acknowledge and agree that all written or
computer-readable information provided by one party to the other regarding the terms set forth in
any of the Program Documents or the Transactions contemplated hereby or thereby or regarding
any other confidential or proprietary information of a party, including, without limitation, any
financial information of Seller provided to Agent, including, without limitation, pursuant to
Section 13(a) (the “Confidential Terms”), will be kept confidential by such party, and will not be
divulged to any party without the prior written consent of such other party except to the extent
that (i) such information is disclosed to direct or indirect parent companies, Subsidiaries,
Affiliates, directors, officers, members, managers, shareholders, legal counsel, auditors,
accountants, employees, service providers or agents (the “Representatives”); provided that such
Representatives are informed of the confidential nature of such information and the disclosing
party is responsible for their breach of these confidentiality provisions; provided, further, that
with respect to any financial information of Seller provided to Agent, including, without
limitation, financial information provided pursuant to Section 13(a), such financial information is
only disclosed to Representatives in connection with the ongoing administration or performance
of the Program Documents, (ii) disclosure of such information is required by law, rule, regulation
or order of any court, taxing authority, governmental agency or regulatory body, governmental
agencies, or in connection with any other legal, governmental or regulatory process, (iii) any of
the Confidential Terms are in the public domain other than due to a breach of the provisions of
this Section 41, (iv) other than with respect to any financial information of Seller provided to
Agent, including, without limitation, pursuant to Section 13(a), which shall require Seller’s
separate and prior written consent to disclose, disclosure is made to any approved hedge
counterparty to the extent necessary to obtain any hedging arrangement, (v) other than with
respect to any financial information of Seller provided to Agent, including, without limitation,
pursuant to Section 13(a), which shall require Seller’s separate and prior written consent to
disclose, any such disclosure is made in connection with an offering of securities, (vi) other than
with respect to any financial information of Seller provided to Agent, including, without
limitation, pursuant to Section 13(a), which shall require Seller’s separate and prior written
consent to disclose, disclosures are made in Seller’s financial statements or footnotes, (vii) such
disclosures are made to lenders or prospective lenders to Seller, buyers or prospective buyers of
Seller’s business, sellers or prospective sellers of businesses to Seller and its counsel,
accountants, representatives and agents, (viii) such disclosure is to any assignee or participant or
proposed assignee or participant of Buyer or, any other financing source or provider to NCFA
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Buyer, SPV Buyer or any other Buyer (including any potential assignees or purchasers from such
financing source or provider), or any entity established as part of a transaction with each such
party, and to any Representative of each such party; provided that such receiving party (except
for Representatives) shall enter into a Non-Disclosure Agreement and each such Representative
is informed of the confidential nature of such information and the disclosing party is responsible
for their breach of these confidentiality provisions; or (ix) after an Event of Default has occurred,
such disclosure is made in connection with any enforcement of any Program Document or in
connection with any sale, disposition, enforcement or management of the mortgage loans;
provided that such receiving party (except for Representatives) shall enter into a Non-Disclosure
Agreement and each such Representative is informed of the confidential nature of such
information and the disclosing party is responsible for their breach of these confidentiality
provisions. Notwithstanding the foregoing or anything to the contrary contained herein or in any
other Program Document, the parties hereto may disclose to any and all Persons, without
limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact
relevant to understanding the federal, state and local tax treatment of the Transactions, and all
materials of any kind (including opinions or other tax analyses) relating to such federal, state and
local tax treatment and that may be relevant to understanding such tax treatment; provided that,
except as provided above, no party may disclose the name of or identifying information with
respect to Seller, Agent, any Buyer, their Affiliates or any other Indemnified Party, or any
pricing terms (including, without limitation, the Applicable Margin, Applicable Percentage and
Purchase Price) or other nonpublic business or financial information (including any sublimits and
financial covenants) that is unrelated to the federal, state and local tax treatment of the
Transactions and is not relevant to understanding the federal, state and local tax treatment of the
Transactions, without the prior written consent of the other parties. For the avoidance of doubt, any
recipient of Confidential Terms that divulges such information to another Person (whether a
Representative, third party, or otherwise, and regardless of whether such Person is subject to a Non-
Disclosure Agreement) shall remain liable for any breach of the terms hereof by such other Person as if
such breach were made directly by the divulging party.
(b) In the case of disclosure by Seller, Agent or Buyers, other than pursuant to Section
41(a)(i), (iii), (vi) or (vii), the disclosing party shall, to the extent permitted by law,
provide the other parties with prior written notice to permit the other party to seek a
protective order or to take other appropriate action. The disclosing party shall use
commercially reasonable efforts to cooperate in the other party’s efforts to obtain a
protective order or other reasonable assurance that confidential treatment will be
accorded the Program Documents. If, in the absence of a protective order, the disclosing
party or any of its Representatives is compelled as a matter of law to disclose any such
information, the disclosing party may disclose to the party compelling disclosure only the
part of the Program Documents it is compelled to disclose (in which case, prior to such
disclosure, the disclosing party shall, to the extent permitted by law, use commercially
reasonable efforts to advise and consult with the other parties and their counsel as to such
disclosure and the nature and wording of such disclosure).
(c) Notwithstanding anything in this Agreement to the contrary, Agent, Buyers and Seller
shall comply, in all material respects, with all applicable local, state and federal laws,
including, without limitation, all privacy and data protection law, rules and regulations
that are applicable to the Purchased Assets and/or any applicable terms of this Agreement
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(the “Confidential Information”). Seller shall notify Agent and Buyers promptly
following discovery of any breach or compromise in any material respect of any
applicable requirements of law with respect to the security, confidentiality, or integrity of
nonpublic personal information of the customers and consumers of Agent or Buyers.
Seller shall provide such notice to Agent and Buyers by personal delivery, by facsimile
with confirmation of receipt, or by overnight courier with confirmation of receipt to the
applicable requesting individual.
42. SERVICING
(a) Subject to subsection (d) below, the Seller covenants to maintain or cause the servicing of
the Purchased Assets to be maintained in conformity with Accepted Servicing Practices
and pursuant to the related underlying Servicing Agreement, if any. In the event that the
preceding language is interpreted as constituting one or more servicing contracts, each
such servicing contract shall terminate automatically upon the earliest of (i) an Event of
Default, or (ii) the date on which all the Obligations have been paid in full.
(b) During the period the Seller is servicing the Purchased Assets for Agent for the benefit of
Buyers, (i) the Seller agrees that Agent for the benefit of Buyers is the owner of all
Servicing Records relating to Purchased Assets that have not been repurchased, including
but not limited to any and all servicing agreements, files, documents, records, data bases,
computer tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of such Loans (the “Servicing Records”),
and (ii) the Seller grants Agent for the benefit of Buyers a security interest in all servicing
fees and rights relating to the Purchased Assets that have not been repurchased and all
Servicing Records to secure the obligation of the Seller or its designee to service in
conformity with this Section 42 and any other obligation of the Seller to Agent and
Buyers. At all times during the term of this Agreement, the Seller covenants to hold such
Servicing Records in trust for Agent for the benefit of Buyers and to safeguard, or cause
each Subservicer to safeguard, such Servicing Records and to deliver them, or cause any
such Subservicer to deliver them to the extent permitted under the related Servicing
Agreement promptly to Agent or its designee (including the Custodian) at Agent’s
reasonable request.
(c) If any Loan that is proposed to be sold on a Purchase Date is serviced by a servicer other
than the Seller (a “Subservicer”), or if the servicing of any Purchased Asset is to be
transferred to a Subservicer, the Seller shall provide a copy of the related servicing
agreement and an Instruction Letter executed by such Subservicer, Seller and Agent
(collectively, the “Servicing Agreement”) to Agent at least one (1) Business Day prior to
such Purchase Date or transfer date, as applicable, which Servicing Agreement shall be in
form and substance reasonably acceptable to Agent. In addition, the Seller shall have
obtained the prior written consent of Agent for such Subservicer to subservice the Loans,
which consent may not unreasonably be withheld or delayed.
(d) After the Purchase Date, until the Repurchase Date, the Seller will have no right to
modify or alter the terms of the Loan or consent to the modification or alteration of the
terms of any Loan, except as required by law, Agency Guidelines, FHA Regulations,
requirements for VA Loans, Rural Housing Service Regulations, Accepted Servicing
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Practices, any Program Documents or other requirements, and the Seller will have no
obligation or right to repossess any Loan or substitute another Loan, except as provided
in any Custodial Agreement or any Program Document, including, without limitation,
Section 16 of this Agreement.
(e) The Seller shall permit Agent and each Buyer to inspect upon reasonable prior written
notice at a mutually convenient time the Seller’s servicing facilities, as the case may be,
for the purpose of satisfying Agent and each Buyer that the Seller has the ability to
service the Loans as provided in this Agreement. In addition, with respect to any
Subservicer which is not an Affiliate of the Seller, the Seller shall use its best efforts to
enable Agent and each Buyer to inspect the servicing facilities of such Subservicer.
(f) Seller retains no economic rights to the servicing of the Purchased Assets; provided that
Seller shall continue to service the Purchased Assets hereunder as part of its Obligations
hereunder. As such, Seller expressly acknowledges that the Purchased Assets are sold to
Agent for the benefit of Buyers on a “servicing released” basis.
43. PERIODIC DUE DILIGENCE REVIEW
The Seller acknowledges that Agent has the right to perform continuing due diligence reviews
with respect to the Purchased Assets and Seller, for purposes of verifying compliance with the
representations, warranties, covenants and specifications made hereunder or under any other Program
Document, or otherwise, and the Seller agrees that upon reasonable (but no less than three (3) Business
Days’) prior notice to the Seller (provided that upon the occurrence of a Default or an Event of Default,
no such prior notice shall be required), Agent or its respective authorized representatives will be permitted
during normal business hours to examine, inspect, make copies of, and make extracts of, the Mortgage
Files, the Servicing Records and any and all documents, records, agreements, instruments or information
relating to such Purchased Assets in the possession, or under the control, of the Seller and/or the
Custodian. Provided that no Event of Default has occurred and is continuing, Agent agrees that it shall
exercise commercially reasonable efforts, in the conduct of any such due diligence, to minimize any
disruption to Seller’s normal course of business. The Seller also shall make available to Agent a
knowledgeable financial or accounting officer for the purpose of answering questions respecting the
Mortgage Files and the Purchased Assets. Without limiting the generality of the foregoing, the Seller
acknowledges that Agent for the benefit of Buyers shall purchase Loans from the Seller based solely upon
the information provided by the Seller to Agent in the Loan Schedule and the representations, warranties
and covenants contained herein, and that Agent, at its option, has the right, at any time to conduct a partial
or complete due diligence review on some or all of the Purchased Assets, including, without limitation,
ordering new broker’s price opinions, new credit reports, new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such Loan. Agent may
underwrite such Loans itself or engage a mutually agreed upon third party underwriter to perform such
underwriting. The Seller agrees to cooperate with Agent and any third party underwriter in connection
with such underwriting, including, but not limited to, providing Agent and any third party underwriter
with reasonable access to any and all documents, records, agreements, instruments or information relating
to such Purchased Assets in the possession, or under the control, of the Seller. In addition, Agent has the
right to perform continuing Due Diligence Reviews of Purchased Assets for purposes of verifying
compliance with the representations, warranties, covenants and specifications made hereunder or under
any other Program Document, or otherwise. The Seller and Agent further agree that all reasonable and
documented out-of-pocket costs and expenses incurred by Agent in connection with Agent’s activities
pursuant to this Section 43 shall be paid by the Seller subject to the limitations of Section 23(b) of this
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Agreement and that, unless an Event of Default has occurred and is continuing, Agent shall be limited to
one (1) on-site visit in any calendar year.
44. SET-OFF
In addition to any rights and remedies of Agent and Buyers provided by this Agreement and by
law, Agent and each Buyer shall have the right, without prior notice to the Seller (except for such notice
(to the extent required) and right to cure as may be specifically provided hereunder in connection with
certain Events of Default), any such notice being expressly waived by the Seller to the extent permitted by
applicable law, upon any amount becoming due and payable by the Seller hereunder (whether at the
stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount
any and all Property and deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims and any other obligation (including to return
excess margin), in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by Agent or any Buyer to or for the credit or the account of the
Seller only to the extent specifically relating to this Agreement, the other Program Documents or the
Transactions described hereunder. Agent and each Buyer may set-off cash, the proceeds of the
liquidation of any Purchased Items and all other sums or obligations owed by Agent or such Buyer, as
applicable to the Seller, against all of the Seller’s obligations to Agent or such Buyer, as applicable, under
this Agreement or under any other Program Documents, if such obligations of the Seller are then due,
without prejudice to Agent and each Buyer’s right to recover any deficiency. Agent agrees promptly to
notify the Seller after any such set-off and application made by Agent or any Buyer; provided that the
failure to give such notice shall not affect the validity of such set-off and application.
45. ENTIRE AGREEMENT
This Agreement and the other Program Documents embody the entire agreement and
understanding of the parties hereto and thereto and supersede any and all prior agreements, arrangements
and understandings relating to the matters provided for herein and therein. No alteration, waiver,
amendments, or change or supplement hereto shall be binding or effective unless the same is set forth in
writing signed by a duly authorized representative of each party hereto.
46. LIMITATION OF LIABILITY
The Trust is a Delaware statutory trust and a separate legal entity under the Delaware
Statutory Trust Act and pursuant to such act a trustee, when acting in such capacity, is not personally
liable to any person (other than the statutory trust or any beneficial owner thereof) for any act, omission
or obligation of a statutory trust. In furtherance thereof, the parties hereto are put on notice and hereby
acknowledge and agree that the Trust (a) this Agreement is executed and delivered by Wilmington
Savings Fund Society, FSB (“WSFS”), not individually or personally but solely as trustee of the Trust, in
the exercise of the powers and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by WSFS but is made and intended for the purpose of
binding only the Trust, (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 of the
Participant, 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 and warranties made by the Trust in this Agreement and (e) under
no circumstances shall WSFS be personally liable for the payment of any indebtedness or expenses of the
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Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents.
47. ELECTRONIC SIGNATURES
If any party executes this Agreement or any other related document via electronic signature, (i)
such party's creation and maintenance of such party's electronic signature to this Agreement or related
document and such party’s storage of its copy of the fully executed Agreement or related document will
be in compliance with applicable eCommerce Laws to ensure admissibility of such electronic signature
and related electronic records in a legal proceeding, (ii) such party has controls in place to ensure
compliance with applicable eCommerce Laws, including, without limitation, section 201 of E-SIGN and
section 16 of UETA, regarding such party’s electronic signature to the Agreement or related document
and the records, including electronic records, retained by such party will be stored to prevent
unauthorized access to or unauthorized alteration of the electronic signature and associated records, and
(iii) such party has controls and systems in place to provide necessary information, including, but not
limited to, such party’s business practices and methods, for record keeping and audit trails, including
audit trails regarding such party’s electronic signature to this Agreement or related documents and
associated records.
48. WIRE INSTRUCTIONS
(a) In addition to the foregoing, the Agent shall have the right to accept and
act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this
Agreement, set forth on Exhibit F hereto (as such schedule may be updated from time to time
pursuant to the provisions set forth below), and delivered using Electronic Means (as hereinafter
defined). If the Seller elects to give the Instructions using Electronic Means and the Agent in its
discretion elects to act upon such Instructions, the Agent’s understanding of such Instructions
shall be deemed controlling. The Seller understands and agrees that due to the nature of
electronic transmissions, Agent cannot determine the identity of the actual sender of such
Instructions and that the Agent shall conclusively presume that directions that purport to have
been sent by the Seller (and which Instructions appear reasonably valid) have been sent by the
Seller. The Seller shall be responsible for safeguarding the use and confidentiality of applicable
user and authorization codes, passwords and/or authentication keys upon receipt. The Agent shall
not be liable for any losses, costs or expenses arising directly or indirectly from the Agent’s
reliance upon and compliance with such Instructions notwithstanding such directions conflict or
are inconsistent with a subsequent written instruction. The Seller agrees: (i) the Seller shall
assume all risks and liabilities arising out of the use of Electronic Means to submit Instructions to
the Agent, including without limitation the risk of the Agent’s acting on unverified unauthorized
Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed
of the protections and risks associated with the various methods of transmitting Instructions to
the Agent and that there may be more secure methods of transmitting Instructions than the
method(s) selected by the Seller, not otherwise stated herein; and (iii) to notify the Agent
immediately upon learning of any compromise or unauthorized use of the security procedures.
“Electronic Means” shall mean the following communications methods: e-mail, facsimile
transmission, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Agent, or another method or system specified
by the Agent as available for use in connection with its services hereunder.
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LEGAL02/40509503v2
(b) In the event that any party hereto desires to amend the information set
forth on Exhibit F hereto (the “Requesting Party”), such Requesting Party shall submit such
request to the other party hereto. Upon confirmation of the other party that such Requesting
Party’s changes have been confirmed pursuant to its internal protocols, such party shall deliver
confirmation thereof to the Requesting Party. Upon receipt of such confirmation, the Requesting
Party shall revise Exhibit F hereto to reflect the changes requested by the Requesting Party and
shall circulate a revised Exhibit F hereto to the parties hereto. Each party hereto shall promptly
confirm its acceptance of Exhibit F hereto and upon such confirmation from at least one email
address from each party hereto, the Requesting Party shall confirm to all parties hereto that such
Exhibit F is amended.
[SIGNATUREPAGEFOLLOWS]
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LEGAL02/40509503v2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
and delivered as of the day and year first above written.
QUICKEN LOANS, LLC, as Seller
By:/s/ Jay Farner
Name: Jay Farner
Title: Chief Executive Officer
NOMURA CORPORATE FUNDING
AMERICAS, LLC, as Agent and a Buyer
By: /s/ Sanil Patel
Name: Sanil Patel
Title: Managing Director
By:/s/ Mary Emily Pagano
Name: Mary Emily Pagano
Title: Assistant Vice President
[Signature Page to Master Repurchase Agreement]
LEGAL02/40509503v2
Schedule 1
REPRESENTATIONSANDWARRANTIESRE:LOANS
1 For purposes of this Schedule 1 and the representations and warranties set forth herein, a
breach of a representation or warranty will be deemed to have been cured with respect to a Loan if and
when Seller has taken or caused to be taken action such that the event, circumstance or condition that
gave rise to such breach no longer adversely affects such Loan. Seller represents and warrants to Buyer
that as to each Loan that is subject to a Transaction hereunder, the Seller hereby makes the following
representations and warranties to Buyer as of the Purchase Date and as of each date such Loan is subject
to a Transaction:
(a) Loans as Described. The information set forth in the Loan Schedule with respect
to the Loan is complete, true and correct in all material respects as of the Purchase Date.
(b) Payments Current. No payment required under the Loan is 30 days or more
delinquent nor has any payment under the Loan been 30 days or more delinquent at any time since the
origination of the Loan.
(c) No Outstanding Charges. There are no defaults in complying with the terms of
the Mortgage, and all taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and owing have been paid or
are not delinquent, or an escrow of funds (for Loans other than Cooperative Loans) has been established
in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but
is not yet due and payable and delinquent. Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for
the payment of any amount required under the Loan, except for interest accruing from the date of the
Note or date of disbursement of the Loan proceeds, whichever is earlier, to the day which precedes by one
month the Due Date of the first installment of principal and interest.
(d) Original Terms Unmodified. The terms of the Note and Mortgage have not been
impaired, waived, altered or modified in any respect, from the date of origination except by a written
instrument which has been recorded, if necessary to protect the interests of Buyer, and which has been
delivered to the Custodian or to such other Person as Buyer shall designate in writing, and the terms of
which are reflected in the Loan Schedule. The substance of any such waiver, alteration or modification
has been approved by the issuer of any related PMI Policy and the title insurer, if any, to the extent
required by the policy, and, with respect to RHS Loans, has been approved by the RHS to the extent
required by the Rural Housing Service Guaranty, and its terms are reflected on the Loan Schedule, if
applicable. No Mortgagor has been released, in whole or in part, except in connection with an assumption
agreement, approved by the issuer of any related PMI Policy and the title insurer, to the extent required by
the policy, and with respect to any RHS Loan, the RHS to the extent required by the Rural Housing
Service Guaranty, and which assumption agreement is part of the Mortgage File delivered to the
Custodian or to such other Person as Buyer shall designate in writing and the terms of which are reflected
in the Loan Schedule.
(e) No Defenses. The Note and the Mortgage are not subject to any right of
rescission, set□ off, counterclaim or defense, including without limitation the defense of usury, nor will
the operation of any of the terms of the Note or the Mortgage, or the exercise of any right thereunder,
render either the Note or the Mortgage unenforceable, in whole or in part, or subject to any right of
Schedule 1-1
LEGAL02/40509503v2
rescission, set-off, counterclaim or defense, including without limitation the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no
Mortgagor was a debtor in any state or federal bankruptcy or insolvency proceeding at, or subsequent to,
the time the Loan was originated.
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings or other
improvements upon the Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards covered by extended coverage insurance and such other hazards as are provided for in the
applicable Agency, FHA, VA, RHS or HUD guidelines, as well as all additional requirements set forth in
the Agency Guidelines or the Underwriting Guidelines. If required by the Flood Disaster Protection Act
of 1973, as amended, each Loan is covered by a flood insurance policy meeting the applicable
requirements of the current guidelines of the Federal Insurance Administration as in effect which policy
conforms to the applicable Agency, FHA, VA, RHS or HUD guidelines or Underwriting Guidelines. All
individual insurance policies contain a standard mortgagee clause naming the Seller and its successors
and assigns as mortgagee, and all premiums due and owing thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance policies at the Mortgagor’s cost and
expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Mortgagor’s cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket”
hazard insurance policy covering a condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation
of the insurer and is in full force and effect. Seller has not engaged in, and has no knowledge of the
Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy,
the benefits of the endorsement provided for herein, or the validity and binding effect of such policy,
including, without limitation, to Seller’s knowledge, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have been received, retained or
realized by Seller, in any case, to the extent it would impair coverage under any such policy.
(g) Compliance with Applicable Law. Any and all requirements of any federal, state
or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, anti-predatory lending laws, laws covering fair housing, fair credit reporting,
community reinvestment, homeowners equity protection, equal credit opportunity, mortgage reform and
disclosure laws or unfair and deceptive practices laws applicable to the origination and servicing of such
Loan have been complied with in all material respects, the consummation of the transactions
contemplated hereby will not involve the violation of any such laws or regulations. Seller shall maintain
in its possession, available for Buyer’s inspection, evidence of compliance with all requirements set forth
herein.
(h) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such
satisfaction, cancellation, subordination or rescission other than in the case of a release of a portion of the
land comprising a Mortgaged Property or a release of a blanket Mortgage which release will not cause the
Loan to fail to satisfy the applicable Agency Guidelines. Seller has not waived the performance by the
Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Loan to be in
default, nor has the Seller waived any default resulting from any action or inaction by the Mortgagor.
Schedule 1-2
LEGAL02/40509503v2
Valid First Lien. Each Mortgage is a valid and subsisting first lien on a single parcel or multiple
contiguous parcels of real estate included in the Mortgaged Property, including all buildings and
improvements on the Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems annexed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing, subject in all cases to the exceptions to title
set forth in the title insurance policy with respect to the related Loan, which exceptions are generally
acceptable to prudent mortgage lending companies, the exceptions set forth below and such other
exceptions to which similar properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended to be provided by such
Mortgage. The lien of the Mortgage is subject to:
(1) the lien of current real property taxes and assessments not yet delinquent.
(2) covenants, conditions and restrictions, rights of way, easements and other matters
of the public record as of the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the lender’s title insurance policy delivered to
the originator of the Loan and (a) referred to or otherwise considered in the appraisal made for the
originator of the Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal; and
(3) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided by the Mortgage or
the use, enjoyment, value or marketability of the related Mortgaged Property, and which will not
prevent realization of the full benefits of any Rural Housing Service Guaranty.
Any security agreement, chattel mortgage or equivalent document related to and delivered in connection
with the Loan establishes and creates a valid, subsisting, enforceable and first lien and first priority
security interest on the property described therein and Seller has full right to pledge and assign the same
to Buyer.
(i) Validity of Mortgage Documents. The Note and the Mortgage and any other
agreement executed and delivered by a Mortgagor in connection with a Loan are genuine (or in the case
of an eNote, the copy of the eNote transmitted to Custodian’s eVault is the Authoritative Copy), and each
is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms,
subject to bankruptcy, insolvency, moratorium, reorganization and other laws of general application
affecting the rights of creditors and by general equitable principles. All parties to the Note, the Mortgage
and any other such related agreement had legal capacity to enter into the Loan and to execute and deliver
the Note, the Mortgage and any such agreement, and the Note, the Mortgage and any other such related
agreement have been duly and properly executed by other the applicable related parties. No fraud or
error, omission, misrepresentation, negligence or similar occurrence with respect to a Loan has taken
place on the part of any Person, including without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination or servicing of the Loan or in any mortgage or
flood insurance, if applicable, in relation to such Loan. The Seller has reviewed all of the documents
constituting the Mortgage File and has made such inquiries as they deem necessary to make and confirm
the accuracy of the representations set forth herein.
(j) Full Disbursement of Proceeds. The Loan has been closed and the proceeds of
the Loan have been fully disbursed to or for the account of the Mortgagor and there is no further
requirement for future advances thereunder and any and all requirements as to completion of any on□ site
Schedule 1-3
LEGAL02/40509503v2
or off-site improvement and as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing the Loan and the recording of the Mortgage
were paid or are in the process of being paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Note or Mortgage (excluding refunds that may result from escrow analysis
adjustments).
(k) Ownership. Seller is the sole owner and holder of the Loan and the indebtedness
evidenced by each Note and upon the sale of the Loans to Buyer, Seller will retain the Mortgage Files or
any part thereof with respect thereto not delivered to the Custodian, Buyer or Buyer’s designee, in trust
for the purpose of servicing and supervising the servicing of each Loan. The Loan is not assigned or
pledged to a third party, subject to Takeout Commitments, and Seller has good, indefeasible and
marketable title thereto, and has full right to transfer and sell the Loan to Buyer free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full
right and authority subject to no interest or participation of, or agreement with, any other party, to sell and
assign each Loan pursuant to this Agreement and following the sale of each Loan, Buyer will hold such
Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, except any security interest created pursuant to this Agreement, subject to Takeout
Commitments.
(l) Doing Business. All parties which have had any interest in the Loan, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of
such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state,
(B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a
national bank having a principal office in such state, (D) not doing business in such state, or (E) not
otherwise required to be qualified to do business in such state.
(m) Title Insurance. Other than with respect to a Cooperative Loan, the Loan is
covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance of which is
acceptable to prudent mortgage lending institutions making mortgage loans or reverse mortgage loans, as
applicable, in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance
policy, or with respect to any Loan for which the related Mortgaged Property is located in California a
CLTA lender’s title insurance policy, or other generally acceptable form of policy or insurance acceptable
to the applicable Agency, FHA, VA, RHS or HUD and each such title insurance policy is issued by a title
insurer acceptable to the applicable Agency, FHA, VA, RHS or HUD and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Seller, its successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of the Loan, subject only to the
exceptions contained in clauses (1), (2) and (3) of paragraph (l) of this Schedule 1, and in the case of
adjustable rate Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly
Payment. Where required by state law or regulation, the Mortgagor has been given the opportunity to
choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance
policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged
Property or any interest therein. The title policy does not contain any special exceptions (other than the
standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or
to replace the standard survey exception with a specific survey reading. The Seller, its successors and
assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance
policy is valid and remains in full force and effect and will be in force and effect upon the consummation
of the transactions contemplated by this Agreement. No claims have been made under such lender’s title
Schedule 1-4
LEGAL02/40509503v2
insurance policy, and no prior holder of the related Mortgage, including Seller, has done, by act or
omission, anything which would impair the coverage of such lender’s title insurance policy, including
without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no
such unlawful items have been received, retained or realized by Seller.
(n) No Defaults. There is no default, breach, violation or event which would permit
acceleration existing under the Mortgage or the Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event
which would permit acceleration, and neither Seller nor any of its predecessors, have waived any default,
breach, violation or event which would permit acceleration.
(o) No Mechanics’ Liens. At origination, there were no mechanics’ or similar liens
or claims which have been filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which are or may be liens prior to,
or equal to, the lien of the related Mortgage.
(p) Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property, except those which are insured against by the related
title insurance policy. No improvement located on or being part of the Mortgaged Property is in violation
of any applicable zoning law or regulation.
(q) Origination. The Loan was originated by or in conjunction with a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and examined by a federal or state
authority. Principal payments on the Loan commenced no more than 60 days after funds were disbursed
in connection with the Loan. The Mortgage Interest Rate as well as the lifetime rate cap and the periodic
cap are as set forth on the Loan Schedule, as applicable. The Note is payable in equal monthly
installments of principal and interest, which installments of interest, with respect to adjustable rate Loans,
are subject to change due to the adjustments to the Mortgage Interest Rate on each date on which an
adjustment to the Mortgage Interest Rate with respect to each Loan becomes effective, with interest
calculated and payable in arrears, sufficient to amortize the Loan fully by the stated maturity date, over an
original term of not more than 30 years from commencement of amortization. The Due Date of the first
payment under the Note is no more than 60 days from the date of the Note.
(r) Payment Provisions. Principal payments on the Loan commenced no more than
sixty days after the proceeds of the Loan were disbursed. With respect to each Loan, the Note is payable
on the first day of each month in Monthly Payments. The Note does not permit negative amortization.
There are no convertible Loans which contain a provision allowing the Mortgagor to convert the Note
from an adjustable interest rate Note to a fixed interest rate Note.
(s) Customary Provisions. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure,
subject to applicable federal and state laws and judicial precedent with respect to bankruptcy and right of
Schedule 1-5
LEGAL02/40509503v2
redemption. Upon default by a Mortgagor on a Loan and foreclosure on, or trustee’s sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Loan will be able to deliver good
and merchantable title to the Mortgaged Property, subject to applicable federal and state laws and judicial
precedent with respect to bankruptcy and right of redemption. There is no homestead or other exemption
available to the Mortgagor that would interfere with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose on the related Mortgage, subject to applicable federal and state laws
and judicial precedent with respect to bankruptcy and right of redemption.
(t) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination and collection practices and servicing used by Seller with respect to each Note and Mortgage
are in compliance in all material respects with Accepted Servicing Practices and applicable law. The
Loan has been serviced by Seller and any predecessor servicer in accordance with the terms of the Note.
With respect to escrow deposits and Escrow Payments, if any, all such payments are in the possession of,
or under the control of, Seller and there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. Each escrow of funds that has been established is not
prohibited by applicable law. No escrow deposits or Escrow Payments or other charges or payments due
Seller have been capitalized under the Mortgage or the Note. All Mortgage Interest Rate adjustments
have been made in strict compliance with state and federal law and the terms of the related Note. Any
interest required to be paid on escrowed funds pursuant to state, federal and local law has been properly
paid and credited.
(u) Conformance with Underwriting Guidelines and Agency Guidelines. The Loan
was underwritten in accordance with the applicable Agency Guidelines or Underwriting Guidelines. The
Note and Mortgage (exclusive of any riders) are on forms similar to those used by or acceptable to the
applicable Agency, FHA, VA or HUD, as applicable, and Seller has not made any representations to a
Mortgagor that are inconsistent with the mortgage instruments used.
(v) No Additional Collateral. The Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged Property and the security
interest of any applicable security agreement or chattel mortgage referred to in (i) above.
(w) Appraisal. Unless the applicable Agency, FHA, VA, RHS or HUD requires
otherwise, the Mortgage File contains an appraisal of the related Mortgaged Property or Cooperative Unit
which satisfied the applicable standards of Fannie Mae and Freddie Mac and was made and signed prior
to the approval of the Loan application by a qualified appraiser, duly appointed by Seller or the originator
of the Loan, who had no interest, direct or indirect in the Mortgaged Property or Cooperative Unit or in
any loan made on the security thereof, and whose compensation is not affected by the approval or
disapproval of the Loan, and the appraisal and appraiser both satisfy the requirements of the applicable
Agency, FHA, VA, RHS or HUD and Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Loan
was originated. Seller makes no representation or warranty regarding the value of the Mortgaged
Property or Cooperative Unit.
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified under applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, and no fees or expenses, except as may be required by
local law, are or will become payable by Buyer to the trustee under the deed of trust, except in connection
with a trustee’s sale after default by the Mortgagor.
Schedule 1-6
LEGAL02/40509503v2
(y) Delivery of Mortgage Documents. The Note, the Mortgage, the Assignment of
Mortgage (other than for a MERS Loan) and any other documents required to be delivered under the
Custodial Agreement for each Loan (other than Wet-Ink Loans) have been delivered to the Custodian, and
Control of any eMortgage Loan that is a Purchased Asset has been transferred to the Custodian as agent
for Buyer, except as otherwise provided in the Custodial Agreement. Seller is, or an agent of Seller is, in
possession of a complete, true and materially accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered to the Custodian and
except as otherwise provided in the Custodial Agreement.
(z) No Buydown Provisions; No Graduated Payments or Contingent Interests.
Except for Loans made in connection with employee relocations, no Loan contains provisions pursuant to
which Monthly Payments are (a) paid or partially paid with funds deposited in any separate account
established by Seller, the Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any source other
than the Mortgagor or (c) contains any other similar provisions which may constitute a “buydown”
provision. Except for Loans made in connection with employee relocations, the Loan is not a graduated
payment Loan and the Loan does not have a shared appreciation or other contingent interest feature. Such
employee relocation Loans are identified on the related Loan Schedule.
(aa) Mortgagor Acknowledgment. The Mortgagor has executed a statement to the
effect that the Mortgagor has received all disclosure materials to the extent required by applicable law
with respect to the making of fixed rate Loans and adjustable rate Loans and rescission materials with
respect to refinanced Loans. Seller shall maintain such statement in the Mortgage File.
(ab) No Construction Loans. No Loan was made in connection with the construction
or rehabilitation of a Mortgaged Property or facilitating the trade in or exchange of a Mortgaged Property.
(ac) Acceptable Investment. To Seller’s actual knowledge, there are no specific
circumstances or conditions with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor’s credit standing that are reasonably expected to (i) cause private
institutional investors which invest in loans similar to the Loan, to regard the Loan as an unacceptable
investment, or (ii) adversely affect the value of the Loan in comparison to similar loans.
(ad) LTV, PMI Policy. Except as approved by one of the Agencies, FHA, VA, RHS
or HUD, no Loan has an LTV greater than 100%. If required by the applicable Agency, FHA, VA, RHS
or HUD, the Loan is insured by a PMI Policy. All provisions of any PMI Policy have been and are being
complied with, such policy is in full force and effect, and all premiums due thereunder have been paid.
No action, inaction, or event has occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Loan subject to a PMI Policy obligates the
Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Loan as set forth on the Loan Schedule is net of any such
insurance premium.
(ae) Capitalization of Interest. The Note does not by its terms provide for the
capitalization or forbearance of interest.
(af) No Equity Participation. No document relating to the Loan provides for any
contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or
a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the
Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and Seller
Schedule 1-7
LEGAL02/40509503v2
has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(ag) Proceeds of Loan. The proceeds of the Loan have not been and shall not be used
to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to Seller, except in connection
with a refinanced Loan.
(ah) Origination Date. The origination date is no earlier than ninety (90) days prior to
the related Purchase Date.
(ai) No Exception. Custodian has not noted any material Exceptions on a Custodial
Loan Transmission with respect to the Loan which would materially adversely affect the Loan or Buyer’s
interest in the Loan.
(aj) Occupancy of Mortgaged Property or Cooperative Unit. The occupancy status of
the Mortgaged Property or Cooperative Unit is in accordance with Agency Guidelines. All inspections,
licenses and certificates required to be made or issued with respect to all occupied portions of the
Mortgaged Property or Cooperative Unit and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire underwriting certificates, have been made
or obtained from the appropriate authorities.
(ak) Transfer of Loans. Except with respect to Loans registered with MERS and
Cooperative Loans, the Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located. With respect to each
Cooperative Mortgage Loan, the UCC-3 assignment is in a form suitable for filing in the jurisdiction in
which the Mortgaged Property is located.
(al) Consolidation of Future Advances. Any future advances made to the Mortgagor
prior to the origination of the Loan have been consolidated with the outstanding principal amount secured
by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single
repayment term. With respect to each Loan other than a Cooperative Loan, the lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other
title evidence acceptable to the applicable Agency, FHA, VA, RHS or HUD, as applicable. The
consolidated principal amount does not exceed the original principal amount of the Loan.
(am) No Balloon Payment. No Loan has a balloon payment feature.
(an) Condominiums/ Planned Unit Developments. If the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de minimis planned unit
development) such condominium or planned unit development project is (i) acceptable to the applicable
Agency, FHA, VA, RHS or HUD or (ii) located in a condominium or planned unit development project
which has received project approval from the applicable Agency, FHA, VA, RHS or HUD. The
representations and warranties required by the applicable Agency, FHA, VA, RHS or HUD with respect
to such condominium or planned unit development have been satisfied and remain true and correct.
(ao) Downpayment. The source of the down payment with respect to each Loan has
been verified in accordance with applicable Agency Guidelines.
Schedule 1-8
LEGAL02/40509503v2
(ap) Mortgaged Property Undamaged; No Condemnation Proceedings. There is no
proceeding pending or threatened in writing for the total or partial condemnation of the Mortgaged
Property or Cooperative Unit. The Mortgaged Property or Cooperative Unit is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the
value of the Mortgaged Property or Cooperative Unit as security for the Loan or the use for which the
premises were intended and each Mortgaged Property or Cooperative Unit is in good repair.
(aq) No Violation of Environmental Laws. To the knowledge of Seller, there exists
no violation of any local, state or federal environmental law, rule or regulation with respect to the
Mortgaged Property. To the knowledge of Seller, there is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is
an issue.
(ar) Location and Type of Mortgaged Property. Other than with respect to a
leasehold estate, the Mortgaged Property is a fee simple property located in the state identified in the
Loan Schedule. Any Mortgaged Property that is a leasehold estate meets the guidelines of the applicable
Agency, FHA, VA, RHS or HUD, as applicable. The Mortgaged Property consists of a single parcel or
multiple contiguous parcels of real property with a detached single family residence erected thereon, a
townhouse, or a Cooperative Unit in a Cooperative Project or a two to four-family dwelling, or an
individual condominium in a low rise or high-rise condominium, or an individual unit in a planned unit
development or a de minimis planned unit development and that no residence or dwelling is (i) a mobile
home or (ii) a manufactured home, provided, however, that any condominium or planned unit
development shall not fall within any of the “Ineligible Projects” of part VIII, Section 102 of the Fannie
Mae Selling Guide and shall conform with the Agency Guidelines. The Mortgaged Property is not raw
land. As of the date of origination, no portion of the Mortgaged Property was used for commercial
purposes, and since the date of origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain a home office shall not be
considered as being used for commercial purposes as long as the entire Mortgaged Property has not been
altered for commercial purposes and no portion of the Mortgaged Property is storing any chemicals or
raw materials other than those commonly used for homeowner repair, maintenance and/or household
purposes.
(as) Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Loan in the event that the Mortgaged
Property or Cooperative Unit, as applicable, is sold or transferred without the prior written consent of the
mortgagee thereunder.
(at) Servicemembers Civil Relief Act of 2003. The Mortgagor has not notified
Seller, and Seller has no knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act of 2003.
(au) No Denial of Insurance. No action, inaction, or event has occurred and no state
of fact exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to
coverage under any applicable special hazard insurance policy, primary mortgage guaranty insurance
policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has been or will be received
by Seller or any designee of Seller or any corporation in which Seller or any officer, director, or employee
had a financial interest at the time of placement of such insurance.
Schedule 1-9
LEGAL02/40509503v2
(av) Leaseholds. With respect to any ground lease to which a Mortgaged Property is
subject, (1) a true, correct and complete copy of the ground lease and all amendments, modifications and
supplements thereto is included in the servicing file, and the Mortgagor is the owner of a valid and
subsisting leasehold interest under such ground lease; (2) such ground lease is in full force and effect,
unmodified and not supplemented by any writing or otherwise except as contained in the Mortgage File,
(3) all rent, additional rent and other charges reserved therein have been fully paid to the extent payable as
of the Purchase Date, (4) the Mortgagor enjoys quiet and peaceful possession of the leasehold estate,
subject to any sublease, (5) the Mortgagor is not in default under any of the terms of such ground lease,
and there are no circumstances that, with the passage of time or the giving of notice, or both, would result
in a default under such ground lease, (6) the lessor under such ground lease is not in default under any of
the terms or provisions of such ground lease on the part of the lessor to be observed or performed, (7) the
lessor under such ground lease has satisfied any repair or construction obligations due as of the Purchase
Date pursuant to the terms of such ground lease, (8) the execution, delivery and performance of the
Mortgage do not require the consent (other than those consents which have been obtained and are in full
force and effect) under, and will not contravene any provision of or cause a default under, such ground
lease, (9) the ground lease term extends, or is automatically renewable, for at least five years after the
maturity date of the Note; (10) the Buyer has the right to cure defaults on the ground lease and (11) the
ground lease meets the guidelines of the applicable Agency, FHA, VA, RHS or HUD, as applicable.
(aw) Prepayment Penalty. No Loan is subject to a prepayment penalty.
(ax) Predatory Lending Regulations; High Cost Loans. No Loan (i) is classified as a
High Cost Loan, or (ii) is subject to Section 226.32 of Regulation Z or any similar state law (relating to
high interest rate credit/lending transactions).
(ay) Tax Service Contract. Seller has obtained a life of loan, transferable real estate
tax service contract with an approved tax service contract provider on each Loan and such contract is
assignable without penalty, premium or cost to Buyer.
(az) Flood Certification Contract. Seller has obtained a life of loan, transferable flood
certification contract for each Loan and such contract is assignable without penalty, premium or cost to
Buyer.
(ba) Recordation. Each original Mortgage was recorded or has been sent for
recordation, and, except for those Loans subject to the MERS identification system, all subsequent
assignments of the original Mortgage (other than the assignment to Buyer) have been recorded or sent for
recordation in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien
thereof as against creditors of the Mortgagor, or is in the process of being recorded.
(bb) Located in U.S. No collateral (including, without limitation, the related real
property and the dwellings thereon and otherwise) relating to a Loan is located in any jurisdiction other
than in one of the fifty (50) states of the United States of America or the District of Columbia.
(bc) Single-Premium Credit Life Insurance. In connection with the origination of any
Loan, no proceeds from any Loan were used to purchase any single premium credit insurance policy (e.g.,
life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation
agreement through Seller as a condition of obtaining the extension of credit. No proceeds from any Loan
were used at the closing of such loan to purchase single premium credit insurance policies (e.g., life,
Schedule 1-10
LEGAL02/40509503v2
mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation
agreements as part of the origination of, or as a condition to closing, such Loan.
(bd) FHA Mortgage Insurance, VA Loan Guaranty, Rural Housing Service Guaranty.
With respect to each Agency Loan that is an FHA Loan, the FHA Mortgage Insurance Contract is, or
when issued will be, in full force and effect and to Seller’s knowledge, there exists no circumstances with
respect to such FHA Loan that would permit the FHA to deny coverage under such FHA Mortgage
Insurance. With respect to each Agency Loan that is a VA Loan, the VA Loan Guaranty Agreement is, or
when issued will be, in full force and effect. With respect to each Agency Loan that is an RHS Loan, the
Rural Housing Service Guaranty is, or when issued will be, in full force and effect. All necessary steps on
the part of Seller have been taken to keep such guaranty or insurance valid, binding and enforceable and
to Seller’s knowledge, each is the binding, valid and enforceable obligation of the FHA, the VA and the
RHS, respectively, without currently applicable surcharge, set off or defense.
(be) Qualified Mortgage. Other than with respect to a Permitted Non-Qualified
Mortgage Loan, each Loan satisfied the following criteria: (i) such Loan is a Qualified Mortgage, and (ii)
such Loan is supported by documentation that evidences compliance with the QM Rule or the Ability to
Repay Rule, as applicable.
(bf) Permitted Non-Qualified Mortgage Loans. With respect to each Permitted Non-
Qualified Mortgage Loan, there are no actions, suits, arbitrations, investigations or proceedings pending
or threatened against Seller that questions or challenges the compliance of any Permitted Non-Qualified
Mortgage Loan with the Ability to Repay Rule. Prior to the origination of each Permitted Non-Qualified
Mortgage Loan, if required pursuant to applicable law, Seller or the related Qualified Originator, as
applicable, made a reasonable and good faith determination that the related Mortgagor would have a
reasonable ability to repay such Permitted Non-Qualified Mortgage Loan, according to its terms, in
accordance with, at a minimum, the eight (8) underwriting factors set forth in 12 C.F.R. § 1026.43(c)(2)
as the same may be amended from time to time (or any successor statute or regulation). In addition, if
required pursuant to applicable law with respect to any Permitted Non-Qualified Mortgage Loan
underwritten pursuant to any “Asset Qualification” or “Asset Utilization” program, such Permitted Non-
Qualified Mortgage Loan considered and includes the calculations used to determine Mortgagor’s “debt-
to-income ratio” or “residual income” in the underwriting process and such calculation are included in the
Documentation Capsule. The Mortgage File for each Permitted Non-Qualified Mortgage Loan contains
all necessary third-party records and other evidence and documentation to demonstrate such compliance
by the related Permitted Non-Qualified Mortgage Loan with 12 C.F.R. § 1026.43(c) as the same may be
amended from time to time (or any successor statute or regulation) (the “Documentation Capsule”). If
required pursuant to applicable law, Seller shall provide in connection with the delivery of each Permitted
Non-Qualified Mortgage Loan a Documentation Capsule in the related Mortgage File and related
Servicing File that fully documents how each Permitted Non-Qualified Mortgage Loan meets the ability
to repay requirements of 12 C.F.R. § 1026.43(c) as the same may be amended from time to time (or any
successor statute or regulation). If applicable, the related Documentation Capsule shall contain all
reasonably reliable third party records used by Seller to prove that each Permitted Non-Qualified
Mortgage Loan complies with the ability to repay requirements of 12 C.F.R. § 1026.43(c) as the same
may be amended from time to time (or any successor statute or regulation). If applicable, the related
Documentation Capsule shall also include an evidentiary summary cover checklist that specifically
enumerates each of the eight (8) underwriting factors set forth in 12 C.F.R. § 1026.43(c)(2) as the same
may be amended from time to time (or any successor statute or regulation), and summarizes how each
element of the checklist is satisfied by the Permitted Non-Qualified Mortgage Loan which shall be
certified by either (A) Seller’s (or other applicable Qualified Originator’s) underwriter or (B) the credit
Schedule 1-11
LEGAL02/40509503v2
officer of Seller (or other applicable Qualified Originator’s) involved in the origination of such Permitted
Non-Qualified Mortgage Loan (the “ATR Checklist”).
(bg) Borrower Benefit. Each HARP Loan, as of the date of origination, meets the
applicable borrower benefit requirements as defined by the applicable Agency subject to any exceptions
or variances provided to Seller.
(bh) Cooperative Loans. With respect to each Cooperative Loan, Seller represents
and warrants:
(1) the Cooperative Loan is secured by a valid, subsisting, enforceable and
perfected first lien on the Cooperative Shares issued to the related Mortgagor with respect
to such Cooperative Loan, subject only to the Cooperative Corporation’s lien against
such corporation stock, shares or membership certificate for unpaid assessments of the
Cooperative Corporation to the extent required by applicable law. Any Security
Agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Cooperative Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest on the property described therein
and Seller has full right to sell and assign the same to Buyer. The Cooperative Unit was
not, as of the date of origination of the Cooperative Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien subordinate to the
lien of the Security Agreement.
(2) (i) the term of the related Proprietary Lease is longer than the term of the
Cooperative Loan, (ii) there is no provision in any Proprietary Lease which requires the
Mortgagor to offer for sale the Cooperative Shares owned by such Mortgagor first to the
Cooperative, (iii) there is no prohibition in any Proprietary Lease against pledging the
Cooperative Shares or assigning the Proprietary Lease and (iv) the Recognition
Agreement is on a form of agreement published by the Aztech Document Systems, Inc.
or includes provisions which are no less favorable to the lender than those contained in
such agreement.
(3) There is no proceeding pending or threatened for the total or partial
condemnation of the building owned by the applicable Cooperative Corporation (the
“Underlying Mortgaged Property”). The Underlying Mortgaged Property is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Underlying Mortgaged Property as security for
the mortgage loan on such Underlying Mortgaged Property (the “Cooperative Mortgage”)
or the use for which the premises were intended.
(4) There is no default, breach, violation or event of acceleration existing
under the Cooperative Mortgage or the mortgage note related thereto and no event which,
with the passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration.
(5) The Cooperative Corporation has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its formation. The
Cooperative Corporation has requisite power and authority to (i) own its properties, and
(ii) transact the business in which it is now engaged. The Cooperative Corporation
Schedule 1-12
LEGAL02/40509503v2
possesses all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in which is now
engaged.
(6) The Cooperative Corporation complies in all material respects with all
applicable legal requirements. The Cooperative Corporation is not in default or violation
of any order, writ, injunction, decree or demand of any governmental authority, the
violation of which might materially adversely affect the condition (financial or otherwise)
or business of the Cooperative Corporation.
(7) The Cooperative Note, the Security Agreement, the Cooperative Shares,
the Proprietary Lease or occupancy agreement, and any other documents required to be
delivered under the Custodial Agreement for each Cooperative Loan have been delivered
to Custodian, except as otherwise provided in the Custodial Agreement.
(8) The Security Agreement contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the realization
against the Cooperative Shares of the benefits of the security provided thereby.
(9) As of the date of origination of the Cooperative Loan, the related
Cooperative Project is insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area where
the Cooperative Project is located or as provided in the applicable Agency, FHA, VA,
RHS or HUD guidelines.
(bi) RHS Loans. With respect to each RHS Loan:
(1) All parties which have had any interest in such RHS Loan, whether as
mortgagee or assignee, are (or, during the period in which they held and disposed of such
interest, were) Rural Housing Service Approved Lenders;
(2) The Mortgage is guaranteed by the RHS to the maximum extent
permitted by law and all necessary steps have been taken to make and keep such guaranty
valid, binding and enforceable and the applicable guaranty agreement is the binding,
valid and enforceable obligation of the RHS, to the full extent thereof, without surcharge,
set-off or defense;
(3) In the case of an RHS Loan, no claim for guarantee has been filed;
(4) No Loan is (a) a Section 235 subsidy loan (24 C.F.R. § 235), or a
graduated loan under Section 245 (24 C.F.R. § 203.45 and 24 C.F.R. § 203.436), (b) an
advance claim loan, or (c) a VA vendee loan;
(5) Neither Seller, its servicer, nor any prior holder or servicer of the Loan
has engaged in any action or inaction which would result in the curtailment of a payment
(or nonpayment thereof) by the RHS; and
(6) All actions required to be taken by Seller or the related Qualified
Originator (if different from Seller) to cause Buyer, as owner of the RHS Loan, to be
Schedule 1-13
LEGAL02/40509503v2
eligible for the full benefits available under the applicable insurance or guaranty
agreement have been taken by such entity.
(bj) CEMA Loans. With respect to each Loan which is a CEMA Loan, Seller or
Servicer has possession or control of, and maintains in its Servicing Records, the originals of each
promissory note or other evidence of indebtedness related to such CEMA Loan (other than CEMA
Consolidated Notes which have been delivered to the Custodian), including, without limitation all
previous promissory notes or other evidence of indebtedness referenced in the Consolidation, Extension
and Modification Agreement or CEMA Consolidated Note and any gap, new money or other similar
promissory notes or other evidence of indebtedness of the related mortgagor/borrower. The
Consolidation, Extension and Modification Agreement complies with all applicable laws and is in a form
generally acceptable for sale in the secondary market.
(bk) eNotes. With respect to each eMortgage Loan, the related eNote satisfies all of
the following criteria:
(i) the eNote bears a digital or electronic signature;
(ii) the Hash Value of the eNote indicated in the MERS eRegistry matches the Hash
Value of the eNote as reflected in the eVault;
(iii) there is a single Authoritative Copy of the eNote, as applicable and within the
meaning of Section 9-105 of the UCC or Section 16 of the UETA, as applicable,
that is held in the eVault;
(iv) the Location status of the eNote on the MERS eRegistry reflects the MERS Org
ID of the Custodian;
(v) the Controller status of the eNote on the MERS eRegistry reflects the MERS Org
ID of Buyer;
(vi) the Delegatee status of the eNote on the MERS eRegistry reflects the MERS Org
ID of Custodian;
(vii) the Servicing Agent status of the eNote on the MERS eRegistry is blank;
(viii) There is no Control Failure or Electronic Security Failure with respect to such
eNote;
(ix) the eNote is a valid and enforceable Transferable Record or comprises a “general
intangible” or “payment intangible” within the meaning of the UCC;
(x) there is no defect with respect to the eNote that would result in Buyer having less
than full rights, benefits and defenses of “Control” (within the meaning of the
UETA or the UCC, as applicable) of the Transferable Record; and
(xi) there is no paper copy of the eNote in existence nor has the eNote been papered-
out.
Schedule 1-14
LEGAL02/40509503v2
Schedule 1-15
LEGAL02/40509503v2
Schedule 2
Subsidiaries
One Mortgage Holdings, LLC
One Reverse Mortgage, LLC
QL Ginnie EBO, LLC
QL Ginnie REO, LLC
Quicken Loans Co-Issuer, Inc.
Schedule 2-1
LEGAL02/40509503v2
Schedule 12(c)
Litigation
I. Standard Business Litigation
As a residential mortgage lender originating, closing and servicing loans in all 50 states, Quicken Loans,
LLC may, at any point in time, be named as a party to dozens of legal proceedings which arise in the
ordinary course of business, such as actions alleging improper lending practices, improper servicing, quiet
title actions, improper foreclosure practices, violations of consumer protection laws, etc. In many of these
actions, Quicken Loans may not be the real party of interest, but it may appear in the pleadings because it
is in the chain of title to property over which there may be a dispute. In other cases, such as lien avoidance
cases brought in bankruptcy, Quicken Loans is insured by title insurance and the case is turned over to the
title insurer who tenders our defense.
As to other matters that arise in the ordinary course, management does not believe that the amount of
liability, if any, for any of the pending matters individually or in the aggregate will materially affect
Quicken Loans’ consolidated financial position. However, litigation can have a significant effect on
Quicken Loans for other reasons such as defense costs, diversion of management focus and resources, and
other factors. To the best of Quicken Loans’ information and belief, there are no outstanding judgments,
liens or orders that have not been satisfied.
II. Non-Standard Business Litigation
Schedule 12(c)
Case Title Court Case
Number
Nature of
Action
Description of Claims Date
Served
Phillip Alig, et al. v.
Quicken Loans Inc.,
et al.
US Court of
Appeals for
the Fourth
Circuit
11-c-428 Lender
Liability
Class action lawsuit
alleging violation of
state consumer
protection statutes for
including the
homeowners’
estimated home values
on appraisal order
forms.
06/25/2012
Erik Mattson v.
Quicken Loans Inc.,
et al.
US District
Court for the
District of
Oregon
3:17-
cv-01840
Consumer
Protection
Putative class action
alleges violations of
the Telephone
Consumer Protection
Act by claiming,
among other things,
that: (a) QL called
him, without express
consent, even though
his number was on the
national DNC list; and
(b) QL called him
without having the
proper procedures in
place for maintaining
an internal do not call
list.
11/29/2017
Uzezi Ajomale v.
Quicken Loans, Inc.
and Corelogic
Credco, LLC
US Court
of Appeals
for the
Eleventh
Circuit
20-12952 Fair Credit
Reporting
Act
Putative class action
alleging Quicken
Loans failed to
provide plaintiff
(and a class of
others) with a credit
score disclosure
notice as required by
the Fair Credit
Reporting Act.
* This case was
dismissed by the
district court and
affirmed on
appeal (in QL’s
favor), but the
deadlines for
further appeal
have not expired.
12/15/2017
Schedule 12(c)
HouseCanary, Inc. v.
Quicken Loans Inc.,
One Reverse
Mortgage, LLC, and
In-House Realty LLC
US District
Court for
the
Western
District of
Texas, San
Antonio
Division
5:18-cv-00519 Intellectual
Property
Lawsuit alleging that
Quicken Loans (and
the other defendants)
misappropriated
HouseCanary’s trade
secret information and
used the purported
trade secrets to their
advantage.
03/21/2018
Amanda Hill v. Quicken
Loans Inc.
US District Court
for the Central
District of
California
5:19-cv-00163 Consumer
Protection
Putative class action that
alleges Quicken Loans
violated the Telephone
Consumer Protection Act
by: (a) texting Plaintiff
(and a class of others),
without consent, through
the use of an automatic
telephone dialing
system; and (b) texting
Plaintiff (and a class of
others) after the
individual revoked
consent.
01/28/2019
William Gray v.
Quicken Loans
Inc.
California
Court of
Appeals,
2nd District
56-2019-0052811
8- CU-OR-
VTA
California Civil
Code &
Business and
Professions
Code
Putative statewide
class action that
alleges Quicken
Loans violated
California law by
failing to pay
interest on insurance
proceeds that were
placed into an
escrow account.
06/11/2019
* This case was
dismissed (in QL’s
favor) and is now
on appeal.
Christian Lopez and
Stephen Lawlor v.
Quicken Loans Inc.
US District Court
for the Eastern
District of
Michigan
2:19-cv-13340 Consumer
Protection
Putative class action that
alleges Quicken Loans
violated the Telephone
Consumer Protection Act
by calling Plaintiff (and
a class of others), on
their cell phones, without
consent, through the use
of an automatic
telephone dialing
system.
11/15/2019
Schedule 12(c)
Richard Winters
v. Quicken Loans
Inc.
US District
Court for
the District
of Arizona
2:20-cv-00112 Consumer
Protection
Putative class
action that alleges
Quicken Loans
violated the
Telephone
Consumer
Protection Act by
calling Plaintiff
(and a class of
others), without
consent or after
revoking consent,
through the use of
an automatic
telephone dialing
system or an
artificial or
prerecorded
voice.
01/23/2020
Samuel Voss v.
Quicken Loans
LLC and
MERS
US
District
Court,
Southern
District of
Ohio
1:20-cv-00756-
SJD
Consumer
Protection
Putative statewide
class action alleges
Ohio statutory
violations for
failing to timely
file mortgage
discharges.
08/24/2020
Donna Carter v.
Quicken Loans,
LLC
US District
Court, District
of
Massachusetts
20-11898 Consumer
Protection
Putative statewide
class action that
alleges Quicken
Loans violated
Massachusetts
state law by
placing more than
two calls to clients
in a seven- day
period for
purposes of
debt collection.
09/23/2020
Suzanne Viscuso v.
Quicken Loans,
Inc.
Richland
County
Circuit Court,
South
Carolina
2021-CP-4001216 Consumer
Protection
Putative statewide
class action alleging
data breach and
consumer protection
violations for email
disclosures.
03/22/2021
III. Regulatory and Administrative Matters
As a non-depository mortgage company, Quicken Loans is regulated by and subject to various state
agencies that oversee and regulate mortgage lending and the activities of bank and/or non-bank
financial institutions. These state agencies are generally authorized to: issue licenses or registrations
where state law requires; conduct periodic on-site or remote audits or examinations of the regulated
Schedule 12(c)
institution’s books, files and practices; investigate consumer complaints; issue findings of audit or
compliance variances that may require refunds to borrowers for charges beyond those permitted under
the state’s laws or regulations; assess fines or penalties if administrative rules are not adhered to, and/
or require other corrective actions to be taken.
These agencies also have the authority to seek revocation of an institution’s or individual’s license or
registration to operate as a mortgage lender or loan originator in the state. In the ordinary course of
business and in any given year, Quicken Loans participates in and responds to numerous regular
periodic state examinations. If the state agency issues a finding, Quicken Loans may dispute that
finding or attempt to reconcile any differences of opinion. In other instances, Quicken Loans may
undertake corrective action before being required to do so by the state regulator. In some states, the
state’s attorney general may also investigate consumer complaints regarding mortgage lending and
issue subpoenas, commence informal inquiries or formal investigations. As a licensed mortgage
company Quicken Loans is, in the ordinary course of business, subject to such inquiries and
investigations. Although Quicken Loans may currently be subject to various state examinations and
consumer complaint inquiries, management does not believe the outcomes of these examinations or
inquiries, individually or in the aggregate, will materially affect Quicken Loans’ consolidated financial
position or operations.
Dated: April 13, 2021
Schedule 12(c)
Schedule 13(i)
Related Party Transactions
[***]
Schedule 13(i)-1
LEGAL02/40509503v2
EXHIBITA
COMPLIANCECERTIFICATE
1. I, _______________________, _______________________ of Quicken Loans, LLC (the
“Seller”), do hereby certify that as of the last calendar day of the fiscal [quarter/year] for which
financial statements are being provided with this certification:
(i) Seller is in compliance with all provisions and terms of the Master Repurchase
Agreement, dated as of December 18, 2020 (as amended, restated, supplemented
or otherwise modified from time to time, “Agreement”), among Seller, Nomura
Corporate Funding Americas, LLC, in its capacity as a buyer (together with its
permitted successors and assigns in such capacity hereunder, the “NCFA
Buyer”), Oakdale Secured Funding Trust Quartz, acting with respect to Series
2020-1, in its capacity as a buyer (together with its permitted successors and
assigns in such capacity hereunder, “SPV Buyer” or the “Trust”, and together
with NCFA Buyer and each other entity that may be subsequently added as a
party to this Agreement in the capacity of Buyer pursuant to a joinder agreement,
each, a “Buyer”, and collectively, the “Buyers”), and Nomura Corporate Funding
Americas, LLC (“Nomura”), as agent pursuant hereto (together with its permitted
successors and assigns in such capacity hereunder, “Agent”), and the other
Program Documents;
(ii) no Default or Event of Default has occurred and is continuing thereunder which
has not previously been disclosed or waived[, except as specified below;] [If any
Default or Event of Default has occurred and is continuing, describe the same in
reasonable detail and describe the action Seller has taken or proposes to take
with respect thereto];
(iii) the Seller’s consolidated Adjusted Tangible Net Worth is not less than $[***].
The ratio of the Seller’s consolidated Indebtedness to Adjusted Tangible Net
Worth is not, as of the last day of the most recently completed calendar month,
greater than [***]. The Seller has, on a consolidated basis, cash, Cash
Equivalents and unused borrowing capacity on unencumbered assets that could
be drawn against (taking into account required haircuts) under committed
warehouse and repurchase facilities in an amount equal to not less than [***]. If
as of the last day of any calendar month within the fiscal quarter ended on or
immediately before the last calendar day of the calendar month for which
financial statements are being provided with this certification, the Seller’s
consolidated Adjusted Tangible Net Worth was less than [***] or the Seller, on
a consolidated basis, had cash and Cash Equivalents in an amount that was less
than [***], in either case the Seller’s consolidated Net Income for the fiscal
quarter ended on or immediately before the last calendar day of the calendar
month for which financial statements are being provided with this certification
before income taxes for such fiscal quarter was not less than [***].
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LEGAL02/40509503v2
(iv) The detailed summary on Schedule 1 hereto of the Seller’s compliance with the
financial covenants in clause (iv) hereof, is true, correct and complete in all
material respects.
Capitalized terms used but not defined herein shall have the meanings assigned thereto in the
Agreement.
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LEGAL02/40509503v2
IN WITNESS WHEREOF, I have signed this certificate.
Date: , 20__
QUICKEN LOANS, LLC
By:
Name:
Title:
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LEGAL02/40509503v2
Schedule 1 to Quarterly Certification
Calculation of Financial Covenants as of _______
Liquidity:
Cash $
plus
Cash Equivalents $
Total $
Minimum Liquidity Amount [***]
COMPLIANCE PASS FAIL
Adjusted Tangible Net Worth:
Consolidated Net Worth (total assets over
total liabilities)
$
Less
Book value of all investments in non-
consolidated subsidiaries
$
Less
goodwill $
research and development costs $
Trademarks $
trade names $
Copyrights $
Patents $
rights to refunds and indemnification $
unamortized debt discount and expense $
[other intangibles, except servicing rights] $
Total $
Minimum Adjusted Tangible Net Worth
Amount
[***]
COMPLIANCE PASS FAIL
Leverage:
A-1-4
LEGAL02/40509503v2
Consolidated Indebtedness $
Divided by
Adjusted Tangible Net Worth $
Ratio
Maximum Leverage Amount [***]
COMPLIANCE PASS FAIL
Net Income:
Adjusted Tangible Net Worth as of last
calendar day of the applicable month
[Only applicable if less than [***] in any month in
the quarter]
Cash and Cash Equivalents as of last
calendar day of the applicable month
[Only applicable if less than [***] in any month in
the quarter]
Net Income for the fiscal quarter ended on or
immediately before the last calendar day of
the calendar month for which financial
statements are being provided with this
certification
[Only applicable if both of the prior two conditions
are met.]
$
Total
Net Income requirement [***]
COMPLIANCE PASS FAIL NOT APPLICABLE
A-1-5
LEGAL02/40509503v2
EXHIBITB
FORMOFINSTRUCTIONLETTER
__________ __, 20_
___________________, as Subservicer/Additional Collateral Servicer
____________________
____________________
Attention: _______________
Re: Master Repurchase Agreement, dated as of December 18, 2020, among Quicken Loans,
LLC (the “Seller”), Nomura Corporate Funding Americas, LLC, in its capacity as a buyer
(together with its permitted successors and assigns in such capacity hereunder, the
“NCFA Buyer”), Oakdale Secured Funding Trust Quartz, acting with respect to Series
2020-1, in its capacity as a buyer (together with its permitted successors and assigns in
such capacity hereunder, “SPV Buyer” or the “Trust”, and together with NCFA Buyer
and each other entity that may be subsequently added as a party to this Agreement in the
capacity of Buyer pursuant to a joinder agreement, each, a “Buyer”, and collectively, the
“Buyers”), and Nomura Corporate Funding Americas, LLC (“Nomura”), as agent
pursuant hereto (together with its permitted successors and assigns in such capacity
hereunder, “Agent”).
Ladies and Gentlemen:
As [sub]servicer of those assets described on Schedule 1 hereto, which may be amended or
updated from time to time (the “Eligible Assets”) pursuant to that Servicing Agreement, between you and
the undersigned Seller, as amended or modified, attached hereto as Exhibit A (the “Servicing
Agreement”), you are hereby notified that the undersigned Seller has sold to Buyer such Eligible Assets
pursuant to that certain Master Repurchase Agreement, dated as of December 18, 2020 (as amended,
restated, supplemented or otherwise modified from time to time, the “Agreement”), among the Seller,
Buyers and Agent. Capitalized terms used but not defined herein shall have the meanings assigned
thereto in the Agreement.
You agree to service the Eligible Assets in accordance with the terms of the Servicing Agreement
for the benefit of Buyer and, except as otherwise provided herein, Buyer shall have all of the rights, but
none of the duties or obligations of the Seller under the Servicing Agreement including, without
limitation, payment of any indemnification or reimbursement or payment of any servicing fees or any
other fees. No subservicing relationship shall be hereby created between you and Buyer.
Upon your receipt of written notification by Buyer that a Default has occurred under the
Agreement and identifying the then-current Eligible Assets (the “Default Notice”), you, as [Subservicer]
[Additional Collateral Servicer], hereby agree to remit all payments or distributions made with respect to
such Eligible Assets, net of the servicing fees payable to you with respect thereto, immediately in
accordance with Buyer’s wiring instructions provided below, or in accordance with other instructions that
may be delivered to you by Buyer:
Bank: [JP Morgan Chase Bank, New York (Chasus33)]
ABA: [___________]
A/C: [___________]
A/C Name: [___________]
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LEGAL02/40509503v2
FFC: [___________]
FFC A/C: [___________]
You agree that, following your receipt of such Default Notice, under no circumstances will you
remit any such payments or distributions in accordance with any instructions delivered to you by the
undersigned Seller, except if Buyer instructs you in writing otherwise.
You further agree that, upon receipt written notification by Buyer that an Event of Default has
occurred under the Agreement, Buyer shall assume all of the rights and obligations of Seller under the
Servicing Agreement, except as otherwise provided herein. Subject to the terms of the Servicing
Agreement, you shall (x) follow the instructions of Buyer with respect to the Eligible Assets and deliver
to a Buyer any information with respect to the Eligible Assets reasonably requested by such Buyer, and
(y) treat this letter agreement as a separate and distinct servicing agreement between you and Buyer
(incorporating the terms of the Servicing Agreement by reference), subject to no setoff or counterclaims
arising in your favor (or the favor of any third party claiming through you) under any other agreement or
arrangement between you and the Seller or otherwise. Notwithstanding anything to the contrary herein or
in the Servicing Agreement, in no event shall Buyer be liable for any fees, indemnities, costs,
reimbursements or expenses incurred by you prior to such Event of Default or otherwise owed to you in
respect of the period of time prior to such Event of Default.
Notwithstanding anything to the contrary herein or in the Servicing Agreement, with respect to
those Eligible Assets marked as “Servicing Released” on Schedule 1 (the “Servicing Released Assets”),
you are hereby instructed to service such Servicing Released Assets for a term (the “Servicing Term”)
commencing as of the date such Servicing Released Assets become subject to a purchase transaction
under the Agreement. The Servicing Term shall terminate upon the occurrence of any of the following
events: (i) such Servicing Released Asset is not repurchased by the Seller on the Repurchase Date under
the Agreement, or (ii) you shall have received a written termination notice from Buyer at any time with
respect to some or all of the Servicing Released Assets being serviced by you (each, a “Servicing
Termination”). In the event of a Servicing Termination, you hereby agree to (i) deliver all servicing and
“records” relating to such Servicing Released Assets to the designee of Buyer at the end of each such
Servicing Term and (ii) cooperate in all respects with the transfer of servicing to Buyer or its designee.
The transfer of servicing and such records by you shall be in accordance with customary standards in the
industry and the terms of the Servicing Agreement, and such transfer shall include the transfer of the
gross amount of all escrows held for the related mortgagors (without reduction for unreimbursed advances
or “negative escrows”).
Further, you hereby constitute and appoint Buyer and any officer or agent thereof, with full power
of substitution, as your true and lawful attorney-in-fact with full irrevocable power and authority in your
place and stead and in your name or in Buyer’s own name, following any Servicer Termination with
respect solely to the Servicing Released Assets that are subject to such Servicer Termination, to direct any
party liable for any payment under any such Servicing Released Assets to make payment of any and all
moneys due or to become due thereunder directly to Buyer or as Buyer shall direct including, without
limitation, the right to send “goodbye” and “hello” letters on your behalf. you hereby ratify all that said
attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
For the purpose of the foregoing, the term “records” shall be deemed to include but not be limited
to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation,
A-1-7
LEGAL02/40509503v2
payment history records, and any other records relating to or evidencing the servicing of such Servicing
Released Assets.
This instruction letter may not be amended or superseded without the prior written consent of the
Buyer. Buyer is a beneficiary of all rights and obligations of the parties hereunder.
[NO FURTHER TEXT ON THIS PAGE]
A-1-8
LEGAL02/40509503v2
Please acknowledge receipt of this instruction letter by signing in the signature block below and
forwarding an executed copy to Buyer promptly upon receipt. Any notices to Buyer should be delivered
to the following address: [__________].
Very truly yours,
QUICKEN LOANS, LLC
By:_______________________________
Name:
Title:
Acknowledged and Agreed as of this __ day of ___________, 20__:
[SUBSERVICER] [ADDITIONAL COLLATERAL SERVICER]
By:________________________________
Name:
Title:
B-2
LEGAL02/40509503v2
EXHIBITC
AGENT’S WIRE INSTRUCTIONS
[***]
E-10
LEGAL02/40509503v2
EXHIBIT D
FORMOFSECURITYRELEASECERTIFICATION
[DATE]
[___________]
[___________]
[___________][___________]
Re: Security Release Certification
In accordance with the provisions below and effective as of ___[DATE]________ [ ] (“[ ]”)
hereby relinquishes any and all right, title and interest it may have in and to the Loans described in
Annex A attached hereto upon purchase thereof by the [___________] (“Agent”) from the Seller named
below pursuant to that certain Master Repurchase Agreement, dated as of [___________] (as amended,
restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), as of the
date and time of receipt by [ ] of an amount at least equal to the amount then due to [ ] as set forth on
Annex A for such Loans (the “Date and Time of Sale”) and certifies that all notes, mortgages,
assignments and other documents in its possession relating to such Loans have been delivered and shall
be released to the Seller named below or its designees as of the Date and Time of Sale. Capitalized terms
used but not defined herein shall have the meanings assigned thereto in the Repurchase Agreement.
Name and Address of Lender:
[Custodian]
[ ]
For Credit Account No. [ ]
Attention: [ ]
Phone: [ ]
Further Credit – [ ]
[NAME OF WAREHOUSE LENDER]
By:________________________________
Name:
Title:
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LEGAL02/40509503v2
The Seller named below hereby certifies to Agent that, as of the Date and Time of Sale of the above
mentioned Loans to Agent, the security interests in the Loans released by the above named [corporation]
comprise all security interests in any and all such Loans. The Seller warrants that, as of such time, there
are and will be no other security interests in any or all of such Loans.
QUICKEN LOANS, LLC
By:__________________________________
Name:
Title:
E-2
LEGAL02/40509503v2
ANNEX TO SECURITY RELEASE CERTIFICATION
[List of Loans and amounts due]
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LEGAL02/40509503v2
EXHIBIT E
FORM OF NON-DISCLOSURE AGREEMENT
[DATE]
[COUNTERPARTY LEGAL NAME]
[COUNTERPARTY ADDRESS]
[Attention:]
All:
Nomura Corporate Funding Americas, LLC (“Nomura”) proposes to make available to [Insert legal
name of Counterparty] (the “Company”), certain proprietary, non-public or confidential information
regarding a master repurchase agreement and other associated documents (collectively, the “Repo”) to
facilitate the Company’s review (the “Review”) of a potential financing transaction secured by the Repo
(the “Transaction”).
In consideration of the foregoing, the parties agree as follows:
1. The term “Confidential Information” shall mean all non-public, proprietary, confidential or trade
secret information, term sheets, presentations, data, reports, interpretations, forecasts and records
relating to the Transaction, the Repo, any parties to the Repo, Nomura or its affiliates, whether oral,
in writing or otherwise, furnished to the Company or its Representatives (as defined below) by or
on behalf of Nomura or it Representatives. The term “Confidential Information” shall also include:
(i) the fact that discussions or negotiations may take place, are taking place or have taken place
concerning the Transaction or any of the terms or other facts relating thereto (including
Nomura’s participation, if any, in any such discussions or negotiations);
(ii) the existence or the terms of this Non-Disclosure Agreement (this “Agreement”); and
(iii) the fact that the Company or its Representatives (as defined below) have received or
produced any Confidential Information.
The Company acknowledges that the Confidential Information may include material non-public
information, represents that it has developed compliance procedures regarding the use of material
non-public information, and agrees that it will handle any such material non-public information
only in accordance with applicable law.
2. The Confidential Information shall remain the property of Nomura and/or Quicken Loans, LLC
(“Quicken”) and all applicable rights in, to, under, or embodied in the Confidential Information
shall remain in Nomura and/or Quicken. The Company shall: (i) treat all such Confidential
Information as strictly confidential and take all necessary precautions against the disclosure of such
Confidential Information to third parties; and (ii) not, except as hereinafter provided, without the
prior written consent of Nomura or, if applicable, the prior written consent of a party to the Repo,
disclose the Confidential Information to any person in any manner whatsoever. The Company shall
make all appropriate efforts to safeguard Confidential Information consistent with those as the
Company makes with respect to its own confidential information of like importance, but in no
event, less than reasonable care. In furtherance of such efforts, the Company agrees that it will (a)
LEGAL02/40509503v2
not duplicate or distribute to anyone other than its Representatives any of the Confidential
Information for any purposes, including any competitive purpose, except as strictly necessary in
connection with the Review, and (b) take such steps as may be reasonably necessary to prevent any
unauthorized disclosure, copying or use of the Confidential Information. The Company shall use
all Confidential Information for the sole purpose of the Review.
3. Confidential Information shall not be disclosed by the Company without prior written permission of
Nomura except on a confidential basis to the directors, officers, employees, affiliates and authorized
representatives of the Company (including its accountants, attorneys and agents) that are, in each
case, subject to a duty of confidentiality and required to receive such information in connection
with the Review (collectively referred to herein as “Representatives”). The Company shall (a)
cause its directors, officers and employees to observe the terms of this Agreement to the same
extent that the Company is required to do so, (b) advise its Representatives that are not directors,
officers or employees of the existence of this Agreement and instruct them to observe the terms of
this Agreement as if they had executed it, and (c) ensure that any third party Representatives agree
to be bound by confidentiality and use terms at least as restrictive as set forth herein, except for
such Representatives that are bound by a professional duty of confidentiality to the Company (e.g.,
legal counsel and accountants). The Company will be responsible for any breach of the terms of
this Agreement by any of its Representatives.
4. Notwithstanding any other provision in this Agreement, the Company may disclose such
information as may be required (a) by court order, subpoena or similar process issued by a court of
competent jurisdiction or by a governmental body, (b) in any report, statement or testimony
submitted to any municipal, state, Federal or other regulatory body having jurisdiction over the
Company, or (c) in order to comply with any law, order, regulation or ruling applicable to the
Company; provided that in such case, to the extent permitted by applicable law, the Company shall
provide Nomura with prompt prior notice of such requirement so that Nomura may seek a
protective order or other appropriate remedy. Whether or not such protective order is ultimately
obtained, the Company may disclose only that portion of the Confidential Information which the
Company is advised by its counsel is legally required to be disclosed and to exercise reasonable
efforts to obtain confidential treatment of such Confidential Information.
5. The Company will, to the extent permitted by applicable law, rule or regulation, promptly upon
Nomura’s request, destroy and/or deliver to Nomura all copies of the Confidential Information, in
any form whatsoever (including any notes, reports, transmittal letters or other writings prepared by
the Company or its Representatives) in the possession of the Company or its Representatives. Upon
the request of Nomura, Company agrees to provide to Nomura a written confirmation stating that
Company has complied with the terms of this Section 5. Any Confidential Information not
delivered or destroyed shall be retained by the Company or its Representatives in accordance with
the terms of this Agreement.
6. The Company acknowledges and agrees that Nomura has not made and does not make herein any
representation or warranty as to the accuracy or completeness of the Confidential Information.
Furthermore, except as may be set forth in a written definitive agreement between the parties, the
Company acknowledges and agrees that Nomura shall have no liability to the Company resulting
from use of the Confidential Information. Nomura shall not be responsible for revising or updating
any Confidential Information provided to the Company.
E-3
LEGAL02/40509503v2
7. This Agreement shall not apply to any information which (i) becomes generally available to the
public, without violation of any obligation of confidentiality by the Company or its Representatives,
(ii) becomes available to the Company from a third party without knowledge (after due inquiry) by
the Company that the third party violated an obligation of confidentiality to Nomura, or (iii) the
Company can demonstrate is already in the Company’s possession or which the Company has
independently developed prior to the date hereof without the use of the Confidential Information.
8. The Company acknowledges that the unauthorized use or disclosure of Confidential Information
may cause irreparable injury to Nomura and that in the event of a violation or threatened violation
of any of the Company’s obligations hereunder, money damages may not be a sufficient remedy
and Nomura may be entitled to enforce each such obligation by seeking specific performance and
injunctive relief obtained in any court of competent jurisdiction without the necessity of proving
damages, posting any bond or other security. Such remedies shall not be deemed to be the
exclusive remedies for a breach or threatened breach of this Agreement, but shall be in addition to
all remedies available at law or in equity to Nomura, including, without limitation, the recovery of
money damages from Company.
9. THIS AGREEMENT AND ALL MATTERS ARISING FROM, RELATING TO, OR
INCIDENTAL TO THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE SUBSTANTIVE LAW OF THE STATE OF NEW YORK. ANY
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, ACTION OR
PROCEEDING, DIRECTLY OR INDIRECTLY, ARISING OUT OF, OR RELATING TO, THIS
AGREEMENT ARE EXPRESSLY AND IRREVOCABLY WAIVED BY THE PARTIES
HERETO.
10. This Agreement constitutes the entire understanding of the parties and supersedes all prior
agreements with respect to the subject matter hereof. If any term or provision of this Agreement
should be declared invalid by a court of competent jurisdiction, the remaining terms and provisions
of this Agreement shall remain unimpaired and in full force and effect.
11. No amendment to or change, waiver or discharge of, any provision of any document described in
this Agreement shall be valid unless in a writing signed by an authorized representative of either the
applicable party or both parties, as set forth in this Agreement. No delay or omission by either
party hereto to exercise any right or power occurring upon any noncompliance or default by the
other party with respect to any of the terms of this Agreement shall impair any such right or power
or be construed to be a waiver thereof. A waiver by either of the parties hereto of any of the
covenants, conditions, or agreements to be performed by the other shall not be construed to be a
waiver of any succeeding breach thereof or of any covenant, condition, or agreement herein
contained. Unless stated otherwise, all remedies provided for in this Agreement shall be cumulative
and in addition to and not in lieu of any other remedies available to either party at law, in equity, or
otherwise.
12. The parties acknowledge that this Agreement does not obligate either party hereto to enter into any
further agreement or to proceed with or participate in any transaction or refrain from entering into
an agreement or negotiations with any party.
13. Upon the closing of a Transaction contemplated hereunder (a “Closed Transaction”),
notwithstanding anything to the contrary herein or in a definitive agreement related to the Closed
Transaction, dated now or in the future, no conditions of confidentiality within the meaning of
E-4
LEGAL02/40509503v2
Internal Revenue Code Section 6111 or U.S. Treasury Regulation Section 1.6011-4 are intended
and any party (and each employee, representative or other agent) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of the Closed
Transaction and all materials of any kind (including opinions and other tax analyses) that are
provided to such party relating to such tax treatment and tax structure. The provisions of this
Section 13 shall survive the termination of this Agreement.
14. This Agreement may be (a) executed in wet or electronic signature and in counterparts, each of
which shall be deemed an original and both of which taken together shall constitute one and the
same instrument, and/or (b) executed and transmitted by .pdf or facsimile copy by one party to the
other, and such executed .pdf or facsimile copy shall constitute an original executed copy of this
Agreement.
15. The Company’s obligations hereunder with respect to any Confidential Information shall terminate
upon the earlier of (i) the date on which a definitive agreement regarding the Transaction has been
executed between the parties (or their respective affiliates) and (ii) two (2) years from the date of
disclosure of such Confidential Information.
[signature page follows]
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LEGAL02/40509503v2
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives who represent having the authority to bind the respective party to this
Agreement.
NOMURA CORPORATE FUNDING AMERICAS, LLC
By:
Name:
Title:
Agreed and Accepted:
[COUNTERPARTY]
By:
Name:
Title:
E-6
LEGAL02/40509503v2
Exhibit F
Third Party Wire Instructions
JPMorgan Chase Bank, N.A.
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
Morgan Stanley
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
Royal Bank of Canada
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
UBS
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
FFC: [***]
Citibank, N.A.
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
FFC: [***]
Barclays
Contact Name/Phone: [***]
LEGAL02/40509503v2
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
FFC: [***]
BMO
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
Bank of America, N.A.
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
FFC: [***]
Credit Suisse First Boston Mortgage Capital LLC
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
Jefferies
Contact Name/Phone: [***]
Bank Name: [***]
Beneficiary Name: [***]
ABA #: [***]
Account #: [***]
FFC: [***]
Disbursement Account
[***]
ABA: [***]
Account number: [***]
Account name: [***]
Ref: [***]
Attention: [***]
LEGAL02/40509503v2
LEGAL02/40509503v2
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
among
BANK OF AMERICA, N.A.
(“Buyer”),
RCKT MORTGAGE SPE-A, LLC
(“Seller”)
and
QUICKEN LOANS, LLC
(“Guarantor”)
dated as of
June 29, 2021
Exhibit 10.5
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH
NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
EXECUTION
LEGAL02/40464938v16
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION ............................................2
1.1 Defined Terms ........................................................................................................................... 2
1.2 Interpretation; Principles of Construction. ................................................................................ 2
ARTICLE 2 AMOUNT AND TERMS OF TRANSACTIONS .............................................................3
2.1 Agreement to Enter into Transactions ....................................................................................... 3
2.2 Transaction Limits ..................................................................................................................... 3
2.3 Description of Underlying Assets .............................................................................................. 3
2.4 Maximum Transaction Amounts ............................................................................................... 3
2.5 Use of Proceeds ......................................................................................................................... 4
2.6 Price Differential ....................................................................................................................... 4
2.7 All Transactions are “Servicing Released” ............................................................................... 4
2.8 Terms and Conditions of Transactions ...................................................................................... 5
2.9 Reserved..................................................................................................................................... 5
2.10 Temporary Increase of Aggregate Transaction Limit ............................................................... 5
ARTICLE 3 PROCEDURES FOR REQUESTING AND ENTERING INTO TRANSACTIONS ......5
3.1 Policies and Procedures ............................................................................................................ 5
3.2 Request for Transaction; Asset Data Record ............................................................................ 5
3.3 Delivery of Mortgage Loan Documents ................................................................................... 6
3.4 Haircut ...................................................................................................................................... 7
3.5 Over/Under Account ................................................................................................................ 7
3.6 Payment of Purchase Price...................................................................................................... 11
3.7 Approved Payees. ................................................................................................................... 12
3.8 Delivery of Pledged Securities................................................................................................ 13
ARTICLE 4 REPURCHASE ...............................................................................................................13
4.1 Repurchase Price .................................................................................................................... 13
4.2 Repurchase Acceleration Events............................................................................................ 14
4.3 Reduction of Asset Value as Alternative Remedy ................................................................ 15
4.4 Designation as Noncompliant Asset as Alternative Remedy ................................................ 15
4.5 Illegality or Commercial Unreasonableness .......................................................................... 16
4.7 Payments Pursuant to Sale to Approved Investors ................................................................ 17
4.8 Application of Payments from Seller Parties or Approved Investors ................................... 17
4.9 Method of Payment ............................................................................................................... 18
4.10 Reserved................................................................................................................................. 18
4.11 Reserved................................................................................................................................. 18
4.12 Book Account ........................................................................................................................ 18
4.13 Full Recourse ......................................................................................................................... 18
4.14 Alternative Rate ..................................................................................................................... 18
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ARTICLE 5 FEES ............................................................................................................................. 20
5.1 Payment of Fees ........................................................................................................................... 20
ARTICLE 6 SECURITY; SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF
MORTGAGE LOAN DOCUMENTS; REPURCHASE TRANSACTIONS;
DUE DILIGENCE ............................................................................................................................. 20
6.1 Precautionary Grant of Security Interest in Purchased Assets and Purchased Items............ 20
6.2 Servicing ............................................................................................................................... 22
6.3 Margin Account Maintenance ............................................................................................... 25
6.4 Custody of Mortgage Loan Documents ................................................................................ 26
6.5 Repurchase and Release of Purchased Assets........................................................................ 28
6.6 Repurchase Transactions ....................................................................................................... 28
6.7 Periodic Due Diligence .......................................................................................................... 29
ARTICLE 7 CONDITIONS PRECEDENT .................................................................................... 30
7.1 Initial Transaction .................................................................................................................. 30
7.2 All Transactions ..................................................................................................................... 31
7.3 Intercreditor Agreements ....................................................................................................... 34
7.4 Satisfaction of Conditions ...................................................................................................... 34
ARTICLE 8 REPRESENTATIONS AND WARRANTIES ...............................................................34
8.1 Representations and Warranties Concerning Seller Parties ................................................... 34
8.2 Representations and Warranties Concerning Purchased Assets and Underlying Assets.….... 40
8.3 Continuing Representations and Warranties .......................................................................... 40
8.4 Amendment of Representations and Warranties .................................................................... 40
ARTICLE 9 AFFIRMATIVE COVENANTS .....................................................................................41
9.1 Financial Statements and Other Reports. ............................................................................... 41
9.2 Reserved.................................................................................................................................. 42
9.3 Notice ..................................................................................................................................... 42
9.4 Existence, Etc. ........................................................................................................................ 44
9.5 Servicing of Mortgage Loans.................................................................................................. 44
9.6 Evidence of Purchased Assets ................................................................................................ 44
9.7 Defense of Title; Protection of Purchased Items .................................................................... 44
9.8 Further Assurances ................................................................................................................. 45
9.9 Fidelity Bonds and Insurance.................................................................................................. 45
9.10 Table-Funded Mortgage Loans .............................................................................................. 45
9.11 Reserved.................................................................................................................................. 46
9.12 ERISA. ................................................................................................................................... 46
9.13 Reserved.................................................................................................................................. 46
9.14 MERS ..................................................................................................................................... 46
9.15 Agency Audit and Approval Maintenance. ............................................................................ 47
9.16 Reserved.................................................................................................................................. 47
9.17 Financial Covenants and Ratios ............................................................................................. 47
9.18 Beneficial Ownership Certification ........................................................................................ 47
9.19 Special Purpose Entity Provisions .......................................................................................... 47
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9.20 Participation Interests as Securities ........................................................................................ 48
ARTICLE 10 NEGATIVE COVENANTS ..........................................................................................48
10.1 Debt ........................................................................................................................................ 48
10.2 Lines of Business ................................................................................................................... 48
10.3 Subordinated Debt ................................................................................................................. 48
10.4 Loss of Eligibility. ................................................................................................................. 49
10.5 Loans to Officers, Employees and Shareholders ................................................................... 49
10.6 Liens on Purchased Assets and Purchased Items ................................................................... 49
10.7 Transactions with Affiliates ................................................................................................... 49
10.8 Consolidation, Merger, Sale of Assets and Change of Control ............................................. 49
10.9 Payment of Dividends and Retirement of Stock .................................................................... 50
10.10 Purchased Items ..................................................................................................................... 50
10.11 Regulation W ......................................................................................................................... 50
ARTICLE 11 DEFAULTS AND REMEDIES .................................................................................. 50
11.1 Events of Default ................................................................................................................... 50
11.2 Remedies ................................................................................................................................ 54
11.3 Treatment of Custodial Account ............................................................................................ 55
11.4 Sale of Purchased Items ......................................................................................................... 55
11.5 No Obligation to Pursue Remedy .......................................................................................... 56
11.6 No Judicial Process ................................................................................................................ 56
11.7 Reimbursement of Costs and Expenses ................................................................................. 56
11.8 Application of Proceeds ......................................................................................................... 56
11.9 Rights of Set-Off .................................................................................................................... 57
11.10 Reasonable Assurances .......................................................................................................... 57
ARTICLE 12 INDEMNIFICATION ..............................................................................................… 57
12.1 Indemnification ..................................................................................................................… 57
12.2 Reimbursement ..................................................................................................................… 58
12.3 Payment of Taxes ...............................................................................................................… 58
12.4 Buyer Payment ...................................................................................................................… 59
12.5 Agreement not to Assert Claims ........................................................................................… 59
12.6 Survival ..............................................................................................................................… 60
ARTICLE 13 TERM AND TERMINATION ................................................................................… 60
13.1 Term ...................................................................................................................................… 60
13.2 Termination ........................................................................................................................… 60
13.3 Extension of Term ..............................................................................................................… 61
ARTICLE 14 GENERAL ...............................................................................................................… 61
14.1 Integration; Servicing Provisions Integral and Non-Severable ..........................................… 61
14.2 Amendments .....................................................................................................................….. 61
14.3 No Waiver ............................................................................................................................. 61
14.4 Remedies Cumulative ........................................................................................................... 61
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14.5 Assignment ........................................................................................................................... 62
14.6 Successors and Assigns ........................................................................................................ 62
14.7 Participations ........................................................................................................................ 62
14.8 Invalidity ............................................................................................................................... 62
14.9 Additional Instruments ......................................................................................................... 62
14.10 Survival. ................................................................................................................................ 62
14.11 Notices .................................................................................................................................. 62
14.12 Governing Law ..................................................................................................................... 64
14.13 Submission to Jurisdiction; Service of Process; Waivers ..................................................... 64
14.14 Waiver of Jury Trial .............................................................................................................. 64
14.15 Counterparts .......................................................................................................................... 64
14.16 Headings ................................................................................................................................ 64
14.17 Reserved................................................................................................................................. 64
14.18 Reserved................................................................................................................................. 64
14.19 Confidential Information ....................................................................................................... 65
14.20 Intent ...................................................................................................................................... 66
14.21 Right to Liquidate .................................................................................................................. 67
14.22 Insured Depository Institution ............................................................................................... 67
14.23 Netting Contract .................................................................................................................... 67
14.24 Tax Treatment ....................................................................................................................... 67
14.25 Examination and Oversight by Regulators ........................................................................... 67
14.26 ISDA Stay Protocol .............................................................................................................. 67
14.27 Amendment and Restatement ............................................................................................... 68
14.28 Guarantor Name Change....................................................................................................... 68
EXHIBITS
Exhibit A: Glossary of Defined Terms
Exhibit B: Irrevocable Closing Instructions
Exhibit C: Secretary’s Certificate
Exhibit D: Reserved
Exhibit E: Officer’s Certificate
Exhibit F: Assignment of Closing Protection Letter
Exhibit G: Reserved
Exhibit H: Form of Power of Attorney
Exhibit I: Acknowledgement of Password Confidentiality Agreement
Exhibit J: Wiring Instructions
Exhibit K: Form of Servicer Notice
Exhibit L: Representations and Warranties
Exhibit M: Required Agency Documents
Exhibit N: Reserved
Exhibit O: Form of Request for Temporary Increase
SCHEDULES
Schedule 1: Filing Jurisdictions and Offices
Schedule 2: Reserved
Schedule 3: List of Seller Parties’ Existing Debt
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AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
THIS AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT (the
“Agreement”) is made and entered into as of June 29, 2021 by and among Bank of America, N.A., a
national banking association (“Buyer”), RCKT Mortgage SPE-A, LLC, a Delaware limited liability
company (“Seller”) and acknowledged, guaranteed and agreed to by Quicken Loans, LLC, a Michigan
limited liability company (“Guarantor” and together with the Seller, each a “Seller Party” and together,
the “Seller Parties”).
RECITALS
A. Buyer and Guarantor entered into that certain Master Repurchase Agreement,
dated as of October 16, 2015 (as amended, restated, supplemented or otherwise
modified from time to time, the “Original Agreement”).
B. Buyer and Seller Parties desire to amend the Original Agreement in its entirety
by amending and restating it subject to the terms and conditions of this
Agreement.
C. Seller has requested Buyer to enter into transactions with Seller whereby Seller
may, from time to time, sell to Buyer certain Eligible Participation Interests and
all related rights in and interests related to such Eligible Participation Interests
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to sell to Seller such Eligible Participation Interests at a date certain or on
demand in accordance with the terms of this Agreement after the Purchase Date,
against the transfer of funds by Seller (representing the Repurchase Price for such
Eligible Participation Interests) (each such transaction and as applicable the
Purchase Price Increase, a “Transaction”).
D. From time to time, Seller may request Purchase Price Increases due to the Transaction
involving Participation Interests sold to Buyer under this Agreement with the allocation
of an Underlying Asset to the Participation Interests resulting in the increase in Asset
Value of the Participation Interests.
E. The Guarantor owns the legal title to the Underlying Assets and issues Participation
Interests in each such Underlying Asset to the Seller directly. In connection with the
initial Transaction, subject to the terms and conditions set forth herein, (i) Seller will sell
to Buyer the Eligible Participation Interests, and (ii) as additional credit enhancement in
connection with the Transactions hereunder and as a condition precedent to the Buyer
entering into the Transactions hereunder, (x) Guarantor shall deliver a guaranty in favor
of Buyer and (y) Guarantor shall pledge to Buyer a first priority security interest in and to
the Eligible Participation Interests and any other related collateral including Purchased
Items and Residual Collateral pursuant to the terms hereof.
F. Thereafter, as part of any subsequent Transactions, (x) the Guarantor may acquire
Eligible Mortgage Loans and issue Participation Interests therein to the Seller,
and Seller may request to sell and Buyer may purchase, subject to the terms and
conditions of this Agreement, additional Participation Interests.
G. Buyer has agreed to enter into such Transactions, subject to the terms and
conditions set forth in this Agreement.
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NOW, THEREFORE, in consideration of the mutual rights and obligations provided herein and
for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
Seller Parties and Buyer agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.1 Defined Terms. As used in this Agreement, capitalized terms shall have the meanings set forth
in Exhibit A hereto, unless the context otherwise requires. All such defined terms shall, unless
specifically provided to the contrary, have the defined meanings set forth herein when used in
any other agreement, certificate or document made or delivered pursuant hereto.
1.2 Interpretation; Principles of Construction. The following rules of this Section 1.2 apply unless
the context requires otherwise. A gender includes all genders. Where a word or phrase is
defined, its other grammatical forms have a corresponding meaning. A reference to a
subsection, Section, Schedule or Exhibit is, unless otherwise specified, a reference to a Section
of, or schedule or exhibit to, this Agreement. A reference to a party to this Agreement or
another agreement or document includes the party’s successors and permitted substitutes or
assigns. A reference to an agreement or document (including any Principal Agreement) is to the
agreement or document as amended, modified, novated, supplemented or replaced, except to
the extent prohibited thereby or by any Principal Agreement and in effect from time to time in
accordance with the terms thereof. A reference to legislation or to a provision of legislation
includes a modification or re-enactment of it, a legislative provision substituted for it and a
regulation or statutory instrument issued under it. A reference to writing includes a facsimile
transmission and any means of reproducing words in a tangible and permanently visible form.
A reference to conduct includes, without limitation, an omission, statement or undertaking,
whether or not in writing. The words “hereof”, “herein”, “hereunder” and similar words refer
to this Agreement as a whole and not to any particular provision of this Agreement. The term
“including” is not limiting and means “including without limitation”. In the computation of
periods of time from a specified date to a later specified date, the word “from” means “from
and including”, the words “to” and “until” each mean “to but excluding”, and the word
“through” means “to and including”.
A reference to an agreement includes a security interest, guarantee, agreement or legally
enforceable arrangement whether or not in writing related to such agreement.
A reference to a document includes an agreement (as so defined) in writing or a certificate,
notice, instrument or document, or any information recorded in electronic form. At the request of
Buyer, where Seller Parties are required to provide any document to Buyer under the terms of this
Agreement, the document may be provided in printed form or both printed and electronic form.
This Agreement is the result of negotiations among, and has been reviewed by counsel to, Buyer
and Seller Parties, and is the product of all parties. In the interpretation of this Agreement, no
rule of construction shall apply to disadvantage one party on the ground that such party proposed
or was involved in the preparation of any particular provision of this Agreement or this
Agreement itself. Except where otherwise expressly stated, Buyer may give or withhold, or give
conditionally, approvals and consents and may form opinions and make determinations at its sole
and absolute discretion. Any requirement of good faith, discretion or judgment by Buyer shall
not be construed to require Buyer to request or await receipt of information or documentation not
immediately available from or with respect to Seller Parties, a servicer of the Underlying Assets,
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any other Person or the Purchased Assets themselves. All references herein or in any Principal
Agreement to “good faith” means good faith as defined in Section 1-201(b)(20) of the Uniform
Commercial Code.
ARTICLE 2
AMOUNT AND TERMS OF TRANSACTIONS
2.1 Agreement to Enter into Transactions. Subject to the terms and conditions of this Agreement
and provided that no Event of Default or Potential Default has occurred and is continuing,
Buyer shall, from time to time during the term of this Agreement, enter into Transactions with
Seller; provided, however, that (a) the Aggregate Outstanding Purchase Price as of any date
shall not exceed the Aggregate Transaction Limit and (b) the Aggregate Outstanding Purchase
Price for any Type of Transaction shall not exceed the applicable Type Sublimit. Buyer shall
have the obligation to enter into Transactions with an Aggregate Outstanding Purchase Price
equal to or less than the Committed Amount, and Buyer shall have no obligation to enter into
Transactions with respect to the Uncommitted Amount. All purchases of Participation Interests
shall be first deemed committed up to the Committed Amount and then the remainder, if any,
shall be deemed uncommitted up to the Uncommitted Amount; provided however that
Transactions, the subject of which are eMortgage Loans, shall be entered into solely on an
uncommitted basis and shall be attributed to the Uncommitted Amount. Seller may request
Transactions in excess of the Aggregate Transaction Limit and Buyer may, from time to time,
in its sole and absolute discretion, consent to a Temporary Increase of the Aggregate
Transaction Limit in accordance with Section 2.10.
2.2 Transaction Limits. The Aggregate Transaction Limit and each Type Sublimit shall be as set
forth in the Transactions Terms Letter. Buyer shall, subject to the terms herein, have the right
to cease entering into new Transactions and require the repurchase of any such Purchased
Assets or Participation Interests thereto, or reduce, whether permanently or temporarily, and
without refund of any fee or other amount previously paid by Seller Parties, the Aggregate
Transaction Limit and/or each Type Sublimit by an amount up to the Uncommitted Amount;
provided, however, that Buyer shall give Seller Parties no less than two (2) Business Days prior
written notice thereof, which notice shall designate (a) the effective date of any such reduction,
which with respect to any Underlying Asset then subject to a Transaction shall not apply until
the expiration of the Maximum Dwell Time applicable to such Underlying Asset, (b) the
amount of the reduction and (c) the Transaction and/or Type Sublimit limit(s) to which such
reduction amount shall apply. Buyer shall not be liable to any Seller Party for any costs, losses
or damages arising from or relating to a reduction by Buyer in the Aggregate Transaction Limit
or any Type Sublimit made in accordance with this section.
2.3 Description of Underlying Assets. With respect to each Transaction, Seller shall cause to be
subject to such Transaction with Buyer Underlying Assets with an Asset Value not less than, at
any date, the related Purchase Price for such Transaction. With respect to each Transaction, the
type of Underlying Asset shall be the type of Underlying Asset as specified in the Transactions
Terms Letter as the Type, and in each case shall consist of the type of mortgage loans,
mortgage related securities, or interests therein as described in Bankruptcy Code Section
101(47)(A). If there is uncertainty as to the Type of an Underlying Asset, Buyer shall
determine the correct Type for such Underlying Asset in its good faith discretion.
2.4 Maximum Transaction Amounts. The Purchase Price for each proposed Transaction shall not
exceed the lesser of:
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(a) the Aggregate Outstanding Purchase Price for the applicable Type Sublimit (after giving
effect to all Transactions then subject to the Agreement), as determined by the Type of
Underlying Asset;
(b) the Aggregate Transaction Limit (as such amount may be increased from time to time in
the sole discretion of Buyer as provided in Section 2.10), minus the Aggregate
Outstanding Purchase Price of all other Transactions outstanding, if any; and
(c) the Asset Value of the related Underlying Asset(s).
2.5 Use of Proceeds. Seller Parties shall use the Purchase Price of each Transaction solely for the
purpose of originating and/or acquiring the related Purchased Asset(s) and Underlying Asset(s),
as applicable.
2.6 Price Differential.
(a) Price Differential . Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales by Seller to Buyer of the Purchased Assets for all purposes except
accounting and tax purposes, Seller shall pay Buyer interest on the Purchase Price for
each Purchased Asset from the Purchase Date until, but not including, the date on which
the Repurchase Price is paid, at an annual rate equal to the Price Differential; provided
that if the Repurchase Price for a Transaction is not paid by Seller when due (whether at
the Repurchase Date, upon acceleration or otherwise), the Repurchase Price shall bear a
Price Differential from the date due until paid in full at an annual rate equal to the Default
Rate. For the avoidance of doubt, from and after the date on which an Underlying Asset
is deemed to be a Noncompliant Asset, the Purchase Price for such Underlying Asset
shall bear a Price Differential at an annual rate equal to the sum of the Applicable Pricing
Rate plus the Type Margin for a Noncompliant Asset.
(b) Time for Payment. Price Differential with respect to any Purchased Asset shall be due
and payable on the Payment Date occurring in the second month following the related
Purchase Date and thereafter on each subsequent Payment Date. On the date that the
Repurchase Price for such Purchased Asset is paid, all accrued Price Differential not
otherwise paid by the Seller with respect to such Purchased Asset shall be due and
payable. Notwithstanding anything to the contrary in this Section 2.6(b), in the event the
Asset Value of any Underlying Asset is marked to zero and a Seller Party requests Buyer
to release its security interest in the Purchased Asset relating to such Underlying Asset,
and such Underlying Asset, or any Purchased Items related thereto, Buyer shall not
release any such security interest therein unless and until Seller shall have paid to Buyer
the Repurchase Price for such Purchased Asset.
(c) Computations. All computations of Price Differential and fees payable hereunder shall
be based upon the actual number of days (including the first day but excluding the last
day) occurring in the relevant period, and a three-hundred sixty (360) day year.
2.7 All Transactions are “Servicing Released”. Each Participation Certificate sold by a Seller to
Buyer pursuant to Transactions under this Agreement includes the participation interests in the
related Servicing Rights related to the related Underlying Assets and all Transactions under this
Agreement are “servicing released” purchase and sale transactions for all intents and purposes,
it being understood that the Purchase Price paid by Buyer to Seller for each such Participation
Certificate includes a premium that compensates Seller for such Servicing Rights related to
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such Underlying Asset and upon payment of the Purchase Price by Buyer to Seller, Buyer
becomes the owner of the Participation Interests which represent the 100% beneficial
ownership of the related Underlying Asset and the Servicing Rights related thereto.
2.8 Terms and Conditions of Transactions. The terms and conditions of the Transactions as set
forth in the Transactions Terms Letter, this Agreement or otherwise may be changed from time
to time by mutual agreement between Buyer and Seller Parties. The terms and conditions of the
Transactions Terms Letter are hereby incorporated and form a part of this Agreement as if fully
set forth herein; provided however, to the extent of any conflict between the terms of this
Agreement and the terms of the Transactions Terms Letter, the Transactions Terms Letter shall
control.
2.9 Reserved.
2.10 Temporary Increase of Aggregate Transaction Limit Seller may request a temporary increase of
the Aggregate Transaction Limit (a “Temporary Increase”) by submitting to Buyer an
executed request for Temporary Increase in the form of Exhibit O hereto (a “Request for
Temporary Increase”), setting forth the requested increased Aggregate Transaction Limit
(such increased amount, the “Temporary Aggregate Transaction Limit”), the effective date
of such Temporary Increase and the date on which such Temporary Increase shall terminate.
Buyer may from time to time, in its sole and absolute discretion, consent to such Temporary
Increase, which consent shall be in writing as evidenced by Buyer’s delivery to Seller Parties of
a countersigned Request for Temporary Increase. At any time that a Temporary Increase is in
effect, the Aggregate Transaction Limit shall equal the Temporary Aggregate Transaction Limit
for all purposes of this Agreement and all calculations and provisions relating to the Aggregate
Transaction Limit shall refer to the Temporary Aggregate Transaction Limit, including without
limitation, Type Sublimits and the Minimum Over/Under Account Balance. Upon the
termination of a Temporary Increase, Seller shall repurchase a sufficient number of Purchased
Assets in order to reduce the Aggregate Outstanding Purchase Price to the Aggregate
Transaction Limit (as reduced by the termination of such Temporary Increase) in accordance
with Section 4.2(k).
ARTICLE 3
PROCEDURES FOR REQUESTING AND ENTERING INTO TRANSACTIONS
3.1 Policies and Procedures. In connection with the Transactions contemplated hereunder, each
Seller Party shall comply with all applicable policies and procedures of Buyer (i) as may
currently exist and which have been made available to Seller Parties, or (ii) as hereafter created
and with respect to which Seller Parties have been provided notice thereof in accordance with
this Agreement. Such policies and procedures may be in writing, published on Buyer’s
website(s) or otherwise contained in the Handbook. Buyer shall have the right to change,
revise, amend or supplement its policies and procedures and the Handbook from time to time to
conform to current legal requirements or Buyer practices by giving no less than twenty (20)
Business Days prior written notice to Seller Parties of such changes, revisions, amendments or
supplements. To the extent of any conflict between the terms of this Agreement and the terms
of the Handbook or Buyer’s policies and procedures, this Agreement shall control.
3.2 Request for Transaction; Asset Data Record.
(a) Request for Transaction. Seller shall request a Transaction by delivering to Buyer,
electronically or in writing, an Asset Data Record for each Underlying Asset intended to
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be the subject of the Transaction no later than 4:00 p.m. (New York City time) and, if an
Asset Data Record is submitted after such time, Buyer shall use best efforts to enter into
such Transaction. Buyer shall be under no obligation to enter into any Transaction or
Transactions requested by Seller if the Purchase Price relates to the Uncommitted
Amount. Assuming the satisfaction of all conditions precedent set forth in Article 7 and
as otherwise set forth in this Agreement, Buyer may, for any Transaction with respect to
the Uncommitted Amount and shall, for any Transaction with respect to the Committed
Amount, confirm to Seller the terms of Transactions, including the related Repurchase
Date, electronically or in writing. Buyer reserves the right to reject any Transaction
request that Buyer determines fails to comply with the terms and conditions of this
Agreement or Buyer’s then current policies and procedures (provided that such policies
and procedures are applicable hereunder in accordance with Section 3.1).
(b) Failure to Enter into Transaction; Cancellation of Transaction. If Seller fails five (5)
times or more to enter into a Transaction in each case, after Seller has requested such
Transaction and submitted an Asset Data Record in connection with such request, and
regarding which Buyer is otherwise ready and willing to fund, for each Transaction
requested by Seller thereafter for which Seller fails to enter into such Transaction after
Seller has requested such Transaction and submitted an Asset Data Record in connection
with such request, Seller shall reimburse Buyer for any reasonable and documented out-
of-pocket losses, costs and expenses incurred by Buyer in connection with such failure to
enter into the Transaction, including, without limitation, costs relating to re-employment
of funds obtained by Buyer and fees paid to terminate the arrangements through which
such funds were obtained. In addition, with respect to any Transaction, including the
initial Transaction, if following disbursement by Buyer of the Purchase Price relating to
such Transaction, Seller cancels such Transaction, in each case, Seller shall pay Buyer a
Price Differential on such Purchase Price from the date of disbursement thereof until, but
not including, the date the Purchase Price is returned to Buyer.
(c) Form of Asset Data Record. Buyer shall have the right to revise or supplement the form
of the Asset Data Record from time to time by giving no less than five (5) Business Days
prior written notice thereof to Seller.
3.3 Delivery of Mortgage Loan Documents.
(a) Dry Mortgage Loans. Prior to any Transaction, the subject of which is a Purchased Asset
related to a Dry Mortgage Loan (including eMortgage Loans), Seller Parties shall deliver
to Buyer or its Custodian, or authorize and direct the Closing Agent to deliver to Buyer or
its Custodian, the related Mortgage Loan Documents in accordance with and pursuant to
the terms of Section 7.2 hereof and the Custodial Agreement; provided that, with respect
to any eMortgage Loan, Seller Parties shall deliver to Custodian each of Buyer’s and
Guarantor’s MERS Org IDs, and shall cause (i) the Authoritative Copy of the related
eNote to be delivered to the eVault via a secure electronic file, (ii) other than with respect
to a Ginnie Mae eNote Pooled Loan, the Controller status of the related eNote to be
transferred to Buyer, (iii) with respect to a Ginnie Mae eNote Pooled Loan, the Controller
status of the related eNote to reflect the MERS Org ID of Guarantor and the eNote
Secured Party status of the related eNote to reflect the MERS Org ID of Ginnie Mae, (iv)
the Location status of the related eNote to be transferred to Custodian, (v) other than with
respect to a Ginnie Mae eNote Pooled Loan, the Delegatee status of the related eNote to
be transferred to Custodian, in each case using MERS eDelivery and the MERS
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eRegistry, (vi) the Master Servicer Field of the related eNote shall reflect the MERS Org
ID of the Guarantor and (vii) the Subservicer Field status of the related eNote to be (a) if
there is a thirty party subservicer, such subservicer’s MERS Org ID or (b) if there is not a
subservicer, blank (collectively, the “eNote Delivery Requirements”).
(b) Wet Mortgage Loans. With respect to a Transaction the subject of which is a Purchased
Asset related to a Wet Mortgage Loan, (i) Seller Parties shall deliver to Buyer or its
Custodian any Mortgage Loan Documents in a Seller Party’s possession, and (ii) Seller
Parties shall authorize and direct the Closing Agent to deliver the related Mortgage Loan
Documents to Seller Parties, for delivery to Buyer or its Custodian, in each case, within
the Maximum Dwell Time in accordance with the terms of Section 7.2 hereof and the
Custodial Agreement.
(c) Pooled Mortgage Loans. With respect to a Transaction the subject of which is a
Purchased Asset related to a Pooled Mortgage Loan, Seller Parties shall deliver to Buyer
or its Custodian, as applicable, the related Agency Documents in accordance with and
pursuant to the terms of Section 7.2(e) hereof and the Custodial Agreement and Seller
Parties shall cause the Custodian to deliver a trust receipt to Buyer with respect to such
Mortgage Loans in accordance with the terms of the Custodial Agreement. In no event
shall Pooled Mortgage Loans or Mortgaged Backed Securities be settled outside of the
Joint Pooling Documents without the prior written consent of Buyer.
(d) Government Mortgage Loans. With respect to a Transaction the subject of which is a
Purchased Asset related to a Government Mortgage Loan, Seller Parties shall, at the
request of Buyer, deliver to Buyer or its Custodian, within forty five (45) calendar days
following the Purchase Date for such Purchased Asset, the FHA Mortgage Insurance
Contract, the VA Loan Guaranty Agreement or the RD Loan Guaranty Agreement, as
applicable, or evidence of such insurance or guaranty, as applicable, including proof of
payment of the premium and the case number so Buyer can access the information on the
computer system maintained by FHA, the VA or the RD; provided, however, that in lieu
of providing such information the Seller Parties may, with the consent of Buyer, elect
treatment of such Underlying Asset as a Type other than a Government Mortgage Loan,
to the extent otherwise eligible.
(d) Mortgage Loan Documents in Seller Parties’ Possession. At all times during which the
Mortgage Loan Documents related to any Underlying Asset are in the possession of
Seller Parties, and until such Underlying Asset is repurchased by a Seller Party, such
Seller Party shall hold such Mortgage Loan Documents in trust separate and apart from
such Seller Party’s own documents and assets and for the exclusive benefit of Buyer and
shall act only in accordance with this Agreement or Buyer’s written instructions related
thereto. Such Mortgage Loan Documents should be clearly marked as subject to delivery
to Buyer.
(e) Other Mortgage Loan Documents in Seller Parties’ Possession. With respect to each
Underlying Asset, until such Underlying Asset is released by Buyer from the related
Transaction hereunder, such Seller Party shall hold in trust separate and apart from such
Seller Parties’ own documents and assets and for the exclusive benefit of Buyer all
mortgage loan documents related to such Underlying Asset and not delivered to Buyer,
including, without limitation, the Other Mortgage Loan Documents, as applicable. All
such mortgage loan documents shall be clearly marked as subject to delivery to Buyer.
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3.4 Haircut. With respect to each Transaction for which the related Purchase Price is being
remitted by Buyer to one or more Approved Payees, Seller shall ensure that there are sufficient
funds on deposit in the Over/Under Account such that following the withdrawal of the related
Haircut by Buyer, the balance of the Over/Under Account is equal to or greater than the
Minimum Over/Under Account Balance, as set forth in the Transactions Terms Letter.
3.5 Over/Under Account.
(a) Minimum Balance; Terms and Conditions Pertaining to Over/Under Account. Seller
shall at all times maintain a balance in the Over/Under Account of not less than the
Minimum Over/Under Account Balance, as set forth in the Transactions Terms Letter.
The Over/Under Account shall be used to assist in settling the Transactions and any other
obligations under this Agreement. Buyer shall not be required to segregate and hold
funds deposited by or on behalf of Seller in the Over/Under Account separate and apart
from Buyer’s own funds or funds deposited by or held for others; provided, however, that
Buyer keeps records reflecting which funds in the Over/Under Account are those of
Seller; it being understood that such amounts are owned by and held for the benefit of the
Seller. For the avoidance of doubt, unless and until a Margin Call is outstanding or an
Event of Default has occurred and is continuing (and in any case, only to the extent of
any outstanding monetary obligation owed by Seller to Buyer related thereto), all
deposits in the Over/Under Account in excess of the Minimum Over/Under Account
Balance may be freely withdrawn at any time, for any reason, by the Seller in accordance
with Section 3.5(c).
Subject to Buyer’s rights and security interests as provided for in this Agreement, Seller
shall retain title to and ownership of all its funds on deposit in the Over/Under Account.
Upon request of Seller Parties, Buyer shall provide Seller Parties with reasonable
evidence regarding the existence and maintenance of the Over/Under Account.
Buyer shall provide Seller Parties with an accounting of the balance of, all fees and
charges to, and all credits and debits made to the Over/Under Account via a posting of
such accounting on Buyer’s website(s), which shall be updated by Buyer on each
Business Day.
(b) Deposits.
(i) Seller. Seller shall deposit margin in the form of funds in the Over/Under
Account in accordance with the terms of this Agreement, including, without
limitation, Section 3.4 and Section 3.5(a).
(ii) Buyer. Buyer shall credit to the Over/Under Account all amounts in excess of
those amounts due to Buyer in accordance with the Principal Agreements on the
date Buyer receives or has received both (1) a payment by a Seller or an
Approved Investor pursuant to a Purchase Commitment (if any) and (2) a
Purchase Advice relating to such payment without discrepancy; provided,
however, that funds and Purchase Advices received by Buyer after 4:00 p.m.
(New York City time), shall be deemed to have been received on the next
Business Day. Buyer shall notify Seller if there is a discrepancy between a wire
transfer and the related Purchase Advice, and thereafter, Seller shall notify Buyer
as to whether Buyer should accept such settlement payment despite the
discrepancy between the amount received and the related Purchase Advice;
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provided, however, that if an Event of Default has occurred and is continuing,
Buyer is not obligated to receive approval from Seller Parties prior to accepting
any amounts received and releasing the related Purchased Assets.
(iii) Settlement Statement. Buyer shall deliver to Seller Parties via facsimile or make
available to Seller Parties via the internet within one (1) Business Day following
settlement of a Transaction, or as soon thereafter as is reasonably possible, a
settlement statement, which includes an explanation of all amounts credited by
Buyer to the Over/Under Account to settle the Transaction.
(c) Withdrawals.
(i) Seller. If at any time the balance of any amounts in the Over/Under Account is
greater than the Minimum Over/Under Account Balance, Seller shall be entitled
to the return of the amounts in excess thereof. Buyer shall wire transfer all such
excess amounts to Seller in immediately available funds (without any wire
transfer fees payable by Seller) not later than the end of the same Business Day in
which it receives written notice (facsimile and e-mail notices are acceptable for
this purpose) thereof from Seller by 2:00 p.m. (New York City Time); provided,
however, and notwithstanding anything contained in this Section 3.5(c)(i) to the
contrary, that Buyer reserves the right to reject any request for excess funds from
the Over/Under Account if a Margin Call is outstanding or upon the occurrence
and during the continuation of an Event of Default or in the event of a Potential
Default, but only to the extent of any outstanding monetary obligation owed by
Seller Parties to Buyer related thereto.
(ii) Buyer. Buyer may, from time to time and without separate authorization by
Seller or notice to Seller, withdraw funds from the Over/Under Account to settle
amounts owed in accordance with the terms of this Agreement or to otherwise
satisfy Seller Parties’ obligations under this Agreement, in the following order of
priority:
(1) to satisfy any outstanding Margin Call as provided in Section 6.3(b);
(2) upon and during an Event of Default, to reimburse itself for any
reasonable and documented out-of-pocket costs and expenses incurred by
Buyer in connection with this Agreement, to the extent expressly
permitted herein;
(3) with respect to any Transaction with respect to which the Purchase Price
is being paid to one or more Approved Payees on behalf of Seller Parties,
to deliver the Haircut to such Approved Payees;
(4) to pay itself any Price Differential on a Purchase Price that is due and
owing;
(5) to Seller as provided in Section 3.5(c)(i);
(6) provided a Potential Default or Event of Default has occurred and is
continuing, as security for the performance of Seller Parties’ obligations
hereunder;
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(7) on the Expiration Date, to reimburse itself for any reasonable costs and
expenses incurred by Buyer in connection with this Agreement, as
permitted herein; and
(8) in the exercise of Buyer’s or its Affiliates’ rights under Section 11.9.
(d) Reserved.
(e) Security Interest. Any funds of Seller Parties at any time deposited or held in the Over/
Under Account, whether such funds are required to be deposited and held in the Over/
Under Account pursuant to this Section 3.5 or otherwise, are hereby pledged by Seller
Parties as security for its obligations under this Agreement to the extent described in
Section 3.5(c)(ii) above, and, subject to the foregoing, each Seller Party hereby grants a
security interest in such funds to Buyer, and such pledge and security interest shall be
considered “a security agreement or other arrangement or other credit enhancement” that
is “related to” the Agreement and Transactions hereunder within the meaning of
Bankruptcy Code Sections 101(38A)(A), 101(47)(a)(v) and 741(7)(A)(x).
Notwithstanding the foregoing, upon a transfer of funds by Buyer to any Seller Party in
accordance with Section 3.5(c) or Section 3.5(f), the security interest granted by Seller
Parties to Buyer with respect to such funds shall be deemed to automatically release
without further action by any party.
(f) Return of Over/Under Account Balances Upon Termination. Upon termination or
expiration of this Agreement, Buyer shall promptly (but in any event within two (2)
Business Days after the Expiration Date) wire Seller Parties any remaining balances in
the Over/Under Account and return to Seller Parties any pledged certificates of deposit,
subject to the terms below.
(i) Notwithstanding the foregoing, to the extent there are bona fide Outstanding
Obligations (as defined below) of Seller Parties under this Agreement as of the
Expiration Date, whether such obligations are disputed or undisputed by Seller
Parties, Buyer shall be entitled to retain in the Over/Under Account, and shall not
be obligated to return to Seller Parties, an amount equal to such Outstanding
Obligations until such obligations are resolved to the good faith, reasonable
satisfaction of Buyer. As such Outstanding Obligations are resolved to the good
faith satisfaction of Buyer, the amount of funds being held by the Buyer against
such Outstanding Obligations shall be released and wired to Seller promptly (but
in any event within [***] Business Days thereafter).
(ii) To the extent the amount of such Outstanding Obligations exceeds the balance in
the Over/Under Account, Buyer shall be entitled to retain the entire balances in
the Over/Under Account until such obligations are resolved to the good faith
satisfaction of Buyer, up to the amount of Outstanding Obligations.
(iii) For the avoidance of doubt, it is understood and agreed that upon termination of
this Agreement, Buyer shall only be obligated to return to Seller Parties funds in
the Over/Under Account to the extent such funds exceed the amount of
Outstanding Obligations.
(iv) During the term of this Agreement (and, thereafter, for as long as Buyer claims
there are Outstanding Obligations), Seller Parties may request, and Buyer shall
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provide a full accounting from Buyer as to the amount, source, itemization and
description of the Outstanding Obligations. Buyer shall provide such
information within two (2) Business Days after receiving such a request.
For purposes of this Section 3.5(f), the term “Outstanding Obligations” means the debts
or obligations due from Seller Parties to Buyer under this Agreement and the other
Principal Agreements (net of any payments , amounts or credits paid by Seller Parties and
received by Buyer) which are unsatisfied or outstanding as of the date of the termination
or expiration of this Agreement and the other Principal Agreements including, without
limitation, (1) Seller Parties’ obligation under this Agreement to repurchase Underlying
Assets from Buyer, (2) unpaid costs and/or fees (including, but not limited to, unpaid
legal fees, Unused Facility Fees and/or unpaid funding fees) due from Seller Parties to
Buyer under this Agreement and the other Principal Agreements, and/or (3) unpaid Price
Differential. Further, Outstanding Obligations shall include those amounts which Buyer
and/or its Affiliates are entitled to set-off against the funds and certificates of deposit in
the Over/Under Account as provided in Section 11.9.
3.6 Payment of Purchase Price.
(a) Payment of Purchase Price. On the Purchase Date for each Transaction, the Purchased
Assets, including the Participation Interests in the Servicing Rights related to the
Underlying Assets (including on account of any Purchase Price Increase), shall be
transferred to Buyer against the simultaneous transfer of the Purchase Price to Seller or
on behalf of Seller to an Approved Payee, as applicable, and simultaneously with the
delivery to Buyer of the Purchased Assets relating to each Transaction. With respect to
the Purchased Assets being sold by Seller on the Purchase Date, Seller hereby sells,
transfers, conveys and assigns to Buyer or its designee without recourse, but subject to
the terms of this Agreement, all of Seller’s right, title and interest in and to the Purchased
Assets, including the Participation Interests in the Servicing Rights related to the related
Underlying Assets, together with all right, title and interest of Seller in and to the
proceeds of such Underlying Assets.
(b) Methods of Payment. On the Purchase Date for each Transaction:
(i) Buyer shall pay the Purchase Price for all Transactions by wire transfer in
accordance with Seller’s wire instructions set forth on Exhibit J.
Notwithstanding the foregoing, Buyer shall not be obligated to pay the Purchase
Price under any method of payment to any Closing Agent, third party
institutional originator or warehouse lender that is not an Approved Payee.
Further, the payment of the Purchase Price by Buyer to any Closing Agent, third
party institutional originator or warehouse lender that is not an Approved Payee
shall not make such Closing Agent, third party institutional originator or
warehouse lender an Approved Payee. Any funds disbursed by Buyer to Seller
or its Approved Payee shall be subject to all applicable federal, state and local
laws, including, without limitation, regulations and policies of the Board of
Governors of the Federal Reserve System on Reduction of Payments System
Risk, or
(ii) Notwithstanding the foregoing, where a Purchased Asset or an Underlying Asset
is the subject of third party financing, Buyer may pay all or any portion of the
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Purchase Price directly to the warehouse lender or other lender that has a security
interest in such Purchased Asset or Underlying Asset, as applicable, to satisfy the
related indebtedness and obtain a release of such security interest.
(c) Transaction Limitations and Other Restrictions Relating to Closing Agents.
Notwithstanding that a particular Transaction request will not exceed the Aggregate
Transaction Limit or applicable Type Sublimit, if the payment of the Purchase Price for
such Transaction to the related Closing Agent will violate Buyer’s applicable policies and
procedures (as contained in the Handbook or otherwise) regarding payments to Closing
Agents, Buyer may refuse to pay the Purchase Price to such Closing Agent.
(d) Return of Purchase Price. If a Wet Mortgage Loan related to a Purchased Asset subject
to a Transaction is not closed on the Business Day following the day on which the
Purchase Price was funded, Seller shall immediately return, or cause to be immediately
returned (but in any event within two (2) Business Days), the Purchase Price (or such
greater amount that shall have been remitted by Buyer, if applicable) with respect to such
Purchased Asset to Buyer by wire transfer in accordance with Buyer’s wire instructions
set forth on Exhibit B. Further, Seller shall pay Buyer all reasonable and documented
fees and expenses incurred by Buyer in connection with the funding of the Purchase Price
for such Purchased Asset and, from the date of such funding up to but excluding the date
such Purchase Price is returned to Buyer, Seller shall also pay Buyer any Price
Differential accrued on such Purchase Price promptly upon notification from Buyer;
provided, however, that Price Differential shall continue to accrue until the Purchase
Price is returned to Buyer.
3.7 Approved Payees.
(a) Closing Agents. In order for a Closing Agent to be designated an Approved Payee with
respect to any Purchase Price for new origination Wet Mortgage Loans or Dry Mortgage
Loans as to which the origination funds are being remitted to the closing table, Seller
shall submit to Buyer the following documents:
(i) a written request, including the name and address of the Closing Agent;
(ii) if the title company issuing the title policy is Title Source, Inc., evidence of
fidelity bond coverage with respect to Title Source, Inc., and evidence that Seller
is able to directly make claims under such policy;
(iii) if (1) the title company issuing the title policy is not Title Source, Inc., and (2)
the applicable title company has not already issued to Seller or Buyer a blanket
Closing Protection Letter which covers closings conducted by such Closing
Agent in the jurisdiction where the closing for the applicable Mortgage Loan will
take place:
(1) a valid Closing Protection Letter, in a form acceptable to Buyer, issued to
the applicable Seller Party or Buyer by the title company, which is
issuing the title insurance policy that covers the related Mortgage Loan
and is an Acceptable Title Insurance Company, that covers the closing of
this specific Mortgage Loan and if applicable, an assignment to Buyer of
such Closing Protection Letter, substantially in the form of Exhibit F
hereto;
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(2) a valid blanket Closing Protection Letter, in a form acceptable to Buyer,
issued to the applicable Seller Party or Buyer by the title company, which
is issuing the title insurance policy that covers the related Mortgage Loan
and is an Acceptable Title Insurance Company, that covers the closings
conducted by the Closing Agent in the jurisdiction where this closing
will take place and if applicable, an assignment to Buyer of such Closing
Protection Letter, substantially in the form of Exhibit F hereto; or
(3) with respect to those jurisdictions outlined in the Handbook for which
Closing Protection Letters are not available or are limited in their
applicability, any other documents Buyer may reasonably require,
including without limitation, a duly executed, valid and enforceable
assignment to Buyer of such Seller Parties’ rights under its fidelity bond
and errors and omissions policy with respect to the Underlying Assets
maintained pursuant to Section 9.9; and
(iv) provided, however, that for the avoidance of doubt, a Closing Protection Letter
shall not be required hereunder unless and until the Underlying Assets (a) which
were table-funded using, in part, the Purchase Price, (b) where title insurance is
provided by a Person other than Title Source, Inc., and (c) regarding which a
Closing Protection Letter or alternative documentation specified in Section
3.7(a)(iii)(3) has not been provided, exceed (i) [***]([***]%) of Guarantor’s
Tangible Net Worth for Wet Mortgage Loans and (ii) [***]([***]%) of
Guarantor’s Tangible Net Worth for all other Mortgage Loans in the aggregate,
in each case measured as of the end of Guarantor’s most recent fiscal quarter.
(b) Warehouse Lenders. In order for a warehouse lender to be designated an Approved
Payee with respect to any Purchase Price, Seller Parties shall submit to Buyer a written
request, including the name and address of the warehouse lender, demonstrating a need
for such designation. Notwithstanding the foregoing, Buyer reserves the right to refuse to
designate any warehouse lender as an Approved Payee, or, alternatively, to require
additional terms and conditions in order for Buyer to pay a Purchase Price to a warehouse
lender in each case where such warehouse lender is not already designated as an
Approved Payee. Any additional terms and conditions shall not apply to any Approved
Payee except upon (i) [***] Business Days prior written notice delivered to the Seller
Parties, or (ii) if such additional terms and conditions are to apply to all Approved
Payees, [***] days prior written notice delivered to the Seller Parties; provided,
however, that no advance notice shall be required hereby where such additional terms and
conditions imposed on an Approved Payee arise due to actual or reasonably suspected
fraud or criminal activity on the part of such Approved Payee.
(c) Approval Process. Buyer shall review the applicable documents and notify Seller Parties
within [***] Business Days as to whether such Closing Agent or warehouse lender has
been designated by Buyer to be an Approved Payee with respect to such Purchase Price.
Buyer may withdraw its approval of any Closing Agent or warehouse lender as an
Approved Payee if Buyer becomes aware of any facts or circumstances at any time
related to such Closing Agent or warehouse lender which Buyer determines materially
and adversely affects the Closing Agent or warehouse lender or otherwise makes the
Closing Agent or warehouse lender unacceptable as an Approved Payee; provided,
however, that such disapproval shall not be effective except upon (i) [***] Business Days
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prior written notice delivered to the Seller Parties, or (ii) in the case of Title Source, Inc.,
or if such additional terms and conditions are to apply to all Approved Payees, [***] days
prior written notice delivered to the Seller Parties; provided, further, that no advance
notice shall be required hereby where such disapproval of an Approved Payee arises due
to actual or reasonably suspected fraud or criminal activity on the part of such Approved
Payee.
3.8 Delivery of Pledged Securities. Buyer shall release its interests in Underlying Assets that are
Pooled Mortgage Loans subject to a Transaction simultaneously with the Settlement Date of a
Mortgage-Backed Security that is backed by such Underlying Assets. Provided that such
Mortgage-Backed Security is an Eligible Security and has been issued to the Depository in the
name of the Securities Intermediary in accordance with the Joint Pooling Documents from and
after such Settlement Date, the Mortgage-Backed Security shall replace such Underlying Assets
as the Asset that is pledged as additional related credit enhancement in support of the
Transaction.
ARTICLE 4
REPURCHASE
4.1 Repurchase Price.
(a) Payment of Repurchase Price. The Repurchase Price for each Purchased Asset shall be
payable in full and by wire transfer in accordance with Buyer’s wire instructions set forth
on Exhibit B or Exhibit J, as applicable, upon the earliest to occur of (i) the Repurchase
Date of the related Transaction, (ii) the occurrence of any Repurchase Acceleration Event
with respect to such Purchased Asset, (iii) at Buyer’s sole option, upon the occurrence
and during the continuance of an Event of Default, or (iv) the Expiration Date. Such
obligation to repurchase exists without regard to any prior or intervening liquidation or
foreclosure with respect to any Purchased Asset or Underlying Asset. While it is
anticipated that Seller will repurchase each Purchased Asset on its related Repurchase
Date, Seller may repurchase any Purchased Asset (or obtain the release of any
Underlying Asset) hereunder on demand without any pre-payment penalty or premium.
(b) Effect of Payment of Repurchase Price. On the Repurchase Date (or such other date on
which the Repurchase Price is received in full by Buyer), termination of the related
Transaction will be effected by the repurchase by Seller or its designee of the Purchased
Assets (and release of the related Underlying Assets) and the simultaneous transfer of the
Repurchase Price to an account of Buyer, or transfer to Buyer of additional Participation
Interests related to Additional Underlying Assets (in each case subject to the provisions
of Section 6.5), and all of Buyer’s rights, title and interests therein shall then be conveyed
to Seller or its designee; provided that, Buyer shall not be deemed to have terminated or
conveyed its interests in such Purchased Assets or related Underlying Assets if an Event
of Default shall then be continuing or shall be caused by such repurchase. Seller Parties
are obligated to obtain the Mortgage Loan Documents from Custodian at Guarantor’s
expense on the Repurchase Date.
4.2 Repurchase Acceleration Events. The occurrence of any of the following events shall be a
Repurchase Acceleration Event with respect to one or more affected Purchased Assets, as the
case may be:
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(a) Buyer has determined that the related Underlying Asset is a Defective Asset and the
related Margin Deficit has not been cured within the applicable time period set forth in
Section 6.3(b);
(b) [***] calendar days elapse from the date the related Mortgage Loan Documents relating
to an Underlying Asset associated with such Purchased Assets were delivered to an
Approved Investor and such Approved Investor has not returned such Mortgage Loan
Documents or purchased such Underlying Asset, unless an extension is granted by Buyer;
(c) [***] Business Days elapse from the date a related Mortgage Loan Document relating to
the Underlying Asset associated with such Purchased Asset was delivered to a Seller
Party for correction or completion or for servicing purposes, without being returned to
Buyer or its designee;
(d) with respect to a Purchased Asset that is a Wet Mortgage Loan, Seller Parties fail to
deliver to Buyer the related Mortgage Loan Documents related to an Underlying Asset
associated with such Purchased Asset that is a Wet Mortgage Loan within the Maximum
Dwell Time or any Mortgage Loan Document delivered to Buyer, upon examination by
Buyer, is found not to be in compliance with the requirements of this Agreement or the
related Purchase Commitment and is not corrected within the Maximum Dwell Time;
(e) regardless of whether an Underlying Asset associated with such Purchased Asset is a
Defective Asset, a foreclosure or similar type of proceeding is initiated with respect to
such Underlying Asset;
(f) the further sale of the Underlying Asset associated with such Purchased Assets by Seller
Parties to any party other than an Approved Investor;
(g) (1) with respect to any Underlying Asset associated with such Purchased Asset that is a
Pooled Mortgage Loan that has been pooled to support a Mortgage-Backed Security
issued by Guarantor and fully guaranteed by Ginnie Mae for which Buyer has executed a
Form HUD 11711A, the Custodian ceases to hold the Mortgage Loan File and the related
Mortgage Loan Documents in respect thereof for the sole and exclusive benefit of Buyer
at any time prior to the issuance of the related Mortgage-Backed Security, or (2) with
respect to all other Underlying Assets, the Custodian ceases to hold the related Mortgage
Loan File and all Mortgage Loan Documents in respect thereof for the sole and exclusive
benefit of Buyer at any time, in each case subject to Sections 6.4(b), (c) and (d);
(h) reserved;
(i) with respect to any Underlying Asset that is a Pooled Mortgage Loan, if the Applicable
Agency has not issued the related Mortgage-Backed Security to the Securities
Intermediary in accordance with the Joint Pooling Documents on the related Settlement
Date;
(j) with respect to any Pledged Security, that is subject to a Transaction pursuant to Section
3.8, if Buyer has not received the related Takeout Price from the Approved Investor on
the related Settlement Date; or
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(k) following the termination of a Temporary Increase, the Aggregate Outstanding Purchase
Price exceeds the Aggregate Transaction Limit (as reduced by the termination of such
Temporary Increase).
4.3 Reduction of Asset Value as Alternative Remedy. In lieu of requiring full repayment of the
Repurchase Price upon the occurrence of a Repurchase Acceleration Event, Buyer may elect to
reduce the Asset Value of the related Purchased Asset or Underlying Asset, as applicable to as
low as zero and accordingly require a full or partial repayment of such Repurchase Price or the
delivery of other funds or collateral, which additional assets shall be “margin payments” or
“settlement payments” as such terms are defined in Bankruptcy Code Sections 741(5) and (8),
respectively.
4.4 Designation as Noncompliant Asset as Alternative Remedy. In lieu of requiring full repayment
of the Repurchase Price upon the occurrence of a Repurchase Acceleration Event, Buyer may
elect to deem the related Underlying Asset a Noncompliant Asset, provided that (a) after such
Underlying Asset is deemed to be a Noncompliant Asset, the aggregate original Asset Value of
all Noncompliant Assets does not exceed the Type Sublimit for Noncompliant Assets; (b) the
Asset Value of the Noncompliant Asset is greater than the Repurchase Price or Seller provides
additional Participation Interests related to Additional Underlying Assets or repays part of the
Repurchase Price as provided in Section 6.3 in each case as a “margin payment” as such term is
defined in Bankruptcy Code Section 741(5); and (c) Seller Parties deliver to Buyer all
documentation relating to the Purchased Asset and related Underlying Asset reasonably
requested by Buyer.
4.5 Illegality or Commercial Unreasonableness. Notwithstanding anything to the contrary in this
Agreement, if Buyer determines in its commercially reasonable discretion that any law,
regulation, treaty or directive or any change therein or in the interpretation or application
thereof, or any circumstance materially and adversely affecting the London interbank market,
the repurchase market for mortgage loans or mortgage-backed securities or the source or cost of
Buyer’s funds, shall (a) make it unlawful for Buyer to maintain an existing Transaction or to
enter into a new Transaction, or (b) commercially unreasonable for Buyer to enter into a new
Transaction, each as contemplated by this Agreement, then (i) with respect to (a), the
commitment of Buyer hereunder to enter into or to continue to maintain Transactions, as
applicable, shall be cancelled and the Repurchase Price for each Transaction then outstanding
shall be due and payable within [***] Business Days of receipt of notice regarding Buyer’s
determination that such Transactions are unlawful to maintain and (ii) upon no less than [***]
Business Days prior notice with respect to (b), the commitment of Buyer to enter into a new
Transaction shall be cancelled. Buyer shall not be liable to any Seller Party for any costs,
losses or damages arising from or relating from any actions taken by Buyer in accordance with
this Section 4.5. Buyer shall provide to Seller Parties, along with notice of its determination
made in accordance with this Section 4.5 regarding illegality, reasonable information regarding
the specific legal basis underlying such determination, in form and substance determined by
Buyer in good faith.
4.6 Increased Costs.
(a) Notwithstanding anything to the contrary in this Agreement, if Buyer determines in its
commercially reasonable discretion that if any change in any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority or
any change in the interpretation or application thereof or compliance by Buyer with any
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request or directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof (i) subjects Buyer to
any tax of any kind whatsoever with respect to this Agreement or any Purchased Assets
(excluding Excluded Taxes) or changes the basis of taxation of payments to Buyer in
respect thereof, (ii) imposes, modifies or holds applicable any reserve, special deposit,
compulsory advance or similar requirement against assets held by deposits or other
liabilities in or for the account of Transactions or extensions of credit by, or any other
acquisition of funds by any office of Buyer which is not otherwise included in the
determination of the Applicable Pricing Rate hereunder, or (iii) imposes on Buyer any
other condition, the result of which is to increase the cost to Buyer, by an amount which
Buyer deems in its commercially reasonable discretion to be material, of effecting or
maintaining purchases hereunder, or to materially reduce any amount receivable
hereunder in respect thereof, then, Buyer shall provide prompt written notice, in any such
case, and Seller shall promptly pay Buyer such additional amount or amounts as will
compensate Buyer for such increased cost or reduced amount receivable thereafter
incurred.
(b) If Buyer has determined in its commercially reasonable discretion that the adoption of or
any change in any law, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority regarding capital adequacy or in the interpretation
or application thereof or compliance by Buyer or any corporation controlling Buyer with
any request or directive regarding capital adequacy (whether or not having the force of
law) from any Governmental Authority made subsequent to the date hereof has the effect
of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence
of its obligations hereunder by an amount determined in good faith by Buyer to be
material, then from time to time, Buyer shall provide written notice of such reduction to
Seller Parties and Seller Parties shall promptly pay to Buyer such additional amount or
amounts as calculated by Buyer in good faith as will thereafter compensate Buyer for
such reduction. Notwithstanding the foregoing, Seller shall have no obligation to pay
Buyer for any amounts incurred in connection with such adoption, change or compliance
which were incurred by Buyer in excess of [***] days prior to the date of notice of such
determination.
If Buyer becomes entitled to claim any additional amounts pursuant to this Section 4.6, it shall
promptly notify Seller of the event by reason of which it has become so entitled, and Seller shall
have no less than ten (10) days to make payment therefor. A certificate providing reasonable
explanation regarding the calculation of any additional amounts payable pursuant to this
subsection submitted by Buyer to Seller shall be conclusive in the absence of manifest error.
4.7 Payments Pursuant to Sale to Approved Investors. Seller Parties shall direct each Approved
Investor purchasing an Underlying Asset to pay directly to Buyer, by wire transfer of
immediately available funds, the applicable Takeout Price in full and without set-off on the date
set forth in the applicable Purchase Commitment. In addition, Seller Parties shall provide
Buyer with a Purchase Advice relating to such payment. Seller Parties shall not direct the
Approved Investor to pay to Buyer an amount less than the full Takeout Price or modify or
otherwise change the wire instructions for payment of the Takeout Price provided to Approved
Investor by Buyer. Buyer shall apply all amounts received from an Approved Investor for the
account of Seller in accordance with Section 4.8 below and credit all amounts due Seller to the
Over/Under Account in accordance with Section 3.5(b)(ii) above. Buyer may reject any
amount received from an Approved Investor and not release the related Underlying Asset if (a)
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Buyer does not receive a Purchase Advice in respect of any wire transfer, (b) Buyer does not
receive the full Takeout Price, without set-off or (c) the amount received is not sufficient to pay
the related Repurchase Price in full. Alternatively, in lieu of rejecting an amount received by
Buyer from an Approved Investor, at Buyer’s option, if the amount received from the Approved
Investor does not equal or exceed the related Repurchase Price, Buyer may accept the amount
received from the Approved Investor and deduct the remaining amounts owed by Seller from
the Over/Under Account or demand payment of such remaining amount from Seller. If a Seller
Party receives any funds intended for Buyer, such Seller Party shall segregate and hold such
funds in trust for Buyer and promptly pay to Buyer all such amounts by wire transfer of
immediately available funds together with providing Buyer with a settlement statement for the
transaction.
4.8 Application of Payments from Seller Parties or Approved Investors. Provided that no Event of
Default has occurred and is continuing, payments made directly by a Seller or an Approved
Investor to Buyer shall be applied in the following order of priority:
(a) first, the outstanding Repurchase Price, in each case, on the Purchased Asset in
connection with which the payment is made;
(b) second, to all costs, expenses and fees incurred (to the extent reasonable, documented,
and out-of-pocket) or charged by Buyer under this Agreement that are due and owing and
related to the Transaction in connection with which the payment is made;
(c) third, to any amounts due and owing to Buyer pursuant to Section 6.3;
(d) fourth, to all costs, expenses and fees incurred (the extent reasonable, documented, and
out-of-pocket) or charged by Buyer under this Agreement that are due and owing and not
related to a specific Transaction; and
(e) fifth, to the amount of all other obligations then due and owing by Seller to Buyer under
this Agreement and the other Principal Agreements.
Buyer and Seller intend and agree that all such payments shall be “settlement payments” as such
term is defined in Bankruptcy Code Section 741(8). After the settlement payments have been
applied as set forth above, Buyer shall deposit in the Over/Under Account any amounts that
remain.
4.9 Method of Payment. Except as otherwise specifically provided herein, all payments hereunder
must be received by Buyer on the date when due and shall be made in United States dollars by
wire transfer of immediately available funds in accordance with Buyer’s wire instructions set
forth on Exhibit B or Exhibit J, as applicable. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day, and with respect to repayments of the Purchase
Price, the Price Differential thereon shall be payable at the Applicable Pricing Rate during such
extension. All payments made by or on behalf of Seller with respect to any Transaction shall
be applied to Seller’s account in accordance with Section 3.5(b)(ii) and Section 4.8 above and
shall be made in such amounts as may be necessary in order that all such payments after
withholding for or on account of any present or future Taxes imposed by any Governmental
Authority, other than any Excluded Taxes, compensate Buyer for any additional cost or reduced
amount receivable of making or maintaining Transactions as a result of such Taxes. All
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payments to be made by or on behalf of Seller with respect to any Transaction shall be made
without set-off, counterclaim or other defense.
4.10 Reserved.
4.11 Reserved.
4.12 Book Account. Buyer and Seller Parties shall maintain an account on their respective books of
all Transactions entered into between Buyer and Seller and for which the Repurchase Price has
not yet been paid. As a courtesy to Seller Parties, Buyer shall provide such information to
Seller Parties via the Internet or by telephone or facsimile, if Seller Parties are unable to access
the information via the Internet. Notwithstanding the foregoing, Seller Parties shall be
responsible for maintaining its own book account and records of Transactions entered into with
Buyer, amounts due to Buyer in connection with such Transactions and for paying such
amounts when due. Failure of Buyer to provide Seller Parties with information regarding any
Transaction shall not excuse Seller Parties’ timely performance of all obligations under this
Agreement, including, without limitation, payment obligations under this Agreement.
4.13 Full Recourse. The obligations of Seller from time to time to pay the Repurchase Price, Margin
Deficit payments, settlement payments and all other amounts due under this Agreement shall be
full recourse obligations of Seller.
4.14 Alternative Rate. Notwithstanding anything to the contrary herein or in any other Principal
Agreement:
(a) On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory
supervisor of LIBOR’s administrator (“IBA”), announced in a public statement the future
cessation or loss of representativeness of, among other benchmarks, One-Month LIBOR. On the
earliest of (A) the date that One-Month LIBOR has permanently or indefinitely ceased to be
provided by IBA or has been announced by the FCA pursuant to public statement or publication
of information to be no longer representative, (B) June 30, 2023 and (C) the Early Opt-in
Effective Date in respect of a SOFR Early Opt-in, if the then-current Benchmark is based on One-
Month LIBOR, the Benchmark Replacement will replace such Benchmark for all purposes
hereunder and under any other Principal Agreement in respect of any setting of such Benchmark
on such day and all subsequent settings without any amendment to, or further action or consent of
any other party to this Agreement or any other Principal Agreement. If the Benchmark
Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.
(b) (i) Upon either (A) the occurrence of a Benchmark Transition Event, or (B) in
connection with determining the Benchmark Replacement relating to One-Month LIBOR, a
reasonable determination is made by Buyer that neither of the alternatives under clause (1) of the
definition of Benchmark Replacement are available, the Benchmark Replacement selected under
clause (2) of the definition of Benchmark Replacement will replace the then-current Benchmark
for all purposes hereunder and under any Principal Agreement in respect of any Benchmark
setting at or after 5:00 p.m. on the [***] calendar day (or if such day is not a Business Day, the
next succeeding Business Day) after the date notice of such Benchmark Replacement is provided
to Seller without any amendment to, or further action or consent of any other party to, this
Agreement or any other Principal Agreement, unless prior to such date Seller shall notify Buyer
of its election to terminate this Agreement pursuant to clause (d) of this Section 4.14; provided
that, for the avoidance of doubt, in the event that the then-current Benchmark at the time of such
Benchmark Transition Event is not a SOFR-based rate, the Benchmark Replacement therefor
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shall be determined in accordance with clause (1) of the definition of Benchmark Replacement
unless Buyer determines that neither of such alternative rates is available, and, to the extent the
Benchmark Replacement is determined in accordance with clause (1) of the definition of
Benchmark Replacement, such Benchmark Replacement will replace the then-current Benchmark
for all purposes hereunder and under any Principal Agreement in respect of any Benchmark
setting at or after 5:00 p.m. on the [***] Business Day after the date notice of such Benchmark
Replacement is provided to Seller without any amendment to, or further action or consent of any
other party to, this Agreement or any other Principal Agreement.
(ii) On the Early Opt-in Effective Date in respect of an Other Rate Early Opt-in, the
Benchmark Replacement will replace One-Month LIBOR for all purposes hereunder and
under any Principal Agreement in respect of any setting of such Benchmark on such day
and all subsequent settings without any amendment to, or further action or consent of any
other party to this Agreement or any other Principal Agreement.
(c) In connection with the implementation and administration of a Benchmark
Replacement, Buyer will have the right to make Benchmark Replacement Conforming Changes
from time to time and, notwithstanding anything to the contrary herein or in any other Principal
Agreement, any amendments implementing such Benchmark Replacement Conforming Changes
will become effective without any further action or consent of any other party to this Agreement.
(d) Buyer will promptly notify Seller of (A) the implementation of any Benchmark
Replacement and (B) the effectiveness of any Benchmark Replacement Conforming Changes.
Any determination, decision or election that may be made by Buyer pursuant to this Section 4.14,
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, will be conclusive and binding absent manifest error and may be made in its sole
discretion and without consent from any other party hereto, except, in each case, as expressly
required pursuant to this Section 4.14.
(e) Seller may, within [***] days of Buyer’s notification of the Benchmark Replacement,
(i) give notice to Buyer of its good faith determination that the Benchmark Replacement is not
consistent with the successor rate of interest implemented by the majority of financial institutions
similar to Buyer for assets similar to the Mortgage Loans in warehouse facilities in the United
States similar to this Agreement and (ii) elect to terminate this Agreement on an elected
termination date that is on or after the date the Benchmark Replacement is effective (such date,
the “Elected Facility Termination Date”). Upon such termination, (i) Buyer shall refund the pro-
rated portion of any unpaid Facility Fee then due and owing from the date the Benchmark
Replacement is effective through and including the Elected Facility Termination Date and deposit
such refund into the Over/Under Account and (ii) Seller shall have no further liability for the
Facility Fee or to pay further installments thereof.
ARTICLE 5
FEES
5.1 Payment of Fees. Seller Parties shall pay to Buyer those fees set forth in this Agreement and
the Transactions Terms Letter when they become due and owing. Buyer shall be entitled to
withdraw from the Over/Under Account or retain from payments made by Seller or an
Approved Investor, subject to Section 4.7, or set off against any Purchase Prices to be paid by
Buyer any fees permitted under this Agreement that are due and owing. If such amounts on
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deposit in the Over/Under Account or payments received in connection with a Transaction or
Purchase Prices to be paid by Buyer are not sufficient to pay Buyer all fees owed, Buyer shall
notify Seller, and if such notice is provided on or prior to 12:00 p.m. (New York City time) on
any Business Day, then Seller shall pay to Buyer, no later than 5:00 p.m. (New York City time)
on the next subsequent Business Day all unpaid fees. If Buyer provides notice to Seller after
12:00 p.m. (New York City time) on any Business Day, Seller shall be required to pay such
unpaid fees no later than 5:00 p.m. (New York City time) on the second Business Day.
ARTICLE 6
SECURITY; SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE LOAN
DOCUMENTS; REPURCHASE TRANSACTIONS; DUE DILIGENCE
6.1 Precautionary Grant of Security Interest in Purchased Assets and Purchased Items. With
respect to the Purchased Assets, although the parties intend that all Transactions hereunder be
sales and purchases (other than for accounting and tax purposes) and not secured loans, and
without prejudice to the provisions of Section 6.6 and the expressed intent of the parties, if any
Transactions are deemed to be secured loans, as security for the performance of all of Seller’s
obligations hereunder, Seller hereby pledges, assigns and grants to Buyer a continuing first
priority security interest in and lien upon the Purchased Assets and other Purchased Items and
Buyer shall have all the rights and remedies of a “secured party” under the Uniform
Commercial Code with respect to the Purchased Assets and other Purchased Items. Possession
of any promissory notes, or instruments by the Custodian shall constitute possession on behalf
of Buyer.
As security for the performance of all of Guarantor’s obligations hereunder and as a
precautionary measure in the event that the conveyance of any Purchased Asset or Participation
Interests in any Underlying Assets by Guarantor to Seller is determined not to be a true sale or
contribution or the separate existence of Seller from Guarantor is otherwise disregarded at any
point, Guarantor hereby pledges, assigns and grants to Buyer a continuing first priority security
interest in and lien upon the Purchased Assets and related Residual Collateral and Buyer shall
have all the rights and remedies of a “secured party” under the Uniform Commercial Code with
respect to the Purchased Assets and related Residual Collateral. Possession of any promissory
notes, instruments or documents by the Custodian shall constitute possession on behalf of Buyer
Each Seller Party acknowledges that it has no rights to the Servicing Rights or the Participation
Interests in the Servicing Rights related to any Underlying Asset. Without limiting the generality
of the foregoing and for the avoidance of doubt, if any determination is made that the
Participation Interests in the Servicing Rights related to any Underlying Asset were not sold by
Seller to Buyer or that the Participation Interests in the Servicing Rights are not an interest in
such Underlying Asset and are severable from such Underlying Asset despite Buyer’s and Seller
Parties’ express intent herein to treat them as included in the purchase and sale transaction,
Guarantor hereby pledges, assigns and grants to Buyer a continuing first priority security interest
in and lien upon the Servicing Rights related to such Underlying Assets and Seller hereby
pledges, assigns and grants to Buyer a continuing first priority security interest in and lien upon
the Participation Interests in the Servicing Rights related to such Underlying Assets, and Buyer
shall have all the rights and remedies of a “secured party” under the Uniform Commercial Code
with respect thereto, in each case to the extent allowed by applicable law and the applicable
Agency Guides. In addition, each Seller Party, as applicable, further grants, assigns and pledges
to Buyer a first priority security interest in and lien upon (i) all documentation and rights to
receive documentation related to such Servicing Rights and the Participation Interests in the
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Servicing Rights and the servicing of each of the Underlying Assets, (ii) all Income related to the
Purchased Assets and Underlying Assets received by Seller Parties, (iii) all rights to receive such
Income, and (iv) all products, proceeds and distributions relating to or constituting any or all of
the foregoing (collectively, and together with the pledge of the Servicing Rights and the
Participation Interests in the Servicing Rights in the immediately preceding sentence, the
“Related Credit Enhancement”). The Related Credit Enhancement is hereby pledged as further
security for Seller Parties’ obligations to Buyer hereunder.
At any time and from time to time, upon the written request of Buyer, and at the sole expense of
Seller Parties, Seller Parties will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such further action
as Buyer may request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Purchased Assets and related Purchased Items and Residual
Collateral the liens created hereby. Seller Parties also hereby authorize Buyer to file any such
financing or continuation statement in a manner consistent with this Agreement to the extent
permitted by applicable law. For purposes of the Uniform Commercial Code and all other
relevant purposes, this Agreement shall constitute a security agreement.
If Seller shall, as a result of its ownership of the Participation Interests, become entitled to receive
or shall receive any certificate evidencing any Participation Interest, any option rights, whether in
addition to, in substitution for, as a conversion of, or in exchange for the Participation Interests, or
otherwise in respect thereof, Seller shall accept the same as the Buyer’s agent, hold the same in
trust for the Buyer and deliver the same forthwith to the Buyer in the exact form received, duly
indorsed by Seller to the Buyer, if required, together with an undated transfer power, if required,
covering such certificate duly executed in blank, or if requested, deliver the Participation
Interests, registered in the name of Buyer (as designee of the Seller under the Participation
Agreement), to be held by the Buyer subject to the terms hereof as additional security for the
obligations of Seller hereunder. Any sums paid upon or in respect of the Participation Interests
upon the liquidation or dissolution of Seller, or otherwise shall be paid over to the Buyer as
additional security for the obligations of Seller hereunder. If any sums of money or property so
paid or distributed in respect of the Participation Interests shall be received by Seller, Seller shall,
until such money or property is paid or delivered to the Buyer, hold such money or property in
trust for the Buyer segregated from other funds of Seller as additional security for the obligations
of Seller hereunder.
Buyer shall have the right, but not the obligation, to exercise all voting and member rights with
respect to the Participation Interests. Notwithstanding the foregoing and consistent with the
provisions hereof, prior to the occurrence of an Event of Default which is continuing, Buyer shall
notify and consult with Seller prior to the exercise of any rights under this paragraph; provided,
however, Buyer may in its sole discretion (x) remove a Servicer or terminate a Servicing
Agreement in connection with a Servicer Termination Event or (y) consent to a waiver of a
material breach or consent to a material modification of a Servicing Agreement. In no event shall
Buyer be required to cast or exercise a vote or other action taken which would impair the
Participation Interests, or which would be inconsistent with or result in a violation of any
provision of this Agreement. Without limiting the generality of the foregoing, Buyer shall have
no obligation to, (i) vote to enable, or take any other action to permit the Seller to issue any
interests of any nature or to issue any other interests convertible into or granting the right to
purchase or exchange for any interests of such entity, or (ii) sell, assign, transfer, exchange or
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otherwise dispose of, or grant any option with respect to, the Participation Interests or (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to,
such Seller Party’s interest in the Participation Interest except for the Lien provided for by this
Agreement, or (iv) enter into any agreement or undertaking restricting the right or ability of such
Seller Party or Buyer to sell, assign or transfer the Participation Interests.
The parties acknowledge that the Participation Interests have been sold by Guarantor to the Seller
pursuant to the Participation Agreement. Notwithstanding the foregoing, each Seller Party
acknowledges and agrees that their respective rights with respect to the Purchased Assets,
Purchased Items and Residual Collateral (including without limitation its security interest in the
Purchased Items and Residual Collateral) are and shall continue to be at all times junior and
subordinate to the rights of Buyer under this Agreement. The parties further acknowledge that
the Buyer shall enter into Transactions and Purchase Price Increases hereunder with respect to
Purchased Assets, Purchased Items and Residual Collateral, free and clear of any obligations
under the Participation Agreement and that such Participation Agreement shall not confer any
obligations or liabilities on Buyer to any Seller Party. For the sake of clarity, if Buyer releases its
security interest granted by Seller to Buyer hereunder in any Purchased Assets or other Purchased
Items in accordance with the terms hereof, Buyer’s security interest in the related Underlying
Assets and related Residual Collateral granted by Guarantor to Buyer hereunder shall be released
concurrently therewith.
Notwithstanding any language herein to the contrary, upon repurchase of any Purchased Asset in
accordance with this Agreement, the security interest in such Purchased Asset granted pursuant to
this Section 6.1 shall be deemed to be automatically released without further action by any party.
6.2 Servicing.
(a) Servicing Rights Owned by Buyer; Buyer’s Right to Appoint Servicer. In recognition
that each Participation Interest (including the related Servicing Rights of the Underlying
Assets) is sold by Seller to Buyer on a servicing released basis and Buyer is the owner of
the Servicing Rights related to each such Underlying Asset, Buyer shall have the sole
right to appoint the Servicer for each Underlying Asset, subject to the terms set forth
herein.
(b) Appointment of Servicer. Buyer hereby appoints the Servicer to subservice the
Underlying Assets on behalf of Buyer as agent for Buyer for the period between the
Purchase Date and the Repurchase Date of the Purchased Assets relating to such
Underlying Assets. The right of the Servicer to service the Underlying Assets is on an
interim basis only and does not provide or confer a contractual, ownership or other right
for the Servicer to service the Underlying Assets, it being understood that upon payment
of the Purchase Price, Buyer owns the Participation Interests in the related Servicing
Rights and may assume servicing or appoint a Successor Servicer in accordance with
Section 6.2(h) below. Further, the fact that the Servicer may be entitled to a servicing fee
for interim servicing of the Underlying Assets or that Buyer may provide a separate
notice of default to the Servicer regarding the servicing of the Underlying Assets shall not
affect or otherwise change Buyer’s ownership of the Participation Interests related to the
Servicing Rights related to the Underlying Assets.
(c) Interim Servicing Period; No Servicing Fee or Income. For each Transaction, Servicer’s
right to interim service an Underlying Asset shall commence on the related Purchase Date
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and shall automatically terminate without notice on the earlier of (i) thirty (30) days after
the related Purchase Date, or if longer, the term of the relevant Transaction, or (ii) the
Repurchase Date. If the interim servicing period expires with respect to any Underlying
Asset for any reason other than Seller repurchasing such Underlying Asset, then such
interim servicing period shall automatically terminate if not renewed by Buyer; provided,
that Buyer shall be deemed to have renewed such interim servicing period if Buyer enters
into a new Transaction or extends the Transaction in respect of such Underlying Asset.
In connection with any such renewal, the Servicer shall continue to interim service the
Underlying Asset for a thirty (30) day extension period. Absent any such extension of
the interim servicing period, the Servicer shall transfer servicing of the Underlying Asset
(which shall include the delivery of all Servicing Records related to such Underlying
Asset) to Buyer or its designee in accordance with the instructions of Buyer and any other
applicable requirements of this Agreement. For the avoidance of doubt, upon expiration
of the interim servicing period (including the expiration of any extension period) with
respect to any Underlying Asset, Servicer shall have no right to service the related
Underlying Asset nor shall Buyer have any obligation to extend the interim servicing
period (or continue to extend the interim servicing period), it being understood that upon
such expiration, Servicer shall promptly transfer the servicing of the related Underlying
Asset to Buyer or its designee in accordance with the instructions of Buyer and any other
applicable requirements of this Agreement. Buyer shall have no obligation to pay the
Servicer, nor shall the Servicer have any right to deduct or retain, any servicing fee or
similar compensation in connection with the interim servicing of an Underlying Asset.
(d) Servicing Agreement. If there is a Servicer of the Underlying Assets other than Servicer
or Guarantor, Buyer or an Affiliate of Buyer, Seller Parties shall enter into a Servicing
Agreement with the Servicer on behalf of Buyer, which such Servicing Agreement shall
be on terms acceptable to Buyer in its discretion, and which shall include, at a minimum,
(i) a recognition by the servicer of Buyer’s interests and rights to the Underlying Assets
as provided under this Agreement, including, without limitation, Buyer’s ownership of
the Servicing Rights related to the Underlying Assets; (ii) an obligation for the Servicer
to subservice the Underlying Assets consistent with the degree of skill and care that the
Servicer customarily requires with respect to similar Mortgage Loans owned or managed
by it but in no event less than in accordance with Accepted Servicing Practices; (iii) an
obligation to comply with all applicable federal, state and local laws and regulations; (iv)
an obligation to maintain all state and federal licenses necessary for it to perform its
subservicing responsibilities; (v) an obligation not to impair the rights of Buyer in any
Underlying Assets or any payment thereto, and (vi) an obligation to collect all Income in
respect of the Underlying Assets on behalf of Buyer, in trust, in segregated custodial
accounts and remit such Income to the custodial account within two (2) Business Days of
receipt. Further, such Servicing Agreement shall contain express reporting requirements
and other rights to allow Buyer to inspect the records of the Servicer with respect to the
Underlying Assets. Buyer may terminate the subservicing of any Underlying Asset with
the then existing Servicer in accordance with either Section 6.2(f) or Section 6.2(h).
(e) Servicing Obligations of Guarantor. To the extent Guarantor shall subservice any
Underlying Asset on behalf of Buyer, Guarantor shall:
(i) Subservice and administer the Underlying Assets on behalf of Buyer in
accordance with prudent mortgage loan servicing standards and procedures
generally accepted in the mortgage banking industry and in accordance with the
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degree of care and servicing standards generally prevailing in the industry,
including all applicable requirements of the Agency Guides, applicable law, FHA
Regulations, VA Regulations and RD Regulations, the requirements of any
Insurer, as applicable, and the requirements of any applicable Purchase
Commitment and the related Approved Investor, so that neither the eligibility of
the Underlying Asset and any related Pledged Security for purchase under such
Purchase Commitment nor the FHA Mortgage Insurance, VA Loan Guaranty
Agreement, RD Loan Guaranty Agreement or any other applicable insurance or
guarantee in respect of any such Underlying Assets, if any, is voided or reduced
by such servicing and administration;
(ii) Subject to Sections 6.2(f), 6.2(h) and 6.2(k), and to the extent not otherwise held
by the Custodian, Guarantor shall at all times maintain and safeguard the
Mortgage Loan File for the Underlying Asset in accordance with applicable law
and lending industry custom and practice and shall hold such Mortgage Loan File
in trust for Buyer, and in any event shall maintain and safeguard photocopies of
the documents delivered to Buyer pursuant to Section 3.3, and accurate and
complete records of its servicing of the Underlying Asset; Guarantor’s possession
of such Mortgage Loan File is for the sole purpose of subservicing such
Underlying Asset and such retention and possession by Guarantor is in a
custodial capacity only;
(iii) Buyer may, at any time during Guarantor’s business hours on reasonable notice,
examine and make copies of such documents and records, or require delivery of
the originals of such documents and records to Buyer or its designee;
(iv) Guarantor shall deliver to Buyer all such reports with respect to the Underlying
Assets required in the Transactions Terms Letter and herein at the times and on
the dates set forth therein and herein. In addition, at Buyer’s reasonable request,
Guarantor shall promptly deliver to Buyer reports regarding the status of any
Underlying Asset being subserviced by it, which reports shall include, but shall
not be limited to, a description of any default thereunder for more than thirty (30)
days; Guarantor is required to deliver such reports until the repurchase of the
Underlying Asset by Seller; and
(v) Guarantor shall immediately notify Buyer if a Responsible Officer of Guarantor
becomes aware of any payment default that occurs under an Underlying Asset.
(f) Sale or Transfer of Servicing Rights by Buyer. Following the occurrence and during the
continuation of an Event of Default, Buyer may sell or transfer any rights to service an
Underlying Asset without the prior written consent of Seller Parties or any Servicer.
(g) Release of Mortgage Loan Files. Seller Parties shall release their custody of the contents
of any Mortgage Loan File only in accordance with the written instructions of Buyer,
except when such release is required (1) as incidental to any Seller Party’s subservicing
of the related Underlying Asset, (2) to complete the Purchase Commitment, or (3) by law.
(h) Right to Appoint Successor Servicer. Upon and during the continuation of an Event of
Default or Servicer Termination Event, Buyer reserves the right, in its discretion, to
appoint a successor servicer to subservice any Underlying Asset (each a “Successor
Servicer”). In the event of such an appointment, Guarantor and the Servicer shall
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perform all acts and take all action so that any part of the Mortgage Loan File and related
Servicing Records held by Seller Parties or the Servicer, together with all funds in the
applicable custodial account and other receipts relating to such Underlying Asset, are
promptly delivered to the Successor Servicer. Seller Parties shall have no claim for
servicing fees, lost profits or other damages if Buyer appoints a Successor Servicer
hereunder.
(i) Servicer Notice. As a condition precedent to Buyer funding the Purchase Price for any
Underlying Asset subserviced by a Servicer other than Guarantor, Buyer, or an Affiliate
of Buyer, Seller Parties shall provide to Buyer a Servicer Notice addressed to and agreed
to by the Servicer, advising the Servicer of such matters as Buyer may reasonably
request, including, without limitation, recognition by the Servicer of Buyer’s interest in
such Underlying Assets and ownership of the Participation Interests in the Servicing
Rights related thereto and the Servicer’s agreement that upon receipt of notice of an
Event of Default from Buyer, it will follow the instructions of Buyer with respect to the
subservicing of the related Underlying Assets.
(j) Notification of Servicer Defaults. If a Responsible Officer of a Seller Party should
discover that, for any reason whatsoever, any entity responsible to Guarantor by contract
for managing or servicing any such Underlying Asset has failed to perform fully
Guarantor’s obligations with respect to the management or servicing of such Underlying
Asset as required under this Agreement or any of the obligations of such entities with
respect to the Underlying Assets as delegated by Guarantor pursuant to any Servicing
Agreement, Seller Parties shall promptly notify Buyer.
(k) Termination. Upon and during the continuation of an Event of Default or Servicer
Termination Event, Buyer shall have the right to immediately terminate the Guarantor’s
or any Servicer’s (as applicable) right to service the Underlying Assets for any reason
without payment of any penalty or termination fee. Seller Parties shall cooperate, or
cause the Servicer to cooperate, in transferring the servicing of the Underlying Assets to a
successor servicer appointed by Buyer. For the avoidance of doubt, any termination of
the Servicer’s rights to service by the Buyer as a result of an Event of Default shall be
deemed part of an exercise of the Buyer’s rights to cause the liquidation, termination or
acceleration of this Agreement.
(l) Buyer’s Right to Service. Buyer or its designee, in accordance with Section 6.2(h) and
(k) herein, shall be entitled to service some or all of the Underlying Assets, including,
without limitation, receiving and collecting all sums payable in respect of same. Subject
to the foregoing, upon Buyer’s determination and written notice to the Seller Parties or
the Servicer, as applicable, that Buyer desires to service some or all of the Underlying
Assets, Seller Parties shall promptly cooperate, or shall cause the Servicer to promptly
cooperate, with all instructions of Buyer and do or accomplish all acts or things necessary
to effect the transfer of the servicing to Buyer or its designee, at Seller Parties’ sole
expense. Upon Buyer’s or its designee’s servicing of the Underlying Assets, (i) Buyer
may, in its own name or in the name of Seller Parties or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on account of
or in exchange for the Underlying Asset(s), but shall be under no obligation to do so; (ii)
Seller Parties shall, if Buyer so requests, pay to Buyer all amounts received by Seller
Parties upon or in respect of the Underlying Asset(s) or other Purchased Items, advising
Buyer as to the source of such funds; and (iii) all amounts so received and collected by
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Buyer shall be held by it as part of the Purchased Items or applied against any
outstanding Repurchase Price owed Buyer.
6.3 Margin Account Maintenance.
(a) Asset Value. Buyer shall have the right to determine the Asset Value of each Purchased
Asset and its related Underlying Asset at any time. For the avoidance of doubt, the Asset
Value of a Purchased Asset shall be determined with respect to the Asset Value of the
related Underlying Asset; provided that if a Purchased Asset fails to qualify as an Eligible
Participation Interest, Buyer may mark the Asset Value of such Purchased Asset (and all
related Underlying Assets) to zero.
(b) Margin Deficit and Margin Call. If Buyer shall determine at any time that the aggregate
Asset Value of a Purchased Asset (or any related Underlying Asset) subject to all
Transactions is less than the Aggregate Outstanding Purchase Price for such Transactions
(in any such case, a “Margin Deficit”) and provided that such Margin Deficit shall equal
or exceed $[***], then Buyer may, at its sole option and by written notice to Seller
Parties (as such written notice is more particularly set forth below, a “Margin Call”),
require Seller to either:
(i) transfer to Buyer or its designee cash or, at Buyer’s sole option Seller may
transfer Eligible Assets approved by Buyer (“Additional Purchased Assets”) so
that (x) the individual Asset Value of the Purchased Asset, (y) the aggregate
Asset Value of all Purchased Assets subject to each Transaction, or (z) the
aggregate Asset Value of all Purchased Assets subject to Transactions, as the
case may be, including any such cash or Additional Purchased Assets tendered
by the Seller, will thereupon equal or exceed the individual or Aggregate
Outstanding Purchase Price(s) as applicable; or
(ii) pay one or more Repurchase Prices, as applicable, in an amount sufficient to
reduce the related Purchase Price so that the related Purchase Price (or the related
aggregate Purchase Price) is less than or equal to the Asset Value of the
Purchased Asset (or the aggregate Asset Value of the Purchased Assets, as
applicable).
If Buyer delivers a Margin Call to Seller on or prior to 12:00 p.m. (New York City time) on any
Business Day, then Seller shall transfer cash to Buyer or additional Participation Interests related
to or Additional Underlying Assets, or otherwise pay one or more Repurchase Prices, as
applicable, to Buyer no later than 5:00 p.m. (New York City time) on the second subsequent
Business Day. If Buyer delivers a Margin Call to Seller after 12:00 p.m. (New York City time)
on any Business Day, Seller shall be required to transfer cash or Additional Underlying Assets no
later than 5:00 p.m. (New York City time) on the third subsequent Business Day. Notice of a
Margin Call may be provided by Buyer to Seller electronically or in writing, such as via
electronic mail.
(c) Buyer’s Discretion. Buyer’s election not to make a Margin Call at any time there is a
Margin Deficit shall not in any way limit or impair its right to make a Margin Call at any
time a Margin Deficit exists.
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(d) Over/Under Account. Buyer may withdraw from the Over/Under Account amounts equal
to any Margin Call which is not otherwise satisfied by Seller within the time frames
provided in this Section 6.3.
(e) Credit to Repurchase Price. Any cash transferred to Buyer pursuant to this Section 6.3
shall be credited to the Repurchase Price of the related Transaction(s).
6.4 Custody of Mortgage Loan Documents.
(a) Custodial Arrangements. With respect to Underlying Assets, and subject to the terms
herein, Buyer may appoint any Person to act as the Custodian, with Seller Parties’
consent (provided no consent shall be required if an Event of Default has occurred and is
continuing) to hold possession of the Mortgage Loan Documents and the Agency
Documents (or a portion thereof) and to take actions at the direction of Seller Parties or
Buyer, as the case may be. If any Person other than Buyer is appointed as Custodian, it
shall be a condition precedent to Buyer entering into any Transactions hereunder that
Seller Parties, Buyer and Custodian enter into a Custodial Agreement acceptable to
Buyer. Seller Parties hereby consent to any and all such appointments and agrees to
deliver the Mortgage Loan Documents and certain of the Agency Documents to the
Custodian upon the direction of Buyer; provided, however, that Seller Parties shall not be
required to make any such delivery until a Custodial Agreement has been entered into
with such Custodian. Seller Parties and Buyer further agree (i) the Custodian shall be
exclusively the agent, bailee and/or custodian of Buyer; (ii) receipt of the Mortgage Loan
Documents or the Agency Documents by the Custodian shall be constructive receipt by
Buyer of such documents; and (iii) Seller Parties shall not have and shall not attempt to
exercise any degree of control over the Custodian or any Mortgage Loan Document or
Agency Document held by the Custodian except as may be otherwise provided in the
Custodial Agreement.
(b) Temporary Withdrawal of Mortgage Loan Documents for Correction. Buyer may permit
Seller Parties to withdraw, for a period not to exceed [***] Business Days, specified
Mortgage Loan Documents for the purpose of correcting or completing such documents
or servicing the related Underlying Asset; provided, however, that unless otherwise
agreed to by Buyer in writing, in no event shall the outstanding balance of the
Transactions related to such Mortgage Loan Documents exceed [***] of the Aggregate
Transaction Limit; provided further, that any Mortgage Loan Documents that are
withdrawn by or at the request of Seller Parties and delivered to a Person other than
Seller Parties shall at all times be covered by one or more Bailee Agreements, true and
complete and fully executed copies of which shall be delivered to Buyer.
Notwithstanding the foregoing, Buyer shall be deemed to be in possession of any
Mortgage Loan Documents released pursuant to this Section 6.4(b), and the interest of
Buyer in the related Underlying Asset shall continue unimpaired until the Mortgage Loan
Documents are returned to, or the Repurchase Prices with respect thereto are received by,
Buyer.
(c) Delivery of Mortgage Loan Documents to Approved Investors. Provided that no Event
of Default has occurred and is continuing, upon the written request of Seller Parties,
Buyer may, at its option, deliver to an Approved Investor set forth in the related Purchase
Commitment, or its custodian, the Mortgage Loan Documents relating to a specified
Underlying Asset. All such Underlying Assets and the related Mortgage Loan
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Documents shall at all times be covered by one or more Bailee Agreements, and Buyer or
its designee will not release Mortgage Loan Documents to an Approved Investor unless
Buyer or its Custodian has received a true and complete and fully executed Bailee
Agreement from the Approved Investor. Notwithstanding the foregoing, Buyer shall be
deemed to be in possession of any Mortgage Loan Documents released pursuant to this
Section 6.4(c), and the interest of Buyer in the related Underlying Asset shall continue
unimpaired until the Mortgage Loan Documents are returned to, or the Repurchase Prices
with respect thereto are received by, Buyer. If the Approved Investor does not purchase
an Underlying Asset as contemplated by the related Purchase Commitment, Seller Parties
shall, upon the request of Buyer, assist Buyer in the recovery of any Mortgage Loan
Documents not returned by the Approved Investor to Buyer.
(d) Delivery of Mortgage Loan Documents Relating to Mortgage-Backed Securities. Upon
the written request of Seller Parties, Buyer may, at its option, deliver to the certifying
custodian or permit the delivery to the certifying custodian of the Mortgage Loan
Documents relating to those Underlying Assets that are or will be Pooled Mortgage
Loans. All such Underlying Assets and the related Mortgage Loan Documents shall at all
times be covered by a Bailee Agreement, and Buyer or its designee will not release
Mortgage Loan Documents to a certifying custodian unless Buyer or its designee has
received a signed tri-party custodial agreement from such custodian, in a form acceptable
to Buyer. Buyer shall have no obligation to release or permit the release of any Mortgage
Loan Documents to any certifying custodian that will not sign a custodial agreement.
Notwithstanding the foregoing, Buyer shall be deemed to be in possession of any
Mortgage Loan Documents released pursuant to this Section 6.4(d), and the interest of
Buyer in the related Underlying Asset shall continue unimpaired until the Mortgage Loan
Documents are returned to, or proceeds thereof are received by, Buyer. Seller Parties
shall pay for all costs of the certifying custodian and use commercially reasonable efforts
to ensure that the issuer delivers the Mortgage-Backed Securities to the securities account
and issues such securities in the name of the Securities Intermediary in accordance with
the Joint Pooling Documents on the related Settlement Date.
6.5 Repurchase and Release of Purchased Assets. Provided that no Event of Default has occurred
and is continuing, Seller may repurchase a Purchased Asset (or obtain the release of the related
Underlying Assets, as applicable) by either:
(a) paying, or causing an Approved Investor to pay, to Buyer, subject to Sections 4.7 and 4.8
above, the Repurchase Price; or
(b) transferring to Buyer cash and/or additional Participation Interests relating to Underlying
Assets satisfactory to Buyer, in aggregate amounts sufficient to cover the amount by
which the aggregate amount of Transactions then outstanding hereunder (plus accrued
interest and accrued fees with respect thereto) exceeds the Asset Value of the existing
Purchased Assets, excluding the Purchased Assets (and related Underlying Assets) to be
released; provided that (i) such additional Assets shall be deemed part of a new
Transaction, and (ii) the conditions precedent in Section 7.2 shall be satisfied prior to any
such transfer.
Upon receipt of the applicable amount, as set forth above, Buyer shall (i) with respect to
Underlying Assets, deliver or shall cause the Custodian to deliver the related Mortgage Loan
Documents to Seller Parties or Seller Parties’ designee, if such documents have not already been
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delivered pursuant to a Bailee Agreement and (ii) with respect to related Pledged Securities,
deliver the Pledged Security to the applicable Seller Party or Approved Investor, as applicable, on
a delivery versus payment basis. If any such release gives rise to or perpetuates a Margin Deficit,
Buyer shall notify Seller of the amount thereof and Seller shall thereupon satisfy the Margin Call
in the manner specified in Section 6.3(b). Buyer shall have no obligation to release an
Underlying Asset or Pledged Security or terminate its security interest in such Underlying Asset
or Pledged Security until such Margin Call is satisfied.
6.6 Repurchase Transactions. Beginning on the related Purchase Date and prior to the related
Repurchase Date, Buyer shall have free and unrestricted use of all Purchased Assets (and
related Underlying Assets) and may in its discretion and without notice to Seller Parties engage
in repurchase transactions with respect to any or all of the Underlying Assets or otherwise
pledge, hypothecate, assign, transfer or convey any or all of the Purchased Assets (and related
Underlying Assets) (such transactions, “Repurchase Transactions”); provided, however, that
such Repurchase Transactions mature on or prior to the Repurchase Date of the related
Purchased Assets, Buyer, in its discretion, has the ability to repurchase such Purchased Assets
prior to the related Repurchase Date or the ability to substitute collateral in order to obtain
release of related Purchased Assets. Nothing contained in this Agreement shall obligate Buyer
to segregate any Purchased Asset or Purchased Item or Residual Collateral delivered to Buyer
by Seller Parties. Seller Parties shall not be responsible for any additional obligations, costs or
fees in connection with such Repurchase Transactions. Seller Parties shall not take any action
inconsistent with Buyer’s ownership of a Purchased Asset (representing the Participation
Interests in the related Underlying Assets) and shall not claim any legal, beneficial or other
interest in such a Purchased Asset other than the limited right and obligations to provide
servicing of such Underlying Assets (representing the Participation Interests in the related
Underlying Assets) where Buyer designates Guarantor as servicer as provided in Section 6.2.
6.7 Periodic Due Diligence. Seller Parties acknowledge that Buyer has the right at any time during
the term of this Agreement to perform continuing due diligence reviews with respect to the
Purchased Assets and the related Underlying Assets, for purposes of verifying compliance with
the representations, warranties, covenants and specifications made hereunder or under any other
Principal Agreement, or otherwise, and Seller Parties agree that upon reasonable (but no less
than five (5) Business Days’) prior notice to Seller Parties (provided that upon the occurrence
of an Event of Default, no such prior notice shall be required), Buyer or its authorized
representatives will be permitted during normal business hours to examine, inspect, make
copies of, and make extracts of, the Mortgage Loan Files, the Servicing Records and any and all
documents, records, agreements, instruments or information relating to such Purchased Assets
in the possession, or under the control, of Seller Parties, Custodian or Servicer; provided,
however, that unless an Event of Default or Potential Default has occurred and is continuing,
such on-site visits and/or on-site examinations shall be limited to one (1) per calendar year.
Further, Seller Parties will make available to Buyer a knowledgeable financial or accounting
officer and will instruct such officer to answer candidly and fully, at no cost to Buyer, any and
all questions that any authorized representative of Buyer may address to them in reference to
the Mortgage Loan Files, Purchased Assets and Underlying Assets. Without limiting the
generality of the foregoing, Seller Parties acknowledge that Buyer shall purchase Assets from
Seller based solely upon the information provided by Seller Parties to Buyer in the Asset Data
Records and the representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right, at any time to re-underwrite any of the Underlying Assets itself or
engage a third party underwriter to perform such re-underwriting. Seller Parties agree to
reasonably cooperate with Buyer and any third party underwriter acting on behalf of Buyer in
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connection with such re-underwriting, including, but not limited to, providing Buyer and any
third party underwriter with access to any and all documents, records, agreements, instruments
or information relating to such Purchased Assets in the possession, or under the control, of
Seller Parties. Seller Parties and Buyer further agree that all reasonable and documented out-
of-pocket costs and expenses incurred by Buyer in connection with Buyer’s activities pursuant
to this Section 6.7 shall be paid by Seller Parties; provided, that Seller Parties shall not be
responsible for costs and expenses incurred by Buyer in excess of the Due Diligence Cap;
provided further, that such Due Diligence Cap shall not apply upon the occurrence and
continuance of an Event of Default. Seller Parties and Buyer further agree that prior to
initiating any due diligence, Buyer agrees that it shall cause any third party vendor that
performs such due diligence on behalf of Buyer to enter into a mutually agreeable non-
disclosure agreement with Buyer and Seller Parties. Seller Parties shall not be responsible for
out-of-pocket costs and expenses incurred by Buyer in connection with the initial due diligence
of Seller Parties conducted prior to the Effective Date in excess of the Initial Due Diligence
Cap.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 Initial Transaction. As conditions precedent to Buyer considering whether to enter into the
initial Transaction hereunder:
(a) Seller Parties shall have delivered to Buyer, in form and substance satisfactory to Buyer:
(i) each of the Principal Agreements duly executed by each party thereto and in full
force and effect, free of any modification, breach or waiver;
(ii) an opinion of Seller Parties’ counsel as to Buyer’s first priority lien on and
perfected security interest in the Purchased Assets, Purchased Items and Residual
Collateral; a non-contravention, enforceability and corporate opinion with respect
to Seller Parties; an opinion with respect to the inapplicability of the Investment
Company Act of 1940 to Seller Parties; and a Bankruptcy Code opinion with
respect to the matters outlined in Section 14.19, each in form and substance
acceptable to Buyer;
(iii) a Power of Attorney duly executed by Seller Parties and notarized;
(iv) a certified copy of each Seller Party’s articles or certificate of incorporation and
bylaws (or corresponding organizational documents if such Seller Party is not a
corporation) and, if required by Buyer, a certificate of good standing issued by
the appropriate official in such Seller Party’s jurisdiction of organization, in each
case, dated no less recently than thirty (30) days prior to the Effective Date;
(v) a certificate of each Seller Party’s corporate secretary or general counsel,
substantially in the form of Exhibit C hereto, dated as of the Effective Date, as to
the incumbency and authenticity of the signatures of the officers of each Seller
Party executing the Principal Agreements and the resolutions of the board of
directors of such Seller Party (or its equivalent governing body or Person) in
form and substance reasonably acceptable to Buyer;
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(vi) independently audited financial statements of Guarantor (and its Subsidiaries, on
a consolidated basis) for each of the two (2) fiscal years most recently ended (if
available), containing a balance sheet and related statements of income,
stockholders’ equity and cash flows, all prepared in accordance with GAAP,
applied on a basis consistent with prior periods, and otherwise acceptable to
Buyer, together with an auditor’s opinion that is unqualified or otherwise is
consented to in writing by Buyer;
(vii) if more than six (6) months has passed since the close of the most recently ended
fiscal year, interim financial statements of Guarantor covering the period from
the first day of the current fiscal year to the last day of the most recently ended
month;
(viii) a letter of good standing from a title insurance company with respect to Title
Source, Inc. in form and substance acceptable to Buyer;
(ix) certificates of insurance evidencing Seller Parties’ errors and omissions insurance
policy or mortgage impairment insurance policy and blanket bond coverage
policy, showing compliance by Seller with Section 9.9 below;
(x) a duly executed Assignment of Closing Protection Letter in those cases where a
Closing Protection Letter is required;
(xi) the Participation Certificate registered in the name of the Buyer (as designee of
the Seller under the Participation Agreement);
(xii) an Acknowledgement of Confidentiality of Password Agreement in the form of
Exhibit I hereto;
(xiii) any fees then due and owing under the Transactions Terms Letter; and
(xiv) a copy of Guarantor’s underwriting guidelines for Mortgage Loans in form and
substance acceptable to Buyer in its sole discretion, as amended from time to
time.
(b) Buyer shall have determined that it has received satisfactory evidence that the appropriate
Uniform Commercial Code Financing Statements (UCC-1 or UCC-3, as applicable) and/
or such other instruments as may be necessary in order to create in favor of Buyer, a
perfected first- priority security interest in the Purchased Assets and related Purchased
Items and other Residual Collateral should any of the Transactions be deemed to be
loans, and same shall have been duly executed and appropriately filed or recorded in each
office of each jurisdiction in which such filings and recordation’s are required to perfect
such first-priority security interest.
(c) Buyer shall have determined that it has satisfactorily completed its due diligence review
of Seller Parties’ operations, business, financial condition and underwriting and
origination of Mortgage Loans.
(d) Seller Parties shall have provided evidence, satisfactory to Buyer that Seller Parties have
all Approvals and such Approvals are in good standing.
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7.2 All Transactions. As conditions precedent to Buyer (or the Custodian if set forth below)
considering whether to enter into any Transaction hereunder (including the initial Transaction),
or whether to continue a Transaction, in the case of a Transaction in respect of Mortgage Loans
which convert to Pooled Mortgage Loans on the related Pooling Date or a Transaction in
respect of Pooled Mortgage Loans which convert to a Mortgage-Backed Security on the related
Settlement Date, as applicable:
(a) Seller Parties shall have delivered to Buyer, in form and substance satisfactory to Buyer
and not later than 4:00 p.m. (New York City time) and best efforts thereafter:
(i) an Asset Data Record for the Assets subject to the proposed Transaction, which
Asset Data Record may be an individual record or part of a group report and shall
be authenticated by Seller;
(ii) to the Custodian, a complete Mortgage Loan File for each Mortgage Loan subject
to the proposed Transaction, unless such Mortgage Loan is a Wet Mortgage
Loan;
(iii) [reserved];
(iv) for each Mortgage Loan that is subject to the proposed Transaction that is also
subject to a security interest (including any precautionary security interest)
immediately prior to the Purchase Date, a Warehouse Lender’s Release, bailee
letter or Seller’s Release, as applicable, for such Mortgage Loan. The secured
party shall have filed Uniform Commercial Code termination statements in
respect of any Uniform Commercial Code filings made in respect of such
Mortgage Loan, and each such release and Uniform Commercial Code
termination statement has been delivered to Buyer prior to each Transaction and
to the Custodian as part of the Mortgage Loan File;
(v) a schedule identifying each Asset subject to the proposed Transaction as either a
Safe Harbor Qualified Mortgage, Rebuttable Presumption Qualified Mortgage, a
Permitted Non-Qualified Mortgage Loan, a Bond Loan – 1st Lien or a Ginnie
Mae EBO Mortgage Loan for which the originator received the related original
loan application prior to January 10, 2014, as applicable; and
(vi) such other documents pertaining to the Transaction as Buyer may reasonably
request, from time to time;
(b) reserved;
(c) for Mortgage Loans proposed to be sold under such Transaction with respect to which the
related Purchase Price is to be paid to one or more Approved Payees on behalf of Seller
Parties, an amount equal to the related Haircut (if any) plus the Minimum Over/Under
Account Balance, as set forth in Section 3.5(a), shall be on deposit in the Over/Under
Account;
(d) for all new origination Wet Mortgage Loans or Dry Mortgage Loans as to which the
origination funds are being remitted to the closing table that are proposed to be sold
under such Transaction, Seller Parties shall have delivered (i) to the applicable Closing
Agent, closing and disbursement instructions in the form customarily provided by Seller,
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and, if applicable, (ii) to Buyer (1) with respect to Title Source, Inc., evidence of fidelity
bond coverage and evidence that Buyer is able to make claims thereunder in accordance
with Section 3.7(a), or (2) to the extent that such Wet Mortgage Loans or Dry Mortgage
Loans, along with the number of Underlying Assets (a) which were table-funded using, in
part, the Purchase Price, (b) where title insurance is provided by a Person other than Title
Source, Inc., and regarding which a blanket or individual Closing Protection Letter, or
alternative documentation specified in Section 3.7(a)(ii)(3), has not been provided, would
exceed (A) [***] of Guarantor’s Tangible Net Worth in the case of Wet Mortgage Loans
and (B) [***] of Guarantor’s Tangible Net Worth in the case of all other Mortgage
Loans, in the aggregate, measured as of the end of Guarantor’s most recent fiscal quarter
the applicable title company blanket or individual Closing Protection Letter, or
alternative documentation specified in Section 3.7(a)(ii)(3), and the related Assignment
of Closing Protection Letter (if applicable) duly executed and naming Buyer as the
assignee, each in accordance with Section 9.10;
(e) on or prior to the Pooling Date for any Pooled Mortgage Loan, Seller Parties shall deliver
or cause to be delivered (A) to Buyer, an executed trust receipt from the Custodian
relating to such Mortgage Loan in form and substance satisfactory to Buyer, (B) to the
Custodian (or otherwise made available to the Custodian), all documents, schedules and
forms required by and in accordance with the Custodial Agreement and (C) to the
applicable parties, each of the applicable Agency Documents as set forth on Exhibit M
hereto;
(f) on or prior to the related Settlement Date for any Mortgage-Backed Security relating to
an Underlying Asset, Seller Parties shall have provided Buyer with the CUSIP number
for such Mortgage-Backed Security;
(g) All fees (including Facility Fees and Unused Facility Fees), expenses, indemnity
payments and other amounts that are then due and owing under the Principal Agreements
have been paid by (x) prior to a Potential Default or Event of Default, Seller and (y) on
and after the occurrence of a Potential Default or Event of Default, Seller Parties;
(h) No rescission notice and/or notice of right to cancel shall have been improperly delivered
to the Mortgagor in respect of any Eligible Mortgage Loan;
(i) Seller Parties shall have designated one or more Approved Payees, if applicable, to whom
the related Haircut (if any) and Purchase Price shall be delivered;
(j) the representations and warranties of Seller Parties set forth in Article 8 hereof shall be
true and correct in all material respects as if made on and as of the date of each
Transaction;
(k) if required by Buyer, Seller Parties shall have performed all agreements to be performed
by it hereunder, and after giving effect to the requested Transaction, there shall exist no
Event of Default or Potential Default hereunder;
(l) no Potential Default, Event of Default or a Material Adverse Effect, as determined in
Buyer’s good faith discretion, shall have occurred and be continuing;
(m) if applicable, a Servicing Agreement duly executed by the Servicer and Seller Parties and
a Servicer Notice duly executed by the Servicer shall have been delivered to Buyer;
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(n) except with respect to any Agency Eligible Mortgage Loan or other Mortgage Loan
originated in accordance with Agency Guides, Buyer shall have received a copy of any
material amendments or updates to Guarantor’s underwriting guidelines certified by
Seller Parties to be a true and complete copy (to the extent not already delivered to
Buyer) that clearly identifies the material changes to the underwriting guidelines; and
(o) Buyer shall have received a security release certification for each Underlying Asset that is
subject to a security interest (including any precautionary security interest) immediately
prior to the Purchase Date that is duly executed by the related secured party and Seller
Parties and in form and substance satisfactory to Buyer, and such secured party shall have
filed Uniform Commercial Code termination statements in respect of any Uniform
Commercial Code filings made in respect of such Underlying Asset, and each such
release and Uniform Commercial Code termination statement has been delivered to
Buyer prior to each Transaction and to the Custodian as part of the Mortgage Loan File.
(p) Buyer has approved any consent order by any Governmental Authority, if such consent
order (i) relates to the settlement of any claim or claims, on an individual or aggregate
basis, equal to or greater than [***] Guarantor’s Tangible Net Worth (as of the most
recent month end), (ii) is reasonably likely to result in a Material Adverse Effect, (iii)
questions or challenges the validity or enforceability of any of the Principal Agreements
or (iv) pertains to Underlying Assets with a combined aggregate unpaid principal balance
of at least $[***], and questions or challenges compliance with, (x) with respect to
Underlying Assets other than Bond Loans – 1st Lien and Ginnie Mae EBO Mortgage
Loans for which the originator, received the related original loan application prior to
January 10, 2014, the Ability to Repay Rule or (y) with respect to any Underlying Assets
other than Bond Loans – 1st Lien, Ginnie Mae EBO Mortgage Loans for which the
originator received the related original loan application prior to January 10, 2014, and
Permitted Non-Qualified Mortgage Loans, the QM Rule.
For the avoidance of doubt, notwithstanding that foregoing conditions may be satisfied with
respect to any Transaction request, Buyer shall be under no obligation to enter into any
Transaction with respect to the Uncommitted Amount including, without limitation, Transactions
the subject of which are eMortgage Loans, and whether the Buyer enters into any Transaction
with respect to the Uncommitted Amount shall be at the discretion of Buyer.
7.3 Intercreditor Agreements. Within sixty (60) calendar days following the Effective Date, Buyer
will enter into the Joint Pooling Documents on terms and conditions mutually agreeable to the
parties.
7.4 Satisfaction of Conditions. The entering into of any Transaction prior to or without the
fulfillment by Seller Parties of all the conditions precedent thereto, whether or not known to
Buyer, shall not constitute a waiver by Buyer of the requirements that all conditions, including
the non- performed conditions, shall be required to be satisfied with respect to all Transactions.
All conditions precedent hereunder are imposed solely and exclusively for the benefit of Buyer
and may be freely waived or modified in whole or in part by Buyer. Any waiver or
modification asserted by Seller Parties to have been agreed by Buyer must be in writing. Buyer
shall not be liable to Seller Parties for any costs, losses or damages arising from Buyer’s
determination that any Seller Party has not satisfactorily complied with any applicable
condition precedent.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties Concerning Seller Parties. Each Seller Party represents and
warrants to and covenants with Buyer that the following representations and warranties are true
and correct as of the Effective Date through and until the date on which all obligations of Seller
Parties under this Agreement are fully satisfied.
(a) Due Formation and Good Standing. Each Seller Party is (i) duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (ii)
has the full legal power and authority and has all governmental licenses, authorizations,
consents and approvals, necessary to own its property and to carry on its business as
currently conducted except where failure will not have a Material Adverse Effect, and
(iii) is duly qualified to do business and is in good standing in each jurisdiction in which
the transaction of its business makes such qualification necessary except where failure
will not have a Material Adverse Effect.
(b) Authorization. The execution, delivery and performance by each Seller Party of the
Principal Agreements and all other documents and transactions contemplated thereby, are
within such Seller Party’s corporate powers, have been duly authorized by all necessary
corporate action and do not constitute or will not result in (i) a breach of any of the terms,
conditions or provisions of such Seller Party’s articles or certificate of incorporation or
bylaws (or corresponding organizational documents if such Seller Party is not a
corporation); (ii) a material breach of any legal restriction or any material agreement or
instrument to which such Seller Party is now a party or by which it is bound; (iii) a
material default or an acceleration under any of the foregoing; or (iv) the violation of any
law, rule, regulation, order, judgment or decree to which any Seller Party or its property
is subject.
(c) Enforceable Obligation. The Principal Agreements and all other documents
contemplated thereby constitute legal, binding and valid obligations of each Seller Party,
enforceable against such Seller Party in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditor’s rights.
(d) Approvals. The execution and delivery of the Principal Agreements and all other
documents contemplated thereby and the performance of each Seller Party’s obligations
thereunder do not require any license, consent, approval, authorization or other action of
any Governmental Authority or any other Person, or if required, such license, consent,
approval, authorization or other action has been obtained prior to the Effective Date,
except for filings and recordings, or liens created hereunder.
(e) Compliance with Laws. No Seller Party is in violation of any of its articles or certificate
of incorporation or bylaws, of any provision of any applicable law, or of any judgment,
award, rule, regulation, order, decree, writ or injunction of any court or public regulatory
body or authority that might have a Material Adverse Effect with respect to such Seller
Party.
(f) Financial Condition. All financial statements of Seller Parties delivered to Buyer fairly
and accurately present the financial condition of the parties for whom such statements are
submitted in all material respects, as of the dates and for the periods referred to therein,
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subject to year-end audit adjustments, footnotes and schedules. The financial statements
of Seller Parties have been prepared in accordance with GAAP consistently applied
throughout the periods involved, and there are no contingent liabilities not disclosed
thereby that would materially and adversely affect the financial condition of Seller
Parties. Since the close of the period covered by the latest financial statement delivered
to Buyer with respect to Seller Parties, there has been no material adverse change in the
assets, liabilities or financial condition of any Seller Party nor is any Seller Party aware of
any facts that, with or without notice or lapse of time or both, would or could result in
any such material adverse change. No event has occurred, including, without limitation,
any litigation or administrative proceedings, and no condition exists, that (i) is reasonably
likely to render Seller Parties unable to perform its obligations under the Principal
Agreements and all other documents contemplated thereby; (ii) would constitute an Event
of Default; or (iii) might have a Material Adverse Effect with respect to Seller Parties.
(g) Credit Facilities. The only credit facilities, including repurchase agreements for
mortgage loans and mortgage-backed securities, of each Seller Party that are presently in
effect and are secured by mortgage loans or provide for the purchase, repurchase or early
funding of mortgage loan sales, are either (i) with Persons disclosed to Buyer at the time
of application, or thereafter disclosed to Buyer, and, if required by Buyer, Buyer has
entered into existing joint account security and inter-creditor agreements with other
warehouse lenders of Seller that provide warehouse lines of credit, repurchase facilities or
similar mortgage finance arrangements to Seller Parties or (ii) warehouse lenders that are
Approved Payees.
(h) Reserved.
(i) Litigation. There are no actions, claims, suits or proceedings pending against or affecting
any Seller Party or any of its Subsidiaries or any of the property thereof in any court or
before or by any arbitrator, government commission, board, bureau or other
administrative agency that, is reasonably likely to be adversely determined, and if so
determined would reasonably be expected to result in a Material Adverse Effect.
(j) Payment of Taxes. Each Seller Party has timely filed all Tax returns and reports required
to be filed and has paid all taxes, assessments, fees and other governmental charges
levied upon it or its property or income (whether or not shown on such Tax returns) that
are due and payable, including interest and penalties, or has provided adequate reserves
for the payment thereof in accordance with GAAP. Any Taxes, fees and other
governmental charges payable by any Seller Party in connection with a Transaction and
the execution and delivery of the Principal Agreements have been paid.
(k) No Defaults. No Seller Party is in default under any indenture, mortgage, deed of trust,
agreement or other instrument or contractual or legal obligation to which it is a party or
by which it is bound in any respect that may reasonably be expected to result in a
Material Adverse Effect.
(l) ERISA. Each Seller Party and each Plan is in compliance in all material respects with the
requirements of ERISA and the Code, and no Reportable Event has occurred with respect
to any Plan maintained by each Seller Party or any of its ERISA Affiliates. The present
value of all accumulated benefit obligations under each Plan subject to Title IV of ERISA
or Section 412 of the Code (based on the assumptions used for purposes of Accounting
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Standards Codification (ASC) 715) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all Plans (based on
the assumptions used for purposes of ASC 715) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of the assets of
all such Plans. Each Seller Party and its Subsidiaries and their ERISA Affiliates do not
provide any material medical or health benefits to former employees other than as
required by the Consolidated Omnibus Budget Reconciliation Act, as amended, or similar
state or local law (collectively, “COBRA”). The assets of each Seller Party are not “plan
assets” within the meaning of 29 CFR Section 2510.3-101 as modified by section 3(42)
of ERISA.
(m) Approved Mortgagee. Guarantor is an approved FHA, VA, RD, Ginnie Mae, Fannie
Mae and/or Freddie Mac seller, issuer, mortgagee and/or servicer and is in good standing
with these agencies.
(n) True and Complete Disclosure. The information, reports, financial statements, exhibits
and schedules furnished in writing by or on behalf of each Seller Party to Buyer in
connection with the negotiation, preparation or delivery of this Agreement and the other
Principal Agreements or included herein or therein or delivered pursuant hereto or
thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of each Seller Party to Buyer
in connection with this Agreement and the other Principal Agreements and the
transactions contemplated hereby and thereby will be true, complete and accurate in all
material respects, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known to any
Seller Party that, after due inquiry, could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Principal Agreements or in
a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished
to Buyer for use in connection with the transactions contemplated hereby or thereby.
(o) Ownership; Priority of Liens. Seller owns the Participation Interests in all Assets
identified in the Transactions Terms Letter that are to become Underlying Assets, and
any Transaction shall convey all of Seller’s right, title and interest in and to the related
Participation Interests in such Underlying Assets including the Servicing Rights thereto,
and other Purchased Items to Buyer, including with respect to each Underlying Asset and
the Participation Interests in the Servicing Rights related thereto. This Agreement creates
in favor of Buyer, a valid, enforceable first priority lien and security interest in the
Purchased Assets and other Purchased Items and Residual Collateral, prior to the rights of
all third Persons and subject to no other liens provided; however, that Buyer’s interests in
the Servicing Rights related to any Mortgage Loans included in a Pledged Security may
be subject to the rights of the respective Agency.
(p) Investment Company Act. No Seller Party 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.
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(q) Filing Jurisdictions; Relevant States. Schedule 1 hereto sets forth all of the jurisdictions
and filing offices in which a financing statement should be filed in order for Buyer to
perfect its security interest in the Purchased Assets and other Purchased Items and
Residual Collateral.
(r) Seller Solvent; Fraudulent Conveyance. As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of each Seller Party is
greater than the fair value of the liabilities (including, without limitation, contingent
liabilities if and to the extent required to be recorded as a liability on the financial
statements of each Seller Party in accordance with GAAP) of each Seller Party and each
Seller Party is and will be solvent, is and will be able to pay its debts as they mature and
does not and will not have unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. No Seller Party intends to incur, or believes that it
has incurred, debts beyond its ability to pay such debts as they mature. No Seller Party is
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 each Seller Party or any of its assets. No Seller Party is transferring
any Assets with any intent to hinder, delay or defraud any of its creditors.
(s) Reserved.
(t) Chief Executive Office. Guarantor’s chief executive office is located at 1050 Woodward
Avenue, Detroit, Michigan 48226.
(u) True Sales. For each Underlying Asset with respect to which the originator, issuer or
prior owner is an Affiliate of Guarantor, any and all interest of such originator, issuer or
prior owner has been sold, transferred, conveyed and assigned to Guarantor pursuant to a
legal and true sale and such originator, issuer or prior owner retains no interest in such
Underlying Asset.
(v) No Adverse Selection. No Seller Party has intentionally or in bad faith selected
Underlying Assets in a manner as to adversely affect Buyer’s interests.
(w) No Broker. No Seller Party has dealt with any broker, investment banker, agent, or other
person, except for Buyer, who may be entitled to any commission or compensation in
connection with the sale of Purchased Assets pursuant to this Agreement; provided, that
if any Seller Party has dealt with any broker, investment banker, agent, or other person,
except for Buyer, who may be entitled to any commission or compensation in connection
with the sale of Purchased Assets pursuant to this Agreement, such commission or
compensation shall have been paid in full by such Seller Party.
(x) MERS. Guarantor is a member of MERS in good standing.
(y) Agency Approvals. Guarantor has all requisite Approvals and is in good standing with
each Agency to the extent necessary to conduct its business as it is now being conducted
and as necessary to fulfill its obligations with respect to the Mortgage Loans hereunder,
with no event having occurred, including, without limitation, a change in insurance
coverage which would either make the Guarantor unable to comply with the eligibility
requirements for maintaining all such applicable approvals with the relevant Agency or to
HUD, FHA, VA or RD.
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(z) Reserved.
(aa) No Adverse Actions. No Seller Party has received from any Agency, HUD, FHA, VA or
RD (i) a notice of extinguishment or a notice indicating material breach, default or
material non-compliance which is reasonably likely to result in such Agency or HUD,
FHA, VA or RD to (A) terminate or suspend such Seller Party’s Approval; or (B) impose
sanctions or levy penalties against such Seller Party in excess of 10% of Guarantor’s
Tangible Net Worth (as of the most recent month end), individually or in the aggregate,
or (ii) a notice from any Agency, HUD, FHA, VA or RD indicating any adverse fact or
circumstance in respect of such Seller Party which such adverse fact or circumstance has
caused any Agency, HUD, FHA, VA or RD to terminate such Seller Party’s Approval.
(ab) Accuracy of Wire Instructions. With respect to each Underlying Asset subject to a
Purchase Commitment by an Agency, as applicable, (1) either the wire transfer
instructions as set forth on the applicable Agency Documents are identical to Buyer’s
designated wire instructions or the wire transfer instructions set forth in the Joint Pooling
Documents or the Buyer has approved such wire transfer instructions in writing in its sole
good faith discretion, or (2) the payee number set forth on the applicable Agency
Documents is identical to the payee number as set forth in the Joint Pooling Documents.
With respect to each Pooled Mortgage Loan, the applicable Agency Documents are duly
executed by Seller Parties and designate the Securities Intermediary as set forth in the
Joint Pooling Documents as the party authorized to receive the related Mortgage-Backed
Securities.
(ac) No Sanctions. Neither any Seller Party nor any of its Affiliates, officers, directors,
partners or members, (i) is an entity or person (or to each Seller Party’s knowledge,
owned or controlled by an entity or person) that (A) is currently the subject of any
economic sanctions administered or imposed by the Office of Foreign Assets Control of
the U.S. Department of the Treasury, the U.S. Department of State, the United Nations
Security Council, the European Union, Her Majesty’s Treasury or any other relevant
authority (collectively, “Sanctions”) or (B) resides, is organized or chartered, or has a
place of business in a country or territory that is currently the subject of Sanctions or (ii)
is engaging or will engage in any dealings or transactions prohibited by Sanctions or will
directly or indirectly use the proceeds of any Transactions contemplated hereunder, or
lend, contribute or otherwise make available such proceeds to or for the benefit of any
person or entity, for the purpose of financing or supporting, directly or indirectly, the
activities of any person or entity that is currently the subject of Sanctions.
(ad) Anti-Money Laundering Laws. Each Seller Party has complied with all applicable anti-
money laundering laws and regulations, including, without limitation, the USA Patriot
Act of 2001, as amended, and the Bank Secrecy Act of 1970, as amended (collectively,
the “Anti Money Laundering Laws”); Each Seller Party has established an anti-money
laundering compliance program as required by the Anti-Money Laundering Laws, has
conducted the requisite due diligence in connection with the origination of each
Underlying Asset for purposes of the Anti-Money Laundering Laws, including with
respect to the bona fide identity of the applicable Mortgagor and the origin of the assets
used by said Mortgagor to purchase the property in question, and maintains, and will
maintain, sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws.
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(ae) Beneficial Ownership Certification. The information included in the Beneficial
Ownership Certification, if applicable, is true and correct in all respects.
(af) Separateness. Each Seller Party is in compliance with the requirements of Section 9.19
hereof.
(ag) Acquisition of Underlying Assets. The Guarantor has issued Participation Interests
pursuant to the terms of the Participation Agreement to the Seller, and the Guarantor
retains no beneficial or economic interests in such Underlying Assets.
(ah) Participation Certificates; Participation Interests.
(i) The Participation Certificate represents all of the Participation Interests issued by
the Guarantor.
(ii) Each Participation Certificate and the related Participation Interests have been
duly and validly issued in compliance with applicable law and the Participation
Agreement and is fully paid and nonassessable.
(iii) Immediately prior to the sale, transfer and assignment of a Participation Certificate
or Participation Interests to, and the registration thereof in the name of, Buyer
pursuant to this Agreement, the Seller is the record and beneficial owner of, and
has good and marketable title to, such Participation Certificate and Participation
Interests.
(iv) Each Participation Certificate and the related Participation Interests are
unencumbered (other than Liens created in favor of Buyer pursuant to this
Agreement and Liens created by or through Buyer). Upon consummation of the
Transaction contemplated to occur in respect of such any Participation Interests,
the Seller will have validly and effectively conveyed to Buyer all legal and
beneficial interest in and to such Participation Interests free and clear of any Liens
(other than Liens created in favor of Buyer pursuant to this Agreement and Liens
created by or through Buyer).
(v) There are (x) no outstanding rights, options, warrants or agreements (other than as
created by Buyer) for a purchase, sale or issuance, in connection with any
Participation Certificate or any Participation Interests, (y) no agreements on the
part of Seller to issue, sell or distribute any Participation Certificate or
Participation Interests (other than to Buyer), and (z) no obligations on the part of
Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any
securities or any interest therein or to pay any dividend or make any distribution in
respect of any Participation Certificate or Participation Interests.
(vi) Each Participation Certificate is a certificated security in registered form. It is the
intent of the parties hereto that each Participation Certificate constitute a
“security” as that term is defined in Section 8-102 of the New York Uniform
Commercial Code.
(vii) No fraudulent acts were committed by any Seller Party or Affiliates thereof in
connection with the issuance of any Participation Certificates or Participation
Interests.
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(viii) No Seller Party is a party to any document, instrument or agreement, and there is
no document, instrument or agreement, that by its terms modifies or affects the
rights and obligations of any holder of such Participation Interests for which
Buyer’s consent has not been obtained and no Seller Party has consented to any
material change or waiver to any term or provision of any such document,
instrument or agreement and no such change or waiver exists (other than changes
or waivers to which Buyer has consented).
(ix) No Participation Interests have been cancelled, satisfied or rescinded in whole or
part nor has any instrument been executed that would effect a cancellation,
satisfaction or rescission thereof, except in connection with Underlying Assets.
(x) Other than consents and approvals obtained as of the related Purchase Date or
those already granted in the Principal Agreements governing such Participation
Interests, no consent or approval by any Person is required in connection with
Seller’s sale, and/or Buyer’s acquisition of such Participation Interests, or Buyer’s
exercise of any rights or remedies in respect of such Participation Interests or for
Buyer’s sale, pledge or other disposition of such Participation Interests. No third
party holds any “right of first refusal”, “right of first negotiation”, “right of first
offer”, purchase option, or other similar rights of any kind, and no other
impediment exists to any such transfer or exercise of rights or remedies with
respect to such Participation Interests.
(xi) The issuance of Participation Interests by the Guarantor to the Seller was not for
or on account of an antecedent debt owed by the Guarantor to the applicable Seller
and is not voidable or subject to avoidance under the Bankruptcy Code.
8.2 Representations and Warranties Concerning Purchased Assets and Underlying Assets. Each
Seller Party represents and warrants to and covenants with Buyer that the representations and
warranties contained on Exhibit L hereto are true and correct with respect to each Purchased
Asset and Underlying Asset as of the related Purchase Date through and until the related
Repurchase Date.
8.3 Continuing Representations and Warranties. Without limiting the generality of Section 8.2 of
the Agreement, by submitting an Asset Data Record hereunder, each Seller Party shall be
deemed to have represented and warranted the truthfulness and completeness of the
representations and warranties set forth in Exhibit L hereto.
8.4 Amendment of Representations and Warranties. From time to time, Buyer and Seller Parties
may by mutual written agreement amend the representations and warranties set forth in Exhibit
L hereto. Any such amendment shall not apply to Transactions entered into prior to the
effective date of the amendment and in no event shall the amendment apply to any Transaction
on a retroactive basis.
ARTICLE 9
AFFIRMATIVE COVENANTS
Each Seller Party hereby covenants and agrees with Buyer that during the term of this Agreement
and for so long as there remain any obligations of Seller Parties to be paid or performed under the
Principal Agreements:
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9.1 Financial Statements and Other Reports.
(a) Interim Statements. Within [***] days after the end of each calendar month, Guarantor
shall deliver to Buyer financial statements of Guarantor, including statements of income
and changes in shareholders’ equity (or its equivalent) for the period from the beginning
of such fiscal year to the end of such month, and the related balance sheet as of the end of
such month, all in reasonable detail and certified by the chief financial officer of
Guarantor, subject, however, to year-end audit adjustments.
(b) Annual Statements. Within [***] days following the end of Guarantor’s fiscal year,
Guarantor shall deliver to Buyer audited financial statements of Guarantor, including
statements of income and changes in shareholders’ equity (or its equivalent) for such
fiscal year and the related balance sheet as at the end of such fiscal year, all in reasonable
detail and accompanied by an unqualified opinion of a certified public accounting firm
reasonably satisfactory to Buyer including a management representation letter signed by
the chief financial officer of Guarantor stating that the financial statements fairly present
the financial condition and results of operations of Guarantor as of the end of, and for,
such year.
(c) Officer’s Certificate. Together with the financial statements required to be delivered
pursuant to Sections 9.1(a) and (b), Guarantor shall deliver to Buyer an officer’s
certificate in substantially the form set forth as Exhibit E hereto, or in such other form as
mutually agreed between the parties.
(d) Reserved.
(e) Reserved.
(f) Hedging Reports. Seller Parties shall deliver to Buyer, or cause to be delivered to Buyer
on each Monday, or if Monday is not a Business Day, the next succeeding Business Day,
a hedging report in a form reasonably satisfactory to Buyer. Seller Parties shall review
their hedging policies periodically to confirm that they are being complied with in all
material respects and are adequate to meet Seller Parties’ business objectives. Seller
Parties shall provide a current copy of each Seller Party’s hedging policies upon the
reasonable request of the Buyer.
(g) Reports and Information Regarding Purchased Assets. Seller Parties shall deliver to
Buyer, with reasonable promptness upon Buyer’s reasonable request, copies of
documentation in connection with the underwriting and origination of any Underlying
Asset that evidences compliance with, (x) with respect to all Underlying Assets other
than a Bond Loan – 1st Lien or Ginnie Mae EBO Mortgage Loans for which the
originator received the related original loan application prior to January 10, 2014, the
Ability to Repay Rule and, (y) with respect to all Underlying Assets other than a Bond
Loan – 1st Lien, Ginnie Mae EBO Mortgage Loans for which the originator received the
related original loan application prior to January 10, 2014 and a Permitted Non-Qualified
Mortgage Loan, the QM Rule, as applicable.
(h) Monthly Collateral Tape. Seller Parties shall, or shall cause Servicer to, deliver within
five (5) days after the end of each month, a collateral tape including data fields
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representing the Underlying Assets subject to Transactions hereunder as of the end of
such month, in a form mutually acceptable to the Buyer and Seller.
(i) Reserved.
9.2 Reserved.
9.3 Notice. To the extent permitted by applicable law and regulatory authority, Seller Parties shall
give Buyer prompt written notice, in reasonable detail no later than [***] Business Days,
(except for clause (k), with respect to which notice shall be provided within [***] Business
Days) following a Responsible Officer of any Seller Party becoming aware of:
(a) any Control Failure or eNote Secured Party Failure with respect to an Underlying Asset
that is an eMortgage Loan or any eNote Replacement Failure;
(b) any action, suit or proceeding instituted against any Seller Party in any federal or state
court or before any commission or other regulatory body (federal, state or local, foreign
or domestic) or any issuance of consent order by any Governmental Authority, if such
action, suit, proceeding or consent order, or any such action, suit, proceeding or consent
order, (i) (x) with respect to Seller, involves a potential liability greater than $[***] and
(y) with respect to the Guarantor, involves a potential liability, on an individual or
aggregate basis, equal to or greater than [***] of Guarantor’s Tangible Net Worth (as of
the most recent month end), (ii) is reasonably likely to result in a Material Adverse
Effect, if determined adversely, (iii) questions or challenges the validity or enforceability
of any of the Principal Agreements or (iv) pertains to Underlying Assets with a combined
aggregate unpaid principal balance of at least $[***] , and questions or challenges
compliance with, (x) with respect to any Underlying Asset other than Bond Loans – 1st
Lien or Ginnie Mae EBO Mortgage Loans for which the originator received the related
original loan application prior to January 10, 2014, the Ability to Repay Rule or (y) with
respect to any Underlying Asset other than Bond Loans – 1st Lien, Ginnie Mae EBO
Mortgage Loans for which the originator received the related original loan application
prior to January 10, 2014 and Permitted Non-Qualified Mortgage Loans, the QM Rule;
(c) the filing, recording or assessment of any federal, state or local tax lien against any Seller
Party or any of its assets, and with respect to the Guarantor only, on an individual or
aggregate basis, equal to or greater than [***] of Guarantor’s Tangible Net Worth (as of
the most recent month end);
(d) the occurrence of any Potential Default or Event of Default;
(e) the actual or written notice of intent of suspension, revocation or termination, for cause,
of any Seller Party’s licensing or eligibility with a Governmental Authority or Agency, as
an approved, licensed lender, seller, mortgagee or servicer;
(f) the suspension, revocation or termination for cause of any (x) Agency or (y) material
agreement with an Approved Investor that is not an Agency and is the only Approved
Investor for a Type of Underlying Asset; to facilitate the sale and/or origination of
residential mortgage loans or residential mortgage-backed securities;
(g) Guarantor incurs any additional material Debt in excess of $[***] individually or in the
aggregate (other than (i) the Existing Debt, (ii) Debt incurred in connection with a
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mortgage loan repurchase agreement or a warehouse facility or similar credit facility or
mortgage servicing rights or servicing advance facility, (iii) Debt incurred with Buyer or
its Affiliates, and (iv) usual and customary accounts payable for a mortgage company);
(h) reserved;
(i) any Purchased Asset or Underlying Asset ceases to be an Eligible Asset or Eligible
Underlying Asset, as applicable;
(j) any Change of Control of any Seller Party;
(k) an event of default under any Debt (i) with respect to the Seller, in excess of $[***] and
(ii) with respect to the Guarantor, in excess of $[***], and in the case of clause (ii), has
occurred (and with respect to an event of default that must be declared in order to enforce
applicable remedies under the terms of such Debt, an event of default has been declared)
including, without limitation, if (A) the Debt that was the basis for such event of default
has been discharged, repaid, liquidated, accelerated, terminated and/or closed-out, (B) the
holder or holders thereof have rescinded, annulled or waived the acceleration, notice or
action (as the case may be) giving rise to such event of default, or (C) the default that was
the basis for such event of default has been cured;
(l) any other action, event or condition of any nature that may reasonably be expected to lead
to or result in a Material Adverse Effect;
(m) any (i) change to the location of its chief executive office/chief place of business from
that specified in Section 8.1(t), (ii) change in the name, identity or corporate structure (or
the equivalent) or change in the location where any Seller Party maintains its records with
respect to the Purchased Assets or any Purchased Items, or (iii) reincorporation or
reorganization of any Seller Party under the laws of another jurisdiction; provided,
however, that no additional notice shall be required in connection with Guarantor’s name
change as contemplated by Section 14.28;
(n) (i) any material penalties, sanctions or charges levied against any Seller Party, (ii) any
material adverse change in Approval status, or (iii) the commencement of any non-
routine Agency Audit, investigation, or the institution of any action against any Seller
Party (other than those that, pursuant to a legal requirement, may not be disclosed), in
each case by any Agency, HUD, the FHA, the VA or the RD or any other agency, or any
supervisory or regulatory Governmental Authority supervising or regulating the
origination or servicing of mortgage loans by, or the issuer or seller status of, any Seller
Party;
(o) with respect to Underlying Assets that constitute Government Mortgage Loans, any fact
or circumstance which would cause (a) such Mortgage Loan to be ineligible for FHA
Mortgage Insurance, a VA loan guaranty or a RD loan guaranty, as applicable, (b) the
FHA, the VA or the RD to deny or reject such Mortgagors’ application for FHA
Mortgage Insurance, a VA loan guaranty or a RD loan guaranty, respectively, or (c) the
FHA, the VA or the RD to deny or reject any claims with respect to such Underlying
Assets under any FHA Mortgage Insurance Contract, VA Loan Guaranty Agreement or
RD Loan Guaranty Agreement, respectively; and
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(p) any change to the date on which any Seller Party’s fiscal year begins from such Seller
Party’s current fiscal year beginning date.
9.4 Existence, Etc. Each Seller Party shall (i) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises necessary for such Seller Party to conduct its
business and to perform its obligations under the Principal Agreements, (ii) comply with the
requirements of all applicable laws, rules, regulations and orders of Governmental Authorities
(including, without limitation, truth in lending, real estate settlement procedures and all
environmental laws) if the failure to comply with such requirements would be reasonably likely
(either individually or in the aggregate) to have a Material Adverse Effect, (iii) maintain
adequate records and books of account, in which complete entries will be made in accordance
with GAAP consistently applied, and (iv) 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
properties 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 in accordance with
GAAP.
9.5 Servicing of Mortgage Loans. Subject to Section 6.2 above, Servicer shall subservice all
Underlying Assets at Guarantor’s expense and without charge of any kind to Buyer. Guarantor
may delegate its obligations hereunder to subservice the Underlying Assets (subject to Section
6.2) to an independent servicer provided that such independent subservicer and the related
Servicing Agreement has been approved by Buyer and such independent subservicer has
executed a Servicer Notice with Buyer. The failure of Guarantor to obtain the prior approval of
Buyer regarding the delegation of its subservicing obligations to an independent subservicer
and/or the failure of the independent subservicer to execute and return to Buyer a Servicer
Notice shall be considered a Servicer Termination Event hereunder. In any event, Guarantor or
its delegate shall subservice such Underlying Assets with the degree of care and in accordance
with the subservicing standards of prudent mortgage servicers servicing assets similar to the
Purchased Assets, including those required by Fannie Mae, Freddie Mac and Ginnie Mae.
9.6 Evidence of Purchased Assets. Seller Parties shall indicate on its books and records (including
its computer records) that each Purchased Asset has been included in the Purchased Items.
9.7 Defense of Title; Protection of Purchased Items. Each Seller Party warrants and will defend the
right, title and interest of Buyer in and to all Purchased Items and Residual Collateral against all
adverse claims and demands of all Persons whomsoever (other than any claim or demand
related to any act or omission of Buyer, which claim or demand does not arise out of or relate to
any breach or potential breach of a representation or warranty by any Seller Party under this
Agreement). Each Seller Party will comply with all applicable laws, rules and regulations of
any Governmental Authority applicable to such Seller Party or relating to the Purchased Items
or Residual Collateral and cause the Purchased Items and the Residual Collateral to comply
with all applicable laws, rules and regulations of any such Governmental Authority. As required
to protect or preserve the Purchased Items or the rights of Buyer therein, each Seller Party shall,
upon the occurrence and during the continuation of an Event of Default and to the extent
allowed by applicable law and the applicable Agency Guides, allow Buyer (a) to inspect any
Mortgaged Property relating to an Underlying Asset; (b) to appear in or intervene in any
proceeding or matter affecting any Purchased Asset or other Purchased Item or the value
thereof; (c) to initiate, commence, appear in and defend any foreclosure, action, bankruptcy or
proceeding which could affect Buyer’s ownership or security of the Purchased Items or the
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value thereof, or the rights and powers of Buyer; (d) to contest by litigation or otherwise any
lien asserted against any Residual Collateral or other Purchased Items (or against the related
Mortgaged Property), the improvements, or the personal property identified therein; and/or (e)
to make payments on account of such encumbrances, charges, or liens and to service any
Underlying Asset and take any action it may deem appropriate to collect all amounts due and
owing with respect to any Purchased Items or Residual Collateral or any part thereof or to
enforce any rights with respect thereto. All reasonable and documented out-of-pocket costs and
expenses, including reasonable attorneys’ fees (including, but not limited to, those incurred on
appeal), that Buyer may incur with respect to any of the foregoing and with respect to the
protection or preservation of the Purchased Items or Residual Collateral or the rights of Buyer,
during the continuation of an Event of Default shall be payable by Seller.
9.8 Further Assurances. Each Seller Party shall, at its reasonable expense, promptly procure,
execute and deliver to Buyer, upon request, all such other and further documents, agreements
and instruments reasonably requested by Buyer in compliance with or accomplishment of the
covenants and agreements of Seller Parties in this Agreement.
9.9 Fidelity Bonds and Insurance. Guarantor shall maintain an insurance policy, in a form and
substance satisfactory to Buyer, covering against loss or damage relating to or resulting from
any breach of fidelity by Seller Parties, or any officer, director, employee or agent of Seller
Parties, any loss or destruction of documents (whether written or electronic), fraud, theft,
misappropriation and errors and omissions, such that Buyer shall have the right to pursue any
claim for coverage available to any named insured to the full extent allowed by law. This
policy shall name Buyer as a loss payee with an unlimited right of action and shall provide
coverage in an amount as required by the Fannie Mae Guide.
9.10 Table-Funded Mortgage Loans. In connection with the funding of each new origination Wet
Mortgage Loan or Dry Mortgage Loan as to which the origination funds are being remitted to
the closing table, Seller Parties shall provide to the applicable Closing Agent, (i) closing and
disbursement instructions in the form customarily provided by the Seller, and (ii) final closing
instructions which shall stipulate the title insurance company that will be issuing the applicable
title insurance policy and Closing Protection Letter (if applicable), which title insurance
company shall be an Acceptable Title Insurance Company. In no event shall any Seller Party
use such final closing instructions to modify or attempt to modify the terms of the Irrevocable
Closing Instructions unless such modifications are agreed to in advance and in writing by
Buyer. No Seller Party shall otherwise modify or attempt to modify the terms of the Irrevocable
Closing Instructions without Buyer’s prior written approval. If the Closing Agent is not an
Acceptable Title Insurance Company, except as otherwise permitted pursuant to Section
3.7(a)(i), Seller Parties shall also (a) confirm that the closing is covered by a blanket Closing
Protection Letter issued to Buyer by the title insurance company stipulated in the final closing
instructions, and shall provide a copy of such Closing Protection Letter to Buyer; (b) provide to
Buyer such alternative documentation as is specified at Section 3.7(a)(ii)(3); or (c) provide
Buyer (1) a Closing Protection Letter covering the closing issued to Seller by the title insurance
company stipulated in the final closing instructions and (2) a duly executed Assignment of
Closing Protection Letter relating to the above referenced Closing Protection Letter naming
Buyer as the assignee; provided, however, that for the avoidance of doubt, a Closing Protection
Letter and Assignment of Closing Protection Letter, or additional documentation as specified in
Section 3.7(a)(ii)(3), shall not be required hereunder unless and until the Underlying Assets (a)
which were table-funded using, in part, the Purchase Price, (b) where title insurance is provided
by a Person other than Title Source, Inc., and (c) regarding which a Closing Protection Letter
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has not been provided, exceed (i) [***] of Guarantor’s Tangible Net Worth in the case of Wet
Mortgage Loans and (ii) [***] of Guarantor’s Tangible Net Worth in the case of all other
Mortgage Loans, in the aggregate, in each case, measured as of the end of Seller’s most recent
fiscal quarter.
9.11 Reserved.
9.12 ERISA. As soon as reasonably possible, and in any event within thirty (30) days after any
Seller Party knows or has reason to believe that any of the events or conditions specified below
with respect to any Plan has occurred or exists, a statement signed by a senior financial officer
of such Seller Party setting forth details respecting such event or condition and the action, if
any, that such Seller Party or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by such Seller Party or
an ERISA Affiliate with respect to such event or condition):
(a) any Reportable Event or failure to meet minimum funding standards, provided that a
failure to meet the minimum funding standard of Section 412 of the Code or Sections 302
or 303 of ERISA, including, without limitation, the failure to make on or before its due
date a required installment under Section 430(j) of the Code or Section 303(j) of ERISA,
shall be a reportable event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code or any request for a waiver under Section 412(c) of the Code
for any Plan;
(b) the distribution under Section 4041(c) of ERISA of a notice of intent to terminate any
Plan or any action taken by a Seller Party or an ERISA Affiliate to terminate any Plan;
(c) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or the receipt by a Seller Party,
any Subsidiary or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer Plan;
(d) the complete or partial withdrawal from a Multiemployer Plan by any Seller Party, any
Subsidiary or any ERISA Affiliate that results in a material liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by a Seller Party, any Subsidiary or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(e) the institution of a proceeding by a fiduciary of any Multiemployer Plan against Seller,
any Subsidiary or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within [***] days; and
(f) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the
Code, would result in the loss of tax-exempt status of the trust of which such Plan is a
part if a Seller Party, any Subsidiary or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of said Sections.
9.13 Reserved.
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9.14 MERS. Each Seller Party will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of all Underlying Assets that are registered with MERS
and, with respect to Underlying Assets that are eMortgage Loans, the maintenance of the
related eNotes on the MERS eRegistry for as long as such Underlying Assets are so registered.
9.15 Agency Audit and Approval Maintenance. Each Seller Party shall (i) at all times maintain
copies of relevant portions of all Agency Audits in which there are material adverse findings,
including without limitation notices of defaults, notices of termination of approved status,
notices of imposition of supervisory agreements or interim servicing agreements, and notices of
probation, suspension, or non-renewal, (ii) provide Buyer with copies of such Agency Audits
promptly upon Buyer’s request, and (iii) take all actions necessary to maintain its respective
Approvals; provided, that, it shall not be a breach of this Section 9.15 should (a) any Seller
Party no longer maintain an applicable Approval so long as the failure to maintain such
Approval is an independent decision of such Seller Party and in no way is attributed to a
disapproval or other adverse action taken against such Seller Party specifically (as opposed to
all approved lenders generally) by the applicable Agency, FHA, VA, HUD or RD, and (b) each
Seller Party maintains at least one Approval.
9.16 Reserved.
9.17 Financial Covenants and Ratios. Guarantor shall at all times comply with any financial
covenants and/or financial ratios set forth in the “Financial Covenants” section of the
Transactions Terms Letter.
9.18 Beneficial Ownership Certification. Each Seller Party shall at all times either (i) ensure that
such Seller Party has delivered to Buyer a Beneficial Ownership Certification, if applicable, and
that the information contained therein is true and correct in all respects, or (ii) deliver to Buyer
an updated Beneficial Ownership Certification within one (1) Business Day following the date
on which the information contained in any previously delivered Beneficial Ownership
Certification ceases to be true and correct in all respects.
9.19 Special Purpose Entity Provisions. Seller shall (a) own no assets, and will not engage in any
business, other than the assets and transactions specifically contemplated by the Principal
Agreements and, prior to the occurrence of an Event of Default, the assets and dispositions
thereof, including sales, distributions or contributions of assets made by Seller as promptly as
practicable following the date on which such assets are no longer subject to a Transaction; (b) not
incur any Debt or obligation, secured or unsecured, direct or indirect, absolute or contingent,
other than pursuant to the Principal Agreements; (c) not make any loans or advances to any
Affiliate or third party, and shall not acquire obligations or securities of its Affiliates other than
the assets and transactions specifically contemplated by the Principal Agreements; (d) pay its
debts and liabilities (including, as applicable, shared personnel expenses and overhead expenses)
only from its own assets; (e) comply with the provisions of its organizational documents; (f) do
all things necessary to observe organizational formalities and to preserve its existence, and not
amend, modify or otherwise change its organizational documents, or suffer same to be amended,
modified or otherwise changed, without the Buyer’s prior written consent which shall not be
unreasonably withheld; (g) maintain all of its books, records and financial statements separate
from those of its Affiliates (except that such financial statements may be consolidated to the
extent consolidation is required under GAAP or as a matter of applicable law); provided, that (i)
appropriate notation shall be made on such financial statements if prepared to indicate the
separateness of Seller from such Affiliate and to indicate that Seller’s assets and credit are not
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available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii)
such assets shall also be listed on Seller’s own separate balance sheet (if prepared) and (iii) such
Seller shall file its own tax returns if filed, except to the extent consolidation is required or
permitted under applicable law; (h) be, and at all times will hold itself out to the public as, a legal
entity separate and distinct from any other entity (including any Affiliate), shall correct any
known misunderstanding regarding its status as a separate entity, shall conduct business in its
own name, shall not identify itself or any of its Affiliates as a division or part of the other; (i) not
enter into any transactions with any Affiliates except on commercially reasonable terms similar to
those available to unaffiliated parties in an arm’s length transaction except as expressly permitted
hereunder; (j) maintain adequate capital in light of its contemplated business purpose,
transactions and liabilities; (k) not engage in or suffer any dissolution, winding up, liquidation,
consolidation or merger or transfer all or substantially all of its properties and assets to any
Person (except as contemplated herein); (l) not commingle its funds or other assets with those of
any Affiliate or any other Person and shall maintain its properties and assets in such manner that
it would not be costly or difficult to identify, segregate or ascertain its properties and assets from
those of others; (m) will not hold itself out to be responsible for the debts or obligations of any
other Person; (n) not form, acquire or hold any Subsidiary or own any equity interest in any other
entity; (o) use separate stationery, invoices and checks bearing its own name; (p) allocate fairly
and reasonably any overhead for shared office space and services performed by an employee of
an Affiliate; and (q) not pledge its assets to secure the obligations of any other Person except as
contemplated under the Principal Agreements. Seller shall (i) be a Delaware limited liability
company and (ii) not take any Insolvency Event with respect to itself.
9.20 Participation Interests as Securities. The parties acknowledge and agree that the Participation
Interests shall constitute and remain “securities” as defined in Section 8-102 of the Uniform
Commercial Code. Each Seller Party covenants and agrees that the Participation Interests (i) are
not and will not be dealt in or traded on securities exchanges or securities markets, and (ii) are not
and will not be investment company securities within the meaning of Section 8-103 of the
Uniform Commercial Code. Each Seller Party shall, at its sole cost and expense, take all steps as
may be necessary in connection with the indorsement, transfer, delivery and pledge of all
Participation Interests to Buyer. No Seller Party shall issue any new classes under existing
Participation Certificates that are subject to Transactions hereunder without Buyer’s prior written
consent, which shall not be unreasonably withheld.
ARTICLE 10
NEGATIVE COVENANTS
Each Seller Party hereby covenants and agrees with Buyer that during the term of this Agreement
and for so long as there remain any obligations of Seller to be paid or performed under this Agreement,
Seller shall comply with the following:
10.1 Debt. Seller shall not incur any additional Debt without the prior written consent of Buyer
other than Debt in connection with the Principal Agreements.
10.2 Lines of Business. Without [***] days prior written notice to the Buyer, no Seller Party shall
engage to any substantial extent in any line or lines of business activity other than the
businesses generally carried on by (i) Seller Parties as of the Effective Date, or (ii) other similar
consumer or mortgage lending business.
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10.3 Subordinated Debt. No Seller Party shall, either directly or indirectly, without the prior written
consent of Buyer, pay any Subordinated Debt if such payment shall cause an Event of Default.
Further, if an Event of Default shall have occurred and for as long as such is occurring, no
Seller Party shall, either directly or indirectly, without the prior written consent of Buyer, make
any payment of any kind thereafter on such Subordinated Debt until all obligations of Seller
Parties hereunder have been paid and performed in full.
10.4 Loss of Eligibility. No Seller Party shall, either directly or indirectly, without the prior written
consent of Buyer, take, or fail to take, any action that would cause any Seller Party to lose all or
any part of its status as an eligible lender, seller, mortgagee or servicer of any Agency or
willfully terminate its status as an eligible lender, seller, mortgagee or servicer of any Agency,
in each case to the extent such would materially and adversely affect any of the Purchased
Assets or cause any Seller Party to not be able to perform its obligations hereunder, without
forty-five (45) days prior written notice to Buyer.
10.5 Loans to Officers, Employees and Shareholders. Seller shall not, either directly or indirectly,
without the prior written consent of Buyer, make any personal loans or advances to any
officers, employees, shareholders, members, partners or owners of Seller. Guarantor shall not,
either directly or indirectly, without the prior written consent of Buyer, make any personal
loans or advances to any officers, employees, shareholders, members, partners or owners of
Guarantor in an aggregate amount exceeding [***] of Guarantor’s Tangible Net Worth;
provided, however, that Guarantor shall be entitled to make a personal loan or advance to a
majority shareholder, member, partner or owner of Guarantor without the prior written consent
of Buyer provided that (i) an Event of Default is not existing and will not occur as a result
thereof and (ii) such loan or advance is clearly reflected on Guarantor’s financial reports
provided to Buyer.
10.6 Liens on Purchased Assets and Purchased Items. Each Seller Party acknowledges that with
respect to each Transaction it shall have sold the Purchased Assets and related Purchased Items
and Residual Collateral and shall have granted to Buyer a first priority security interest in such
assets in the event such Transaction is deemed a loan. Accordingly, no Seller Party shall create,
incur, assume or suffer to exist any lien upon the Purchased Assets or the Purchased Items,
other than as granted to Buyer herein; provided, however, that interests in the Servicing Rights
related to any Mortgage Loans included in a Pledged Security may be subject to the rights of
the respective Agency.
10.7 Transactions with Affiliates. No Seller Party shall, directly or indirectly, enter into any
transaction with its Affiliates, if any, without the prior written consent of Buyer, including,
without limitation, (a) making any loan, advance, extension of credit or capital contribution to
an Affiliate, (b) transferring, selling, pledging, assigning or otherwise disposing of any of its
assets to or on behalf of an Affiliate, (c) purchasing or acquiring assets from an Affiliate, or (d)
paying management fees to or on behalf of an Affiliate; provided, however, that Seller Parties
may, without the prior written consent of Buyer, and provided that an Event of Default is not
existing and will not occur as a result thereof, engage in a transaction(s) with any or all of its
Affiliates if (i) with respect to Guarantor, such transaction is with One Reverse Mortgage, LLC,
and/or One Mortgage Holdings, LLC, so long as One Reverse Mortgage, LLC and/or One
Mortgage Holdings, LLC is directly or indirectly 100% owned by the Guarantor, (ii) such
transaction is in the ordinary course of such Seller Party’s mortgage banking business, (iii) such
transaction is upon fair and reasonable terms no less favorable to such Seller Party had such
Seller Party entered into a comparable arm length’s transaction with a Person which is not an
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Affiliate, (iv) such transaction is to pay any dividends or distributions permitted by Section
10.9, (v) such transaction is to incur debt permitted pursuant to Section 10.1, (vi) such
transaction is to make loans allowed under Section 10.5, or (vii) with respect to Guarantor,
such transaction is to issue any guarantee with respect to (A) One Reverse Mortgage, LLC and/
or One Mortgage Holdings, LLC not in excess of $[***], or (b) any other Affiliate not in excess
of $[***].
10.8 Consolidation, Merger, Sale of Assets and Change of Control. No Seller Party shall, directly or
indirectly, (a) wind up, liquidate or dissolve its affairs; (b) enter into any transaction of merger
or consolidation with any Person; (c) convey, sell, lease or otherwise dispose of, or agree to do
any of the foregoing at any future time, all or substantially all of its property or assets; (d) form
or enter into any partnership, joint venture, syndicate or other combination which could have a
Material Adverse Effect; or (e) allow a Change of Control to occur with respect to such Seller
Party, without prior written consent of Buyer; provided, however, that each Seller Party may,
without the prior written consent of Buyer, and provided that an Event of Default is not existing
and will not occur as a result thereof: (i) merge or consolidate with any Person if such Seller
Party is the surviving and controlling entity and (ii) in the ordinary course of such Seller Party’s
mortgage banking business, sell equipment that is uneconomic or obsolete and acquire
Mortgage Loans for resale and sell Mortgage Loans.
10.9 Payment of Dividends and Retirement of Stock. If an Event of Default related to any Seller
Party’s failure to comply with Section 9.17 hereof has occurred and is continuing or will occur
as a result of such payments, no Seller Party shall pay any dividends or distributions with
respect to any capital stock or other equity interests in such Seller Party, 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 such Seller Party; provided,
however, that the foregoing restriction shall not apply with respect to the payment of dividends
or the making of any such other distributions, in each case, solely in connection with the
payment of taxes.
10.10 Purchased Items. Except as otherwise contemplated by this Agreement, no Seller Party shall
attempt to resell, reassign, retransfer or otherwise dispose of, or grant any option with respect
to, or pledge or otherwise encumber (except pursuant to this Agreement or the related Purchase
Commitment) any of the Purchased Assets or other Purchased Items or Residual Collateral or
any interest therein. No Seller Party shall, without prior written consent of Buyer, amend or
modify, or waive any of the terms and conditions of, or settle or compromise any claim in
respect of, any Purchased Item.
10.11 Regulation W. No Seller Party shall use the proceeds from the transfer of funds from Buyer to
any Seller Party to effect transactions with any affiliate (as defined in 12 CFR §223.2 or 12
USC §371c) of Buyer.
ARTICLE 11
DEFAULTS AND REMEDIES
11.1 Events of Default. The occurrence of any of the following conditions or events shall be an
Event of Default:
(a) failure of Seller to transfer the Purchased Assets or of Guarantor to pledge the related
Underlying Assets to Buyer on the applicable Purchase Date (provided Buyer has
tendered the related Purchase Price);
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(b) failure of any Seller Party, as applicable, to (i) repurchase the Purchased Assets on the
applicable Repurchase Date, (ii) repurchase Purchased Assets (or obtain the release of
Underlying Assets upon repayment of the related Repurchase Price) pursuant to Section
2.10, or (iii) perform its obligations under Section 6.3(b) and such Seller Party has not
paid the related Repurchase Price;
(c) failure of any Seller Party to pay (i) any payment of Price Differential or Repurchase
Price hereunder or under any other Principal Agreement within one (1) Business Day
following receipt by Seller Parties of notice of such default, (ii) expenses or fees and
amounts due and owing to the Custodian, where such failure to pay expenses or fees and
amounts due and owing to the Custodian continues for more than [***] days after receipt
by Seller Parties of notice of such default, or (iii) any other payment obligations under the
Principal Agreements, within [***] Business Days following receipt by Seller Parties of
notice of such default;
(d) the occurrence of an event of default under any other Debt of any Seller Party in excess
of (i) with respect to Seller, $[***] and (ii) with respect to Guarantor, $[***], and in the
case of clause (ii), which event of default has resulted in the acceleration of all
obligations under the agreement governing such Debt; provided that an Event of Default
arising under this this subsection (d) and all consequences thereof shall be annulled,
waived and rescinded, automatically and without any action by Buyer, if, within two (2)
Business Days after Guarantor received notice of such acceleration, (A) the Debt that was
the basis for such event of default has been discharged, (B) the holder or holders thereof
have rescinded, annulled or waived the acceleration, notice or action (as the case may be)
giving rise to such event of default, or (C) the default that was the basis for such event of
default has been cured;
(e) [reserved];
(f) [reserved];
(g) any representation, warranty or certification made or deemed made herein or in any other
Principal Agreement by any Seller Party or any certificate furnished to Buyer pursuant to
the provisions thereof, shall prove to have been false or misleading in any material
respect as of the time made or furnished and such occurrence shall not have been
remedied within [***] Business Days of the earlier of receipt by such Seller Party of
notice from Buyer or upon knowledge by a Responsible Officer of such Seller Party
(other than the representations and warranties set forth in Section 8.2 which shall be
considered solely for the purpose of determining the Asset Value of the Underlying
Assets; unless (i) such Seller Party shall have made any such representations and
warranties with knowledge that they were materially false or misleading at the time made
or (ii) any such representations and warranties have been determined by Buyer in good
faith to be materially false or misleading on a regular and systemic basis, in which case
there shall be no such cure period);
(h) (i) the failure of any Seller Party to perform, comply with or observe any term, covenant
or agreement applicable to such Seller Party as contained in Section 9.4 (Existence, Etc.)
(solely to the extent that any Seller Party fails to maintain its legal existence); provided
that if such Seller Party provides Buyer with written evidence reasonably satisfactory to
Buyer that such failure is solely the result of an administrative error, such failure shall
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only be deemed an Event of Default, if such failure to comply shall continue unremedied
for a period of [***] Business Days; (ii) the failure of any Seller Party to perform,
comply with or observe any term, covenant or agreement applicable to Seller Parties as
contained in Sections 9.12, 9.17, 10.1, 10.6 (solely in the event that more than [***] of
the Underlying Assets are, as of the date of determination, impacted by a breach of
Section 10.6), 10.8, 10.9 or 10.10 (other than with respect to a breach thereof arising
from such Seller Party, in the absence of fraud, gross negligence or willful misconduct,
sending Mortgage Loan Documents to a Person other than the Custodian or as otherwise
approved under the Custodial Agreement; provided that such Mortgage Loan Documents
shall be returned to Custodian within [***] Business Days of the earlier of receipt by
such Seller Party of notice from Buyer or upon knowledge by a Responsible Officer of
such Seller Party) of this Agreement, irrespective of any cure period; or (iii) the failure of
any Seller Party to perform, comply with or observe any other term, covenant or
agreement applicable to such Seller Party as contained in this Agreement (not listed in
clause (i) or (ii) hereof) and such occurrence shall not have been remedied within [***]
Business Days following the earlier of written notice from the Buyer or knowledge of a
Responsible Officer of such Seller Party;
(i) an Insolvency Event shall have occurred with respect to any Seller Party; or any Seller
Party shall admit in writing its inability to, or intention not to perform any of its
obligations under this Agreement or any of the other Principal Agreements; provided,
that, without limiting any Event of Default that has occurred or Buyer’s rights under this
Agreement, the Seller Party contesting interpretation of a provision shall not, by itself, be
deemed to be an admission of such Seller Party’s intention not to perform any of its
obligations under this Agreement or any of the other Principal Agreements;
(j) (i) one or more judgments or decrees shall be entered against Seller in an amount greater
than $[***] and (ii) one or more judgments or decrees shall be entered against Guarantor
or any of its Subsidiaries involving a liability equal to the lesser of (A) $[***] and (B)
[***] of Guarantor’s Tangible Net Worth, or more (to the extent that it is, in the
reasonable determination of Buyer, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for these
purposes), and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within [***] days after entry thereof;
(k) any Plan maintained by any Seller Party, any Subsidiary of any Seller Party or any
ERISA Affiliate shall be terminated within the meaning of Title IV of ERISA or a trustee
shall be appointed by an appropriate United States District Court to administer any Plan,
or the Pension Benefit Guaranty Corporation (or any successor thereto) shall institute
proceedings to terminate any Plan or to appoint a trustee to administer any Plan if as of
the date thereof any Seller Party’s liability, any such Subsidiary’s liability or any ERISA
Affiliate’s liability to the PBGC, the Plan or any other entity on termination under the
Plan exceeds the then current value of assets accumulated in such Plan by more than fifty
thousand ($50,000) dollars (or in the case of a termination involving any Seller Party as a
“substantial employer” (as defined in Section 4001 (a)(2) of ERISA) the withdrawing
employer’s proportionate share of such excess shall exceed such amount);
(l) any Seller Party or any Subsidiary of any Seller Party or any ERISA Affiliate, in each
case, as employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such Multiemployer
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Plan shall have notified such withdrawing employer that such employer has incurred a
withdrawal liability in (i) an annual amount exceeding fifty thousand ($50,000) dollars,
or (ii) an aggregate amount exceeding five hundred thousand ($500,000) dollars;
(m) (i) any Seller Party, its Subsidiary, or its ERISA Affiliate shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan that results in a material liability to any Seller Party, its Subsidiary, or its ERISA
Affiliate, (ii) a determination that a Plan is “at risk” (within the meaning of Section 303
of ERISA) or any Lien in favor of the PBGC or a Plan shall arise on the assets of any
Seller Party or any ERISA Affiliate, (iii) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the reasonable opinion
of Buyer, likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Seller Party or any ERISA Affiliate shall file an application for a
minimum funding waiver under section 302 of ERISA or section 412 of the Code with
respect to any Plan, (v) any material obligation for post-retirement medical costs (other
than as required by COBRA) exists, or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect, as determined in Buyer’s good faith
discretion, or (vii) the assets of any Seller Party, any Subsidiary of any Seller Party, or
any ERISA Affiliate become plan assets within the meaning of 29 CFR 2510.3-101 as
modified by section 3(42) of ERISA;
(n) any Governmental Authority or any person, agency or entity acting or purporting to act
under governmental authority shall have taken any action to (i) condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of the property
or assets of any Seller Party; (ii) displace the management of any Seller Party or to curtail
its authority in the conduct of its business; or (iii) to remove, limit or restrict the approval
of any Seller Party as an issuer, buyer or a seller/servicer of Mortgage Loans or securities
backed thereby, and any such action provided for in this subsection (n) shall not have
been discontinued or stayed within thirty (30) days;
(o) any Seller Party shall purport to disavow its obligations hereunder or shall contest the
validity or enforceability of the Principal Agreements or Buyer’s interest in any
Purchased Asset or other Purchased Items or Residual Collateral;
(p) reserved;
(q) a default by the any Seller Party shall occur and be continuing beyond the expiration of
any applicable grace period under any other Principal Agreement;
(r) a Material Adverse Effect shall occur with respect to any Seller Party which is reasonably
likely to affect such Seller Party’s ability to perform its obligations under the Principal
Agreements, as determined in Buyer’s good faith discretion;
(s) a default shall occur under the Guaranty that continues beyond the expiration of any
applicable grace period or Guarantor shall otherwise fail to perform its obligations under
the Guaranty;
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(t) reserved;
(u) reserved;
(v) any Seller Party’s audited financial statements or notes thereto or other opinions or
conclusions stated therein shall be qualified or limited by reference to the status of any
Seller Party as a “going concern” or reference of similar import;
(w) reserved;
(x) reserved; or
(y) a Change of Control of any Seller Party shall have occurred without the prior consent of
Buyer unless (i) waived by Buyer in writing, or (ii) any Seller Party shall have
repurchased all Underlying Assets subject to Transactions within one (1) Business Day.
An Event of Default shall be deemed to be continuing unless expressly waived by Buyer in
writing.
11.2 Remedies. Upon the occurrence of an Event of Default, Buyer may, by notice to Seller Parties,
declare all or any portion of the Repurchase Prices related to the outstanding Transactions to be
immediately due and payable whereupon the same shall become immediately due and payable,
and the obligation of Buyer to enter into Transactions shall thereupon terminate; provided that
the acceleration of all Repurchase Prices and termination of Buyer’s obligation to enter into
Transactions shall immediately occur upon the occurrence of an Event of Default under Section
11.1(i), notwithstanding that Buyer may not have provided any such notice to Seller Parties.
Further, it is understood and agreed that upon the occurrence of an Event of Default, each Seller
Party shall strictly comply with the negative covenants contained in Article 10 hereunder and in
no event shall any Seller Party declare and pay any dividends (other than as set forth in Section
10.9), incur additional Subordinated Debt, make payments on existing Subordinated Debt or
otherwise distribute or transfer any of any Seller Party’s property and assets to any Person
(other than as set forth in Section 10.9) without the prior written consent of Buyer. Upon the
occurrence of any Event of Default, Buyer may also, at its option, exercise any or all of the
following rights and remedies:
(a) enter the office(s) of any Seller Party in accordance with Applicable Law and take
possession of any of the Purchased Assets and Underlying Assets and Residual Collateral
including any records relating thereto;
(b) communicate with and notify Mortgagors of the Underlying Assets and obligors under
other Underlying Assets or on any portion thereof, whether such communications and
notifications are in verbal, written or electronic form, including, without limitation,
communications and notifications that the Underlying Assets have been assigned to
Buyer and that all payments thereon are to be made directly to Buyer or its designee;
settle compromise, or release, in whole or in part, any amounts owing on the Underlying
Assets or any portion of the Underlying Assets, on terms acceptable to Buyer; enforce
payment and prosecute any action or proceeding with respect to any and all Underlying
Assets; and where any Underlying Asset is in default, foreclose upon and enforce security
interests in, such Underlying Asset or other Item by any available judicial procedure or
without judicial process and sell property acquired as a result of any such foreclosure;
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(c) collect payments from Mortgagors and/or assume servicing of, or contract with a third
party to subservice, any or all Underlying Assets requiring servicing and/or perform any
obligations required in connection with Purchase Commitments, with all of any such
third party’s fees to be paid by Seller Parties. In connection with collecting payments
from Mortgagors and/or assuming servicing of any or all Underlying Assets, Buyer may
take possession of and open any mail addressed to any Seller Party relating to the
Underlying Assets, remove, collect and apply all payments for any Seller Party, sign any
Seller Party’s name to any receipts, checks, notes, agreements or other instruments or
letters or appoint an agent to exercise and perform any of these rights. If Buyer so
requests, Seller Parties shall promptly forward to Buyer or its designee, all further mail
and all “trailing” documents, such as title insurance policies, deeds of trust, and other
documents, and all loan payment histories, both in paper and electronic format, in each
case, as same relate to the Underlying Assets;
(d) proceed against any Seller Party under this Agreement or against the Guarantor under the
Guaranty;
(e) either (x) sell, without notice or demand of any kind, at a public or private sale and at
such price or prices as Buyer may deem to be commercially reasonable for cash or for
future delivery without assumption of any credit risk, any or all or portions of the
Purchased Items or Residual Collateral on a servicing-retained or servicing-released
basis; provided that Buyer may purchase any or all of the Purchased Items or Residual
Collateral at any public or private sale; provided further that the Seller Parties shall
remain liable to Buyer for any amounts that remain owing to Buyer following any such
sale and/or credit; or (y) in its sole discretion elect, in lieu of selling all or a portion of
such Purchased Items or Residual Collateral, to give any Seller Party credit for such
Purchased Items or Residual Collateral (including credit for the Servicing Rights in
respect of sales on a servicing-retained basis) in an amount equal to the Market Value of
the Underlying Assets against the aggregate unpaid Repurchase Price and any other
amounts owing by Seller Parties hereunder. Seller Parties shall remain liable to Buyer for
any amounts that remain owing to Buyer following a sale and/or credit under the
preceding sentence;
(f) enter into one or more hedging arrangements covering all or a portion of the Purchased
Items or Residual Collateral; and/or
(g) pursue any rights and/or remedies available at law or in equity against any Seller Party.
11.3 Treatment of Custodial Account. During the existence of an Event of Default, notwithstanding
any other provision of this Agreement, no Seller Party shall have the right to withdraw or
release any funds in any custodial account relating to the Purchased Items and Residual
Collateral to itself or for its benefit, nor shall it have any right to set-off any amount owed to it
by Buyer against funds held by it for Buyer in any custodial account. During the existence of
an Event of Default, each Seller Party shall promptly remit to or at the direction of Buyer all
funds related to the Purchased Items and Residual Collateral in the applicable custodial account
relating to the Purchased Items and Residual Collateral.
11.4 Sale of Purchased Items. With respect to any sale of Purchased Items or Residual Collateral
pursuant to Section 11.2(e), each Seller Party acknowledges and agrees that it may not be
possible to purchase or sell all of the Purchased Items or the Underlying Asset or Residual
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Collateral on a particular Business Day, or in a transaction with the same purchaser, or in the
same manner because the market for the Purchased Items and Residual Collateral may not be
liquid. Seller Parties further agree that in view of the nature of the Purchased Items and
Residual Collateral, liquidation of a Transaction or the underlying Purchased Assets does not
require a public purchase or sale. Accordingly, Buyer may in its good faith discretion elect the
time and manner of liquidating any Purchased Items or Residual Collateral and nothing
contained herein shall obligate Buyer to liquidate any Purchased Item or Residual Collateral on
the occurrence of an Event of Default, to liquidate all Purchased Items and Residual Collateral
in the same manner or on the same Business Day, or constitute a waiver of any right or remedy
of Buyer. Seller Parties hereby waive any claims it may have against Buyer arising by reason
of the fact that the price at which the Purchased Items and Residual Collateral may have been
sold at such private sale was less than the price which might have been obtained at a public sale
or was less than the aggregate Repurchase Price amount of the outstanding Transactions, even
if Buyer accepts the first offer received and does not offer the Purchased Items and Residual
Collateral, or any part thereof, to more than one offeree. Each Seller Party hereby agrees that
the procedures outlined in Section 11.2(e) and this Section 11.4 for disposition and liquidation
of the Purchased Items or Residual Collateral are commercially reasonable to the extent
exercised in good faith by Buyer. Each Seller Party further agrees that it would not be
commercially unreasonable for Buyer to dispose of the Purchased Items or Residual Collateral
or any portion thereof by using internet sites that provide for the auction of assets similar to the
Purchased Items and Residual Collateral, or that have the reasonable capability of doing so, or
that match buyers and sellers of assets.
11.5 No Obligation to Pursue Remedy. Buyer shall have the right to exercise any of its rights and/or
remedies without presentment, demand, protest or further notice of any kind other than as
expressly set forth herein, all of which are hereby expressly waived by Seller Parties. Seller
Parties further waive any right to require Buyer to (a) proceed against any Person, (b) proceed
against or exhaust all or any of the Purchased Assets or Residual Collateral or pursue its rights
and remedies as against the Purchased Assets or Residual Collateral in any particular order, or
(c) pursue any other remedy in its power. Buyer shall not be required to take any steps
necessary to preserve any rights of Seller Parties against holders of mortgages prior in lien to
the lien of any Purchased Items or Residual Collateral or to preserve rights against prior parties.
No failure on the part of Buyer to exercise, and no delay in exercising, any right, power or
remedy provided hereunder, at law or in equity shall operate as a waiver thereof; nor shall any
single or partial exercise by Buyer of any right, power or remedy provided hereunder, at law or
in equity preclude any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies
provided at law or in equity.
11.6 No Judicial Process. Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller Parties hereby expressly waive, to the extent permitted
by law, any right Seller Parties might otherwise have to require Buyer to enforce its rights by
judicial process. Seller Parties also waive, to the extent permitted by law, any defense Seller
Parties might otherwise have to its obligations under this Agreement arising from use of
nonjudicial process, enforcement and sale of all or any portion of the Purchased Assets or from
any other election of remedies. Seller Parties recognize that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity and are the result of a
bargain at arm’s length.
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11.7 Reimbursement of Costs and Expenses. Buyer may, but shall not be obligated to, advance any
sums or do any act or thing necessary to uphold and enforce the lien and priority of, or the
security intended to be afforded by, any Purchased Item or Residual Collateral, including,
without limitation, payment of delinquent Taxes or assessments and insurance premiums. All
reasonable and documented out-of-pocket advances, charges, costs and expenses, including
reasonable attorneys’ fees and disbursements and losses resulting from any hedging
arrangements entered into by Buyer pursuant to Section 11.2(f), incurred or paid by Buyer in
exercising any right, power or remedy conferred by this Agreement, or in the enforcement
hereof, together with interest thereon, at the Default Rate, from the time of payment until
repaid, shall become a part of the Repurchase Price.
11.8 Application of Proceeds. The proceeds of any sale or other enforcement of Buyer’s interest in
all or any part of the Purchased Assets or Residual Collateral shall be applied by Buyer:
(a) first, to the payment of the reasonable and documented out-of-pocket costs and expenses
of such sale or enforcement, including reasonable compensation to Buyer’s agents and
counsel, and all liabilities and reasonable and documented out-of-pocket expenses and
advances made or incurred by or on behalf of Buyer in connection therewith;
(b) second, to the costs of cover and/or related hedging transactions;
(c) third, to the payment of any other amounts due under this Agreement other than the
aggregate Repurchase Price;
(d) fourth, to the payment of the aggregate Repurchase Price;
(e) fifth, to all other obligations due and owing by Seller Parties under this Agreement and
the other Principal Agreements; and
(f) sixth, in accordance with Buyer’s exercise of its rights under Section 11.9 hereof.
11.9 Rights of Set-Off. Buyer shall have the following right of set-off, if Seller Parties shall default
in the payment or performance of any of its obligations under this Agreement, Buyer shall have
the right, at any time, and from time to time, without notice, to set-off claims and to appropriate
or apply any and all deposits of money or property or any other indebtedness at any time held
or owing by Buyer under this Agreement to or for the credit of the account of Seller against and
on account of the obligations and liabilities of any Seller Party under this Agreement then due
and owing; provided, however, that the aforesaid right to set-off shall not apply to any deposits
of escrow monies being held on behalf of the Mortgagors related to the Underlying Assets or
other third parties. Without limiting the generality of the foregoing, Buyer shall be entitled to
set-off claims and apply property held by Buyer with respect to any Transaction against
obligations and liabilities owed by any Seller Party to Buyer with respect to any other
Transaction. After the occurrence of an Event of Default, Buyer may set off cash, the proceeds
of any liquidation of the Purchased Items and Residual Collateral and all other sums or
obligations owed by Buyer to such Seller Party against all of Seller Parties’ obligations to
Buyer under this Agreement or under a Transaction, whether or not such obligations are then
due, without prejudice to Buyer’s right to recover any deficiency. Buyer agrees promptly to
notify Seller Parties after any such set-off and application made by Buyer; provided that the
failure to give such notice shall not affect the validity of such set-off and application.
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11.10 Reasonable Assurances. If, at any time during the term of the Agreement, Buyer has a good
faith reason to believe that any Seller Party is not conducting its business in accordance with, or
otherwise is not satisfying: (i) all applicable statutes, regulations, rules, and notices of federal,
state, or local governmental agencies or instrumentalities, all applicable requirements of
Approved Investors and Insurers and prudent industry standards or (ii) all applicable
requirements of Buyer, as set forth in this Agreement, then, Buyer shall have the right to
demand, pursuant to notice from Buyer to Seller Parties specifying with particularity the
alleged act, error or omission in question, reasonable assurances from Seller Parties that such a
belief is in fact unfounded, and any failure of Seller Parties to provide to Buyer such reasonable
assurances in form and substance reasonably satisfactory to Buyer, within the time frame
reasonably specified in such notice, shall itself constitute an Event of Default hereunder,
without a further cure period. Seller Parties hereby authorize Buyer to take such actions as may
be necessary or appropriate to confirm the continued eligibility of Seller Parties for
Transactions hereunder, including without limitation (i) ordering credit reports and/or
appraisals with respect to any Underlying Asset, (ii) contacting Mortgagors, licensing
authorities and Approved Investors or Insurers, and (iii) performing due diligence reviews on
the Underlying Assets and related Mortgage Loan Files pursuant to Section 6.7 and other
Purchased Assets.
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification. Each Seller Party shall indemnify and hold harmless each of Buyer and its
respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”)
from and against any and all liabilities, obligations, losses, damages, penalties, judgments, suits,
and all reasonable and documented out-of-pocket costs, expenses and disbursements of any
kind whatsoever (including reasonable fees and disbursements of its counsel) that may be
imposed upon, incurred by or asserted against such Indemnified Party in any way relating to or
arising out of the Principal Agreements, any other document referred to therein or any of the
transactions contemplated thereby, or any Purchased Items or the Residual Collateral or any
Seller Party’s obligations thereunder, other than resulting from the Indemnified Party’s gross
negligence, fraud or willful misconduct. Each Seller Party also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such Indemnified
Party’s reasonable and documented out-of-pocket costs and expenses incurred in connection
with the enforcement or the preservation of such Indemnified Party’s rights under this
Agreement, any other Principal Agreement (provided that if the terms of any Principal
Agreement conflict with the foregoing, the terms of the Principal Agreement shall control) or
any transaction contemplated hereby or thereby, including without limitation the reasonable
fees and disbursements of its counsel.
12.2 Reimbursement. Seller shall reimburse Buyer for all expenses required in the Transactions
Terms Letter to be reimbursed when they become due and owing. In addition, Seller agrees to
pay as and when billed by Buyer all of the reasonable and documented out-of pocket costs and
expenses incurred by Buyer in connection with (i) the consummation and administration of the
transactions contemplated hereby including, without limitation, applicable due diligence,
inspection, testing and review costs and expenses incurred by Buyer with respect to Purchased
Assets or the Underlying Assets or Residual Collateral prior to the Effective Date, subject to the
Initial Due Diligence Cap, or otherwise pursuant to Section 6.7, (ii) the development,
preparation and execution of, and any amendment, supplement or modification to, any Principal
Agreement or any other documents prepared in connection therewith, and (iii) all the
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reasonable and documented out-of-pocket fees, disbursements and expenses of counsel to
Buyer incurred in connection with any of the foregoing, in each case subject to the limitations
set forth herein, the Transactions Terms Letter, and or each other applicable Principal
Agreement.
12.3 Payment of Taxes.
(a) All payments made by any Seller Party under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or future taxes,
levies, imposts, duties, deductions, charges, assessments, fees or withholdings (including
backup withholdings), and all liabilities (including penalties, interest and additions to tax)
with respect thereto imposed by any Governmental Authority (collectively, “Taxes”), but
excluding income taxes (however denominated), branch profits taxes and franchise taxes
imposed by the United States, a state or a foreign jurisdiction under the laws of which
Buyer is organized or of its applicable lending office, or any political subdivision thereof
(such exclusions from Taxes, “Excluded Taxes”), all of which shall be paid by any
Seller Party for its own account not later than the date when due. If any Seller Party is
required by law or regulation to deduct or withhold any Taxes from or in respect of any
amount payable hereunder, it shall: (i) make such deduction or withholding; (ii) pay the
amount so deducted or withheld to the appropriate Governmental Authority not later than
the date when due; (iii) deliver to Buyer, promptly, original tax receipts and other
evidence satisfactory to Buyer of the payment when due of the full amount of such
Taxes; and (iv) pay to Buyer such additional amounts as may be necessary so that such
Buyer receives, free and clear of all Indemnified Taxes (as defined below), a net amount
equal to the amount it would have received under this Agreement, as if no such deduction
or withholding had been made. In addition, each Seller Party agrees to timely pay to the
relevant Governmental Authority in accordance with applicable law any current or future
stamp, court or documentary taxes, intangible, filing, excise, property or similar Taxes
(including, without limitation, mortgage recording taxes, transfer taxes and similar fees)
imposed by any Governmental Authority that arise from any payment made hereunder or
from the execution, delivery, performance or registration of, from the receipt or
perfection of a security interest under, or otherwise with respect to, this Agreement
(“Other Taxes”). Taxes other than Excluded Taxes shall be referred to in this Agreement
as “Indemnified Taxes”.
(b) Seller Parties shall, within [***] days after demand therefor, indemnify and hold Buyer
harmless from and against the full amount of any and all Indemnified Taxes (including
any Indemnified Taxes imposed or asserted on or attributable to amounts payable under
this Section) and Other Taxes arising with respect to the Purchased Assets, the Principal
Agreements and other documents related thereto and fully indemnify and hold Buyer
harmless from and against any and all liabilities or expenses with respect to or resulting
from any delay or omission to pay such Taxes, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or assessed by the relevant Governmental
Authority. Buyer shall provide to Seller Parties a certificate as to the amount of any
payment or liability of Buyer with respect to such Indemnified Taxes or Other Taxes,
which shall be conclusive absent manifest error.
(c) Any Buyer that is not incorporated under the laws of the United States, any State thereof,
or the District of Columbia (a “Foreign Buyer”) and that is entitled to an exemption
from or reduction of withholding Tax with respect to payments made under this
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Agreement shall provide Seller Parties with properly completed United States Internal
Revenue Service (“IRS”) Form W-8BEN, W-8BEN-E, W-8IMY or W-8ECI or any
successor form prescribed by the IRS, certifying that such Foreign Buyer is entitled to
benefits under an income tax treaty to which the United States is a party which reduces or
eliminates the rate of withholding Tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States on or prior to the date upon which each such
Foreign Buyer becomes a Buyer. If an IRS form previously delivered expires or becomes
obsolete or inaccurate in any respect, each Foreign Buyer will update such form or
promptly notify Seller Parties of its legal inability to do so. For any period with respect
to which a Foreign Buyer has failed to provide Seller Parties with the appropriate IRS
forms prescribed by this Section 12.3(c) (unless such failure is due to a change in treaty,
law, or regulation occurring subsequent to the date on which such form originally was
required to be provided), such Foreign Buyer shall not be entitled to any “gross-up” of
Indemnified Taxes or indemnification under Section 12.3(b) with respect to Taxes
imposed by the United States; provided, however, that should a Foreign Buyer, which is
otherwise exempt from a withholding tax, become subject to Taxes because of its failure
to deliver an IRS form required hereunder, Seller Parties shall take such steps as such
Foreign Buyer shall reasonably request to assist such Foreign Buyer to recover such
Taxes.
(d) Nothing contained in this Section 12.3 shall require Buyer to make available any of its
tax returns or other information that it deems to be confidential or proprietary.
12.4 Buyer Payment. If any Seller Party fails to pay when due any costs, expenses or other amounts
payable by it under this Article 12, such amount may be paid on behalf of such Seller Party by
Buyer, in its discretion and Seller Parties shall remain liable for any such payments by Buyer.
No such payment by Buyer shall be deemed a waiver of any of Buyer’s rights under any of the
Principal Agreements.
12.5 Agreement not to Assert Claims. Each Seller Party agrees not to assert any claim against any
Indemnified Party, for special, indirect, consequential or punitive damages arising out of or
otherwise relating to the Principal Agreements, the actual or proposed use of the proceeds of
the Transactions, this Agreement or any of the transactions contemplated hereby or thereby.
THE FOREGOING AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES,
WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.
12.6 Survival. Without prejudice to the survival of any other agreement of Seller Parties hereunder,
the covenants and obligations of each Seller Party contained in this Article 12 shall survive the
payment in full of the Repurchase Prices and all other amounts payable hereunder and delivery
of the Purchased Assets and Underlying Assets by Buyer against full payment therefor.
ARTICLE 13
TERM AND TERMINATION
13.1 Term. Provided that no Event of Default has occurred and is continuing, and except as
otherwise provided for herein, this Agreement shall commence on the Effective Date and
continue until the Expiration Date. Following expiration or termination of this Agreement, all
amounts due Buyer under the Principal Agreements shall be immediately due and payable
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without notice to Seller Parties and without presentment, demand, protest, notice of protest or
dishonor, or other notice of default, and without formally placing Seller Parties in default, all of
which are hereby expressly waived by each Seller Party.
13.2 Termination.
(a) Buyer may terminate this Agreement for cause at any time by providing notice to Seller
Parties. For the avoidance of doubt, cause shall be deemed to exist if (i) this Agreement
or any Transaction is deemed by a court or by statute to not constitute a “repurchase
agreement,” a “securities contract,” or a “master netting agreement,” as each such term is
defined in the Bankruptcy Code, (ii) payments or security offered hereunder are deemed
by a court or by statute not to constitute “settlement payments” or “margin payments” as
each such term is defined in the Bankruptcy Code, (iii) this Agreement or any
Transaction is deemed by a court or by statute not to constitute an agreement to provide
financial accommodations as described in Bankruptcy Code Section 365(c)(1) or (iv)
Buyer determines in its good faith discretion that there has been fraud, material
misrepresentation or any similar intentional conduct on behalf of any Seller Party, its
officer, directors, employees, agents and/or its representatives with respect to any of any
Seller Party’s material obligations, responsibilities or actions undertaken in connection
with this Agreement. Except with respect to this Section 13.2(a), during the occurrence
of an Event of Default, or in the event of illegality (to the extent set forth herein), no
existing Transaction may be terminated or cancelled except in accordance with Section
2.2 hereof.
(b) Upon termination of this Agreement for any reason, all outstanding amounts due to Buyer
under the Principal Agreements shall be immediately due and payable without notice to
Seller Parties and without presentment, demand, protest, notice of protest or dishonor, or
other notice of default, and without formally placing Seller Parties in default, all of which
are hereby expressly waived by each Seller Party. Further, any termination of this
Agreement shall not affect the outstanding obligations of Seller Parties under this
Agreement or any other Principal Agreement and all such outstanding obligations and the
rights and remedies afforded Buyer in connection therewith, including, without
limitation, those rights and remedies afforded Buyer under this Agreement, shall survive
any termination of this Agreement. Buyer shall not be liable to Seller Parties for any
costs, loss or damages arising from or relating to a termination by Buyer in accordance
with any subsection of this Section 13.2.
13.3 Extension of Term. Upon mutual agreement of Seller Parties and Buyer, the term of this
Agreement may be extended. Such extension may be made subject to the terms and conditions
hereunder and to any other terms and conditions as the Buyer and Seller Parties may determine
to be necessary or advisable. Under no circumstances shall such an extension be interpreted or
construed as a forfeiture by Buyer of any of its rights, entitlements or interest created
hereunder. Each Seller Party acknowledges and understands that Buyer is under no obligation
whatsoever to extend the term of this Agreement beyond the initial term.
ARTICLE 14
GENERAL
14.1 Integration; Servicing Provisions Integral and Non-Severable. This Agreement, together with
the other Principal Agreements, and all other documents executed pursuant to the terms hereof
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and thereof, constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes any and all prior or contemporaneous oral or written
communications with respect to the subject matter hereof, all of which such communications
are merged herein. All Transactions hereunder constitute a single business and contractual
relationship and each Transaction has been entered into in consideration of the other
Transactions. Accordingly, each of Buyer and the Seller Parties agree that payments,
deliveries, and other transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries, and other transfers in
respect of any other Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted. Without limiting
the generality of the foregoing, the provisions of this Agreement related to the servicing and
Servicing Rights of the Underlying Assets are integral, interrelated, and are non-severable from
the purchase and sale provisions of the Agreement. Buyer has relied upon such provisions as
being integral and non-severable in determining whether to enter into this Agreement and in
determining the Purchase Price methodology for such Mortgage Loans. The integration of
these servicing provisions is necessary to enable Buyer to obtain the maximum value from the
sale of the Underlying Assets by having the ability to sell the Servicing Rights related to the
Underlying Assets free from any claims or encumbrances. Further, the fact that Seller Parties
or the Servicer may be entitled to a servicing fee for interim servicing of the Underlying Assets
or that Buyer may provide a separate notice of default to Seller Parties or the Servicer regarding
the servicing of the Underlying Assets shall not affect or otherwise change the intent of Seller
Parties and Buyer regarding the integral and non- severable nature of the provisions in the
Agreement related to servicing and Servicing Rights nor will such facts affect or otherwise
change Buyer’s ownership of the Participation Interests in the Servicing Rights related to the
Underlying Assets.
14.2 Amendments. No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by the party against whom the
enforcement of such modification, waiver, amendment, discharge or change is sought.
14.3 No Waiver. No failure or delay on the part of Seller Parties or Buyer in exercising any right,
power or privilege hereunder and no course of dealing between Seller Parties and Buyer shall
operate as a waiver thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
14.4 Remedies Cumulative. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies that Seller Parties or Buyer would otherwise have. No
notice or demand on Seller Parties in any case shall entitle Seller Parties to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the rights of Buyer
to any other or further action in any circumstances without notice or demand.
14.5 Assignment. The Principal Agreements may not be assigned by any Seller Party. The Principal
Agreements, along with Buyer’s right, title and interest, including its security interest, in any or
all of the Purchased Assets and other Purchased Items and Residual Collateral, may, at any
time, be transferred or assigned, in whole or in part, by Buyer, with the prior written consent of
Seller Parties, which consent shall not be unreasonably withheld or delayed; provided that such
consent shall not be required if Buyer assigns its rights and obligations (i) to an Affiliate or (ii)
after the occurrence and during the continuation of an Event of Default. Upon providing notice
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to Seller Parties of such transfer or assignment, any transferee or assignee thereof may enforce
the Principal Agreements and such security interest directly against Seller Parties.
14.6 Successors and Assigns. The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns.
14.7 Participations. Buyer may from time to time sell or otherwise grant participations in this
Agreement, and the holder of any such participation, if the participation agreement so provides,
(i) shall, with respect to its participation, be entitled to all of the rights of Buyer and (ii) may
exercise any and all rights of set-off or banker’s lien with respect thereto, in each case as fully
as though Seller Parties were directly obligated to the holder of such participation in the amount
of such participation; provided, however, that Seller Parties shall not be required to send or
deliver to any of the participants other than Buyer any of the materials or notices required to be
sent or delivered by it under the terms of this Agreement, nor shall it have to act except in
compliance with the instructions of Buyer; provided, further, that Buyer’s obligations to Seller
Parties under this Agreement shall remain unchanged and Buyer shall remain solely responsible
for the performance thereof.
14.8 Invalidity. In case any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had not been included.
14.9 Additional Instruments. Seller Parties shall execute and deliver such further instruments and
shall do and perform all matters and things necessary to be done or observed for the purpose of
effectively creating, maintaining and preserving the security and benefits intended to be
afforded by this Agreement.
14.10 Survival. All representations, warranties, covenants and agreements herein contained on the
part of Seller Parties shall survive any Transaction and shall be effective so long as this
Agreement is in effect or there remains any obligation of Seller Parties hereunder to be
performed.
14.11 Notices.
(a) All notices, demands, consents, requests and other communications required or permitted
to be given or made hereunder in writing shall be mailed (first class, return receipt
requested and postage prepaid) or delivered in person or by overnight delivery service or
by facsimile, addressed to the respective parties hereto at their respective addresses set
forth below or, as to any such party, at such other address as may be designated by it in a
notice to the other:
If to Seller Parties: The address set forth in the Transactions Terms Letter
If to Buyer: Bank of America, National Association
[***]
Telephone: [***]
Facsimile: [***]
Email: [***]
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With copies to:
Bank of America, N.A.
[***]
Telephone: [***]
Facsimile: [***]
Email: [***]
Bank of America, N.A.
[***]
Telephone: [***]
Facsimile: [***]
Email: [***]
All written notices shall be conclusively deemed to have been properly given or made
when duly delivered, if delivered in person or by overnight delivery service, or on the
third (3rd) Business Day after being deposited in the mail, if mailed in accordance
herewith, or upon transmission by the receiving party of a facsimile confirming receipt, if
delivered by facsimile. Notwithstanding the foregoing, any notice of termination shall be
deemed effective upon delivery.
(b) All notices, demands, consents, requests and other communications required or permitted
to be given or made hereunder which are not required to be in writing may also be
provided electronically either (i) as an electronic mail sent and addressed to the respective
parties hereto at their respective electronic mail addresses set forth below, or as to any
such party, at such other electronic mail address as may be designated by it in a notice to
the other or (ii) with respect to changes in Buyer’s warehouse lending platform or
notification that a Purchased Asset is no longer being an Eligible Asset, via a posting of
such notice on Buyer’s customer website(s).
If to Seller Parties: The email address(es) specified in the Transactions Terms Letter,
if any.
If to Buyer: [***]
14.12 Governing Law. This Agreement 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).
14.13 Submission to Jurisdiction; Service of Process; Waivers. All legal actions between or among
the parties regarding this Agreement, including, without limitation, legal actions to enforce this
Agreement or because of a dispute, breach or default of this Agreement, shall be brought in the
federal or state courts located in New York County, New York, which courts shall have sole
and exclusive in personam, subject matter and other jurisdiction in connection with such legal
actions. The parties hereto irrevocably consent and agree that venue in such courts shall be
convenient and appropriate for all purposes 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. The parties hereto further irrevocably consent and agree that
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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 in Section 14.11(a), and 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.
14.14 Waiver of Jury Trial. Each of Seller Parties and Buyer hereby irrevocably 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 Agreement, any other Principal Agreement or the transactions
contemplated hereby or thereby.
14.15 Counterparts. This Agreement, the other Principal Agreements, and any document,
amendment, approval, consent, information, notice, certificate, request, statement, disclosure or
authorization related to this Agreement and the other Principal Agreements (each a
“Communication”) may be in the form of an Electronic Record and may be executed using
Electronic Signatures (including, without limitation, facsimile and .pdf) and shall be considered
an original, and shall have the same legal effect, validity and enforceability as a paper record.
This Agreement may be executed simultaneously in as many counterparts as necessary or
convenient, including both paper and electronic counterparts, but each counterpart shall be
deemed to be an original and all such counterparts shall constitute one and the same agreement.
For the avoidance of doubt, the authorization under this paragraph may include, without
limitation, use or acceptance by Buyer of a manually signed paper Communication which has
been converted into electronic form (such as scanned into PDF format), or an electronically
signed Communication converted into another format, for transmission, delivery and/or
retention. Electronic Signatures and facsimile signatures shall be deemed valid and binding to
the same extent as the original. For purposes hereof, “Electronic Record” and “Electronic
Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may
be amended from time to time. The Seller Parties agree that the Buyer shall have the right, at
its sole option, to confirm or otherwise verify the validity or authenticity of Electronic
Signatures delivered in connection with any Communication and Buyer may reject any
Electronic Signature from any Person that does not cooperate with such confirmation or
verification.
14.16 Headings. The headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning or interpretation of any provisions hereof.
14.17 Reserved.
14.18 Reserved.
14.19 Confidential Information. To effectuate this Agreement, Buyer and Seller Parties may disclose
to each other certain confidential information relating to the parties’ operations, computer
systems, technical data, business methods, and other information designated by the disclosing
party or its agent to be confidential, or that should be considered confidential in nature by a
reasonable person given the nature of the information and the circumstances of its disclosure
(collectively the “Confidential Information”). Confidential Information can consist of
information that is either oral or written or both, and may include, without limitation, any of the
following: (i) any reports, information or material concerning or pertaining to businesses,
methods, plans, finances, accounting statements, and/or projects of either party or their
affiliated or related entities; (ii) any of the foregoing related to the parties or their related or
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affiliated entities and/or their present or future activities and/or (iii) any term or condition of
any agreement (including this Agreement) between either party and any individual or entity
relating to any of their business operations. With respect to Confidential Information, the
parties hereby agree, except as otherwise expressly permitted in this Agreement:
(a) not to use the Confidential Information except in furtherance of this Agreement;
(b) to use reasonable efforts to safeguard the Confidential Information against disclosure to
any unauthorized third party with the same degree of care as they exercise with their own
information of similar nature; and
(c) not to disclose Confidential Information to anyone other than employees, agents or
contractors with a need to have access to the Confidential Information and who are bound
to the parties by like obligations of confidentiality, except that the parties shall not be
prevented from using or disclosing any of the Confidential Information which: (i) is
already known to the receiving party at the time it is obtained from the disclosing party
(and such is not otherwise subject to a duty of confidentiality); (ii) is now, or becomes in
the future, public knowledge other than through wrongful acts or omissions of the party
receiving the Confidential Information; (iii) is lawfully obtained by the party from
sources independent of the party disclosing the Confidential Information and without
confidentiality and/or non-use restrictions; or (iv) is independently developed by the
receiving party without any use of the Confidential Information of the disclosing party.
Notwithstanding anything contained herein to the contrary, Buyer may share any Confidential
Information of Seller Parties with an Affiliate of Buyer for any valid business purpose, such as,
but not limited to, to assist an Affiliate in evaluating a current or potential business relationship
with Seller Parties; provided, however, that the financial statements of Seller Parties shall not be
provided without the prior written consent of Seller Parties. For the avoidance of doubt, under no
circumstances shall the financial statements of Seller Parties be provided to any party (including
an Affiliate of Buyer) other than Buyer’s employees, agents, or contractors for the sole purpose of
facilitating this Agreement without the prior written consent of Seller Parties.
In addition, the Principal Agreements and their respective terms, provisions, supplements and
amendments, and transactions and notices thereunder (other than the tax treatment and tax
structure of the transactions), are proprietary to Buyer and shall be held by Seller Parties in strict
confidence and shall not be disclosed to any third party without the consent of Buyer except for
(i) disclosure to Seller Parties’ direct and indirect parent companies, directors, attorneys, agents or
accountants, provided that such attorneys or accountants likewise agree to be bound by this
covenant of confidentiality, or are otherwise subject to confidentiality restrictions; (ii) upon prior
written notice to Buyer, disclosure required by law, rule, regulation or order of a court or other
regulatory body; (iii) upon prior written notice to Buyer, disclosure to any approved hedge
counterparty to the extent necessary to obtain any hedging hereunder; (iv) any disclosures or
filing required under Securities and Exchange Commission (“SEC”) or state securities’ laws; or
(v) the tax treatment and tax structure of the transactions, which shall not be deemed confidential;
provided that in the case of (ii), (iii) and (iv), Seller Parties shall take reasonable actions to
provide Buyer with prior written notice; provided further that in the case of (iv), Seller Parties
shall not file any of the Principal Agreements other than the Agreement with the SEC or state
securities office unless Seller Parties have (x) provided at least [***] days (or such lesser time as
may be demanded by the SEC or state securities office) prior written notice of such filing to
Buyer, and (y) redacted all pricing information and other commercial terms.
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If any party or any of its successors, Subsidiaries, officers, directors, employees, agents and/or
representatives, including, without limitation, its insurers, sureties and/or attorneys, breaches its
respective duty of confidentiality under this Agreement, the non-breaching party(ies) shall be
entitled to all remedies available at law and/or in equity, including, without limitation, injunctive
relief.
14.20 Intent. Seller Parties and Buyer recognize and intend that:
(a) this Agreement and each Transaction hereunder constitutes a “repurchase agreement” as
that term is defined in Section 101(47)(A)(i) of the Bankruptcy Code, a “securities
contract” as that term is defined in Section 741(7)(A)(i) of the Bankruptcy Code and a
“master netting agreement” as that term is defined in Section 101(38A)(A) of the
Bankruptcy Code and that the pledge of the Residual Collateral and the Related Credit
Enhancement in Section 6.1 hereof constitutes “a security agreement or other
arrangement or other credit enhancement” that is “related to” the Agreement and
Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and
741(7)(A)(xi) of the Bankruptcy Code. Seller Parties and Buyer recognize and intend
that this Agreement is an agreement to provide financial accommodations and is not
subject to assumption pursuant to Bankruptcy Code Section 365(a). Seller Parties and
Buyer further agree that they shall not challenge, and hereby waive to the fullest extent
available under applicable law their right to challenge, the characterization of any
Transaction under this Agreement or this Agreement as a “repurchase agreement,”
“securities contract,” and/or “master netting agreement” within the meaning of the
Bankruptcy Code;
(b) Buyer’s right to liquidate the Purchased Items and Residual Collateral delivered to it in
connection with the Transactions hereunder or to accelerate or terminate this Agreement
or otherwise exercise any other remedies herein is a contractual right to liquidate,
accelerate or terminate such Transaction as described in Bankruptcy Code Sections 555,
559 and 561 ;any payments or transfers of property made with respect to this Agreement
or any Transaction to: (i) satisfy a Margin Deficit, (ii) comply with a Margin Call, or (iii)
satisfy the provision of additional security agreements to provide enhancements to satisfy
a deficiency in the Over/Under Account, shall in each case be considered a “margin
payment” as such term is defined in Bankruptcy Code Section 741(5);
(c) any payments or transfers of property by Seller Parties (i) on account of a Haircut, (ii) in
partial or full satisfaction of a repurchase obligation, or (iii) fees and costs under this
Agreement or under any Transaction shall in each case constitute “settlement payments”
as such term is defined in Bankruptcy Code Section 741(8); and
(d) each of the Seller Parties and Buyer agree that this Agreement and each Transaction
hereunder is intended to create a mutuality of obligations among the parties, and as such,
the Agreement and each Transaction constitutes a contract that (i) is among all of the
parties and (ii) places each party in the same right and capacity.
14.21 Right to Liquidate. It is understood that either party’s right to liquidate Purchased Items and
Residual Collateral delivered to it in connection with Transactions hereunder or to terminate or
accelerate obligations under this Agreement or any individual Transaction, are contractual
rights for same as described in Sections 555 and 559 of the Bankruptcy Code.
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14.22 Insured Depository Institution. If a party hereto is an “insured depository institution” as such
term is defined in the Federal Deposit Insurance Act (as amended, the “FDIA”), then each
Transaction hereunder is a “qualified financial contract” as that term is defined in the 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.
14.23 Netting Contract. 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 the FDICIA except insofar as one or more
of the parties hereto is not a “financial institution” as that term is defined in the FDICIA.
14.24 Tax Treatment. Each party to this Agreement acknowledges that it is its intent, solely for
purposes of United States federal income tax purposes and any corresponding provisions of
state, local and foreign law, but not for bankruptcy or any other non-tax purpose, to treat each
Transaction as indebtedness of Seller Parties that is secured by the Purchased Assets and to
treat the Purchased Assets as beneficially owned by Seller Parties in the absence of an Event of
Default by any Seller Party. All parties to this Agreement agree to such tax treatment and agree
to take no action inconsistent with this treatment, unless required by law.
14.25 Examination and Oversight by Regulators. Seller Parties and Buyer agree that the transactions
under this Agreement may be subject to regulatory examination and oversight by one or more
Governmental Authorities. Subject to the provisions of this Agreement, Seller Parties and
Buyer shall comply with all reasonable requests made by the other party to assist such party in
complying with regulatory requirements imposed on it.
14.26 ISDA Stay Protocol. Buyer and each Seller Party agree that (i) to the extent that prior to the
date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the
“Protocol”), the terms of the Protocol are incorporated into and form a part of this Agreement,
and for such purposes this Agreement shall be deemed a Protocol Covered Agreement and each
party shall be deemed to have the same status as “Regulated Entity” and/or “Adhering Party” as
applicable to it under the Protocol; (ii) if clause (i) does not apply, to the extent that prior to the
date hereof the parties have executed a separate agreement the effect of which is to amend the
qualified financial contracts between them to conform with the requirements of the QFC Stay
Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into
and form a part of this Agreement and each party shall be deemed to have the status of
“Covered Entity” or “Counterparty Entity” (or other similar term) as applicable to it under the
Bilateral Agreement; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and
Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral
template entitled “Full-Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)”
published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S.
Resolution Stay Protocol page at www.isda.org, and a copy of which is available upon request),
the effect of which is to amend the qualified financial contracts between the parties thereto to
conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a
part of this Agreement, and for such purposes this Agreement shall be deemed a “Covered
Agreement,” Buyer shall be deemed a “Covered Entity” and each Seller Party shall be deemed
a “Counterparty Entity.” In the event that, after the date of this Agreement, both parties hereto
become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this
paragraph. In the event of any inconsistencies among this Agreement and the terms of the
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Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as
applicable, the QFC Stay Terms will govern. Terms used in this paragraph without definition
shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this
paragraph, references to “this Agreement” include any related credit enhancements entered into
between the parties or provided by one to the other. In addition, the parties agree that the terms
of this paragraph shall be incorporated into any related covered affiliate credit enhancements,
with all references to Buyer replaced by references to the covered affiliate support provider.
14.27 Amendment and Restatement. Buyer and Guarantor entered into the Original Agreement.
Buyer and Seller Parties 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 Effective Date, and each of Buyer and Seller Parties shall
hereafter be bound by the terms and conditions of this Agreement and the other Principal
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 Buyer and Seller Parties that the security interests and liens granted in the Purchased
Assets pursuant to Section 6.1 of the Original Agreement shall continue in full force and effect.
All references to the Original Agreement in any Principal Agreement or other document or
instrument delivered in connection therewith shall be deemed to refer to this Agreement and the
provisions hereof.
14.28 Guarantor Name Change. The Guarantor has publicly announced that on or about July 31,
2021, it will formally change its name from Quicken Loans, LLC to Rocket Mortgage, LLC. It
is expressly agreed that no amendments to this Agreement or any other Principal Agreement
shall be required in connection with such change of the Guarantor’s name, provided that any
Uniform Commercial Code financing statements filed in connection with the Principal
Agreements shall be amended to the extent, and within the timeframe required by, the Uniform
Commercial Code. For the avoidance of doubt, Buyer may, in its sole discretion, request
certain additional documents be provided evidencing Guarantor’s name change. Following the
effective date of such name change by the Guarantor, all references herein and in the Principal
Agreements to Quicken Loans, LLC shall be deemed to refer to Rocket Mortgage, LLC.
(Signature page to follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first above written.
BUYER: BANK OF AMERICA, N.A.
By: /s/ Adam Robitshek
Name: Adam Robitshek
Title: Director
SELLER: RCKT MORTGAGE SPE-A, LLC
By: /s/ Robert Wilson
Name: Robert Wilson
Title: Treasurer
GUARANTOR: QUICKEN LOANS, LLC
By: /s/ Robert Wilson
Name: Robert Wilson
Title: Treasurer
Signature Page to the Amended and Restated Master Repurchase Agreement
LEGAL02/40464938v16
EXHIBIT A
GLOSSARY OF DEFINED TERMS
Ability to Repay Rule: 12 CFR 1026.43(c), including all applicable official staff commentary.
Acceptable Title Insurance Company: (i) Title Source, Inc., or (ii) a nationally recognized title
insurance company that has not been disapproved by Buyer in a writing provided to Seller Parties prior to
any related Mortgage Loan becoming subject to a Transaction hereunder.
Accepted Servicing Practices: With respect to any Underlying Asset, those mortgage servicing practices
of prudent mortgage lending institutions which service mortgage loans of the same type as such
Underlying Asset in the jurisdiction where the related Mortgaged Property is located.
Acknowledgement of Confidentiality of Password Agreement: That certain Acknowledgement of
Confidentiality of Password Agreement attached hereto as Exhibit I.
Additional Underlying Assets: Those additional Eligible Underlying Assets related to the additional
Participation Interests or cash provided by Seller to Buyer pursuant to Section 6.3 of this Agreement.
Affiliate: With respect to any specified entity, any other entity controlling or controlled by or under
common control with such specified entity. For the purposes of this definition, “control” when used with
respect to a specified entity means the power to direct the management and policies of such entity,
directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and
the terms “controlling” and “controlled” having meanings correlative to the foregoing.
Agency: Fannie Mae, Freddie Mac or Ginnie Mae, as applicable.
Agency Audit: Any Agency, HUD, FHA, VA and RD audits, examinations, evaluations, monitoring
reviews and reports of its origination and servicing operations (including those prepared on a contract
basis for any such Agency, HUD, FHA, VA or RD).
Agency Documents: The documents set forth on Exhibit M.
Agency Eligible Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan or a Cooperative Loan that is originated in Strict Compliance with the Agency Guides and
the eligibility requirements specified for the applicable Agency Program, and is eligible for sale to or
securitization by such Agency.
Agency Eligible Escrow Mortgage Loan: An Agency Eligible Mortgage Loan or Government Mortgage
Loan in respect of which (i) the full original principal amount of such Mortgage Loan has not been fully
advanced or disbursed as of the related origination date, (ii) all subsequent advances or disbursements are
made in accordance with the Agency Guides and (iii) has been approved by Buyer in its sole discretion.
Agency Guides: The Ginnie Mae Guide, the Fannie Mae Guide, the Freddie Mac Guide, the FHA
Regulations, the VA Regulations or the RD Regulations, as the context may require, in each case as such
guidelines have been or may be amended, supplemented or otherwise modified from time to time (i) by
Ginnie Mae, Fannie Mae, Freddie Mac, the FHA, the VA or the RD, as applicable, in the ordinary course
of business or (ii) by Ginnie Mae, Fannie Mae, Freddie Mac, the FHA, the VA or the RD, as applicable,
Exhibit A-1
LEGAL02/40464938v16
at the request of Seller Parties and as to which Seller Parties have given notice to Buyer of any such
material amendment, supplement or other modification.
Agency Program: The Ginnie Mae Program, the Fannie Mae Program and/or the Freddie Mac Program,
as the context may require.
Aggregate Outstanding Purchase Price: The aggregate outstanding Purchase Price of all Transactions
or specified Purchased Assets (and related Underlying Assets), as the case may be, as of any date of
determination.
Agency-Required eNote Legend: The legend or paragraph required by Fannie Mae, Freddie Mac or
Ginnie Mae, as applicable, to be set forth in the text of an eNote, which includes the provisions set forth
on Exhibit 18 to the Custodial Agreement, as may be amended from time to time by Fannie Mae, Freddie
Mac or Ginnie Mae, as applicable.
Aggregate Transaction Limit: The maximum aggregate principal amount of Transactions (measured by
the related outstanding Purchase Price) that may be outstanding at any one time, as set forth in the
Transactions Terms Letter.
Anti-Money Laundering Laws: As defined in Section 8.1(dd) hereof.
Applicable Pricing Rate: With respect to any date of determination, the greater of (i) the applicable
Benchmark and (ii) 0%. It is understood that the Applicable Pricing Rate shall be adjusted on a daily
basis.
Approvals: With respect to Seller Parties or Servicer, as applicable, the approvals obtained by the
applicable Agency, HUD, the FHA, the VA or the RD in designation of Guarantor or Servicer as a Ginnie
Mae-approved issuer, a Ginnie Mae-approved servicer, a FHA-approved mortgagee, a VA-approved
lender, a RD-approved lender, a Fannie Mae-approved lender or a Freddie Mac-approved Seller/Servicer,
as applicable, in good standing.
Approved Investor: Any Agency, any private institution or Governmental Authority as approved by
Buyer in its sole good faith discretion, purchasing such Underlying Assets or Mortgage-Backed Securities
on a forward basis from Seller pursuant to a Purchase Commitment; provided, however, that any
disapproval of an Approved Investor shall not apply with respect to any Purchased Asset subject to an
existing Transaction on the effective date of such disapproval, which shall be (i) [***] Business Days
following receipt of written notice, or (ii) [***] days following receipt of written notice in the event of
disapproval of all Approved Investors; provided further that no such prior written notice shall be required
in the event of disapproval due to actual or reasonably suspected fraud or criminal activity on the part of
such Approved Investor.
Approved Payee: As defined in the Transactions Terms Letter and as described in Section 3.7 of this
Agreement, and which, as of the date hereof, includes Title Source, Inc.
Asset: A Mortgage Loan, or in the case of a Pooled Mortgage Loan, the resulting Mortgage-Backed
Security pursuant to Section 3.8, as the context may require.
Asset Data Record: A document containing the information set forth on Buyer’s website(s), which may
be amended, supplemented and modified from time to time as further set forth in the Handbook or such
Exhibit A-2
LEGAL02/40464938v16
other information as Buyer may reasonably request from time to time, completed by Seller and submitted
to Buyer with respect to each Eligible Underlying Asset.
Asset Value: With respect to each Purchased Asset and Underlying Asset and on and any date of
determination, an amount equal to the following, as applicable, as the same may be reduced in accordance
with Section 4.3, and, in the case of each Underlying Asset, as shall include the Participation Interests in
the related Servicing Rights:
(a) if the Underlying Asset (other than a Pooled Mortgage Loan) has Standard Status, the
product of the related Type Purchase Price Percentage and the least of: (i) the Market Value of such
Underlying Asset; (ii) the unpaid principal balance of such Underlying Asset; (iii) the purchase price paid
by Seller for such Underlying Asset if it is a Mortgage Loan; and (iv) the Takeout Price committed by the
related Approved Investor, as evidenced by the related Purchase Commitment, if applicable;
(b) if the Underlying Asset is a Noncompliant Asset (other than a Pooled Mortgage Loan),
the product of the related Type Purchase Price Percentage for a Noncompliant Asset and the least of: (i)
the Market Value of such Underlying Asset; (ii) the unpaid principal balance of such Underlying Asset;
(iii) the purchase price paid by Seller for such Underlying Asset if it is a Mortgage Loan; and (iv) the
Takeout Price committed by the related Approved Investor, as evidenced by the related Purchase
Commitment, if applicable;
(c) if the Underlying Asset is a Pooled Mortgage Loan, the product of the related Type
Purchase Price Percentage and the lesser of (i) the Market Value of such Pooled Mortgage Loan and (ii)
the unpaid principal balance of such Pooled Mortgage Loan; or
(d) if the Underlying Asset is a Defective Asset, zero.
Assignment: A duly executed assignment to Buyer, MERS, or in blank, in recordable form of an
Underlying Asset, of the indebtedness secured thereby and of all documents and rights related to such
Underlying Asset.
Assignment of Closing Protection Letter: An assignment assigning and subrogating Buyer to all of each
Seller Party’s rights in a Closing Protection Letter, substantially in the form of Exhibit F hereto.
Assignment of Proprietary Lease: The specific agreement creating a first lien on and pledge of the
Cooperative Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.
Authoritative Copy: With respect to an eNote, the unique copy of such eNote that is within the Control
of the Controller.
Available Tenor: As of any date of determination and with respect to the then-current Benchmark, as
applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may
be used for determining the length of an interest period or (y) otherwise, any payment period for interest
calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
Average Quarterly Utilization: As defined in the Transactions Terms Letter.
Bailee Agreement: A bailee agreement or bailee letter that is in a form acceptable to Buyer.
Exhibit A-3
LEGAL02/40464938v16
Bankruptcy Code: Title 11 of the United States Code, now or hereafter in effect, as amended, or any
successor thereto.
Benchmark: Initially, One-Month LIBOR; provided that if a replacement of the Benchmark has occurred
pursuant to Section 4.14 then “Benchmark” means the applicable Benchmark Replacement to the extent
that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to
“Benchmark” shall include, as applicable, the published component used in the calculation thereof.
Benchmark Replacement:
(1) For purposes of Section 4.14(a), the first alternative set forth below that can be determined by
Buyer:
(a) the sum of: (i) Term SOFR and (ii) the spread adjustment selected or recommended
by the Relevant Governmental Body for the replacement of One-Month LIBOR with
a SOFR-based rate, or
(b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or
recommended by the Relevant Governmental Body for the replacement of One-
Month LIBOR with SOFR-based rate;
2 provided that, if initially One-Month LIBOR is replaced with the rate contained in clause
(b) above (Daily Simple SOFR plus the applicable spread adjustment) and subsequent to such
replacement, Buyer determines that Term SOFR has become available and is administratively feasible for
Buyer in its sole discretion, and Buyer notifies Seller of such availability, then from and after the relevant
payment date or payment period for the Price Differential calculated, in each case, commencing no less
than thirty (30) days after the date of such notice, the Benchmark Replacement shall be as set forth in
clause (a) above; and
(2) For purposes of Section 4.14(b), the sum of (a) the alternate benchmark rate and (b) an
adjustment (which may be a positive or negative value or zero), in each case, that has been
selected by Buyer as the replacement Benchmark giving due consideration to any evolving or
then-prevailing market convention, including any applicable recommendations made by a
Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such
time.
Any Benchmark Replacement shall be applied in a manner consistent with market practice;
provided that to the extent such market practice is not administratively feasible for Buyer, such
Benchmark Replacement shall be applied in a manner as otherwise reasonably determined by Buyer.
Benchmark Replacement Conforming Changes: With respect to any Benchmark Replacement, any
technical, administrative or operational changes (including changes to the definition of “Business Day,”
timing and frequency of determining rates and making payments of the Price Differential, timing of
borrowing requests or prepayment, conversion or continuation notices, the applicability and length of
lookback periods, the applicability of breakage provisions, and other technical, administrative or
operational matters) that Buyer decides may be appropriate to reflect the adoption and implementation of
such Benchmark Replacement and to permit the administration thereof by Buyer in a manner substantially
consistent with market practice (or, if Buyer decides that adoption of any portion of such market practice
is not administratively feasible or that no market practice for the administration of such Benchmark
Exhibit A-4
LEGAL02/40464938v16
Replacement exists, in such other manner of administration as Buyer decides is reasonably necessary in
connection with the administration of this Agreement and the other Principal Agreements).
Benchmark Transition Event: With respect to any then-current Benchmark other than One-Month
LIBOR, the occurrence of a public statement or publication of information by or on behalf of the
administrator of the then-current Benchmark or a Governmental Authority with jurisdiction over such
administrator announcing or stating that all Available Tenors are or will no longer be representative, or
made available, or used for determining the interest rate of loans, or shall or will otherwise cease,
provided that, at the time of such statement or publication, there is no successor administrator that is
satisfactory to Buyer, that will continue to provide any representative tenors of such Benchmark after
such specific date.
Beneficial Ownership Certification: A certification regarding beneficial ownership required by the
Beneficial Ownership Regulation.
Beneficial Ownership Regulation: 31 C.F.R. § 1010.230.
Bilateral Agreement: As defined in Section 14.26 hereof.
Bilateral Terms: As defined in Section 14.26 hereof.
Bond Loan – 1st Lien: Unless defined otherwise in the Transactions Terms Letter, a first lien mortgage
loan (i) that was originated and underwritten in accordance with a qualifying local or state governmental
homeownership program administered by a Housing Finance Agency (as defined under 24 CFR 266.5)
and (ii) with respect to which Guarantor has obtained a Purchase Commitment on or prior to the related
Purchase Date.
Bond Loan – 2nd Lien: Unless defined otherwise in the Transactions Terms Letter, a second lien
mortgage loan (i) that was originated and underwritten in accordance with a qualifying local or state
governmental homeownership program administered by a Housing Finance Agency (as defined under 24
CFR 266.5) and (ii) with respect to which Guarantor has obtained a Purchase Commitment on or prior to
the related Purchase Date.
Business Day: Any day, excluding Saturday, Sunday and any day that is a legal holiday under the laws of
the State of New York, the State of Michigan or the State of California.
Calculation Period: With respect to: (a) the initial Payment Date on which an Unused Facility Fee is
due, the period beginning on the Effective Date and ending on the last day of the calendar quarter in
which such Effective Date occurs, (b) for each subsequent Payment Date on which an Unused Facility
Fee is due, the prior calendar quarter and (c) with respect to the date this Agreement is terminated
pursuant to the terms herein, the period beginning on the first day of the calendar quarter in which such
termination is to occur and ending on the Expiration Date.
Cash Equivalents: Any (a) securities with maturities of ninety (90) days or less from the date of
acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof,
(b) certificates of deposit and Eurodollar time deposits with maturities of ninety (90) days or less from the
date of acquisition and overnight bank deposits of any commercial bank having capital, surplus and
retained earnings in excess of $70,000,000, (c) repurchase obligations of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of
Exhibit A-5
LEGAL02/40464938v16
a domestic issuer rated at least “A-1” or the equivalent thereof by S&P or “p-1” or the equivalent thereof
by Moody’s and in either case maturing within ninety (90) days after the day of acquisition, (e) securities
with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing authority of
any such state, commonwealth or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may
be) are rated at least “A” by S&P or “A” by Moody’s, (f) securities with maturities of ninety (90) days or
less from the date of acquisition backed by standby letters of credit issued by any commercial bank
satisfying the requirements of clause (b) of this definition, (g) shares of money market, mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this
definition, or (h) [***] percent of the unencumbered marketable securities in Guarantor’s accounts.
Change of Control: Change of Control shall mean any of the following with respect to Seller Parties:
(a) any transaction or event as a result of which Rock Holdings Inc. and Dan Gilbert,
collectively, cease to own, directly or indirectly 50% or more of the stock of Guarantor;
(b) Guarantor is party to a merger or consolidation, or series of related transactions, which
results in the voting securities or voting control interest of Guarantor held by Rock Holdings Inc. and Dan
Gilbert, collectively, failing to continue to represent at least fifty (50%) percent of the combined voting
power of the voting securities or majority voting control interest of Guarantor immediately after such
merger or consolidation;
(d) the sale or disposition of all or substantially all of Guarantor’s assets (or consummation
of any transaction, or series of related transactions, having similar effect);
(e) the dissolution or liquidation of any Seller Party;
(f) any transaction or series of related transactions that has the substantial effect of any one
or more of the foregoing;
(g) if such Person is a Delaware limited liability company, such Person enters into any
transaction or series of transactions to adopt, file, effect or consummate a Division, or otherwise permits
any such Division to be adopted, filed, effected or consummated without the prior written consent of
Buyer; or
(h) Guarantor ceases to own directly 100% of the Capital Stock of Seller.
Closed-End Second Lien Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a
second lien mortgage loan for a fixed amount drawn at closing and underwritten in accordance with Seller
Parties’ underwriting guidelines for second lien mortgages, as the same have been approved by Buyer.
Closing Agent: The Person designated by Seller and approved by Buyer in accordance with Section 3.7,
to receive Purchase Prices from Buyer, for the account of Seller, for the purpose of (i) funding an
Underlying Asset or (ii) in the case of a new origination Wet Mortgage Loan or Dry Mortgage Loan as to
which the origination funds are being remitted to the closing table, originating such Mortgage Loan in
accordance with local law and practice in the jurisdiction where such Mortgage Loan is being originated.
Closing Protection Letter: A document issued by a title insurance company to a Seller Party and/or
Buyer and relied upon by Buyer to provide closing protection for one or more mortgage loan closings and
Exhibit A-6
LEGAL02/40464938v16
to insure such Seller Party and/or Buyer, without limitation, against embezzlement by the Closing Agent
and loss or damage resulting from the failure of the Closing Agent to comply with all applicable closing
instructions.
COBRA: As defined in Section 8.1(l) hereof.
Code: The Internal Revenue Code of 1986, as amended.
Committed Amount: The portion of the Aggregate Transaction Limit that is committed, as set forth in
the Transactions Terms Letter.
Contingent Obligations: Any obligation of a Person arising from an existing condition or situation that
involves uncertainty as to outcome and that will be resolved by the occurrence or nonoccurrence of some
future event, including, without limitation, any obligation guaranteeing or intended to guarantee any Debt,
leases, dividends or other obligations of any other Person in any manner, whether directly or indirectly;
provided; however, that endorsements of instruments for deposit or collection in the ordinary course of
business shall not be included. With respect to guarantees, the amount of the Contingent Obligation shall
be equal to the stated or determinable amount of the primary obligation in respect of the guarantee or, if
not stated or determinable, the maximum reasonably anticipated liability in respect thereof, as determined
by Buyer.
Control: With respect to an eNote, the “control” of such eNote within the meaning of UETA and/or, as
applicable, E-SIGN, which is established by reference to the MERS eRegistry and any party designated
therein as the Controller.
Control Failure: With respect to an eNote, (a) if the Controller status of the eNote shall not have been
transferred to (i) other than with respect to a Ginnie Mae eNote Pooled Loan, Buyer and (ii) with respect
to a Ginnie Mae eNote Pooled Loan, Guarantor, (b) (i) other than with respect to a Ginnie Mae eNote
Pooled Loan, Buyer shall otherwise not be designated as the Controller of such eNote in the MERS
eRegistry (other than pursuant to a Bailee Letter) and (ii) with respect to a Ginnie Mae eNote Pooled
Loan, Seller shall otherwise not be designated as the Controller of such eNote in the MERS eRegistry, (c)
if the eVault shall have released the Authoritative Copy of an eNote in contravention of the requirements
of the Custodial Agreement, or (d) if the Custodian initiated any changes on the MERS eRegistry in
contravention of the terms of the Custodial Agreement.
Controller: With respect to an eNote, the party designated in the MERS eRegistry as the “Controller”,
and who in such capacity shall be deemed to be “in control” or to be the “controller” of such eNote within
the meaning of UETA or E-SIGN, as applicable.
Conventional Conforming Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter,
a first lien mortgage loan that fully conforms to all underwriting standards, loan amount limitations and
other requirements of that standard Agency mortgage loan purchase program accepting only the highest
quality mortgage loans underwritten without dependence on expanded criteria provisions, or that is
approved by Desktop Underwriter or Loan Prospector.
Cooperative Agency Mortgage Loan: An Agency Eligible Mortgage Loan that is a Cooperative Loan.
Cooperative Corporation: With respect to any Cooperative Loan, the cooperative apartment corporation
that holds legal title to the related Cooperative Project and grants occupancy rights to units therein to
stockholders through Proprietary Leases or similar arrangements.
Exhibit A-7
LEGAL02/40464938v16
Cooperative Jumbo Mortgage Loan: A Jumbo Mortgage Loan that is a Cooperative Loan.
Cooperative Loan: A Mortgage Loan that is secured by a first lien on and perfected security interest in
Cooperative Shares and the related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
Cooperative Project: With respect to any Cooperative Loan, all real property and improvements thereto
and rights therein and thereto owned by a Cooperative Corporation including without limitation the land,
separate dwelling units and all common elements.
Cooperative Shares: With respect to any Cooperative Loan, the shares of stock issued by a Cooperative
Corporation and allocated to a Cooperative Unit and represented by a Stock Certificate.
Cooperative Unit: With respect to a Cooperative Loan, a specific unit in a Cooperative Project.
Correspondent Mortgage Loan: A Mortgage Loan originated by a third party originator and acquired by
Guarantor in accordance with Guarantor’s correspondent mortgage loan program.
CRA Aggregation Mortgage Loan: An Agency Eligible Mortgage Loan or Government Mortgage Loan
that is intended to be sold to an Approved Investor, other than an Agency, for purposes of such Approved
Investor, at its sole discretion, seeking credits for the Community Reinvestment Act (“CRA”) (1977) (12
U.S.C. 2901-Regulations 12 CFR parts 25, 228, 345, and 195).
Current Assets: Those assets set forth in the consolidated balance sheet of Guarantor, prepared in
accordance with GAAP, as current assets, defined as those assets that are now cash or will by their terms
or disposition be converted to cash within one (1) year of the date of the determination.
Current Liabilities: Those liabilities set forth in the consolidated balance sheet of Guarantor, prepared in
accordance with GAAP, as current liabilities, defined as those liabilities due upon demand or within one
(1) year of the date of determination.
Custodial Agreement: The Custodial Agreement executed among Buyer, Guarantor and Custodian with
respect to this Agreement, as the same shall be modified and supplemented and in effect from time to
time.
Custodian: Deutsche Bank National Trust Company or such other custodian selected by Buyer.
Daily Simple SOFR: With respect to any applicable determination date means the secured overnight
financing rate published on such date 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 (or any
successor source).
Debt: The debt of any Person consisting of, without duplication: (a) indebtedness for borrowed money,
including principal, interest, fees and other charges; (b) obligations evidenced by bonds, debentures, notes
or other similar instruments; (c) obligations to pay the deferred purchase price of property or services; (d)
obligations as lessee under leases that shall have been or should be in accordance with GAAP, recorded as
capital leases; (e) obligations secured by any lien upon property or assets owned by any Person, even
though such Person has not assumed or become liable for payment of such obligations; (f) obligations in
connection with any letter of credit issued for the account of such Person; (g) obligations under direct or
indirect guarantees in respect of and obligations, contingent or otherwise, to purchase or otherwise
Exhibit A-8
LEGAL02/40464938v16
acquire, or otherwise insure a creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to above; and (h) all Contingent Obligations.
Default Rate: The lesser of (i) the Applicable Pricing Rate plus two percent (2.00%), or (ii) the
maximum nonusurious interest rate, if any, that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received under the laws of the United States and the State of New York, per
annum.
Defective Asset: An Underlying Asset:
(a) that is not or at any time ceases to be an Eligible Underlying Asset;
(b) that has not been repurchased within the Maximum Dwell Time for a Noncompliant
Asset or is ineligible to be a Noncompliant Asset because the Aggregate Outstanding Purchase
Price of other Underlying Assets that are deemed to be Noncompliant Assets is equal to or
exceeds the permitted Type Sublimit for Noncompliant Assets (to the extent any such Type
Sublimit is set forth in the Transactions Terms Letter);
(c) that is a Mortgage Loan and is the subject of fraud by any Person involved in the
origination of such Mortgage Loan;
(d) that is a Mortgage Loan and the related Mortgaged Property is the subject of material
damage or waste and such damage or waste shall not have been remedied within three (3)
Business Days after receipt of notice from Buyer to do so;
(e) for which any breach of a warranty or representation set forth in Section 8.2 or Section
8.3 occurs and is not cured within the applicable grace period;
(f) that is a Mortgage Loan where the related Mortgagor fails to make the first payment due
under the Mortgage Note on or before the applicable due date, including any applicable grace
period;
(g) that was rejected by the Approved Investor set forth in the related Purchase Commitment;
or
(h) that is an Underlying Asset and it is determined to be ineligible for sale as an Underlying
Asset of the Type originally stipulated.
Delaware LLC Act: Chapter 18 of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et
seq., as amended.
Delegatee: With respect to an eNote, the party designated in the MERS eRegistry as the “Delegatee” or
“Delegatee for Transfers”, who in such capacity is authorized by the Controller to perform certain MERS
eRegistry transactions on behalf of the Controller such as Transfers of Control and Transfers of Control
and Location.
Depository: The Federal Reserve Bank of New York, or as otherwise defined in the glossary of the
Ginnie Mae Guide, the Fannie Mae Guide or the Freddie Mac Guide, as applicable.
Exhibit A-9
LEGAL02/40464938v16
Dividing LLC: A Delaware limited liability company that is effecting a Division pursuant to and in
accordance with Section 18-217 of the Delaware LLC Act.
Division: The division of a Dividing LLC into two or more domestic limited liability companies pursuant
to and in accordance with Section 18-217 of the Delaware LLC Act.
Dry Mortgage Loan: A Mortgage Loan for which Buyer or its Custodian has possession of the related
Mortgage Loan Documents, in a form and condition acceptable to Buyer, prior to the payment of the
Purchase Price.
Due Diligence Cap: As defined in the Transactions Terms Letter.
Early Opt-in Effective Date: (i) With respect to any Early Opt-in Election selecting a SOFR-based rate
as the Benchmark Replacement, the [***] Business Day after the date notice of such Early Opt-in
Election is provided to Seller or (ii) with respect to any Early Opt-in Election selecting any other
Benchmark Replacement, the [***] calendar day after the date notice of such Early Opt-in Election is
provided to Seller (or if such day is not a Business Day, the next succeeding Business Day).
Early Opt-in Election: The occurrence of:
(1) a determination by Buyer that mortgage loan financing facilities similar to this facility,
currently being executed, or that include language similar to that contained in Section 4.14, are
being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate
to replace One-Month LIBOR, and
(2) the election by Buyer to replace One-Month LIBOR with a Benchmark Replacement and the
provision by Buyer of written notice of such election to Seller.
Effective Date: That effective date set forth in the Transactions Terms Letter.
Electronic Agent: MERSCORP Holdings, Inc., or its successor in interest or assigns.
Electronic Record: With respect to an eMortgage Loan, the related eNote and all other documents
comprising the Mortgage Loan File electronically created and that are stored in an electronic format, if
any.
Electronic Tracking Agreement: One or more Electronic Tracking Agreements with respect to (x) the
tracking of changes in the ownership, mortgage servicers and servicing rights ownership of Underlying
Assets held on the MERS System, and (y) the tracking of the Control of eNotes held on the MERS
eRegistry, each in a form acceptable to Buyer.
Eligible Asset: With respect to any Transaction from and after the related Purchase Date, an Eligible
Participation Interest.
Eligible Bank: Either (i) Buyer, or (ii) a bank selected by Seller and approved by Buyer in writing and
authorized to conduct trust and other banking business in any state in which Seller conducts operations.
Eligible Mortgage Loan: An Underlying Asset that is a Mortgage Loan that meets the eligibility criteria
set forth in the Transactions Terms Letter.
Exhibit A-10
LEGAL02/40464938v16
Eligible Participation Interests: Each Participation Interest, including related additional Participation
Interests, sold or proposed to be sold to Buyer in a Transaction that satisfies each of the following criteria:
(i) as to which the representations and warranties in Section 8.1(hh), Section 8.2 and Section 8.3 are true
and correct, (ii) is wholly and directly owned by Seller, (iii) is evidenced by a Participation Certificate,
(iv) represents a 100% participation interest in the Eligible Underlying Assets, (v) has been issued
pursuant to the Participation Agreement, as approved by Buyer in its sole and absolute discretion (vi) is
otherwise approved by Buyer in its discretion, and (vii) satisfies such other eligibility criteria as may be
set forth in the Transactions Terms Letter or otherwise mutually agreed to by Buyer and Seller Parties;
provided, that notwithstanding the failure of the Participation Interests to conform to the requirements of
this definition, Buyer may, subject to such terms, conditions and requirements and Type Purchase Price
Percentage adjustments as Buyer may require, designate in writing any such non-conforming
Participation Interests as an Eligible Asset.
Eligible Security: A Mortgage-Backed Security that meets the eligibility criteria set forth in the
Transactions Terms Letter.
Eligible Underlying Asset: With respect to any Transaction (i) from and after the related Purchase Date,
an Eligible Mortgage Loan, (ii) from and after the related Pooling Date, a Pooled Mortgage Loan, and (iii)
from and after the related Settlement Date, an Eligible Security, as the context may require.
eMortgage Loan: A Mortgage Loan with respect to which there is an eNote and as to which some or all
of the other documents comprising the related Mortgage Loan File may be created electronically and not
by traditional paper documentation with a pen and ink signature.
eNote: With respect to any eMortgage Loan, the electronically created and stored Mortgage Note that is a
Transferable Record.
eNote Delivery Requirement: As defined in Section 3.3(a) hereof.
eNote Replacement Failure: As defined in the Custodial Agreement.
eNote Secured Party: With respect to a Ginnie Mae eNote Pooled Loan, the party designated in the
MERS eRegistry as the “Secured Party”.
eNote Secured Party Failure: With respect to a Ginnie Mae eNote Pooled Loan, (a) if the eNote Secured
Party status of the eNote shall not have been transferred to Ginnie Mae within one (1) Business Day of
certification thereof, (b) Ginnie Mae shall otherwise not be designated as the eNote Secured Party in the
MERS eRegistry, (c) if the eVault shall have released the Authoritative Copy of such eNote in
contravention of the requirements of the Custodial Agreement, or (d) if the Custodian initiated any
changes on the MERS eRegistry in contravention of the terms of the Custodial Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from time to time and any
successor statute.
ERISA Affiliate: Any person (as defined in section 3(9) of ERISA) that together with any Seller Party or
any of their Subsidiaries would be a member of the same “controlled group” or treated as a single
employer within the meaning of Section 414 of the Code or ERISA Section 4001.
E-SIGN: The Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq.
Exhibit A-11
LEGAL02/40464938v16
eVault: An electronic repository established and maintained by the Custodian for delivery and storage of
eNotes.
Event of Default: Any of the conditions or events set forth in Section 11.1 hereof.
Excluded Taxes: As defined in Section 12.3(a) hereof.
Existing Debt: All debt (other than Debt evidenced by this Agreement) of Seller Parties existing on the
date hereof and having obligations that are outstanding or will be payable in the aggregate during the next
twelve (12) month period in excess of $[***], as set forth on Schedule 3 hereto, and any such Debt
otherwise approved in writing by Buyer not set forth thereon.
Expiration Date: The earliest of (i) the Expiration Date set forth in the Transactions Terms Letter, (ii) at
Buyer’s option, upon the occurrence and during the continuation of an Event of Default and (iii) the date
on which this Agreement shall terminate in accordance with the provisions hereof or by operation of law.
Facility Fee: The non-refundable, annual commitment fee set forth in the Transactions Terms Letter, if
any.
Fannie Mae: The Federal National Mortgage Association and any successor thereto.
Fannie Mae Guide: The Fannie Mae MBS Selling and Servicing Guide, as such guide may hereafter
from time to time be amended.
Fannie Mae Program: The Fannie Mae Guaranteed Mortgage-Backed Securities Programs, as described
in the Fannie Mae Guide.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FHA: The Federal Housing Administration of the United States Department of Housing and Urban
Development and any successor thereto.
FHA Mortgage Insurance: Mortgage insurance authorized under Sections 203(b), 213, 221(d)(2), 222,
and 235 of the Federal Housing Administration Act and provided by the FHA.
FHA Mortgage Insurance Contract: A contractual obligation of the FHA respecting the insurance of a
Mortgage Loan.
FHA Regulations: The regulations promulgated by HUD under the FHA Act, codified in 24 Code of
Federal Regulations, and other HUD issuances relating to Government Mortgage Loans, including the
related handbooks, circulars, notices and mortgagee letters.
FHA Streamline Refinance Mortgage Loan: A Government Mortgage Loan originated and
underwritten in accordance with the “FHA streamline refinance” program and FHA Regulations.
FICO Score: The credit score of the Mortgagor provided by Fair, Isaac & Company, Inc. or such other
organization providing credit scores on the origination date of a Mortgage Loan; provided, that if (a) two
separate credit scores are obtained on such origination date, the FICO Score shall be the lower credit
score; and (b) three separate credit scores are obtained on such origination date, the FICO Score shall be
the middle credit score.
Exhibit A-12
LEGAL02/40464938v16
Foreign Buyer: As defined in Section 12.3(c) hereof.
Freddie Mac: The Federal Home Loan Mortgage Corporation and any successor thereto.
Freddie Mac Guide: The Freddie Mac Sellers’ and Servicers’ Guide, as such guide may hereafter from
time to time be amended.
Freddie Mac Program: The Freddie Mac Home Mortgage Guarantor Program or the Freddie Mac FHA/
VA Home Mortgage Guarantor Program, as described in the Freddie Mac Guide.
GAAP: Generally accepted accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants and the statements
and pronouncements of the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting profession and that are
applicable to the circumstances as of the date of determination.
Ginnie Mae: Government National Mortgage Association or any successor thereto.
Ginnie Mae EBO Mortgage Loan: Any Mortgage Loan that satisfies the following criteria: (i) such
Mortgage Loan previously backed a mortgage-backed security guaranteed by Ginnie Mae; (ii) Seller
acquired such Mortgage Loan through Ginnie Mae’s early buy-out program; (iii) Seller and the related
Mortgagor have consummated a modification in respect of the terms of such Mortgage Loan; and (iv)
such Mortgage Loan is eligible for sale to or securitization by Ginnie Mae pursuant to the terms of the
Ginnie Mae Guide.
Ginnie Mae eNote Pooled Loan: An eNote that is a Pooled Mortgage Loan that is eligible to be placed
into a Ginnie Mae Program.
Ginnie Mae Guide: The Ginnie Mae Mortgage-Backed Securities Guide I or II, as such guide may
hereafter from time to time be amended.
Ginnie Mae Program: The Ginnie Mae Mortgage-Backed Securities Programs, as described in the
Ginnie Mae Guide.
Government Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan that is:
(a) subject to FHA Mortgage Insurance under a FHA Mortgage Insurance Contract
and is so insured, or is subject to a current binding and enforceable commitment for such insurance
pursuant to the provisions of the National Housing Act, as amended, was originated in Strict Compliance
with the Ginnie Mae Guide, is eligible for inclusion in the Ginnie Mae Program, and unless otherwise
agreed to by Buyer in its sole discretion, does not exceed the applicable maximum mortgage limits as set
forth in the FHA Regulations, including the general loan limits and the high-cost area loan limits;
(b) subject to a guarantee by the VA under a VA Loan Guaranty Agreement, or is
subject to a current binding and enforceable commitment for such guarantee pursuant to the provisions of
the Servicemen’s Readjustment Act, as amended, was originated in Strict Compliance with VA
Regulations and the Ginnie Mae Guide, is eligible for inclusion in the Ginnie Mae Program, and unless
otherwise agreed to by Buyer in its sole discretion, does not exceed the applicable maximum mortgage
Exhibit A-13
LEGAL02/40464938v16
limits as set forth in the VA Regulations, including the general loan limits and the high-cost area loan
limits;
(c) eligible to be guaranteed by the RD under a RD Loan Guaranty Agreement, and
is so guaranteed pursuant to the provisions of the RD Regulations, and was originated in Strict
Compliance with RD Regulations and the Ginnie Mae Guide, is eligible for inclusion in the Ginnie Mae
Program, and unless otherwise agreed to by Buyer in its sole discretion, does not exceed the applicable
maximum mortgage limits as set forth in the RD Regulations, including the general loan limits and the
high-cost area loan limits.
Governmental Authority: With respect to any Person, any nation or government, any state or other
political subdivision, agency or instrumentality thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator
having jurisdiction over such Person, any of its Subsidiaries or any of its properties.
Guaranty: A guaranty signed by the Guarantor in favor of Buyer, in a form acceptable to Buyer.
Haircut: With respect to any Transaction with respect to which the Purchase Price is being paid to one or
more Approved Payees on behalf of Seller Parties, if the Purchase Price is less than the amount that such
Approved Payees are entitled to receive in respect of the related Mortgage Loans, the positive result (if
any) equal to such amount minus such Purchase Price, which shall be considered a “settlement payment”
as defined in Bankruptcy Code Section 741(8).
Handbook: The guide prepared by Buyer containing additional policies and procedures, as same may be
amended from time to time.
HARP Mortgage Loan: Unless otherwise defined in the Transactions Terms Letter, a Mortgage Loan
that fully conforms to the Home Affordable Refinance Program (as such program is amended,
supplemented or otherwise modified, from time to time), and is referred to by Fannie Mae as a “Refi Plus
mortgage loan” or “DU Refi Plus mortgage loan”, and by Freddie Mac as a “Relief Refinance Mortgage”.
Hash Value: With respect to an eNote, the unique, tamper-evident digital signature of such eNote that is
stored with MERS.
HELOC Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a home equity line
of credit underwritten in accordance with Seller’s underwriting guidelines for HELOCs, as same have
been approved by Buyer.
HomePath Mortgage Loan: Unless otherwise defined in the Transactions Terms Letter, a Mortgage
Loan that fully conforms to Fannie Mae’s HomePath mortgage loan program (as such program is
amended, supplemented or otherwise modified, from time to time), and is referred to as a “HomePath
Mortgage” by Fannie Mae; provided, that such HomePath mortgage loan is not a “HomePath Renovation
Mortgage” pursuant to the terms of such HomePath mortgage loan program.
HomePath Renovation Mortgage Loan: Unless otherwise defined in the Transactions Terms Letter, a
Mortgage Loan that fully conforms to Fannie Mae’s HomePath Renovation mortgage loan program (as
such program is amended, supplemented or otherwise modified, from time to time), and is referred to as a
“HomePath Renovation Mortgage” by Fannie Mae.
Exhibit A-14
LEGAL02/40464938v16
HomeStyle Renovation Mortgage Loan: Unless otherwise defined in the Transactions Terms Letter, a
Mortgage Loan that fully conforms to Fannie Mae’s HomeStyle Renovation mortgage loan program (as
such program is amended, supplemented or otherwise modified, from time to time), and is referred to as a
“HomeStyle® Renovation Mortgage” by Fannie Mae.
HUD: The United States Department of Housing and Urban Development or any successor thereto.
Income: With respect to any Purchased Asset or Underlying Asset at any time, any principal and/or
interest thereon and all dividends, Proceeds and other collections and distributions thereon.
Indebtedness: Means:
(a) obligations created, issued or incurred by Seller Parties 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 Seller Parties to pay the deferred purchase or acquisition price of property
or services, other than trade accounts payable (for other than borrowed money) within ninety (90) days of
the date the related goods are delivered or services are rendered, arising in the ordinary course of
business, and other than to pay accrued expenses incurred in the ordinary course of business;
(c) indebtedness of others secured by a lien on a Seller Party’s property, whether or not such
Seller Party has assumed such secured indebtedness;
(d) obligations (contingent or otherwise) of Seller Parties in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions for the account of Seller
Parties;
(e) capital lease obligations of Seller Parties;
(f) obligations of Seller Parties under repurchase agreements, sale/buy-back agreements,
early purchase programs or like arrangements;
(g) indebtedness of others guaranteed by Seller Parties;
(h) all obligations of Seller Parties incurred in connection with the acquisition or carrying of
fixed assets by Seller Parties; and
(i) indebtedness of general partnerships of which a Seller Party is a general partner;
but does not include loan loss reserves, deferred taxes arising from capitalized excess service fees,
operating leases, liabilities associated with any Seller Party’s securitized Home Equity Conversion
Mortgage (HECM) loan inventory where such securitization does not meet the GAAP criteria for sale
treatment, obligations under hedging arrangements or transactions for the sale of Mortgage Loans.
Indemnified Party or Indemnified Parties: As defined in Section 12.1 of this Agreement.
Initial Due Diligence Cap: As defined in the Transactions Terms Letter.
Insolvency Event: The occurrence of any of the following events:
Exhibit A-15
LEGAL02/40464938v16
(a) such Person shall become insolvent or generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily commence any proceeding or file any
petition under any bankruptcy, insolvency or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee, custodian, conservator or liquidator for itself or a
substantial portion of its property, assets or business or to effect a plan or other arrangement with its
creditors, or shall file any answer admitting the jurisdiction of the court and the material allegations of an
involuntary petition filed against it in any bankruptcy, insolvency or similar proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the benefit of creditors, or such Person, or a
substantial part of its property, assets or business, shall be subject to, consent to or acquiesce in the
appointment of a receiver, trustee, custodian, conservator or liquidator for itself or a substantial property,
assets or business;
(b) corporate action shall be taken by such Person for the purpose of effectuating any of the
foregoing;
(c) an order for relief shall be entered in a case under the Bankruptcy Code in which such
Person is a debtor; or
(d) involuntary proceedings or an involuntary petition shall be commenced or filed against
such Person under any bankruptcy, insolvency or similar law or seeking the dissolution, liquidation or
reorganization of such Person or the appointment of a receiver, trustee, custodian, conservator or
liquidator for such Person or of a substantial part of the property, assets or business of such Person, or any
writ, order, judgment, warrant of attachment, execution or similar process shall be issued or levied against
a substantial part of the property, assets or business of such Person, and such proceeding or petition shall
not be stayed or dismissed, or such execution or similar process shall not be released, vacated or fully
bonded, within sixty (60) days after commencement, filing or levy, as the case may be.
Insurer: A private mortgage insurer, which is acceptable to Buyer.
Intercreditor Agreement: An agreement substantially in the form acceptable to Buyer.
Interest Only Mortgage Loan: A Mortgage Loan which, by its terms, requires the related Mortgagor to
make monthly payments of only accrued interest for a certain period of time following origination. After
such interest-only period, the loan terms provide that the Mortgagor’s monthly payment will be
recalculated to cover both interest and principal so that such Mortgage Loan will amortize fully on or
prior to its final payment date.
Irrevocable Closing Instructions: Closing instructions, including wire instructions, in the form of
Exhibit B or such other form as agreed to by Buyer and Seller, issued by Buyer in connection with funds
disbursed for the funding of new origination Wet Mortgage Loans or Dry Mortgage Loans as to which the
origination funds are being remitted to the closing table.
Joint Account Control Agreement: An agreement substantially in the form acceptable to Buyer.
Joint Pooling Documents: Collectively, (i) the Joint Account Control Agreement, (ii) the Joint Securities
Account Control Agreement and (iii) the Intercreditor Agreement.
Joint Securities Account Control Agreement: An agreement substantially in the form acceptable to
Buyer.
Exhibit A-16
LEGAL02/40464938v16
Jumbo Aggregation Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first
lien mortgage loan or Cooperative Loan that (i) Guarantor is aggregating for purposes of consummating a
securitization transaction, and (ii) meets the transaction requirements set forth on Schedule 1 attached to
the Transactions Terms Letter.
Jumbo Agency Plus Mortgage Loan: A Jumbo Mortgage Loan which meets the criteria set forth in the
Transactions Terms Letter.
Jumbo Asset Depletion Mortgage Loan: A Jumbo Mortgage Loan that (a) is not a Qualified Mortgage
and (b) was originated by Guarantor or a third party originator and acquired by Guarantor in accordance
with Guarantor’s origination and/or underwriting guidelines, taking into account the related Mortgagor’s
documented and qualifying income from existing assets other than wages and salaries.
Jumbo Interest Only Mortgage Loan: A Jumbo Mortgage Loan that is an Interest Only Mortgage Loan.
Jumbo Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first lien mortgage
loan or Cooperative Loan (i) with respect to which Seller has obtained a Purchase Commitment on or
prior to the related Purchase Date, unless otherwise agreed to by Buyer (ii) for which the original loan
amount is greater than the conforming limit in the jurisdiction where the related Mortgaged Property is
located, and (iii) meets the transaction requirements set forth on Schedule 1 to the Transactions Terms
Letter.
Jumbo Non-Warrantable Condo Mortgage Loan: Any Jumbo Mortgage Loan as to which the related
Mortgaged Property constitutes a condominium unit that was not originated in compliance with, or no
longer satisfies the requirements of, the applicable Agency Guides.
Key Personnel: Any employee, officer, director, agent or representative of Seller Parties identified in the
Transactions Terms Letter as a “Key Person.”
Location: With respect to an eNote, the location of such eNote which is established by reference to the
MERS eRegistry.
Lien: Any mortgage, lien, pledge, charge, security interest or similar encumbrance.
Liquidity: As of any date of determination, the sum of (a) Guarantor’s unrestricted and unencumbered
cash and Cash Equivalents, (b) the balance in the Over/Under Account or any over/under account,
buydown account or other similar account under any other secured credit facility, including any other
repurchase agreements for mortgage loans and mortgage-backed securities, in each case exclusive of
funds held due to a Margin Deficit or Margin Call (or any similar margin deficit or margin call under each
such secured facility) and (c) Guarantor’s Maximum Current Advance Capacity. By way of example but
not limitation, cash in escrow and/or impound accounts shall not be included in this calculation.
Manufactured Home: A prefabricated or manufactured home on which a lien secures a Mortgage Loan
and which is considered and treated as “real estate” under applicable law.
Manufactured Home Loan: A Conventional Conforming Mortgage Loan or Government Mortgage
Loan secured by a manufactured home (as defined by HUD) provided that (a) such manufactured home is
attached to a permanent foundation or affixed to the land, is no longer transportable (mobile homes) and
is considered and treated as “real estate” under applicable law, (b) such manufactured home is originated
in compliance with Title II under FHA 203(b) and (c) such Conventional Conforming Mortgage Loan or
Exhibit A-17
LEGAL02/40464938v16
Government Mortgage Loan is eligible for securitization by an Agency pursuant to the terms of the
applicable Agency Guides.
Margin Call: A margin call, as defined and described in Section 6.3 hereof.
Margin Deficit: A margin deficit, as defined and described in Section 6.3 hereof.
Market Value: With respect to an Asset, the fair market value of the Asset as determined by Buyer in its
sole good faith discretion using parameters and valuation methodology customarily used by Buyer with
respect to similarly structured repurchase facilities to value similar assets owned by similarly situated
counterparties and without regard to any market value assigned to such Asset by Seller Parties, taking into
account available objective indications of value such as TBA pricing and any identifiable market price for
servicing rights and mortgage loans. The Buyer shall have the right to mark each Asset to market on a
daily basis or more frequently in the sole discretion of the Buyer.Buyer’s determination of Market Value
shall be conclusive upon the parties, absent manifest error on the part of Buyer. At no time and in no
event will the Market Value of a Purchased Asset be greater than the Market Value of such Purchased
Asset on the Purchase Date. Any Mortgage Loan that is not an Eligible Asset shall have a Market Value
of zero.
Master Servicer Field: With respect to an eNote, the field entitled “Master Servicer” in the MERS
eRegistry.
Material Adverse Effect: A material adverse change in the operations, business, properties or financial
condition of any Seller Party, taken as a whole. “Material Adverse Effect” shall not include any effect
caused by or attributable to the gross negligence or willful misconduct on the part of the Buyer.
Maximum Current Advance Capacity: As of any date of determination:
(a) an amount equal to the excess of the available committed amount over the advanced and
unpaid principal amount outstanding under Seller Parties’ unsecured credit facilities or mortgage
servicing rights facilities; and
(b) in respect of each secured mortgage warehouse or similar financing facility, including
this Agreement and also including any of Seller Parties’ other repurchase, credit or similar
agreements for warehouse or similar financing of Seller Parties’ mortgage loans or mortgage-
backed securities that has been amended to provide, or in which the parties have otherwise
agreed, that over/under accounts, buydown accounts or other similar accounts or deposits of
Seller Parties’ funds held by the buyer or lender under such agreement are no longer permitted, an
amount equal to the excess of:
(x) the lesser of (i) the credit, funding or aggregate outstanding purchase price limit of
such facility, including both committed and uncommitted amounts under such facility,
and (ii) the aggregate borrowing base, asset value or other method of determining the
maximum loan or purchase value of the assets sold, pledged or assigned to the buyer or
lender under such facilities agreement (with such value being determined in accordance
with the methodology set forth in such agreement for determining the purchase or loan
value of such assets under any margin test or borrowing base valuation method specified
therein, including application of any applicable haircuts); over
Exhibit A-18
LEGAL02/40464938v16
(y) as applicable, the aggregate purchase price or the advanced and unpaid principal
amount of all outstanding transactions or advances under such agreement.
Maximum Dwell Time: (i) For any Underlying Asset with Standard Status, the maximum number of
days such Underlying Asset can be not repurchased by Seller before such Underlying Asset may be
deemed to be a Noncompliant Asset; and (ii) with respect to a Noncompliant Asset, the maximum number
of days that such Underlying Asset can be deemed to be a Noncompliant Asset before it may be deemed
to be a Defective Asset, all as set forth in the Transactions Terms Letter.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any successor in
interest thereto.
MERS eDelivery: The transmission system operated by the Electronic Agent that is used to deliver
eNotes, other Electronic Records and data from one MERS eRegistry member to another using a system-
to-system interface and conforming to the standards of the MERS eRegistry.
MERS eRegistry: The electronic registry operated by the Electronic Agent that acts as the legal system
of record that identifies the Controller, Delegatee and Location of the Authoritative Copy of registered
eNotes.
MERS Org ID: As defined in the Custodial Agreement.
MERS System: The mortgage electronic registry system operated by the Electronic Agent that tracks
changes in Mortgage ownership, mortgage servicers and servicing rights ownership.
Minimum Over/Under Account Balance: The balance required to be maintained by Seller in the Over/
Under Account as provided in Section 3.5(a) of the Agreement, which balance is specified in the
Transactions Terms Letter.
Moody’s: Moody’s Investors Service, Inc. or any successor thereto.
Mortgage: A first-lien or second-lien mortgage, deed of trust, security deed or similar instrument on
either (i) with respect to a Mortgage Loan other than a Cooperative Loan, improved real property or (ii)
with respect to a Cooperative Loan, the Proprietary Lease and related Cooperative Shares.
Mortgage-Backed Security: Any fully-modified pass-through mortgage-backed security that is (i) either
issued by Guarantor and fully guaranteed by Ginnie Mae or issued and fully guaranteed with respect to
timely payment of interest and ultimate payment of principal by Fannie Mae or Freddie Mac; (ii)
evidenced by a book-entry account in a depository institution having book-entry accounts at the
applicable Depository or deposited in the securities account in accordance with the Joint Pooling
Documents; and (iii) backed by a Pool, in substantially the principal amount and with substantially the
other terms as specified with respect to such Mortgage-Backed Security in the related Purchase
Commitment.
Mortgage Loan: Any mortgage loan of a Type identified on any schedule attached to the Transactions
Terms Letter, which mortgage loan may be either a Dry Mortgage Loan or a Wet Mortgage Loan.
Mortgage Loan Documents: With respect to each Underlying Asset, the documents in the related
Mortgage Loan File to be delivered to the Custodian.
Exhibit A-19
LEGAL02/40464938v16
Mortgage Loan File: With respect to each Mortgage Loan, the documents and instruments relating to
such Mortgage Loan set forth in Exhibit 12 to the Custodial Agreement.
Mortgage Note: A promissory note secured by a Mortgage and evidencing a Mortgage Loan.
Mortgaged Property: The real property or other Cooperative Loan collateral securing repayment of the
debt evidenced by a Mortgage Note.
Mortgagor: The obligor of a Mortgage Loan.
Multiemployer Plan: A multiemployer plan within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA.
Net Income: For any period, the net income of any Person for such period as determined in accordance
with GAAP and without reference to fluctuation in the value of mortgage servicing rights or other non-
cash events.
Net Worth: With respect to any Person, the excess of total assets of such Person, over total liabilities of
such Person, determined in accordance with GAAP.
Noncompliant Asset: If applicable per the Transactions Terms Letter, as of any date of determination, an
Underlying Asset that is an Eligible Asset and was not repurchased prior to the expiration of the
Maximum Dwell Time permitted for an Underlying Asset with Standard Status but was repurchased prior
to the expiration of the Maximum Dwell Time for Noncompliant Assets.
One-Month LIBOR: The daily rate per annum (rounded to three (3) decimal places) for one-month U.S.
dollar denominated deposits as offered to prime banks in the London interbank market, as published on
the Official ICE LIBOR Fixings page by Bloomberg or in the Wall Street Journal as of the date of
determination.
Other Mortgage Loan Documents: In addition to the Mortgage Loan Documents, with respect to any
Mortgage Loan, and in each case to the extent applicable and available the following: (i) the original
recorded Mortgage, if not included in the Mortgage Loan Documents; (ii) a copy of the preliminary title
commitment showing the policy number or preliminary attorney’s opinion of title and the original policy
of mortgagee’s title insurance or unexpired commitment for a policy of mortgagee’s title insurance, if not
included in the Mortgage Loan Documents; (iii) the original Closing Protection Letter and a copy of the
Irrevocable Closing Instructions; (iv) the original Purchase Commitment, if any; (v) the original FHA
certificate of insurance or commitment to insure, the VA certificate of guaranty or commitment to
guaranty the RD Loan Guaranty Agreement or the Insurer’s certificate or commitment to insure, as
applicable; (vi) the survey, flood certificate, hazard insurance policy and flood insurance policy, as
applicable; (vii) the original of any assumption, modification, consolidation or extension agreements, with
evidence of recording thereon or copies stamp certified by an authorized officer of Seller Parties to have
been sent for recording, if any; (viii) copies of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy; (ix) the loan application; (x) verification
of the Mortgagor’s employment and income, if applicable; (xi) verification of the source and amount of
the downpayment; (xii) credit report on Mortgagor; (xiii) appraisal of the Mortgaged Property (or in the
case of any HARP Mortgage Loan, an appraisal or a waiver thereof, and/or a point value estimate, as
permitted by the applicable Agency Guides); (xiv) the original executed disclosure statement; (xv) tax
receipts, insurance premium receipts, ledger sheets, payment records, insurance claim files and
correspondence, underwriting standards used for origination and all other related papers and records; (xvi)
Exhibit A-20
LEGAL02/40464938v16
the original of any guarantee executed in connection with the Mortgage Note (if any); (xvii) the original
of any security agreement, chattel mortgage or equivalent document executed in connection with the
Mortgage; (xviii) all copies of powers of attorney or similar instruments, if applicable; (xix) copies of all
documentation in connection with the underwriting and origination of any Underlying Asset that
evidences compliance with, (1) with respect to all Underlying Assets other than a Bond Loan – 1st Lien
or a Ginnie Mae EBO Mortgage Loan for which the originator received the related original loan
application prior to January 10, 2014, the Ability to Repay Rule and, (2) with respect to all Underlying
Assets other than a Bond Loan – 1st Lien, a Ginnie Mae EBO Mortgage Loan for which the originator
received the related original loan application prior to January 10, 2014 and a Permitted Non-Qualified
Mortgage Loan, the QM Rule; and (xx) all other documents in any Seller Party’s possession or control
relating to the Underlying Asset.
Other Rate Early Opt-in: The election by Buyer to replace One-Month LIBOR with a Benchmark
Replacement other than a SOFR-based rate pursuant to (1) an Early Opt-in Election and (2) Section
4.14(b) and paragraph (2) of the definition of “Benchmark Replacement”.
Other Taxes: As defined in Section 12.3(a) hereof.
Over/Under Account: That account maintained by Buyer, as described in Section 3.5 hereof.
Participation Agreement: The Master Participation Agreement to be entered into between Seller, as
initial participant, and Guarantor, pursuant to which Participation Interests in Underlying Assets are
issued by the Guarantor to the Seller, as the same may be amended, restated, supplemented or otherwise
modified from time to time if approved by Buyer in writing.
Participation Certificate: A participation certificate that evidences 100% of the Participation Interests
issued by Guarantor to Buyer (as designee of the Seller under the Participation Agreement).
Participation Interests: With respect to each Underlying Asset, (i) all of the economic, beneficial and
equitable ownership interests (together with the related Servicing Rights) therein that are issued by the
Guarantor pursuant to a Participation Agreement and owned by Seller, which Participation Interests shall
be evidenced by a Participation Certificate, and (ii) any and all of the beneficial interests, including units
of trust interest designated as “securities” (as defined in Section 8-102 of the Uniform Commercial Code),
issued by Guarantor in respect of the Underlying Assets including, without limitation, and all of
Guarantor’s rights to assets, participation interests and distributions under the Participation Agreement in
respect of such participation interests. “Participation Interests” also include all accounts receivable and
general intangibles arising out of the Participation Agreement in respect of Underlying Assets, and, to the
extent not otherwise included, all proceeds of any and all of the foregoing.
Payment Date: With respect to (i) Unused Facility Fees, by the thirtieth (30th) day following the end of
each quarter, (ii) Over/Under Account interest, the fifth (5th) Business Day of each month, and (iii) Price
Differential, the fifth (5th) Business Day of each month; provided, however, in each case, Buyer may
change the Payment Date from time to time upon thirty (30) days prior written notice to Seller Parties.
PBGC: The Pension Benefit Guaranty Corporation and any successor thereto.
Permitted Non-Qualified Mortgage Loan: A Jumbo Interest Only Mortgage Loan, Jumbo Agency Plus
Mortgage Loan, Jumbo Asset Depletion Mortgage Loan, Schwab Mortgage Loan, or HELOC Mortgage
Loan.
Exhibit A-21
LEGAL02/40464938v16
Person: Includes natural persons, corporations, limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies,
land trusts, business trusts or other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
Plan: Any Multiemployer Plan or single-employer plan as defined in section 4001 of ERISA, that is
maintained and contributed to by (or to which there is an obligation to contribute of), or at any time
during the five (5) calendar years preceding the date of this Agreement was maintained or contributed to
by (or to which there is an obligation to contribute of), a Seller Party or by a Subsidiary of a Seller Party
or an ERISA Affiliate.
Pledged Security: A Mortgage-Backed Security backed by Mortgage Loans that, immediately prior to
the related Settlement Date, were Underlying Assets, and issued to the Depository in the name of Buyer
or Buyer’s nominee on the Settlement Date and all documents, instruments, chattel paper, and general
intangibles and all products and proceeds relating to or constituting any or all of the foregoing.
Pledged Security Takeout Date: With respect to a Pledged Security, the date specified in the related
Purchase Commitment on which the sale of such Pledged Security to the Takeout Investor will be settled
on a delivery-versus-payment basis.
Pool: A pool of fully amortizing first lien residential Mortgage Loans eligible in the aggregate to back a
Mortgage-Backed Security.
Pooled Mortgage Loan: Any Underlying Asset that is part of a Pool of Underlying Assets certified by
the Custodian (or in the case of Fannie Mae, certified by The Bank of New York Mellon Trust Company)
to an Agency that will be exchanged on the related Settlement Date for a Mortgage-Backed Security
backed by such Pool in accordance with the terms of the applicable Agency Guide.
Pooling Date: With respect to Pooled Mortgage Loans, the date on which an Agency pool number is
assigned to the related Pool.
Potential Default: Any event or condition that would constitute an Event of Default but for the existence
of a cure period applicable thereto which has not yet expired.
Power of Attorney: A power of attorney, substantially in the form attached hereto as Exhibit H.
Price Differential: For each Purchased Asset or Transaction as of any date of determination, an amount
equal to the product of (a) (i) prior to the occurrence of an Event of Default, the sum of the Applicable
Pricing Rate plus the applicable Type Margin, or (ii) following the occurrence and during the continuance
of an Event of Default, the Default Rate, and (b) the Purchase Price for such Purchased Asset or
Transaction. Price Differential will be calculated in accordance with Section 2.6.
Principal Agreements: This Agreement, the Transactions Terms Letter, the Participation Agreement, the
Electronic Tracking Agreement, the Custodial Agreement, the Guaranty, any Servicing Agreement
together with the related Servicer Notice, the Joint Pooling Documents, and all other documents and
instruments evidencing the Transactions, as same may from time to time be supplemented, modified or
amended, and any other agreement entered into between Buyer and any Seller Party in connection
herewith or therewith.
Exhibit A-22
LEGAL02/40464938v16
Proceeds: The total amount receivable or received when a Purchased Asset or Underlying Assets or
proceeds are sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including, without limitation, all rights to payment, including return premiums, with respect
to any insurance relating thereto and all escrow withholds and escrow payments for Property Charges, as
applicable.
Property Charges: All taxes, fees, assessments, water, sewer and municipal charges (general or special)
and all insurance premiums, leasehold payments or ground rents.
Proprietary Lease: The lease on a Cooperative Unit evidencing the possessory interest of the owner of
the Cooperative Shares in such Cooperative Unit.
Protocol: As defined in Section 14.26 hereof.
Purchase Advice: In connection with each wire transfer to be made to Buyer by Seller Parties or an
Approved Investor, a written or electronic notification setting forth (a)(i) the loan number assigned by
Seller Parties or last name of the Mortgagor for each Mortgage Loan that is related to the Transaction in
connection with which a payment is being made, or (ii) the CUSIP of any related Mortgage-Backed
Security; (b) the amount of the wire transfer to be applied in the Transaction; and (c) the total amount of
the wire.
Purchase Commitment: A trade ticket or other written commitment issued in favor of a Seller Party by
an Approved Investor pursuant to which that Approved Investor commits to purchase one or more
Underlying Assets or Pledged Securities, and as to which the Takeout Price for such Underlying Assets or
Pledged Securities is for an amount that is not less than the outstanding Repurchase Price for such
Purchased Assets (or related Underlying Assets), together with the related correspondent, whole loan or
forward purchase agreement by and between such Seller Party and the Approved Investor governing the
terms and conditions of any such purchases, all in form and substance satisfactory to Buyer.
Purchase Date: The date on which Buyer purchases a Purchased Asset from Seller or a Purchase Price
Increase Date. If the Purchase Price is paid by wire transfer, the Purchase Date shall be the date such
funds are wired. If the Purchase Price is paid by a cashier’s check, the Purchase Date shall be the date
such check is issued by the bank. If the Purchase Price is paid by a funding draft, the Purchase Date shall
be the date that the draft is posted by the bank on which the draft is drawn.
Purchase Price: The price at which each Purchased Asset (based on the related Underlying Assets) is
transferred by Seller to Buyer (or in the case of a Purchase Price Increase, in connection with the increase
to the Asset Value of the related Underlying Assets on the related Purchase Price Increase Date) which,
except as otherwise may be set forth in the Transactions Terms Letter, shall be equal to the product of the
applicable Type Purchase Price Percentage and the least of (i) the unpaid principal balance of the related
Underlying Asset, (ii) the Market Value of such Underlying Asset, (iii) the purchase price committed by
the related Approved Investor, if applicable, as evidenced by the related Purchase Commitment, or (iv)
the purchase price paid by Seller Party for such Underlying Asset. For the sake of clarity, the Purchase
Price for each Mortgage-Backed Security subject to a Transaction pursuant to Section 3.8 shall be the
same Purchase Price that was paid for the Underlying Assets backing such Mortgage-Backed Security.
For Pooled Mortgage Loans, the Purchase Price shall be equal to the product of the applicable Type
Purchase Price Percentage and the lesser of (i) the unpaid principal balance of such Pooled Mortgage
Loan and (ii) the Market Value of such Pooled Mortgage Loan.
Exhibit A-23
LEGAL02/40464938v16
Purchase Price Increase: An increase in the Purchase Price for the Participation Interests based upon
Guarantor allocating Additional Underlying Assets to the Participation Interests to which such portion of
the Purchase Price is allocated, as requested by Seller pursuant to the terms hereof. The allocation of
Underlying Assets to the Participation Interests and corresponding increase in value of the Participation
Interests shall be used to determine a Purchase Price Increase with respect to such Participation Interests
pursuant to the definition of Purchase Price, and such Purchase Price Increase shall be added to the
Purchase Price with respect to Participation Interests for purposes of determining the outstanding
Purchase Price hereunder.
Purchase Price Increase Date: The date on which a Purchase Price Increase is made.
Purchased Assets: Collectively, the Participation Interests, each as represented by the applicable
Participation Certificate, together with (x) beneficial interests in the Underlying Assets represented
thereby, and (y) the Purchased Items related to the Participation Interests transferred by Seller to Buyer in
a Transaction hereunder.
Purchased Items: Subject to the terms of the Principal Agreements, all now existing and hereafter arising
right, title and interest of Seller in, under and to the following:
(a) all Purchased Assets, now owned or hereafter acquired and all beneficial interest of Seller
in any Underlying Assets, including all beneficial ownership interests in Mortgage Notes and Mortgages
evidencing such Underlying Assets and the related Mortgage Loan Documents, for which a Transaction
has been entered into between Buyer and Seller hereunder and for which the Repurchase Price has not
been paid in full or a Mortgage-Backed Security has not been issued to Buyer and all Mortgage Loans,
including all Mortgage Notes and Mortgages evidencing such Mortgage Loans and the related Mortgage
Loan Documents, which, from time to time, are delivered, or caused to be delivered, to Buyer (including
delivery to a custodian or other third party on behalf of Buyer) as additional security for the performance
of Seller’s obligations hereunder;
(b) all Pledged Securities, now owned or hereafter acquired, that are supported by
Underlying Assets, all right to the payment of monies in non-cash distributions on account thereof and all
new, substituted and additional securities at any time issued with respect thereto;
(c) all Income relating to the Purchased Assets or Underlying Assets and all rights to receive
such Income;
(d) any funds in any custodial account relating to the Purchased Assets or Underlying Assets;
(e) all rights of Seller under all related Purchase Commitments (including the right to receive
the related Takeout Price), purchase agreements or other hedging arrangements, agreements, contracts or
take-out commitments relating to or constituting any or all of the foregoing, now existing and hereafter
arising, covering any part of the Purchased Assets or Underlying Assets, and all rights to receive
documentation relating thereto, and all rights to deliver Underlying Assets and Pledged Securities to
permanent investors and other purchasers pursuant thereto and all Proceeds resulting from the disposition
of such Purchased Assets;
(f) all now existing and hereafter established accounts (solely with respect to the Purchased
Assets) maintained with broker-dealers by Seller for the purpose of carrying out transactions under
Purchase Commitments relating to any part of the Purchased Assets;
Exhibit A-24
LEGAL02/40464938v16
(g) all now existing and hereafter arising rights of Seller to service, administer and/or collect
on the Purchased Assets or Underlying Assets hereunder and any and all rights to the payment of monies
on account thereof;
(h) all Servicing Rights related to the Purchased Assets or Underlying Assets, all related
Servicing Records, and all rights of Seller Parties to receive from any third party or to take delivery of any
Servicing Records or other documents which constitute a part of the Mortgage Loan Files, including,
without limitation, the Other Mortgage Loan Documents;
(i) all now existing and hereafter arising accounts, contract rights and general intangibles
constituting or relating to any of the Purchased Assets or Underlying Assets;
(j) all mortgage and other insurance and all commitments issued by Insurers, the FHA, the
VA or the RD, as applicable, to insure or guaranty any Underlying Asset, including, without limitation,
all FHA Mortgage Insurance Contracts, VA Loan Guaranty Agreements and RD Loan Guaranty
Agreements relating to such Underlying Assets and the right to receive all insurance proceeds and
condemnation awards that may be payable in respect of the premises encumbered by any Mortgage
related to an Underlying Asset; and all other documents or instruments delivered to Buyer in respect of
the Underlying Assets;
(k) all documents, files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, and other information and data of Seller relating solely to the Purchased Assets or
Underlying Assets (but specifically excluding the servicing systems, computer programs, discs, tapes,
hardware and other information and assets of Seller not exclusively relating to the Purchased Assets or
Underlying Assets);
(l) all rights, but not any obligations or liabilities, of Seller with respect to the Approved
Investors relating to the Underlying Assets;
(m) all products and Proceeds of the Purchased Assets and Underlying Assets;
(n) all of Seller’s interests in the Participation Interests and the Underlying Assets;
(o) the Participation Agreement; and
(p) any funds of Seller at any time deposited or held in the Over/Under Account.
QFC Stay Rules: The regulations codified at 12 C.F.R. § 252.2, § 252.81–8, 12 C.F.R. § 382.1-7 and 12
C.F.R. § 47.1-8, which, subject to limited exceptions, require an express recognition of the stay-and-
transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation
Authority under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the
override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency
proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.
QFC Stay Terms: As defined in Section 14.26 hereof.
QM Rule: 12 CFR 1026.43(e), including all applicable official staff commentary.
Qualified Mortgage: A Mortgage Loan that satisfies the criteria for a “qualified mortgage” as set forth in
the QM Rule.
Exhibit A-25
LEGAL02/40464938v16
Rebuttable Presumption Qualified Mortgage: A Qualified Mortgage, excluding FHA and VA
loans, with an annual percentage rate that exceeds the average prime offer rate for a comparable mortgage
loan as of the date the interest rate is set by 1.5 or more percentage points for a first-lien Mortgage Loan
or by 3.5 or more percentage points for a subordinate-lien Mortgage Loan. With respect to FHA Loans, a
Rebuttable Presumption Qualified Mortgage shall mean a Qualified Mortgage with an annual percentage
rate that exceeds the average prime offer rate for a comparable mortgage loan as of the date the interest
rate is set by more than 1.15 percentage points plus the FHS annual premium amount for a first-lien
Mortgage Loan. With respect to VA Loans, a streamline interest rate reduction refinance loan (IRRRL)
that does not satisfy the requirements under 38 C.F.R. 36.4300(c)(1).
Relevant Governmental Body: The Board of Governors of the Federal Reserve System or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors
of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
Review Appraisal: A review whereby a licensed appraiser reviews available information with respect to
the related Mortgaged Property including, without limitation, exterior only pictures and multiple listing
service data to assign a value with respect to such Mortgaged Property.
RD: The United States Department of Agriculture Rural Development and any successor thereto.
RD Loan Guaranty Agreement: The obligation of the United States to pay a specific percentage of a
Mortgage Loan (subject to a maximum amount) upon default of the Mortgagor.
RD Regulations: The regulations promulgated by the RD under the Consolidated Farm and Rural
Development Act of 1977; and other RD issuances relating to rural housing loans codified in the Code of
Federal Regulations.
Recognition Agreement: An agreement among a Cooperative Corporation, a lender and a Mortgagor
with respect to a Cooperative Loan whereby such parties (i) acknowledge that such lender may make, or
intends to make, such Cooperative Loan, and (ii) make certain agreements with respect to such
Cooperative Loan.
Reportable Event: An event described in Section 4043(c) of ERISA with respect to a Plan as to which
the thirty (30) days’ notice requirement has not been waived by the PBGC.
Repurchase Acceleration Event: Any of the conditions or events set forth in Section 4.2 hereof.
Repurchase Date: The date on which Seller is to repurchase a Purchased Asset (or obtain the release of
an Underlying Asset) subject to a Transaction from Buyer, which is either (i) the date specified in the
related Transactions Terms Letter and/or Asset Data Record, or (ii) the date identified to Buyer by Seller
as the date that the related Purchased Asset (or Underlying Asset, as applicable) is to be sold pursuant to a
Purchase Commitment; provided, however, that if the Repurchase Date is not a date within the Maximum
Dwell Time for an Underlying Asset with Standard Status, Buyer may, at its discretion, deem such
Underlying Asset a Noncompliant Asset and Buyer may pursue any rights and remedies accorded Buyer
hereunder as a result thereof, including, without limitation, charging Seller any applicable fees as a result
thereof. The Repurchase Date for each Purchased Asset (or Underlying Asset, as applicable) shall in no
event occur later than one (1) year after the Purchase Date of such Purchased Asset (or Underlying Asset,
as applicable).
Exhibit A-26
LEGAL02/40464938v16
Repurchase Price: The price at which a Purchased Asset is to be transferred from Buyer or its designee
to Seller (or an Underlying Asset is to be released to Seller Parties, as applicable) upon termination of a
Transaction, which shall be determined as the sum of (i) the Purchase Price, (ii) any applicable fees and
indemnities owed by Seller Parties in connection with the Purchased Asset (or Underlying Asset, as
applicable) and (iii) the Price Differential due on such Purchase Price pursuant to Section 2.6 as of the
date of such determination, less any Income received by Buyer related to such Purchased Asset or
Underlying Asset, if applicable.
Repurchase Transaction: A repurchase transaction, as defined and described in Section 6.6 hereof.
Request for Temporary Increase: As defined in Section 2.10 hereof.
Residual Collateral: Subject to the terms of the Principal Agreements, all now existing and hereafter
arising right, title and interest of Guarantor in, under and to the following:
(a) all Purchased Assets, now owned or hereafter acquired and all beneficial interest of
Guarantor in any Underlying Assets, including all beneficial ownership interests in Mortgage Notes and
Mortgages evidencing such Underlying Assets and the related Mortgage Loan Documents, for which a
Transaction has been entered into between Buyer and Seller hereunder and for which the Repurchase
Price has not been paid in full or a Mortgage-Backed Security has not been issued to Buyer and all
Mortgage Loans, including all Mortgage Notes and Mortgages evidencing such Mortgage Loans and the
related Mortgage Loan Documents, which, from time to time, are delivered, or caused to be delivered, to
Buyer (including delivery to a custodian or other third party on behalf of Buyer) as additional security for
the performance of Seller’s obligations hereunder;
(b) all Pledged Securities, now owned or hereafter acquired, that are supported by
Underlying Assets, all right to the payment of monies in non-cash distributions on account thereof and all
new, substituted and additional securities at any time issued with respect thereto;
(c) all Income relating to the Purchased Assets or Underlying Assets and all rights to receive
such Income;
(d) any funds in any custodial account relating to the Purchased Assets or Underlying Assets;
(e) all rights of Guarantor under all related Purchase Commitments (including the right to
receive the related Takeout Price), purchase agreements or other hedging arrangements, agreements,
contracts or take-out commitments relating to or constituting any or all of the foregoing, now existing and
hereafter arising, covering any part of the Purchased Assets or Underlying Assets, and all rights to receive
documentation relating thereto, and all rights to deliver Underlying Assets and Pledged Securities to
permanent investors and other purchasers pursuant thereto and all Proceeds resulting from the disposition
of such Purchased Assets;
(f) all now existing and hereafter established accounts (solely with respect to the Purchased
Assets) maintained with broker-dealers by Guarantor for the purpose of carrying out transactions under
Purchase Commitments relating to any part of the Purchased Assets;
(g) all now existing and hereafter arising rights of Guarantor to service, administer and/or
collect on the Purchased Assets or Underlying Assets hereunder and any and all rights to the payment of
monies on account thereof;
Exhibit A-27
LEGAL02/40464938v16
(h) all Servicing Rights related to the Purchased Assets or Underlying Assets, all related
Servicing Records, and all rights of Seller Parties to receive from any third party or to take delivery of any
Servicing Records or other documents which constitute a part of the Mortgage Loan Files, including,
without limitation, the Other Mortgage Loan Documents;
(i) all now existing and hereafter arising accounts, contract rights and general intangibles
constituting or relating to any of the Purchased Assets or Underlying Assets;
(j) all mortgage and other insurance and all commitments issued by Insurers, the FHA, the
VA or the RD, as applicable, to insure or guaranty any Underlying Asset, including, without limitation,
all FHA Mortgage Insurance Contracts, VA Loan Guaranty Agreements and RD Loan Guaranty
Agreements relating to such Underlying Assets and the right to receive all insurance proceeds and
condemnation awards that may be payable in respect of the premises encumbered by any Mortgage
related to an Underlying Asset; and all other documents or instruments delivered to Buyer in respect of
the Underlying Assets;
(k) all documents, files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, and other information and data of Guarantor relating solely to the Purchased
Assets or Underlying Assets (but specifically excluding the servicing systems, computer programs, discs,
tapes, hardware and other information and assets of Guarantor not exclusively relating to the Purchased
Assets or Underlying Assets);
(l) all rights, but not any obligations or liabilities, of Guarantor with respect to the Approved
Investors relating to the Underlying Assets;
(m) all products and Proceeds of the Purchased Assets and Underlying Assets;
(n) all of Guarantor’s interests in the Participation Interests and the Underlying Assets;
(o) the Participation Agreement; and
(p) any funds of Guarantor at any time deposited or held in the Over/Under Account.
Responsible Officer: With respect to any Person, the chief executive officer, the chief financial officer
(with respect to financial matters) or the general counsel (with respect to legal matters) of such Person.
S&P: S&P Global Ratings, a division of S&P Global Inc., and any successor thereto.
Safe Harbor Qualified Mortgage: A Qualified Mortgage, excluding FHA and VA loans, with an annual
percentage rate that does not exceed the average prime offer rate for a comparable mortgage loan as of the
date the interest rate is set by 1.5 or more percentage points for a first-lien Mortgage Loan or by 3.5 or
more percentage points for a subordinate-lien Mortgage Loan. With respect to FHA Loans, a Safe Harbor
Qualified Mortgage shall mean a Qualified Mortgage with an annual percentage rate that does not exceed
the average prime offer rate for a comparable mortgage loan as of the date the interest rate is set by more
than 1.15 percentage points plus the FHA annual premium amount for a first-lien Mortgage Loan. With
respect to VA loans, a Safe Harbor Qualified Mortgage shall mean all VA loans except for streamline
interest rate reduction refinance loans (IRRRL) that do not satisfy the requirements under 38 C.F.R.
36.4300(c)(1).
Sanctions: As defined in Section 8.1(cc) hereof.
Exhibit A-28
LEGAL02/40464938v16
Schwab Mortgage Loan: A conforming or non-conforming first lien mortgage loan which meets the
criteria set forth in the Transactions Terms Letter that is underwritten in compliance with Guarantor’s
underwriting guidelines for the “schwab wealth management” loan program, which guidelines are
approved by Buyer in its sole discretion.
Securities Intermediary: Deutsche Bank National Trust Company in its capacity as securities
intermediary under the Joint Securities Account Control Agreement, or any successor thereto.
Seller’s Release: A Seller’s release in substantially the form set forth in the Custodial Agreement.
Selling System: The Freddie Mac automated system by which sellers and servicers of mortgage loans to
Freddie Mac transfer mortgage summary and record data or mortgage accounting and servicing
information from their computer system or service bureau to Freddie Mac, as more fully described in the
Freddie Mac Guide.
Servicer: Guarantor, or such other entity responsible for servicing or subservicing, as the case may be,
the Underlying Assets and that has been approved by Buyer in writing, or, in each case, any successor or
permitted assigns thereof.
Servicer Notice: The notice acknowledged by the Servicer which is substantially in the form of Exhibit K
hereto.
Servicer Termination Event: Either of (i) a failure by the Servicer to service the Underlying Assets in
accordance with Accepted Servicing Practices on a regular and systemic basis, in such manner as to
materially and adversely affect the Underlying Assets or the rights of Buyer thereunder, or (ii) the
delegation of any Seller Party of its servicing obligations to an independent subservicer without obtaining
prior approval of Buyer and/or the failure of the independent subservicer to execute and return to Buyer a
Servicing Agreement.
Servicing Agreement: If the Underlying Assets are serviced by any third party servicer, the agreement
with that third party in form and substance acceptable to Buyer.
Servicing Records: All servicing agreements, files, documents, proofs of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and any other records relating
to or evidencing the servicing of a Mortgage Loan (but specifically excluding the servicing systems,
computer programs, hardware, and other assets of Seller Parties not exclusively relating to the Purchased
Assets or Underlying Assets).
Servicing Rights: The contractual, possessory or other rights of Seller Parties, Servicer or any other
Person, whether arising under a Servicing Agreement, the Custodial Agreement or otherwise, to
administer or service a Mortgage Loan or to possess related Servicing Records.
Settlement Date: With respect to a Mortgage-Backed Security, the date on which the applicable Agency
delivers such Mortgage-Backed Security to the Depository and it is registered as a book-entry security in
the name of Buyer or Buyer’s designee, or the Mortgage-Backed Security is deposited in the securities
account in accordance with the Joint Pooling Documents.
SOFR: A rate per annum equal to the secured overnight financing rate for such Business Day published
by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight
Exhibit A-29
LEGAL02/40464938v16
financing rate) on the website of the Federal Reserve Bank of New York, currently at http://
www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such
by the administrator of the secured overnight financing rate from time to time).
SOFR Early Opt-in: The election by Buyer to replace One-Month LIBOR pursuant to (1) an Early Opt-
in Election and (2) Section 4.14(a) and paragraph (1) of the definition of “Benchmark Replacement”.
Standard Status: As of any date of determination, a Purchased Asset (or related Underlying Asset) that
has been subject to a Transaction for less than the applicable Maximum Dwell Time and that is not a
Noncompliant Asset or a Defective Asset.
Stock Certificate: With respect to a Cooperative Loan, the certificates evidencing ownership of the
Cooperative Shares issued by the Cooperative Corporation.
Stock Power: With respect to a Cooperative Loan, an assignment of the Stock Certificate or an
assignment of the Cooperative Shares issued by the Cooperative Corporation.
Strict Compliance: The compliance of Seller Parties and Mortgage Loans that are intended to be Agency
Eligible Mortgage Loans with the requirements of the applicable Agency Guide, as applicable and as
amended by any agreements between Seller Parties and the applicable Agency, sufficient to enable Seller
Parties to issue and Ginnie Mae to guarantee or Fannie Mae or Freddie Mac to issue and guarantee a
Mortgage-Backed Security.
Subordinated Debt: Debt of Seller Parties that either (i) has been subordinated to Buyer as provided in
this Agreement or (ii) that has been otherwise approved by Buyer.
Subservicer Field: With respect to an eNote, the field entitled “Subservicer” in the MERS eRegistry.
Subsidiary: 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.
Successor Servicer: Any successor subservicer of the Underlying Assets appointed by Buyer as
described in Section 6.2(h) of this Agreement.
Takeout Price: The purchase price to be paid for a Purchased Asset (or Underlying Asset, as applicable)
or related Mortgage-Backed Security by the related Approved Investor pursuant to the related Purchase
Commitment.
Tangible Net Worth: As of any date of determination, (i) the Net Worth of Guarantor and its
consolidated Subsidiaries, on a combined basis, determined in accordance with GAAP, and minus (ii) all
intangibles determined in accordance with GAAP (including, without limitation, goodwill, capitalized
financing costs and capitalized administration costs but excluding originated and purchased mortgage
servicing rights) and any and all advances to, investments in and receivables held from Affiliates.
Taxes: As defined in Section 12.3(a) hereof.
Exhibit A-30
LEGAL02/40464938v16
Temporary Aggregate Transaction Limit: As defined in Section 2.10 hereof.
Temporary Increase: As defined in Section 2.10 hereof.
Term SOFR: For the applicable corresponding tenor (or if any Available Tenor of a Benchmark does not
correspond to an Available Tenor for the applicable Benchmark Replacement, the closest corresponding
Available Tenor and if such Available Tenor corresponds equally to two Available Tenors of the
applicable Benchmark Replacement, the corresponding tenor of the shorter duration shall be applied), the
forward-looking term rate based on SOFR that has been selected or recommended by the Relevant
Governmental Body.
Texas Cash-Out Refinance Mortgage Loan: A Mortgage Loan originated in the state of Texas pursuant
to Article XVI, Section 50(a)(6) of the Texas Constitution.
TILA-RESPA Integrated Disclosure Rule: The Truth-in-Lending Act and Real Estate Settlement
Procedures Act Integrated Disclosure Rule, adopted by the Consumer Financial Protection Bureau, which
is effective for residential mortgage loan applications received on or after October 3, 2015.
Transaction: As set forth in the Recitals of the Agreement.
Transactions Terms Letter: The document executed by Buyer and Seller Parties as of the date hereof
and as may be amended, referencing this Agreement and setting forth certain specific terms, and any
additional terms, with respect to this Agreement.
Transfer of Location: With respect to an eNote, a MERS eRegistry transfer transaction used to request a
change to the current Location of such eNote.
Transfer of Servicing: With respect to an eNote, a MERS eRegistry transfer transaction used to request a
change to the current Master Servicer Field or Subservicer Field, as applicable, of such eNote.
Transferable Record: An Electronic Record under E-SIGN and UETA that (i) would be a note under the
Uniform Commercial Code if the Electronic Record were in writing, (ii) the issuer of the Electronic
Record has expressly agreed is a “transferable record”, and (iii) for purposes of E-SIGN, relates to a loan
secured by real property.
Type: A specific type of mortgage loan, as set forth in the Transactions Terms Letter.
Type Margin: With respect to each Type of Underlying Asset, the corresponding annual rate of interest
for such Type as set forth in the Transactions Terms Letter that shall be added to the Applicable Pricing
Rate to determine the annual rate of interest for the related Purchase Price.
Type Purchase Price Percentage: With respect to each Type of Underlying Asset, the corresponding
purchase price percentage for such Type, as set forth in the Transactions Terms Letter.
Type Sublimit: Any of the applicable Type Sublimits, as set forth in the Transactions Terms Letter.
UETA: The 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.
Exhibit A-31
LEGAL02/40464938v16
Unauthorized Servicing Modification: With respect to an eNote, an unauthorized Transfer of Location,
an unauthorized Transfer of Servicing or any unauthorized change in any other information, status or
data, including, without limitation, a change of the Master Servicer Field or Subservicer Field with
respect to such eNote on the MERS eRegistry, initiated by any Seller Party, any Servicer or a vendor.
Uncommitted Amount: The amount of the Aggregate Transaction Limit that is uncommitted, as set forth
in the Transactions Terms Letter, or such other amount as may be determined by the Buyer in its sole
discretion.
Underlying Asset: Any Mortgage Loan the legal title of which is owned by Guarantor and allocated to
the related Participation Interest purchased by Seller.
Underwriter Approval: Written evidence, in form and substance acceptable to Buyer, that an
Underlying Asset has been underwritten to the satisfaction of the Approved Investor issuing the
applicable Purchase Commitment.
Uniform Commercial Code: The Uniform Commercial Code as in effect on the date hereof in the State
of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.
Unused Facility Fee: The fee set forth in the Transactions Terms Letter payable by Seller Parties
quarterly in arrears on each Payment Date, based upon the unused portion of the Aggregate Transaction
Limit; provided, however, that no fee shall be due on a Payment Date if the Average Quarterly Utilization
is greater than the specified percentage of the Aggregate Transaction Limit that is set forth in the
Transactions Terms Letter.
USDA: The United States Department of Agriculture and any successor thereto.
VA: The Department of Veterans Affairs and any successor thereto.
VA Loan Guaranty Agreement: The obligation of the United States to pay a specific percentage of a
Mortgage Loan (subject to a maximum amount) upon default of the Mortgagor pursuant to the
Servicemen’s Readjustment Act, together with all amendments, modifications, supplements and
restatements thereto.
VA Regulations: Regulations promulgated by the U.S. Department of Veterans Affairs pursuant to the
Servicemen’s Readjustment Act, as amended, codified in 38 Code of Federal Regulations, and other VA
issuances relating to Government Mortgage Loans, including related handbooks, circulars and notices.
VA Streamline Refinance Mortgage Loan: A Government Mortgage Loan originated and underwritten
in accordance with the “VA Streamline Refinance” program and VA Regulations.
Warehouse Lender’s Release: A warehouse lender’s release in substantially the form set forth in the
Custodial Agreement.
Wet Mortgage Loan: A Mortgage Loan wherein Buyer purchases a Participation Interest from Seller for
which the complete Mortgage Loan File has not been delivered to Custodian, subject to Seller Parties’
obligation to deliver all of the related Mortgage Loan Documents to Buyer or its Custodian in a form and
condition acceptable to Buyer within the applicable Maximum Dwell Time.
Wet Mortgage Loans Sublimit: The maximum aggregate principal amount of Underlying Assets
Exhibit A-32
LEGAL02/40464938v16
that may be Wet Mortgage Loans at any time, as set forth in the Transactions Terms Letter.
Exhibit A-33
LEGAL02/40464938v16
EXHIBIT B
FORM OF IRREVOCABLE CLOSING INSTRUCTIONS
[DATE]
(“Closing Agent”)
Dear
Re: Irrevocable Closing Instructions
Closing Protection Letter Issued By, if applicable: ______________________________
Ladies and Gentlemen:
This letter is being sent in accordance with that Amended and Restated Master Repurchase Agreement
dated as of June 29, 2021 (the “Agreement”) among Bank of America, N.A. (“Buyer”), RCKT Mortgage
SPE-A, LLC (“Seller”) and acknowledged, guaranteed and agreed to by Quicken Loans, LLC
(“Guarantor” and together with the Seller, each a “Seller Party” and together, the “Seller Parties” ), the
terms of which do not affect Closing Agent except as set forth herein.
Pursuant to the Agreement, you have been identified as either:
• the title insurer to close and provide title insurance on certain mortgage loans made by Guarantor;
or
• the closing agent to close and fund certain mortgage loans made by Guarantor and covered by the
above referenced closing protection letter (the “Mortgage Loans”).
From time to time, Buyer will wire to you, for the account of Guarantor, funds requested by Guarantor
under the terms of the Agreement to be used by you for the purpose of funding such Mortgage Loan(s)
and for no other purpose. Notwithstanding anything to the contrary contained herein, you are not to
distribute any of such funds to Guarantor. You must immediately return the funds to Buyer at the
following account if one of the following conditions occurs:
• You do not close any Mortgage Loan within forty-eight (48) hours of the time you receive the
applicable funds; or
• You receive funds for a Mortgage Loan for which you have not been instructed by Guarantor to
(a) obtain title insurance from the title insurance company specified in the above referenced
closing protection letter or (b) underwrite the title insurance.
Bank: Bank of America, N.A.
ABA No.: [***]
Account No.: [***]
Exhibit B-1
LEGAL02/40464938v16
Credit: Warehouse Lending – Payoff Account
Reference: RCKT Mortgage SPE-A, LLC
If the Mortgage Loan Documents (as described below) have not been delivered to Guarantor prior to the
funding of the Transaction, within forty-eight (48) hours of closing any Mortgage Loan, unless otherwise
instructed by Buyer, you must deliver to Guarantor, the following Mortgage Loan Documents:
(a) the original mortgage note evidencing the Mortgage Loan, endorsed by
Guarantor in blank, with a complete chain from the originator to Guarantor;
(b) if in your possession, an original assignment in blank executed by Guarantor for
the mortgage or deed of trust securing the mortgage note, in recordable form but
unrecorded, with a complete chain of intervening assignments from the originator
to Guarantor;
(c) a certified copy of the executed mortgage or deed of trust securing the mortgage
note; and
(d) an original or copy of the title insurance policy insuring the first lien or second
lien position of the mortgage or deed of trust, as applicable, in at least the original
principal amount of the related mortgage note and containing only those
exceptions permitted by the purchase commitment, as set forth in the final
closing instructions referred to below, or an unconditional commitment to issue
such a title insurance policy, or a preliminary report and instructions received
from Guarantor relating to the issuance of such a title insurance policy.
With respect to each Mortgage Loan for which you act as Closing Agent, Guarantor will deliver to you
final closing instructions specific to such Mortgage Loan. In the event that the terms of the final closing
instructions contradict the terms of these irrevocable closing instructions, the terms of these irrevocable
closing instructions shall govern. Permission to change the scheduled closing date for any Mortgage
Loan beyond the time permitted herein or permission to otherwise deviate from these irrevocable closing
instructions must be furnished to you in a writing signed by Buyer and Guarantor.
By your participation in the closing and funding of a Mortgage Loan as Closing Agent, you agree to act as
Buyer’s bailee with respect to such Mortgage Loan and the Mortgage Loan Documents referenced above
and you thereby acknowledge your responsibility to Buyer as holder of an interest in such Mortgage Loan
and to care for and protect Buyer’s interest in such Mortgage Loan. Facsimile signatures on these
instructions shall be deemed valid and binding to the same extent as the original.
Sincerely,
Bank of America, N.A. Quicken Loans, LLC
By: By:
Name: Name:
Title: Title:
Exhibit B-2
LEGAL02/40464938v16
RCKT Mortgage SPE-A, LLC
By:
Name:
Title:
Exhibit B-3
LEGAL02/40464938v16
EXHIBIT C
FORM OF [SECRETARY’S CERTIFICATE] [CERTIFICATE OF EXECUTIVE VICE PRESIDENT
AND GENERAL COUNSEL]
I, _______________________, am the duly elected [Secretary][Executive Vice President and General
Counsel] of [RCKT Mortgage SPE-A, LLC][Quicken Loans, LLC] (“Company”), and I hereby certify
that:
1. Each of the persons listed below has been duly elected to and now holds the
office of the Company set forth opposite his or her name and is currently serving,
in such capacity, and the signature of each such person set forth opposite his or
her title is his or her true and genuine signature:
Name Office Signature
2. Attached hereto as Exhibit A is a true and complete copy of the Articles of
Incorporation of the Company, as in full force and effect. No amendment or
other document relating to or affecting the Articles of Incorporation has been
filed in the office of the Secretary of State of incorporation or formation and no
action has been taken by the Company or its shareholders, directors or officers in
contemplation of the filing of any such amendment or other documents and no
proceedings therefore have occurred;
3. Attached hereto as Exhibit B is a true and complete copy of the By-laws of the
Company, as in full force and effect, and such By-laws (or its equivalent) have
not been amended, except for amendments included in the copy attached hereto;
and
4. Attached hereto as Exhibit C is a true and complete copy of the resolutions duly
and validly adopted either at a special or regular meeting or by unanimous
consent that apply to the Amended and Restated Master Repurchase Agreement
between among the Company, [SPE Seller/Quicken Loans, LLC] and Bank of
America, N.A., and such resolutions have not been amended, modified or
rescinded in any respect and remain in full force and effect without modification
or amendment as of the date hereof.
Dated: By:
[Secretary] [Executive Vice President and
General Counsel]
Exhibit C-1
LEGAL02/40464938v16
EXHIBIT D
RESERVED
Exhibit D-1
LEGAL02/40464938v16
Exhibit D-2
LEGAL02/40464938v16
EXHIBIT E
FORM OF OFFICER’S CERTIFICATE
Period Ending:
Client Name: Quicken Loans, LLC
I,[ ], hereby certify that I am a duly elected [CFO.SVP, Treasurer, Controller] of
Quicken Loans, LLC (“Client”) and do further certify that the following are accurate, true and
correct and may be relied upon by Bank of America, N.A. (“Buyer”). This Certificate is
delivered to Buyer in connection with Section 9.1(c) of the Amended and Restated Master
Repurchase Agreement dated as of June 29, 2021, among and Buyer, RCKT Mortgage SPE-A,
LLC (the “Seller”) and acknowledged, guaranteed and agreed to by Client as guarantor (the
“Guarantor” and together with the Seller, each a “Seller Party” and together the “Seller Parties”)
(as amended from time to time, the “Agreement”).
1. Representations, Warranties and Covenants: The representations, warranties and
covenants made by Seller Parties under the Principal Agreements are accurate and true on and as
of the date hereof with the same effect as though such representations, warranties and covenants
had been made on and as of the date hereof, including, without limitation, the following:
a) Financial Condition: All financial statements of Seller Parties delivered to
Buyer fairly and accurately present the financial condition of the parties for whom such
statements are submitted in all material respects, as of the dates and for the periods referred to
therein, subject to year-end audit adjustments, footnotes and schedules. The financial statements
of Seller Parties have been prepared in accordance with GAAP consistently applied throughout
the periods involved, and there are no contingent liabilities not disclosed thereby that would
materially and adversely affect the financial condition of Seller Parties. Since the close of the
period covered by the latest financial statement delivered to Buyer with respect to Seller Parties,
there has been no material adverse change in the assets, liabilities or financial condition of Seller
Parties nor is any Seller Party aware of any facts that, with or without notice or lapse of time or
both, would or could result in any such material adverse change. No event has occurred,
including, without limitation, any litigation or administrative proceedings, and no condition
exists, that (i) is reasonably likely to render Seller Parties unable to perform its obligations under
the Principal Agreements and all other documents contemplated thereby; (ii) would constitute an
Event of Default; or (iii) might have a Material Adverse Effect with respect to Seller Parties.
b) Solvency. Seller Parties are and will be solvent, are and will be able to pay its
debts as they mature and does not and will not have unreasonably small capital to engage in the
business in which it is engaged and proposes to engage. No Seller Party intends to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they mature. No Seller
Party is 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 any Seller Party or any of its assets. No Seller Party has transferred any Assets with
any intent to hinder, delay or defraud any of its creditors.
Exhibit E-1
LEGAL02/40464938v16
2. Compliance with Principal Agreements: Each Seller Party has materially complied
with the terms and provisions set forth in the Principal Agreements on its part to be performed
and observed, and no Event of Default or Potential Default has occurred and is continuing.
3. Lines of Business: No Seller Party has engaged to any substantial extent in any line or
lines of business activity other than the businesses generally carried on by (i) Seller Parties as of
the Effective Date, or (ii) with respect to Guarantor, other similar consumer or mortgage lending
business without giving Buyer [***] prior written notice.
4. No Change of Control: No Seller Party has allowed a Change of Control to occur with
respect to such Seller Party (unless (i) such Change of Control occurred with the prior consent of
Buyer, (ii) Buyer waived any Event of Default where prior consent was not obtained, or (iii) such
Seller Party repurchased all Underlying Assets within one (1) Business Day of such Change of
Control).
5. Loans to Officers, Employees and Shareholders: Except as otherwise permitted by
Section 10.5 of the Agreement, Seller has not made any personal loans or advances to any
officers, employees, shareholders, members, partners or owners of Seller and Guarantor has not
made any personal loans or advances to any officers, employees, shareholders, members, partners
or owners of Guarantor in an aggregate amount exceeding [***] of Guarantor’s Tangible Net
Worth.
6. Litigation: There are no actions, claims, suits or proceedings pending against or
affecting any Seller Party or any of its Subsidiaries or any of the property thereof in any court or
before or by any arbitrator, government commission, board, bureau or other administrative
agency that, is reasonably likely to be adversely determined, and if so determined would
reasonably be expected to result in a Material Adverse Effect.
7. Attachments: The following attachments and information contained therein are accurate
and true in all material respects and do not fail to include any information which is necessary to
not make such attachments and the information contained therein materially misleading.
8. Capitalized Terms: All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Agreement.
Exhibit E-2
LEGAL02/40464938v16
Covenant Calculations As of: [ DATE ]
TNW
GAAP Equity
Less: GAAP Intangibles (including, without limitation, goodwill,
capitalized financing costs and capitalized administration costs but excluding
originated and purchased mortgage servicing rights)
Less: Advances to, investments in and receivables held from Affiliates
Tangible Net Worth (TNW) (a) Calc
Liquidity
Unrestricted and Unencumbered Cash
Plus: Cash Equivalents (attached hereto is a detailed investment
statement with respect to the marketable securities)
Plus: Balance of the Over/Under Account, exclusive of funds held due to
a Margin Deficit or Margin Call
Actual Liquidity Calc
Leverage
Indebtedness (b) Calc
Leverage Ratio (b/a) Calc
Covenant Compliance As of: [ DATE ]
Tangible Net Worth
(i) the Net Worth of Guarantor and its consolidated Subsidiaries, on a
combined basis, determined in accordance with GAAP, minus (ii) all
intangibles determined in accordance with GAAP (including, without
limitation, goodwill, capitalized financing costs and capitalized administration
costs but excluding originated and purchased mortgage servicing rights) and
any and all advances to, investments in and receivables held from Affiliates.
Calc
Minimum
$[***]
In Compliance?
Minimum Liquidity
Guarantor has maintained Liquidity a minimum amount equal to the greater
$[***]
Calc
Minimum
$[***]
In Compliance?
Leverage
Guarantor’s ratio of Indebtedness to Tangible Net Worth has not exceeded
[***].
Calc
Maximum
[***]
In Compliance?
Compliance with other Agreements
Has an event of default under any Debt of Guarantor in excess of $[***]
occurred?
Payment of Dividends
Exhibit E-3
LEGAL02/40464938v16
If an Event of Default related to Guarantor’s failure to comply with Section
9.17 of the Agreement has occurred and is continuing or will occur as a result
of such payments, Guarantor shall not pay any dividends or distributions with
respect to any capital stock or other equity interests in Guarantor, 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
Guarantor; provided however, that the foregoing restriction shall not apply
with respect to the payment of dividends or the making of any such other
distributions, in each case, solely in connection with the payment of taxes.
Was the Company permitted to make distributions, i.e. No Default or
Potential Event of Default?
In Compliance?
Servicing Portfolio as of end of most recent quarter:
Servicing portfolio UPB
Sub-servicer (If Applicable) [N/A]
Third party conducting valuation [MountainView]
Most recent valuation date
MSR valuation (at midpoint, if applicable)
Exhibit E-4
LEGAL02/40464938v16
Production Month to Date: Year to Date:
$ # units $ # units
Conv Conf
Govt.
Jumbo
Other
% Retail ($)
% Extended Retail ($)
Warehouse Facilities over $[***] in facility size as of period ending date:
Lender Name Line Amount Amount
Outstanding
Line Maturity
Total 0 0
Other Indebtedness over $[***] in
facility size:
Total Facility
Size
Outstanding
Indebtedness
Expiration
Date
Total
IN WITNESS WHEREOF, the undersigned has here unto signed his/her name on
______________, 202_.
By: ________________________
Name:
Title:
Exhibit E-5
LEGAL02/40464938v16
EXHIBIT F
ASSIGNMENT OF CLOSING PROTECTION LETTER
RCKT Mortgage SPE-A, LLC and Quicken Loans, LLC (collectively, the “Assignor”) declares that for
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it does
hereby convey, transfer, assign, deliver and give to Assignee, and hereby expressly subrogates Bank of
America, N.A. (“Assignee”) unto, all of Assignor’s claims, demands, rights and causes of action, past,
present or future, that Assignor has for loss or damage covered by the closing protection letter issued by
(Title Company) attached hereto (“Closing Protection Letter”). Such rights being assigned by Assignor
hereunder include, without limitation, the right to demand, sue, collect, receive, protect, preserve and
enforce performance under the Closing Protection Letter. Assignee shall succeed to all rights of recovery
of Assignor under the Closing Protection Letter and Assignor shall execute such instruments and
documents necessary and proper to further secure such rights to Assignee and shall not act in any manner
hereafter to prejudice or impair the rights of Assignee. Assignor hereby grants Assignee an irrevocable
mandate and power of attorney coupled with an interest with full power of substitution to transact this act
of assignment and subrogation.
IN WITNESS WHEREOF, the Assignor has caused this assignment to be duly executed as of [DATE].
Quicken Loans, LLC
By:
Name:
Title:
RCKT Mortgage SPE-A, LLC
By:
Name:
Title:
Exhibit F-1
LEGAL02/40464938v16
EXHIBIT G
RESERVED
Exhibit G-1
LEGAL02/40464938v16
EXHIBIT H
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Bank of America, N.A. (“Buyer”), RCKT Mortgage SPE-A, LLC (“Seller”)
and Quicken Loans, LLC (“Guarantor” and together with the Seller, each a “Seller Party”
and together the “Seller Parties”) have entered into the Amended and Restated Master
Repurchase Agreement, dated as of June 29, 2021 (the “Agreement”), pursuant to which
Buyer has agreed to purchase from Seller participation interests in certain mortgage loans
from time to time, subject to the terms and conditions set forth therein;
WHEREAS, [Seller][Guarantor] has agreed to give to Buyer a power of attorney on the
terms and conditions contained herein in order for Buyer to take any action that Buyer
may deem necessary or advisable to accomplish the purposes of the Agreement;
NOW, THEREFORE, [Seller][Guarantor] hereby irrevocably constitutes and appoints Buyer its true and
lawful Attorney-in-Fact, with full power and authority hereby conferred in its name, place and stead and
for its use and benefit, to do and perform the following in connection with assets purchased by Buyer
from [Seller][pledged to Buyer by Guarantor] under the Agreement (the “Purchased Assets”) or as
otherwise provided below:
(1) to receive, endorse and collect all checks made payable to the order of
[Seller][Guarantor] representing any payment on account of the Purchased Assets;
(2) to assign or endorse any mortgage, deed of trust, promissory note or other instrument
relating to the Purchased Assets;
(3) to correct any assignment, mortgage, deed of trust or promissory note or other instrument
relating to the Purchased Assets, including, without limitation, unendorsing and re–
endorsing a promissory note to another investor;
(4) to complete and execute lost note affidavits or other lost document affidavits relating to
the Purchased Assets;
(5) to issue title requests and instructions relating to the Purchased Assets;
(6) to take any action in connection with a sale, distribution, or contribution of assets made
by Seller to a third party pursuant to the Agreement;
(7) to give notice to any individual or entity of its interest in the Purchased Assets under the
Agreement; and
(8) upon termination of [Seller][Guarantor] as Servicer by Buyer as permitted under the
Agreement, to service and administer the Purchased Assets, including, without limitation,
the receipt and collection of all sums payable in respect of the Purchased Assets.
[Seller][Guarantor] hereby ratifies and confirms all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Exhibit H-1
LEGAL02/40464938v16
Third parties without actual notice may rely upon the power granted under this Power of Attorney upon
the exercise of such power by the Attorney-in-Fact.
[RCKT Mortgage SPE-A, LLC][Quicken Loans, LLC]
By:
Name:
Title:
WITNESS my hand this ____ day of _____________, 20___.
STATE OF
County of
This instrument was acknowledged, subscribed and sworn to before me this _____ day of
_________, by ______________________________________
Notary Public
My Commission Expires:
Notary Seal:
Exhibit H-2
LEGAL02/40464938v16
EXHIBIT I
ACKNOWLEDGEMENT OF PASSWORD CONFIDENTIALITY AGREEMENT
RCKT Mortgage SPE-A, LLC (“Seller”) has entered into an Amended and Restated Master Repurchase
Agreement (the “Agreement”) with Bank of America, N.A. (“Buyer”), and acknowledged, guaranteed
and agreed to by Quicken Loans, LLC (the “Guarantor” and together with the Seller, each a “Seller Party”
and together the “Seller Parties”). In connection therewith, Seller is being provided access to the website
at www.bankofamerica.com/warehouselending (the “Website”). As consideration for being provided
access to and use of the Website, Seller agrees that:
1. Seller may only access the Website by using a user name and password issued by Buyer.
2. Buyer reserves the right to revoke or deactivate any user name and/or password at any time.
3. Seller shall designate in writing an authorized representative (the “Authorized Representative”) to
communicate with Buyer regarding the authorized users of the Website. The Authorized
Representative shall be responsible for notifying Buyer of any changes, additions or deletions to
the authorized users. Under no circumstances may user names and passwords be transferred
between authorized users. Seller shall be solely responsible for all actions of its Authorized
Representative and shall immediately notify Buyer of any change in its Authorized
Representative. Buyer shall be entitled to rely on the authority and directions of the Authorized
Representative without further inquiry. Authorized Representative shall communicate with
Buyer in writing or via telephone by dialing (877) 669-2955.
4. Seller shall be solely responsible for safeguarding access to user names and passwords and for
implementing controls to prevent unauthorized usage of the Website by representatives of the
Seller.
5. Seller is responsible for all requests, approvals and other transactions on the Website accessed
through user names and/or passwords issued to Seller.
6. Buyer shall be entitled to rely on all requests, approvals and other communications made on the
Website through a user name and/or password issued to Seller until such time as:
(a) Seller provides Buyer with written instructions to the contrary; and
(b) Buyer has commercially reasonable time to notify the appropriate employees and modify
its computerized systems to deactivate the affected user name and/or password.
7. Any dispute regarding the use of user names and/or passwords shall be resolved in accordance
with the terms and conditions of the Agreement.
Exhibit I-1
LEGAL02/40464938v16
By signing below you acknowledge your agreement to the terms and conditions set forth herein.
Facsimile signatures shall be deemed valid and binding to the same extent as the original.
SELLER AUTHORIZATIONS:
Any of the persons whose signatures and titles appear below, or attached hereto, are authorized, acting
singly, to act for the Seller under this Acknowledgment of Password Confidentiality Agreement as an
Authorized Representative.
By: By: By:
Name: Name: Name:
Title: Title: Title:
RCKT Mortgage SPE-A, LLC
Print Name:
Signature: Date:
Quicken Loans, LLC
Print Name:
Signature: Date:
Exhibit I-2
LEGAL02/40464938v16
EXHIBIT J
WIRING INSTRUCTIONS
Seller Parties’ Wire Instructions:
Account #: [***]
ABA #: [***]
Bank name: [***]
Credit to the Account of: Quicken Loans Deposit Account
Buyer’s Wire Instructions:
Bank: Bank of America, N.A.
ABA #: [***]
Account #: [***]
Reference: Quicken Loans, LLC
These wiring instructions may not be changed except by an authorized representative of Buyer or Seller
Parties, as applicable. Buyer shall be entitled to rely on these wiring instructions without further inquiry
or verification.
Exhibit J-1
LEGAL02/40464938v16
EXHIBIT K
FORM OF SERVICER NOTICE AND ACKNOWLEDGEMENT
[Date]
[_______________], as Servicer
[ADDRESS]
Attention: __________________
Re: Amended and Restated Master Repurchase Agreement, dated as of June 29, 2021 (the
“Repurchase Agreement”), by and among Bank of America, N.A. (“Buyer”), RCKT Mortgage
SPE-A, LLC (“Seller”) and acknowledged, guaranteed and agreed to by Quicken Loans, LLC
(the “Guarantor” and together with the Seller, each a “Seller Party” and together the “Seller
Parties”).
Ladies and Gentlemen:
[_______________________] (“Servicer”) is servicing certain mortgage loans for Seller Parties
pursuant to that certain [Servicing Agreement], dated as of [ ] (the “Servicing Agreement”) between
Servicer and Seller Parties. Pursuant to the Repurchase Agreement between Buyer and Seller Parties,
Servicer is hereby notified that Seller Parties may from time to time sell to Buyer certain mortgage loans
(or interest in certain mortgage loans) which are currently being serviced by Servicer pursuant to the
terms of the Servicing Agreement.
Section 1. Direction Notice. (a) Upon receipt of notice from Buyer (a “Direction Notice”) in
which Buyer shall identify the mortgage loans (or interests therein) which are sold to Buyer under the
Repurchase Agreement (the “Mortgage Loans”), Servicer shall segregate all amounts collected on
account of such Mortgage Loans, hold them in trust for the sole and exclusive benefit of Buyer, and remit
such collections in accordance with Buyer’s written instructions. Further, Servicer shall follow the
instructions of Buyer with respect to the Mortgage Loans, and shall deliver to Buyer any information with
respect to the Mortgage Loans as reasonably requested by Buyer.
(b) Notwithstanding any contrary information which may be delivered to the Servicer by
Seller Parties, Servicer may conclusively rely on any information delivered by Buyer, and Buyer shall
indemnify and hold the Servicer harmless for any and all claims asserted against it for any actions taken
in good faith by the Servicer in connection with the delivery of such information.
Section 2. No Modification of the Servicing Agreement. Without the prior written consent of
Buyer exercised in Buyer’s sole discretion, Servicer shall not agree to (a) any material modification,
amendment or waiver of the Servicing Agreement; (b) any termination of the Servicing Agreement or (c)
the assignment, transfer, or material delegation of any of its rights or obligations under the Servicing
Agreement.
Section 3. Right of Termination. Buyer shall have the right to terminate the Servicer’s rights
and obligations to service the Mortgage Loans under the Servicing Agreement in accordance with the
terms thereof. Any fees due to the Servicer (a) in connection with any termination shall be paid by Seller
Parties and (b) incurred following receipt of a Direction Notice shall be paid by Buyer to the extent that
such fees relate to the Mortgage Loans that are subject to the Servicing Agreement. Seller Parties and the
Exhibit K-1
LEGAL02/40464938v16
Servicer shall cooperate in transferring the servicing with respect to such Mortgage Loans to a successor
servicer appointed by Buyer in its sole discretion.
Section 4. Notices. All notices, demands, consents, requests and other communications required
or permitted to be given or made hereunder in writing shall be mailed (first class, return receipt requested
and postage prepaid) or delivered in person or by overnight delivery service or by facsimile, addressed to
the respective parties hereto at their respective addresses set forth below or, as to any such party, at such
other address as may be designated by it in a notice to the other:
Any notices to Buyer should be delivered to the following addresses:
Bank of America, N.A.
[***]
Telephone: [***]
Facsimile: [***]
Email: [***]
and
Bank of America, N.A.
[***]
Telephone: [***]
Facsimile: [***]
Email: [***]
Any notices to Servicer should be delivered to the following addresses:
[ ]
Any notices to Seller Parties should be delivered to the following addresses:
[ ]
Section 5. Counterparts. This agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all such counterparts shall together constitute one and the
same instrument.
Section 6. Entire Agreement; Severability. This agreement shall supersede any existing
agreements between the parties containing general terms and conditions for the servicing of the Mortgage
Loans. 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.
Section 7. Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This agreement 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).
(b) All legal actions between or among the parties regarding this agreement, including,
without limitation, legal actions to enforce this agreement or because of a dispute, breach or default of
Exhibit K-2
LEGAL02/40464938v16
this agreement, shall be brought in the federal or state courts located in New York County, New York,
which courts shall have sole and exclusive in personam, subject matter and other jurisdiction in
connection with such legal actions. The parties hereto irrevocably consent and agree that venue in such
courts shall be convenient and appropriate for all purposes 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. The parties hereto further irrevocably consent and agree 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 in Section 4, and 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.
(c) The parties hereto hereby irrevocably waive, 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
agreement or the transactions contemplated hereby or thereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Exhibit K-3
LEGAL02/40464938v16
IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
BANK OF AMERICA, N.A., as Buyer
By: ____________________________
Name:
Title:
RCKT Mortgage SPE-A, LLC, as Seller
By: ____________________________
Name:
Title:
QUICKEN LOANS, LLC, as Guarantor
By: ____________________________
Name:
Title:
[ ], as Servicer
By: ____________________________
Name:
Title:
Exhibit K-4
LEGAL02/40464938v16
EXHIBIT L
REPRESENTATIONS AND WARRANTIES
Representations and Warranties Concerning Underlying Assets. Each Seller Party represents and
warrants to and covenants with Buyer that the following are true and correct with respect to each
Underlying Asset as of the related Purchase Date through and until the date on which such Underlying
Asset is released by Buyer upon payment by Seller Parties to Buyer of the related Repurchase Price
therefor. With respect to those representations and warranties which are made to the best of such Seller
Party’s knowledge, if it is discovered by such Seller Party or Buyer that the substance of such
representation and warranty is inaccurate, notwithstanding such Seller Party’s lack of knowledge with
respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty.
(a) Eligible Underlying Asset. The Mortgage Loan is an Eligible Mortgage Loan. The Mortgage
Loan or the Pledged Security is an Eligible Security, is a legal, valid and binding obligation of the
Mortgagor thereunder, enforceable in accordance with its terms and subject to no offset, defense
or counterclaim, obligating Mortgagor to make the payments specified therein, but subject to
bankruptcy, insolvency, moratorium, reorganization and other law of general application
affecting the rights of creditors and by general equitable principles.
(b) Purchase Commitment. Each Pooled Mortgage Loan is covered by a Purchase Commitment and
(i) the Purchase Commitment permits assignment thereof to Buyer, (ii) does not exceed the
availability under such Purchase Commitment (taking into consideration mortgage loans or
securities, as applicable, which have been purchased by the respective Approved Investor under
the Purchase Commitment), (iii) conforms to the requirements and the specifications set forth in
such Purchase Commitment and the related regulations, rules, requirements and/or handbooks of
the applicable Approved Investor, and (iv) is eligible for sale to and insurance or guaranty by,
respectively, the applicable Approved Investor and any applicable insurer. Each such Purchase
Commitment is enforceable, in full force and effect. Each Purchase Commitment is a legal, valid
and binding obligation of Seller Parties enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and
subject, as to enforceability, to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(c) Asset Data Record. The information contained in the Asset Data Record is true, correct and
complete in all material respects as of the date such information is provided by Seller.
(d) Origination and Servicing. The Mortgage Loan was originated by or in conjunction with a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or similar banking institution which is
supervised and examined by a federal or state authority. The Mortgage Loan has been originated
and serviced in compliance with Accepted Servicing Practices, applicable Approved Investor and
Insurer requirements and all applicable federal, state and local statutes, regulations and rules,
including, without limitation, the Federal Truth-in-Lending Act of 1968, as amended, and
Regulation Z thereunder, the Federal Fair Credit Reporting Act, the Federal Equal Credit
Opportunity Act, the Federal Real Estate Settlement Procedures Act of 1974, as amended, and
Regulation X thereunder, and all applicable usury, licensing, real property, consumer protection
and other laws.
Exhibit L-1
LEGAL02/40464938v16
(e) Compliance with Applicable Laws. Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws applicable to the Asset have been
complied with, the consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and Seller Parties shall maintain or shall cause its agent
to maintain in its possession, available for the inspection of Buyer, and shall deliver to Buyer,
upon reasonable advance notice, reasonable evidence of compliance with such requirements.
(f) Validity of Mortgage Documents. The Mortgage Loan is evidenced by instruments acceptable to
FHA, VA, RD, Fannie Mae, Freddie Mac or the Approved Investor, as applicable, given the type
of Mortgage Loan. The Mortgage Note, Mortgage and any other agreement executed and
delivered by a Mortgagor or guarantor, if applicable, in connection with a Mortgage Loan, are
genuine, and each such document is the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization, or other laws affecting the enforcement of
creditor’s rights generally, and general principles of equity, and there are no rights of rescission,
set-offs, counterclaims or other defenses with respect thereto. All parties to the Mortgage Loan
Documents, Other Mortgage Loan Documents and any other agreement executed and delivered
by a Mortgagor or guarantor, if applicable, had legal capacity to enter into the Mortgage Loan and
to execute and deliver any such instrument or agreement and such instrument or agreement has
been duly and properly executed by such related parties.
(g) No Outstanding Charges. All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously became due
and owing have been paid, or an escrow of funds has been established in an amount sufficient to
pay for every such item which remains unpaid and which has been assessed but is not yet due and
payable. Neither Guarantor nor any originator from which Guarantor acquired the Mortgage
Loan has advanced funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any amount required
under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date
of disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the day which
precedes by one month the due date of the first installment of principal [(if applicable)] and
interest thereunder.
(h) Private Mortgage Insurance. Each Agency Eligible Mortgage Loan is insured by a policy of
private mortgage insurance in the amount required by Fannie Mae or Freddie Mac, as applicable,
and by an Insurer and all provisions of such private mortgage insurance policy have been and are
being complied with, such policy is in full force and effect and all premiums due thereunder have
been paid. There are no defenses, counterclaims or rights of setoff affecting the Agency Eligible
Mortgage Loan or affecting the validity or enforceability of any private mortgage insurance
applicable to such Mortgage Loan.
(i) Original Terms Unmodified. The terms of the Mortgage Note (and the Proprietary Lease, the
Assignment of Proprietary Lease and Stock Power with respect to each Cooperative Loan) and
Mortgage have not been impaired, waived, altered or modified in any respect from the date of
origination, except by a written instrument which has been recorded, if necessary to protect the
interests of Buyer, and which has been delivered to Custodian; provided, that none of the
payment terms, interest rate, maturity date or other material terms have been impaired, waived,
altered or modified in any respect. The substance of any such waiver, alteration or modification
has been approved by the title insurer, to the extent required. No Mortgagor in respect of the
Exhibit L-2
LEGAL02/40464938v16
Mortgage Loan has been released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by such policy, and which
assumption agreement is part of the Mortgage Loan File delivered to Custodian.
(j) No Defenses. The Mortgage Loan (and the Assignment of Proprietary Lease to each Cooperative
Loan) is not subject to any right of rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, nor will the operation of any of the terms of the Mortgage Note
or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto, and no Mortgagor in respect of the Mortgage
Loan was a debtor in any state or federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. No Seller Party has any knowledge nor has it received any notice
that any Mortgagor in respect of the Mortgage Loan is a debtor in any state or federal bankruptcy
or insolvency proceeding.
(k) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of
the Mortgage, in whole or in part, nor has any instrument been executed that would affect any
such release, cancellation, subordination or rescission (except with respect to subordination of a
Closed-End Second Lien Mortgage Loan or second lien HELOC Mortgage Loan to the first
priority lien or security interest). No Seller Party has waived the performance by the Mortgagor
of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan
to be in default, nor has any Seller Party waived any default resulting from any action or inaction
by the Mortgagor.
(l) No Defaults. Other than payments due but not yet thirty (30) days or more delinquent, there is no
default, breach, violation or event of acceleration existing under the Mortgage or the related
Mortgage Note, and no event has occurred that, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach, violation or event of
acceleration, and neither any Seller Party nor its predecessors have waived any default, breach,
violation or event of acceleration; and with respect to each Cooperative Loan, there is no default
in complying with the terms of the Mortgage Note, the Assignment of Proprietary Lease and the
Proprietary Lease and all maintenance charges and assessments (including assessments payable in
installments, which previously became due and owing) have been paid, to the extent required by
the applicable Agency Guide, and such Seller Party has the right under the terms of the Mortgage
Note, Assignment of Proprietary Lease and Recognition Agreement to pay any maintenance
charges or assessments owed by the Mortgagor.
(m) No Waiver. The terms of the Mortgage Loan have not been waived, impaired, changed or
modified, except by written instruments which have been recorded to the extent any such
recordation is required by law, or, necessary to protect the interest of the Buyer. No instrument of
waiver, alteration or modification has been executed, and no Mortgagor has been released, in
whole or in part, from the terms thereof except in connection with an assumption agreement and
which assumption agreement is part of the Mortgage Loan File and the terms of which are
reflected in the Asset Data Record; the substance of any such waiver, alteration or modification
has been approved by the issuer of any related primary mortgage insurance policy and title
insurance policy, to the extent required by the related policies.
(n) Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage contains
customary and enforceable provisions such as to render the rights and remedies of the holder
Exhibit L-3
LEGAL02/40464938v16
thereof adequate for the realization against the Mortgaged Property of the benefits of the security
provided thereby. There is no homestead or other exemption or other right available to the
Mortgagor or any other person, or restriction on any Seller Party or any other person, including
without limitation, any federal, state or local, law, ordinance, decree, regulation, guidance,
attorney general action, or other pronouncement, whether temporary or permanent in nature, that
would interfere with, restrict or delay, either (y) the ability of any Seller Party, Buyer or any
servicer, subservicer or any successor servicer or successor subservicer to sell the related
Mortgaged Property at a trustee's sale or otherwise, or (z) the ability of any Seller Party, Buyer or
any servicer or any successor servicer to foreclose on the related Mortgage, other than any
federal, state or local law, ordinance, decree, regulation, guidance, attorney general action, or
other pronouncement, whether temporary or permanent in nature restricting, limiting or otherwise
establishing a moratorium on foreclosing on mortgaged properties (each, a “Foreclosure
Restrictive Rule”), and subject to applicable federal and state laws and judicial precedent with
respect to bankruptcy and right of redemption. Except with respect to HELOC Mortgage Loans,
the Mortgage Note and Mortgage are on forms acceptable to FHA, VA, RD, Freddie Mac or
Fannie Mae. Nothing about the Mortgage Loan or the related Mortgage Loan Documents causes
the Mortgage Loan to be subject to different treatment under any Foreclosure Restrictive Rule
than comparable mortgage loans in the applicable jurisdiction of the related Mortgaged Property.
If the Mortgage Loan is an eMortgage Loan, the related eNote contains the Agency-Required
eNote Legend.
(o) Location and Type of Mortgaged Property. The Mortgaged Property consists of a single parcel of
real property with a detached single family residence erected thereon, or a two- to four-family
dwelling, or such other dwelling(s) conforming with the applicable Fannie Mae and Freddie Mac
requirements regarding such dwellings or conforming to Guarantor’s underwriting guidelines;
provided that no residence or dwelling is a condominium unit or Cooperative Unit (unless the
related Mortgage Loan (i) was originated in compliance with the Agency Guides or (ii) is a
Jumbo Non-Warrantable Condo Mortgage Loan), a mobile home or a manufactured home (other
than a manufactured home that meets the criteria set forth in the definition of Manufactured
Home Loan). No portion of the Mortgaged Property is used for commercial purposes; provided
that Mortgaged Properties which contain a home office shall not be considered as being used for
commercial purposes as long as the entire Mortgaged Property has not been altered for
commercial purposes.
(p) Location of Improvements; No Encroachments. All improvements which were considered in
determining the appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning and building law, ordinance or
regulation.
(q) Occupancy and Use of the Mortgaged Property. As of the Purchase Date the Mortgaged Property
is either vacant or is lawfully occupied under applicable law. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or obtained from the
appropriate authorities. No Seller Party has received notification from any Governmental
Authority that the Mortgaged Property is in material non-compliance with such laws or
regulations, is being used, operated or occupied unlawfully or has failed to have or obtain such
inspection, licenses or certificates, as the case may be. No Seller Party has received notice of any
Exhibit L-4
LEGAL02/40464938v16
violation or failure to conform with any such law, ordinance, regulation, standard, license or
certificate. Solely with respect to Jumbo Mortgage Loans and to the best of each Seller Party’s
knowledge, the Mortgaged Property is not being used for business purposes, as defined in the
Federal Truth-in-Lending Act of 1968, as amended, and Regulation Z thereunder.
(r) Lien Position. The Mortgage Loan is secured by a valid first priority lien on the Mortgaged Property,
including all buildings on the Mortgaged Property, under the laws of the state where the related
mortgaged property is located; provided, however, that if the Mortgage Loan is a Closed-End Second
Lien Mortgage Loan or second-lien HELOC Mortgage Loan, it is secured by a valid second lien on
the Mortgaged Property. The lien of the Mortgage is subject only to:
(i) reserved;
(ii) the lien of current real property taxes and assessments not yet due and payable;
(iii) covenants, conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to prudent mortgage lending institutions generally
and specifically referred to in Buyer’s title insurance policy delivered to the originator of the
Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan or (b) which do not materially and adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal;
(iv) other matters to which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property; and
(v) in the case of a Closed-End Second Lien Mortgage Loan or second-lien HELOC Mortgage
Loan, any first priority lien on the Mortgaged Property that has been disclosed to Buyer.
Any security agreement, chattel mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid, subsisting and enforceable first lien and first
priority security interest (or in the case of Closed-End Second Lien Mortgage Loans and second-lien
HELOC Mortgage Loans, a second lien and second priority interest) on the property described therein and
Seller Parties have full right to pledge and assign the same to Buyer.
(s) No Future Advances. The full original principal amount of each Mortgage Loan, net of any
discounts, has been fully advanced or disbursed to the Mortgagor named therein, except with
respect to specific mortgage products agreed upon by Buyer in writing. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage
were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the
Mortgage Note or Mortgage. With respect to any Mortgage Loan, the terms of which require a
Seller Party to make additional advances or disbursements to or on behalf of the Mortgagor
named therein after the date of origination, Guarantor has made all such advances and
disbursements in accordance with the terms of the Mortgage and/or the terms and conditions of
the related mortgage loan program, and such additional amounts have been advanced or disbursed
from Guarantor’s own funds and not from the funds representing any Purchase Price paid by
Buyer to Seller hereunder. For all Mortgage Loans other than specific mortgage products agreed
upon by Buyer in writing, there is no requirement for future advances and any and all
requirements as to completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been satisfied.
Exhibit L-5
LEGAL02/40464938v16
(t) Ownership. Subject to applicable Purchase Commitments, Guarantor owns and Seller has full
right to sell the Participation Interests in the Asset to Buyer free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security interest and has full right and
authority subject to no interest or participation of, or agreement with, any other party, to sell
Participation Interests in the Asset pursuant to this Agreement and following the sale of
Participation Interests in the Mortgage Loan, Buyer will own such Participation Interests in the
Asset free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim
or security interest except any such security interest created pursuant to the terms of this
Agreement, subject to applicable Purchase Commitments.
(u) Doing Business. All parties which have had any interest in the Mortgage Loan, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and
disposed of such interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either
(A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal
savings and loan association, a savings bank or a national bank having a principal office in such
state, (D) not doing business in such state, or (E) not otherwise required to be qualified to do
business in such state.
(v) Hazard Insurance. The Mortgaged Property is covered by a policy of hazard insurance and
insurance against other insurable risks and hazards as are customary in the area where the
Mortgaged Property is located in such amounts as required by the applicable Approved Investor
and in accordance with the Seller’s underwriting guidelines and the Agency Guides, as
applicable. If required by the Flood Disaster Protection Act of 1973, as amended, the Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration which policy conforms to Agency Guides. All such
insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee
clause naming Guarantor, its successors and assigns (including, without limitation, subsequent
owners of the Mortgage Loan), as mortgagee. No notice of reduction, termination or cancellation
has been received by any Seller Party. All premiums on such insurance policy have been paid.
The related Mortgage obligates the Mortgagor to maintain all such insurance and, at such
Mortgagor’s failure to do so, authorizes the mortgagee to maintain such insurance at the
Mortgagor’s cost and expense and to seek reimbursement therefor from such Mortgagor. Where
required by state law or regulation, the Mortgagor has been given an opportunity to choose the
carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard
insurance policy covering a condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is in full force and effect.
No Seller Party has engaged in, and has no knowledge of the Mortgagor’s having engaged in, any
act or omission which would impair the coverage of any such policy, the benefits of the
endorsement provided for herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney, firm or other Person,
and no such unlawful items have been received, retained or realized by any Seller Party, in any
case to the extent it would impair coverage under any such policy.
(w) Title Insurance. The Mortgage Loan is covered either by (i) an attorney’s opinion of title and
abstract of title, the form and substance of which is acceptable to prudent mortgage lending
institutions making mortgage loans, in the area where the Mortgaged Property is located, or (ii) a
valid and enforceable title insurance policy or commitment to issue such title insurance policy,
which title insurance policy insures (or will insure) that the Mortgage relating thereto is a valid
Exhibit L-6
LEGAL02/40464938v16
first lien or second lien, as applicable, on the Mortgaged Property therein described and that such
Mortgaged Property is free and clear of all encumbrances and liens having priority over the first
lien of the Mortgage (or with respect to a Closed-End Second Lien Mortgage Loan or second-lien
HELOC Mortgage Loan, the priority over the second lien of the Mortgage (other than, for the
avoidance of doubt, any first lien of the Mortgage that has been disclosed to Buyer)), subject only
to the exceptions contained in subpart (r) of this Exhibit L, and is otherwise in compliance with
the requirements of the applicable Approved Investor. Guarantor, its successors and assigns, are
the sole insureds of such title insurance policy, and such title insurance policy is valid and
remains in full force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such title
insurance policy, and no prior holder, servicer or subservicer of the related Mortgage, including
any Seller Party, has done, by act or omission, anything which would impair the coverage of such
title insurance policy, including without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by any Seller Party, in any case to the extent it would impair the coverage of
any such policy.
(x) Reserved.
(y) No Fraud. No material error, omission or misrepresentation, gross negligence, fraud or similar
occurrence has taken place with respect to the Mortgage Loan on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or developer or any other
party involved in the origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan.
(z) Compliance with Guidelines. Each Ginnie Mae EBO Mortgage Loan was originated in Strict
Compliance with and remains in compliance with the Ginnie Mae Guide. The Mortgage Loan
was originated in compliance with Guarantor’s underwriting guidelines. Each Agency Eligible
Mortgage Loan was originated in Strict Compliance with and remains in compliance with the
applicable Agency Guides.
(aa) Transfer of Mortgage Loans. Except with respect to Mortgage Loans intended for purchase by
Ginnie Mae and for Mortgage Loans registered with MERS, the Assignment is in recordable form
and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged
Property is located.
(ab) Due-On-Sale. The Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the mortgagee thereunder.
(ac) No Buydown Provisions; No Graduated Payments or Contingent Interests. Except with respect to
Agency Eligible Mortgage Loans, the Mortgage Loan does not contain provisions pursuant to
which monthly payments are paid or partially paid with funds deposited in any separate account
established by Seller Parties, the Mortgagor, or anyone on behalf of the Mortgagor, nor does it
contain any other similar provisions which may constitute a “buydown” provision. The Mortgage
Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature.
(ad) Consolidation of Future Advances. Any future advances made to the Mortgagor prior to the
Purchase Date have been consolidated with the outstanding principal amount secured by the
Exhibit L-7
LEGAL02/40464938v16
Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated principal amount is
expressly insured as having first lien priority (or with respect to a Closed-End Second Lien
Mortgage Loan or second-lien HELOC Mortgage Loan, second lien priority) by a title insurance
policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other
title evidence acceptable to FHA, VA, RD, Fannie Mae and Freddie Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage Loan.
(ae) No Condemnation Proceeding. There have not been any condemnation proceedings with respect
to the Mortgaged Property and no Seller Party has knowledge of any such proceedings.
(af) Servicemembers Civil Relief Act. The Mortgagor has not notified any Seller Party, and no Seller
Party has knowledge, of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act of 2003.
(ag) Appraisal. Except as may otherwise be permitted by the applicable Agency and except for
Closed-End Second Lien Mortgage Loans with an original loan amount less than or equal to
$100,000, a full appraisal of the related Mortgaged Property was conducted and executed prior to
the funding of the Mortgage Loan by a qualified appraiser, duly appointed by Guarantor, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the relevant FHA, VA, RD, Fannie Mae and
Freddie Mac guidelines, as applicable, each as amended and as in effect on the date the Mortgage
Loan was originated. With respect to a Closed-End Second Lien Mortgage Loan with an original
loan amount less than or equal to $100,000, a Review Appraisal approved by Buyer in its sole
discretion was conducted and executed prior to the funding of the Mortgage Loan by a qualified
appraiser who had no interest, direct or indirect in the Mortgaged Property or in any loan secured
thereby, and whose compensation is not affected by the approval or disapproval of the Mortgage
Loan.
(ah) Disclosure Materials. The Mortgagor has executed a statement to the effect that the Mortgagor
has received all disclosure materials required by applicable law with respect to the making of
adjustable rate mortgage loans, and Seller Parties maintain such statement in the Mortgage Loan
File.
(ai) Construction or Rehabilitation of Mortgaged Property. For all Mortgage Loans other than
specific mortgage products agreed upon by Buyer in writing, no Mortgage Loan was made in
connection with the construction or rehabilitation of a Mortgaged Property or facilitating the
trade-in or exchange of a Mortgaged Property.
(aj) Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization
or forbearance of interest.
(ak) No Equity Participation. No document relating to the Mortgage Loan provides for any contingent
or additional interest in the form of participation in the cash flow of the Mortgaged Property or a
sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the
Mortgagor, except to the extent provided in the Mortgage or by applicable law after a default by
the Mortgagor, and no Seller Party has financed nor does it own directly or indirectly, any equity
of any form in the Mortgaged Property or the Mortgagor.
Exhibit L-8
LEGAL02/40464938v16
(al) Reserved.
(am) Mortgage Submitted for Recordation. The Mortgage either has been or will promptly be
submitted for recordation in the appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located.
(an) Reserved.
(ao) Located in U.S. No collateral (including, without limitation, the related real property and the
dwellings thereon and otherwise) relating to a Mortgage Loan is located in any jurisdiction other
than in one of the fifty (50) states of the United States of America or the District of Columbia.
(ap) HOEPA. No Mortgage Loan is (a) subject to the provisions of 12 U.S.C. Section 226.32 of
Regulation Z implementing the Homeownership and Equity Protection Act of 1994 as amended
(“HOEPA”), (b) a “high cost” mortgage loan, “covered” mortgage loan, “high risk home”
mortgage loan, or “predatory” mortgage loan or any other comparable term, no matter how
defined under any federal, state or local law, (c) subject to any comparable federal, state or local
statutes or regulations, or any other statute or regulation providing for heightened regulatory
scrutiny or assignee liability to holders of such mortgage loans, or (d) a High Cost Loan or
Covered Loan, as applicable (as such terms are defined in the current Standard & Poor’s
LEVELS® Glossary Revised, Appendix E).
(aq) No Predatory Lending. No predatory, abusive or deceptive lending practices, including but not
limited to, the extension of credit to a mortgagor without regard for the mortgagor’s ability to
repay the Mortgage Loan and the extension of credit to a mortgagor which has no tangible net
benefit to the mortgagor, were employed in connection with the origination of the Mortgage
Loan.
(ar) Negative Amortization. None of the Mortgage Notes relating to any of the Mortgage Loans
provides for negative amortization.
(as) Mortgaged Property Undamaged. The Mortgaged Property is in good repair and undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to
affect materially and adversely the value of the Mortgaged Property as security for the Mortgage
Loan, except with respect to specific mortgage products agreed upon by Buyer in writing.
(at) No Exception. No document deficiency exists with respect to the Mortgage Loan which would
materially and adversely affect the Mortgage Loan or Buyer’s ownership and/or security interest
granted by any Seller Party in the Mortgage Loan.
(au) Acceptable Investment. No specific circumstances or conditions exist with respect to the
Mortgage, the Mortgaged Property, Mortgagor or Mortgagor’s credit standing that should
reasonably be expected to (i) cause private institutional investors which invest in Mortgage Loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable investment or (ii)
adversely affect the value or marketability of the Mortgage Loan in comparison to similar
Mortgage Loans.
(av) MERS Mortgage Loans. With respect to each Mortgage Loan registered with MERS, a mortgage
identification number has been assigned by MERS and such mortgage identification number is
accurately provided on the Asset Data Record. The related Assignment to MERS has been duly
and properly recorded. With respect to each Mortgage Loan registered with MERS, no Mortgagor
Exhibit L-9
LEGAL02/40464938v16
has received any notice of liens or legal actions with respect to such Mortgage Loan and no such
notices have been electronically posted by MERS.
(aw) Prepayment Fees. The Mortgage Loan does not contain a provision permitting imposition of a
premium upon a prepayment prior to maturity.
(ax) Points and Fees. All points and fees related to the Mortgage Loan were disclosed in writing to the
Mortgagor in accordance with applicable state and federal law and regulation. The points and
fees related to such Mortgage Loan (other than a Bond Loan – 1st Lien and a Permitted Non-
Qualified Mortgage Loan) did not exceed 3% of the total loan amount (or such other applicable
limits for lower balance Mortgages) as specified under 12 CFR 1026.43(e)(3), and the points and
fees were calculated using the calculation required for qualified mortgages under 12 CFR
1026.32(b) to determine compliance with applicable requirements.
(ay) Mandatory Arbitration. No Mortgage Loan that was originated on or after October 31, 2004, is
subject to mandatory arbitration except when the terms of the arbitration also contain a waiver
provision that provides that in the event of a sale or transfer of the Mortgage Loan or interest in
the Mortgage Loan to Fannie Mae, the terms of the arbitration are null and void and cannot be
reinstated. Seller Parties hereby covenant that Seller Parties or subservicer of the Mortgage Loan,
as applicable, will notify the Mortgagor in writing within 60 days of the sale or transfer of the
Mortgage Loan to Fannie Mae that the terms of the arbitration are null and void.
(az) Mortgage Loan Products. No Mortgagor was encouraged or required to select a Mortgage Loan
product offered by the originator of the Mortgage Loan which is a higher cost product designed
for less creditworthy Mortgagors, unless at the time of the origination of such Mortgage Loan,
such Mortgagor did not qualify taking into account credit history and debt to income ratios for a
lower cost credit product then offered by the originator of the Mortgage Loan. If, at the time of
loan application, the Mortgagor qualified for a lower cost credit product then offered by Seller
Parties or the originator’s standard mortgage channel (if applicable), Seller Parties or the
originator directed the Mortgagor towards such standard mortgage channel, or offered such
lower-cost credit product to the Mortgagor.
(ba) Environmental Matters. There is no pending action or proceeding directly involving any
Mortgaged Property of which any Seller Party is aware in which compliance with any
environmental law, rule or regulation is an issue and nothing further remains to be done to satisfy
in full all requirements of each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property. The Mortgaged Property is free from toxic or hazardous substances
in unlawful quantities or concentrations and there exists no violation of any local, state or federal
environmental law, rule or regulation with respect to the Mortgaged Property.
(bb) Government Mortgage Loans. With respect to each Government Mortgage Loan, (i) the FHA
Mortgage Insurance Contract is in full force and effect, and, to the best of each Seller Party’s
knowledge, there exists no impairment to full recovery, and HUD is not entitled to be
indemnified by the related mortgagee under FHA Mortgage Insurance and the VA Loan Guaranty
Agreement or the RD Loan Guaranty Agreement, as applicable, is in full force and effect to the
maximum extent stated therein and to the best of each Seller Party’s knowledge there exists no
impairment to full recovery thereunder, (ii) all necessary steps have been taken to keep such
guaranty or insurance valid, binding and enforceable and to the best of each Seller Party’s
knowledge, each of such is the binding, valid and enforceable obligation of the FHA, the VA or
the RD, respectively, to the full extent thereof, without currently applicable surcharge, set-off or
Exhibit L-10
LEGAL02/40464938v16
defense, (iii) such Government Mortgage Loan is insured, or eligible to be insured, pursuant to
the National Housing Act or is guaranteed, or eligible to be guaranteed, under the provisions of
Chapter 37 of Title 38 of the United States Code, as applicable, (iv) with respect to each FHA
insurance certificate, VA guaranty certificate or RD loan guaranty, each Seller Party has complied
with applicable provisions of the insurance for guaranty contract and federal statutes and
regulations, all premiums or other charges due in connection with such insurance or guarantee
have been paid (or if not paid, shall be paid within fourteen (14) days of disbursement and such
insurance will be retroactive to the date such Mortgage Loan was closed), to the best of each
Seller Party’s knowledge there has been no act or omission which would or may invalidate any
such insurance or guaranty, and the insurance or guaranty is, or when issued, will be, in full force
and effect with respect to such Loan, (v) no Seller Party has knowledge of any defenses,
counterclaims, or rights of setoff affecting such Government Mortgage Loan or affecting the
validity or enforceability of any private mortgage insurance or FHA Mortgage Insurance, VA
loan guaranty or RD loan guaranty with respect to such Government Mortgage Loan, and (vi) no
Seller Party has knowledge of any circumstance which would cause such Government Mortgage
Loan to be ineligible for FHA Mortgage Insurance, a VA loan guaranty or a RD loan guaranty,
as applicable, or cause the FHA, the VA or the RD, as applicable, to deny or reject the related
Mortgagor’s application for FHA Mortgage Insurance, a VA loan guaranty or a RD loan
guaranty, respectively. Each Government Mortgage Loan was originated in accordance with the
criteria of an Agency for purchase of such Government Mortgage Loans.
(bc) Compliance with HARP Guidelines. Each HARP Mortgage Loan was originated in Strict
Compliance with and remains in compliance with the applicable Agency Guide and the guidance
issued by the Federal Housing Finance Authority, Fannie Mae and Freddie Mac, as applicable,
for origination of mortgage loans under the Home Affordable Refinance Program.
(bd) Pooled Mortgage Loans. Each Underlying Asset that will be pooled to support a Mortgage-
Backed Security is being serviced by Guarantor or a subservicer having all Approvals necessary
to make such Underlying Asset eligible to back the related Mortgage-Backed Security.
(be) eNotes. With respect to each eMortgage Loan, the related eNote satisfies all of the following
criteria:
(i) the eNote bears a digital or electronic signature;
(ii) the Hash Value of the eNote indicated in the MERS eRegistry matches the Hash
Value of the eNote as reflected in the eVault;
(iii) there is a single Authoritative Copy of the eNote, as applicable and within the
meaning of Section 9-105 of the UCC or Section 16 of the UETA, as applicable, that
is held in the eVault;
(iv) the Location status of the eNote on the MERS eRegistry reflects the MERS Org ID of
the Custodian;
(v) other than with respect to a Ginnie Mae eNote Pooled Loan, the Controller status of
the eNote on the MERS eRegistry reflects the MERS Org ID of Buyer;
(vi) with respect to a Ginnie Mae eNote Pooled Loan, the Controller status of the eNote
on the MERS eRegistry reflects the MERS Org ID of Seller;
(vii) with respect to a Ginnie Mae eNote Pooled Loan, the eNote Secured Party status of
the eNote on the MERS eRegistry reflects the MERS Org ID of Ginnie Mae;
(viii) other than with respect to a Ginnie Mae eNote Pooled Loan, the Delegatee status of
the eNote on the MERS eRegistry reflects the MERS Org ID of Custodian;
(ix) with respect to a Ginnie Mae eNote Pooled Loan, the Delegatee status of the eNote
on the MERS eRegistry is blank;
Exhibit L-11
LEGAL02/40464938v16
(x) the Master Servicer Field status of the eNote on the MERS eRegistry is Guarantor;
(xi) the Subservicer Field status of the eNote on the MERS eRegistry (i) reflects, if there
is a third-party subservicer, such subservicer’s MERS Org ID or (ii) if there is not a
subservicer, is blank;
(xii) There is no Control Failure, eNote Secured Party Failure, eNote Replacement Failure
or Unauthorized Servicing Modification with respect to such eNote;
(xiii) the eNote is a valid and enforceable Transferable Record or comprises a “general
intangible” or “payment intangible” within the meaning of the UCC;
(xiv) other than with respect to a Ginnie Mae eNote Pooled Loan, there is no defect with
respect to the eNote that would result in Buyer having less than full rights, benefits
and defenses of “Control” (within the meaning of the UETA or with respect to a
“general intangible” or “payment intangible”, the UCC, as applicable) of the
Transferable Record, “general intangible” or “payment intangible”, as applicable; and
(xv) there is no paper copy of the eNote in existence nor has the eNote been papered-out.
(bf) Cooperative Loan: Valid First Lien. With respect to each Cooperative Loan, the related
Mortgage is a valid, enforceable and subsisting first security interest on the related cooperative
shares securing the related cooperative note and lease, subject only to (a) liens of the cooperative
for unpaid assessments representing the Mortgagor’s pro rata share of the cooperative’s payments
for its blanket mortgage, current and future real property taxes, insurance premiums, maintenance
fees and other assessments to which like collateral is commonly subject and (b) other matters to
which like collateral is commonly subject which do not materially interfere with the benefits of
the security intended to be provided by the security interest, and (c) other matters and exceptions
described in subpart (r) to this Exhibit L. There are no liens against or security interests in the
cooperative shares relating to each Cooperative Loan (except for liens that are permitted by the
applicable Agency Guide), which have priority equal to or over Seller Parties’ security interest in
such Cooperative Shares.
(bg) Cooperative Loan: Compliance with Law. With respect to each Cooperative Loan, the related
cooperative corporation that owns title to the related cooperative apartment building is a
“cooperative housing corporation” within the meaning of Section 216 of the Code, and to the
knowledge of each Seller Party is in material compliance with applicable federal, state and local
laws which, if not complied with, could have a material adverse effect on the Mortgaged
Property.
(bh) Cooperative Loan: No Pledge. With respect to each Cooperative Loan, there is no prohibition
against pledging the shares of the cooperative corporation or assigning the Proprietary Lease.
With respect to each Cooperative Loan, (i) the term of the related Proprietary Lease is longer than
the term of the Cooperative Loan, (ii) there is no provision in any Proprietary Lease which
requires the Mortgagor to offer for sale the Cooperative Shares owned by such Mortgagor first to
the Cooperative Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and (iv) the Recognition
Agreement is on a form of agreement published by Aztech Document Systems, Inc. as of the date
hereof or includes provisions which are no less favorable to the lender than those contained in
such agreement.
(bi) Cooperative Loan: Acceleration of Payment. With respect to each Cooperative Loan, each
Assignment of Proprietary Lease contains enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization of the material benefits of the security
provided thereby. The Assignment of Proprietary Lease contains an enforceable provision for the
Exhibit L-12
LEGAL02/40464938v16
acceleration of the payment of the unpaid principal balance of the Mortgage Note in the event the
Cooperative Unit is transferred or sold without the consent of the holder thereof.
(bj) Qualified Mortgage. Each Mortgage Loan (other than a Bond Loan – 1st Lien, a Ginnie Mae
EBO Mortgage Loan for which the originator received the related original loan application prior
to January 10, 2014 and a Permitted Non-Qualified Mortgage Loan) satisfies the following
criteria:
(i) Such Mortgage Loan is a Qualified Mortgage;
(ii) Such Mortgage Loan is accurately identified in writing to Buyer as either a Safe
Harbor Qualified Mortgage or a Rebuttable Presumption Qualified Mortgage;
(iii) Prior to the origination of such Mortgage Loan, the related originator made a
reasonable and good faith determination that the related Mortgagor would have a
reasonable ability to repay such Mortgage Loan according to its terms, in accordance
with, at a minimum, the eight underwriting factors set forth in 12 CFR
1026.43(c)(2); and
(iv) Such Mortgage Loan is supported by documentation that evidences compliance with
the Ability to Repay Rule or the QM Rule.
(bk) Permitted Non-Qualified Mortgage. Each Mortgage Loan that is a Permitted Non-Qualified
Mortgage Loan satisfies the following criteria:
(i) Prior to the origination of such Mortgage Loan, the related originator made a
reasonable and good faith determination that the related Mortgagor would have a
reasonable ability to repay such Mortgage Loan according to its terms, in accordance
with, at a minimum, the eight underwriting factors set forth in 12 CFR
1026.43(c)(2); and
(ii) Such Mortgage Loan is supported by documentation that evidences compliance with
the Ability to Repay Rule.
(bl) Ability to Repay Determination. There is no action, suit or proceeding instituted by or against
any Seller Party in any federal or state court or before any commission or other regulatory body
(federal, state or local, foreign or domestic) that questions or challenges the compliance of any
Mortgage Loan (or the related underwriting) with, (x) except with respect to a Bond Loan – 1st
Lien or a Ginnie Mae EBO Mortgage Loan for which the originator received the related original
loan application prior to January 10, 2014, the Ability to Repay Rule or, (y) except with respect to
a Bond Loan – 1st Lien, a Ginnie Mae EBO Mortgage Loan for which the originator received the
related original loan application prior to January 10, 2014 or a Permitted Non-Qualified Mortgage
Loan, the QM Rule.
(bm) TRID Compliance. To the extent applicable, effective with respect to applications taken on or
after October 3, 2015, each Mortgage Loan (other than a HELOC Mortgage Loan) was originated
in compliance with the Consumer Financial Protection Bureau's TILA-RESPA Integrated
Disclosure Rule.
(bn) Revolving Term. Each HELOC Mortgage Loan provides for an initial period (the “Revolving
Period”) during which the Mortgagor is required to make monthly payments of interest payable in
arrears and requires repayment of the unpaid principal balance thereof over a period following the
Revolving Period (the “Repayment Period”) which is not in excess of two hundred forty (240)
months. As of the Purchase Date no HELOC Mortgage Loan was in its Repayment Period. The
interest rate on each Mortgage Loan adjusts periodically in accordance with the applicable
Exhibit L-13
LEGAL02/40464938v16
underlying documents. On each interest rate adjustment date the applicable Seller Party has made
interest rate adjustments on the Mortgage Loan which are in compliance with the related
Mortgage, Mortgage Note and applicable law.
(bo) Acquisition of Underlying Assets. (i) Each Underlying Asset was acquired and transferred on a
legal true sale basis pursuant to a purchase agreement, (ii) each transferor received reasonably
equivalent value in consideration for the transfer of such Underlying Asset, (iii) no such transfer
was made for or on account of an antecedent debt owed by such transferor to Guarantor or
Affiliate of Guarantor, and (iv) no such transfer is or may be voidable or subject to avoidance
under the Bankruptcy Code.
Representations and Warranties Concerning Participation Interests. Seller represents and warrants to and
covenants with Buyer that each of the following representations and warranties are true and correct as to
Participation Interests relating to an Underlying Asset at all times while such Underlying Asset is subject
to a Transaction:
(a) Participation Interests in Underlying Assets. The representations and warranties with respect to
the related Underlying Asset set forth on this Exhibit L are true and correct.
(b) Performing Participation Interest. The Participation Interest is a performing senior participation
interest in the Underlying Assets evidenced by a Participation Certificate.
(c) Compliance with Law. Each Participation Interest complies in all respects with, or is exempt
from, all applicable requirements of federal, state or local law relating to such Participation
Interest.
(d) Good and Marketable Title. The Seller has good and marketable title to, and is the sole owner
and holder of, the Participation Interests, and Seller is selling to Buyer such Participation
Interests free and clear of any and all Liens, pledges, encumbrances, charges, security interests
or any other ownership interests of any nature encumbering such Participation Interests.
(e) No Fraud. No fraudulent acts were committed by any Seller Party or any of their respective
Affiliates in connection with the issuance of such Participation Interests.
(f) No Defaults. No (i) monetary default, breach or violation exists with respect to any agreement
or other document governing or pertaining to such Participation Interests, (ii) non-monetary
default, breach or violation exists with respect to such Participation Interests, or (iii) event
which, with the passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation of such Participation Interests.
(g) Power and Authority. Seller has full right, power and authority to sell such Participation
Interests and such Participation Interests have not been cancelled, satisfied or rescinded in
whole or part nor has any instrument been executed that would effect a cancellation,
satisfaction or rescission thereof.
(h) Consents and Approvals. Other than consents and approvals obtained as of the related Purchase
Date or those already granted in the Principal Agreements governing such Participation
Interests, no consent or approval by any Person is required in connection with Seller’s sale of
such Participation Interests to Buyer, or Buyer’s exercise of any rights or remedies in respect of
such Participation Interests or for Buyer’s sale, pledge or other disposition of such Participation
Exhibit L-14
LEGAL02/40464938v16
Interests. No third party holds any “right of first refusal”, “right of first negotiation”, “right of
first offer”, purchase option, or other similar rights of any kind, and no other impediment exists
to any such transfer or exercise of rights or remedies with respect to such Participation
Interests.
(i) No Notices. No Seller Party has received written notice of any outstanding liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind for which the holder of such Participation Interests is or may become
obligated.
(j) Original Certificates. Seller has delivered to Buyer or its designee the original certificate or
other similar indicia of ownership of such Participation Interests, however denominated,
reissued in Buyer’s name.
(k) No Litigation. Seller has not received written notice of any outstanding liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind for which the holder of such Participation Interests is or may become obligated.
(l) Duly and Validly Issued. Each of the Participation Interests is duly and validly issued.
(m) No Modifications. Seller is not a party to any document, instrument or agreement, and there is
no document, that by its terms modifies or affects the rights and obligations of any holder of
such Participation Interests and Seller has not consented to any material change or waiver to
any term or provision of any such document, instrument or agreement and no such change or
waiver exists.
Exhibit L-15
LEGAL02/40464938v16
EXHIBIT M
REQUIRED AGENCY DOCUMENTS
Fannie Mae*:
For MBS transactions:
2014 – Delivery Schedule - completed by Seller and sent to Custodian
2005 – Schedule of Mortgages - completed by Seller and sent to Custodian
2004 A – Release of Interest in Mortgages – completed by Seller and sent to warehouse providers;
warehouse providers will sign off and send to the Custodian in order to complete the certification process.
Bailee letter approved by Fannie Mae
* If Mortgage Loan Documents are shipped to Bank of New York Mellon Trust Company by Custodian
at direction of Seller for cash or MBS settlement, the above forms are not required.
Freddie Mac:
1034E Custodial Certification Schedule – completed by Seller and sent to Custodian
996E Warehouse Provider Release – completed by Seller and sent to warehouse providers; warehouse
providers will sign off and send to the Custodian in order to complete the certification process.
Electronic data file - Seller sends a data file to Freddie Mac for the Mortgage Loans
Ginnie Mae:
11705 – Schedule of Subscribers – completed by Seller and sent to Custodian
11711A – Warehouse Provider Release – completed by Seller and sent to warehouse providers;
warehouse providers will sign off and send to the Custodian in order to complete the certification process.
11711B – Certification and Agreement – completed by Seller and sent to the Custodian.
Exhibit M-1
LEGAL02/40464938v16
EXHIBIT N
RESERVED
Exhibit N-1
LEGAL02/40464938v16
EXHIBIT O
FORM OF REQUEST FOR TEMPORARY INCREASE
Bank of America, N.A.
[***]
The Amended and Restated Master Repurchase Agreement, dated as of June 29, 2021 (as amended,
restated, supplemented or modified from time to time, the “Repurchase Agreement”), among Bank of
America, N.A. (“Buyer”), RCKT Mortgage SPE-A, LLC (“Seller”) and acknowledged, guaranteed and
agreed to by Quicken Loans, LLC (“Guarantor” and together with the Seller, each a “Seller Party” and
together the “Seller Parties”)
Ladies and Gentlemen:
In accordance with Section 2.10 of the Repurchase Agreement, Buyer hereby consents to
a Temporary Increase of the Aggregate Transaction Limit, the Committed Amount or the Uncommitted
Amount as further set forth below:
Amount of Temporary Increase: $__________________.
Temporary Committed Amount: $__________________.
Temporary Uncommitted Amount: $__________________.
Temporary Aggregate Transaction Limit: $__________________.
Effective date: [dd/mm/yyyy]
Termination date: [dd/mm/yyyy]
On and after the effective date indicated above and until the termination date indicated
above, the Aggregate Transaction Limit, Committed Amount and Uncommitted Amount shall equal the
Temporary Aggregate Transaction Limit, Temporary Committed Amount and Temporary Uncommitted
Amount, respectively, indicated above for all purposes of the Repurchase Agreement and all calculations
and provisions relating to the Aggregate Transaction Limit, Committed Amount and Uncommitted
Amount shall refer to the Temporary Aggregate Transaction Limit, Temporary Committed Amount and
Temporary Uncommitted Amount, respectively, including without limitation, Type Sublimits. Unless
otherwise terminated pursuant to the Repurchase Agreement, this Temporary Increase shall terminate on
the termination date indicated above. Upon the termination of this Temporary Increase, Seller shall
repurchase Purchased Assets (and/or obtain the release of the related Underlying Assets upon payment by
Seller Parties to Buyer of the related Repurchase Price therefor) such that (i) the Aggregate Outstanding
Purchase Price does not exceed the Aggregate Transaction Limit and (ii) the applicable portion of the
Aggregate Outstanding Purchase Price does not exceed any Type Sublimit. Seller shall repurchase
Purchased Assets (and/or obtain the release of related Underlying Assets upon payment by Seller Parties
to Buyer of the related Repurchase Price therefor) in order to reduce the Aggregate Outstanding Purchase
Price to the Aggregate Transaction Limit (as reduced by the termination of such Temporary Increase) in
accordance with Section 4.2(k) of the Repurchase Agreement.
Exhibit O-1
LEGAL02/40464938v16
All terms used herein and not otherwise defined herein shall have the respective meanings ascribed to
such terms in the Repurchase Agreement.
RCKT Mortgage SPE-A, LLC, Seller
By:
Name:
Title:
QUICKEN LOANS, LLC, Guarantor
By:
Name:
Title:
Agreed and Consented by:
BANK OF AMERICA, N.A., Buyer
By: _______________________________________
Name:
Title:
Date: ________________
Exhibit O-2
LEGAL02/40464938v16
SCHEDULE 1
Filing Jurisdictions and Offices
Michigan
Delaware
Schedule 1-1
LEGAL02/40464938v16
SCHEDULE 2
Reserved
Schedule 2-1
LEGAL02/40464938v16
SCHEDULE 3
List of Seller’s Existing Debt
QUICKEN LOANS LLC.
EXISTING INDEBTEDNESS
(As of April 30, 2021)
[***]
Schedule 3-1
LEGAL02/40464938v16
EIGHTEENTH AMENDMENT TO MASTER REPURCHASE AGREEMENT
Dated as of July 16, 2021
Between
QUICKEN LOANS, LLC, as Seller,
and
JPMORGAN CHASE BANK, N.A., as a Buyer and as Administrative Agent for the
Buyers,
and
the other Buyers from time to time party hereto
1. This Amendment.
The Parties agree hereby to amend (for the eighteenth time) the Master Repurchase
Agreement dated May 2, 2013 between them (the “Original MRA”, as amended by the First
Amendment to Master Repurchase Agreement dated May 1, 2014, the Second Amendment to
Master Repurchase Agreement dated December 19, 2014, the Third Amendment to Master
Repurchase Agreement dated April 30, 2015, the Fourth Amendment to Master Repurchase
Agreement dated April 28, 2016, the Fifth Amendment to Master Repurchase Agreement dated
November 18, 2016, the Sixth Amendment to Master Repurchase Agreement dated April 27,
2017, the Seventh Amendment to Master Repurchase Agreement dated October 12, 2017, the
Eighth Amendment to Master Repurchase Agreement dated December 14, 2017, the Ninth
Amendment to Master Repurchase Agreement dated January 25, 2018, the Tenth Amendment to
Master Repurchase Agreement dated April 26, 2018, the Eleventh Amendment to Master
Repurchase Agreement dated June 20, 2018, the Twelfth Amendment to Master Repurchase
Agreement dated April 25, 2019, the Thirteenth Amendment to Master Repurchase Agreement
dated June 22, 2019, the Fourteenth Amendment to Master Repurchase Agreement dated
September 26, 2019, the Fifteenth Amendment to Master Repurchase Agreement dated
December 16, 2019, the Sixteenth Amendment to Master Repurchase Agreement dated April 10,
2020, and the Seventeenth Amendment to Master Repurchase Agreement dated April 15, 2020,
the “Amended MRA”, and as amended hereby and as it may be supplemented, further amended
or restated from time to time, the “MRA”) to extend the latest Termination Date, amend the
Jumbo Loan sublimit in the definition of Eligible Mortgage Loan, and update the notice
information of Administrative Agent, and they hereby amend the Amended MRA as follows.
All capitalized terms used in the Amended MRA and used, but not defined differently, in
this amendment (this “Amendment”) have the same meanings here as there. The Sections of
Exhibit 10.6
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH
NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
this Amendment are numbered to correspond with the numbers of the Sections of the Amended
MRA amended hereby and are consequently nonsequential.
2. Definitions; Interpretation
A. The definition of “Termination Date” in Section 2(a) of the Amended MRA is amended
to read as follows:
“Termination Date” means the earliest of:
(i) the Business Day, if any, that Seller designates as the Termination
Date by written notice given to Administrative Agent at least thirty (30) days
before such date;
(ii) the Business Day that Administrative Agent designates as the
Termination Date by written notice given to Seller after the date (if any) of Dan
Gilbert’s death or disability, which notice Administrative Agent shall have the
right to give only if Administrative Agent has not sooner approved in writing the
new voting control (if any) of Rock Holdings and Seller’s new senior
management team, which voting control or executive management team (or both)
shall have been established as a direct or indirect result or consequence of, or in
response to, Dan Gilbert’s death or disability and which Termination Date must
be at least one hundred eighty (180) days after the date of his death or disability
and at least ten (10) Business Days after the date of such written notice by
Administrative Agent;
(iii) the date of declaration of the Termination Date pursuant to clause
(vi) of Section 12(c); and
(iv) April 21, 2023.
B. Clause (xxi) of the definition of “Eligible Mortgage Loan” in Section 2(a) of the
Amended MRA is amended to read as follows:
(xxi) that, if a Jumbo Loan, whose Purchase Price, when added to the
sum of the Purchase Prices of all other Jumbo Loans that are then subject to
Transactions, is less than or equal to [***];
C. The following new definition is added to Section 2(a) of the Amended MRA, in
alphabetical order:
“Eighteenth Amendment to MRA” means the Eighteenth Amendment to
Master Repurchase Agreement dated July 16, 2021, among the Parties, amending
this Agreement.
2
15. Notices and Other Communications
Notice to Administrative Agent in Section 15 is hereby amended to read as
follows:
If to Administrative Agent:
JPMorgan Chase Bank, N.A.
[***]
Attention: [***]
phone: [***]
fax: [***]
email: [***]
with copies to:
JPMorgan Chase Bank, N.A.
[***]
Attention: [***]
phone: [***]
fax: [***]
email: [***]
JPMorgan Chase Bank, N.A.
[***]
Attention: [***]
phone: [***]
fax: [***]
email: [***]
JPMorgan Chase Bank, N.A.
[***]
Attention: [***]
phone: [***]
fax: [***]
email: [***]
[***]
Chase Mortgage Warehouse Finance
[***]
Attention: [***]
phone: [***]
email: [***]
3
Notice of Name Change of Seller
Seller has notified Administrative Agent that Seller intends to change its name to Rocket
Mortgage, LLC, and intends that such change shall be effective as of July 31, 2021.
Administrative Agent and Buyers consent to such name change, and the Parties agree that from
and after the effective date of such name change, all references in this Agreement and the other
Transaction Documents to “Quicken Loans, LLC” shall be read as references to “Rocket
Mortgage, LLC”.
(The remainder of this page is intentionally blank; counterpart signature pages follow)
4
As amended hereby, the Amended MRA remains in full force and effect, and the Parties
hereby ratify and confirm it.
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:/s/ Carolyn Johnson
Carolyn Johnson
Authorized Officer
JPMORGAN CHASE BANK, N.A.,
as (the only) Buyer
By:/s/ Carolyn Johnson
Carolyn Johnson
Authorized Officer
QUICKEN LOANS, LLC,
DocuSigned by:
/s/ Robert P. Wilson
CC8E1688430845
Robert Wilson
Treasurer
Counterpart signature page to Eighteenth Amendment to Master Repurchase Agreement
AMENDMENT NUMBER FOUR
to the
MASTER REPURCHASE AGREEMENT
Dated as of October 17, 2019,
among
ROCKET MORTGAGE, LLC (f/k/a QUICKEN LOANS, LLC),
MORGAN STANLEY BANK. N.A.
and
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC
This AMENDMENT NUMBER FOUR (this “Amendment Number Four”) is made this
2
nd
day of August, 2021, among ROCKET MORTGAGE, LLC (f/k/a QUICKEN LOANS, LLC), a
Michigan limited liability company, as seller (“Seller”), MORGAN STANLEY BANK, N.A., a national
banking association, as buyer (“Buyer”), and MORGAN STANLEY MORTGAGE CAPITAL
HOLDINGS LLC, a New York limited liability company, as agent for Buyer (“Agent”), to the Master
Repurchase Agreement, dated as of October 17, 2019, among Seller, Buyer and Agent, as such agreement
may be further amended from time to time (the “Agreement”).
RECITALS
WHEREAS, Seller, Buyer and Agent have agreed to amend the Agreement, as more
specifically set forth herein; and
WHEREAS, as of the date hereof, Seller represents to Buyer and Agent that Seller is in
full compliance with all of the terms and conditions of the Agreement and each other Program Document
and no Default or Event of Default has occurred and is continuing under the Agreement or any other
Program Document.
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. Effective as of August 2, 2021 (the “Amendment
Effective Date”),
(a) Section 2(a) of the Agreement is hereby amended by deleting the definitions of
Adjusted LIBO Rate and Statutory Reserves in their entirety.
(b) Section 2(a) of the Agreement is hereby amended by amending the definitions of
Electronic Tracking Agreement, LIBO Rate, Loan, Margin Call, Margin Deficit, Mortgage, Note,
Post-Default Rate, Pricing Rate, Records, Responsible Officer, Servicer, Servicing File and
Transaction Notice to read in their entirety as follows:
“Electronic Tracking Agreement” shall mean the electronic tracking agreement,
dated as of October 17, 2019, by and among Buyer, Agent, Seller, Electronic Agent and
Exhibit 10.7
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH
NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
EXECUTION COPY
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MERS, as amended by that certain Addendum to Electronic Tracking Agreement for
eNotes, dated as of August 2, 2021 (the “eNote Addendum”), by and among Buyer,
Agent, Seller, Electronic Agent and MERS and as the same may be further amended,
restated, supplemented or otherwise modified from time to time; provided that if no
Loans are or will be MERS Loans, all references herein to the Electronic Tracking
Agreement shall be disregarded.
“LIBO Rate” shall mean with respect to each day in any period as to which
interest payable hereunder is calculated:
(i) the rate of interest per annum determined for such day, which is
equal to the greater of (a) [***} basis points [***] and (b) the offered rate as
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate) as reported on the display designated as
“BBAM” “Page DG8 4a” on Bloomberg (or such other display as may replace
“BBAM” “Page DG8 4a” on Bloomberg) (or on any successor or substitute page
of such service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as selected by Buyer (or Agent on behalf of Buyer) in good faith from time to
time for purposes of providing quotations of interest rates applicable to U.S.
dollar deposits in the London interbank market) for deposits in Dollars with a
term equivalent to such period, determined as of approximately 11:00 a.m.
(London time); or
(ii) if the rate referenced in the preceding subsection (i) is not
available for such day, the greater of (a) [***] basis points [***] and (b) the rate
per annum determined by Buyer (or Agent on behalf of Buyer) in good faith as
the rate of interest at which deposits in Dollars for delivery on such day in same
day funds in the approximate amount (x) with respect to the Committed Amount,
of the Committed Amount, and (y) with respect to the Uncommitted Amount, of
all outstanding Transactions in excess of the Committed Amount being entered
into or continued by Buyer and with a term and amount comparable to such
period and principal amount as would be offered by Buyer’s London Branch to
major banks in the London interbank Dollar market at their request at
approximately 11:00 a.m. (London time).
“Loan” shall mean a First Lien mortgage loan (including an eMortgage Loan)
together with the Servicing Rights thereon, which Custodian has been instructed to hold
for Buyer pursuant to the Custodial Agreement, and which Loan includes, without
limitation, (i) a Note (including, with respect to any eMortgage Loan, the related eNote),
the related Mortgage and all other Loan Documents and (ii) all right, title and interest of
Seller in and to the Mortgaged Property covered by such Mortgage.
“Margin Call” shall have the meaning assigned thereto in Section 6(b) hereof.
“Margin Deficit” shall have the meaning assigned thereto in Section 6(b) hereof.
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“Mortgage” shall mean with respect to a Loan, the mortgage, deed of trust or
other instrument, which creates a First Lien on either (a) with respect to a Mortgage Loan
other than a Cooperative Loan, the fee simple or leasehold estate in such real property or
(b) with respect to a Cooperative Loan, the Proprietary Lease and related Cooperative
Shares, which in either case secures the Note.
“Note” shall mean, with respect to any Loan, the related promissory note
(including, with respect to any eMortgage Loan, the related eNote), together with all
riders thereto and amendments thereof or other evidence of such indebtedness of the
related Mortgagor. For the avoidance of doubt, with respect to any Loan which is a
CEMA Loan, the “Note” with respect to such Loan shall be the CEMA Consolidated
Note.
“Post-Default Rate” shall mean, in respect of the Repurchase Price for any
Transaction or any other amount under this Agreement, or any other Program Document
that is not paid when due to Buyer (whether at stated maturity, by acceleration or
mandatory prepayment or otherwise), a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid in full
equal to [***] per annum, plus (a) the Pricing Rate otherwise applicable to such Loan or
other amount (which amount shall include the Applicable Margin), or (b) if no Pricing
Rate is otherwise applicable, (i) the applicable Index as of any date of determination, plus
(ii) the highest amount specified under the definition of Applicable Margin.
“Pricing Rate” shall as of any date of determination be equal to the sum of (a) the
greater of (i) the Adjusted Index as of such date of determination, or (ii) [***], plus (b)
the Applicable Margin; provided, that Pricing Rate shall be the applicable Post-Default
Rate for any Transaction and on any other amount payable by Seller hereunder that shall
not be paid in full when due (whether at stated maturity, by acceleration or by mandatory
prepayment or otherwise) for the period from and including the due date thereof to but
excluding the date the same is paid in full, provided further, that in no event shall such
rate exceed the maximum rate permitted by law. The Pricing Rate is calculated on the
basis of a 360 day year and the actual number of days elapsed between the Purchase Date
and the Repurchase Date.
“Records” shall mean 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 a Purchased Loan. Records shall
include, without limitation, the Notes, any Mortgages, the Mortgage Files, the Servicing
File, and any other instruments necessary to document or service a Loan that is a
Purchased Loan, including, without limitation, the complete payment and modification
history of each Loan that is a Purchased Loan; provided that the “Records of an
eMortgage Loan include the eMortgage Loan’s related Electronic Records, including the
related eNote, rather than their paper equivalents.
“Responsible Officer” shall mean, as to any Person, the chief executive officer,
general counsel or, with respect to financial matters, the chief financial officer or
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treasurer of such Person; provided, that in the event any such officer is unavailable at any
time he or she is required to take any action hereunder, Responsible Officer shall mean
any officer authorized to act on such matter.
“Servicer” shall mean Seller in its capacity as servicer or master servicer of such
Loans, any interim servicer for correspondent loans or such other servicer or subservicer
as mutually acceptable to Buyer (or Agent on behalf of Buyer) and Seller.
“Servicing File” shall mean with respect to each Loan, the file retained by Seller
(in its capacity as Servicer) consisting of all documents that a prudent servicer would
have, including copies of all documents necessary to service the Loans. For clarification
purposes and without limiting the foregoing, the Servicing File of an eMortgage Loan
specifically includes the eMortgage Loan’s related Electronic Records.
“Transaction Notice” shall mean a written request by Seller delivered to Agent to
enter into a Transaction hereunder, which may be delivered by Electronic Transmission
through Buyer’s FTP site (or through another means acceptable to Buyer) in the form of a
Loan Schedule or another form acceptable to Buyer.
(c) Section 2(a) of the Agreement is hereby amended by adding the following new
definitions in their proper alphabetical order:
“Adjusted Index” shall mean, with respect to any Transaction, an interest rate per
annum (rounded upward, if necessary, to the nearest 1/100
th
of 1.00%) initially calculated
by Buyer to be equal to (i) the applicable Index for such Transaction divided by (ii) 1
minus the Index Reserve Percentage (if any) for such Transaction.
“Agency-Required eNote Legend” shall mean the legend or paragraph required
by Fannie Mae or Freddie Mac, as applicable, to be set forth in the text of an eNote,
which includes the provisions set forth on Annex 3 to the Custodial Agreement, as may
be amended from time to time by Fannie Mae or Freddie Mac, as applicable.
“Authoritative Copy” shall mean, with respect to any eNote, the single,
authoritative, unique, identifiable and unalterable authentic version of such eNote that is
within the sole Control of the Controller and deposited in an eVault for the benefit of the
Controller in a form that is capable of being retained and accurately reproduced for later
reference.
“Available Tenor” shall mean, as of any date of determination and with respect to
the then-current Index, any tenor for such Index or payment period for interest calculated
with reference to such Index, as applicable, that is or may be used for determining the
length of a Calculation Period pursuant to this Agreement as of such date.
“Calculation Period” shall mean any period as to which interest is determined
hereunder.
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“Control” shall mean, with respect to an eNote, the “control” of such eNote
within the meaning of UETA and/or, as applicable, E-Sign, which is established by
reference to the MERS eRegistry and any party designated therein as the Controller.
“Control Failure” shall mean, with respect to an eNote, (i) if the Controller status
of the eNote shall not have been transferred to Agent, (ii) Agent shall otherwise not be
designated as the Controller of such eNote in the MERS eRegistry, (iii) if the eVault shall
have released the Authoritative Copy of an eNote in contravention of the requirements of
the Custodial Agreement, or (iv) if the Custodian initiated any changes on the MERS
eRegistry in contravention of the terms of the Custodial Agreement.
“Controller” shall mean, with respect to an eNote, the party designated in the
MERS eRegistry as the “Controller”, and who in such capacity shall be deemed to be “in
control” or to be the “controller” of such eNote within the meaning of UETA or E-Sign,
as applicable.
“Corresponding Tenor” shall mean, with respect to any Available Tenor, as
applicable, either a tenor (including overnight) or an interest payment period having
approximately the same length (disregarding Business Day adjustment) as such Available
Tenor.
“Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for
this rate (which may include a lookback) being established by Buyer (or Agent on behalf
of Buyer) in accordance with the conventions for this rate selected or recommended by
the Relevant Governmental Body for determining “Daily Simple SOFR” for business
loans at such times; provided that, if Buyer (or Agent on behalf of Buyer) decides that
any such convention is not administratively feasible, then Buyer (or Agent on behalf of
Buyer) may establish another convention in its reasonable discretion.
“Delegatee” or “Delegatee for Transfers” or “DFT” shall mean, with respect to
an eNote, the party designated in the MERS eRegistry as the “Delegatee” or “Delegatee
for Transfers”, and in such capacity is authorized by the Controller to perform certain
MERS eRegistry transactions on behalf of the Controller such as Transfers of Control
and Transfers of Control and Location.
“Disbursement Agent” shall mean Deutsche Bank National Trust Company, or
such other entity appointed by Buyer (or Agent on behalf of Buyer) to act as
disbursement agent from time to time, or its successors and permitted assigns.
“Early Opt-in Election” shall mean, if the then-current Index is LIBO Rate, the
occurrence of the joint election by Buyer (or Agent on behalf of Buyer) and Seller to
trigger a fallback from LIBO Rate.
“Electronic Agent” shall mean MERSCORP Holdings, Inc., or its successor in
interest or assigns.
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“Electronic Record” shall mean, as the context requires, with respect to an
eMortgage Loan, the related eNote and all other documents comprising the Mortgage File
electronically created and that are stored in an electronic format and bearing an
“electronic signature” as such term is defined in E-Sign, if any.
“eMortgage Loan” shall mean a Loan, other than an FHA Loan, an RHS Loan or
a VA Loan, with respect to which there is an eNote and as to which some or all of the
other documents comprising the related Mortgage File may be created electronically (not
by traditional paper documentation) and signed electronically (not with a pen and ink
signature).
“eNote” shall mean, with respect to any eMortgage Loan, the single, unique and
authenticated electronically created, signed, transmitted and stored Note that is a
Transferable Record.
“eNote Delivery Requirement” shall have the meaning set forth in Section 3(a)
hereof.
“eNote Replacement Failure” shall mean, with respect to an eNote, if the
Custodian shall not have complied with the requirements of Section 4(e) of the Custodial
Agreement.
“eNote Subservicer” shall mean, with respect to any eNote, the Person identified
in the MERS eRegistry for such eNote as the “Subservicer” (if any), and that in such
capacity is authorized by the Controller to perform certain MERS eRegistry transactions
on behalf of the Controller.
“E-Sign” shall mean the Electronic Signatures in Global and National Commerce
Act, codified at 15 U.S.C. § 7001-31, as the same may be supplemented, amended,
recodified or replaced from time to time.
“eVault” shall mean an electronic repository established and maintained by
Custodian for delivery and storage of eNotes.
“Floor” shall mean, for any transaction under this Agreement, the Index rate floor
(which may be zero), if any, provided for in this Agreement with respect to Adjusted
Index and LIBO Rate as determined for such transaction.
“Hash Value” shall mean, with respect to an eNote, the unique, tamper-evident
digital signature of such eNote that is stored with the MERS eRegistry.
“Index” shall mean initially, LIBO Rate; provided that, if an Index Transition
Event or, as the case may be, an Early Opt-in Election and the Index Replacement Date
with respect thereto have occurred with respect to LIBO Rate or the then-current Index,
then “Index” means the applicable Index Replacement.
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“Index Replacement” shall mean, for any Available Tenor, the first alternative set
forth in the order below that can be determined by Buyer (or Agent on behalf of Buyer)
on the applicable Index Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the Index Replacement Adjustment
with respect thereto;
(2) the sum of: (a) either Daily Simple SOFR and (b) the applicable Index
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 Index for the applicable Corresponding Tenor and (b) the Index Replacement
Adjustment;
(4) the sum of: (a) the alternate rate of interest that has been selected by
Buyer (or Agent on behalf of Buyer) as the replacement for the then-current Index for the
applicable Corresponding Tenor giving due consideration to any industry-accepted rate of
interest as a replacement for the then-current Index for U.S. dollar denominated secured
financings or securitizations relating to the relevant asset class, as applicable at such time
and (b) the Index Replacement Adjustment;
provided that, in the case of clause (1) of this definition, such Unadjusted Index
Replacement is displayed on a screen or other information service that publishes such rate
from time to time as selected by Buyer (or Agent on behalf of Buyer) in its reasonable
discretion.
If at any time the Index Replacement as determined pursuant to clause (1), (2), (3) or (4)
of this definition would be less than the Floor, the Index Replacement will be deemed to
be the Floor for the purposes of this Agreement.
“Index Replacement Adjustment” shall mean the first alternative set forth in the
order below that can be determined by Buyer (or Agent on behalf of Buyer) as of the
Index 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 Index Replacement;
(2) the spread adjustment (which may be a positive or negative value or
zero) that has been selected by Buyer (or Agent on behalf of Buyer) 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 Index with
the applicable Unadjusted Index Replacement for U.S. dollar denominated secured
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financing or securitization transactions relating to the relevant asset class, as applicable at
such time.
“Index Replacement Conforming Changes” shall mean, with respect to any Index
Replacement, any technical, administrative or operational changes (including but not
limited to changes to the definition of “Business Day,” the definition of “Calculation
Period,” timing and frequency of determining rates and making payments of interest,
timing of borrowing requests or prepayment, conversion or continuation notices, length
of lookback periods, the applicability of breakage provisions, and other technical,
administrative or operational matters) that Buyer (or Agent on behalf of Buyer) decides
may be appropriate to reflect the adoption and implementation of such Index
Replacement and to permit the administration thereof by Buyer (or Agent on behalf of
Buyer) in a manner substantially consistent with market practice (or, if Buyer (or Agent
on behalf of Buyer) decides that adoption of any portion of such market practice is not
administratively feasible or if Buyer (or Agent on behalf of Buyer) determines that no
market practice for the administration of such Index Replacement exists, in such other
manner of administration as Buyer (or Agent on behalf of Buyer) determines is
reasonably necessary in connection with the administration of this Agreement.
“Index Replacement Date” shall mean the earliest to occur of the following
events with respect to the then-current Index:
(1) in the case of clause (1) or (2) of the definition of “Index Transition
Event,” the later of (a) the date of the public statement or publication of information
referenced therein and (b) the date on which the administrator of such Index (or the
published component used in the calculation thereof) permanently or indefinitely ceases
to provide all Available Tenors of such Index (or such component thereof);
(2) in the case of clause (3) of the definition of “Index Transition Event,” the
date of the public statement or publication of information referenced therein; or
(3) in the case of an Early Opt-in Election, the [***] Business Day after the
date of the joint election by Buyer (or Agent on behalf of Buyer) and Seller to trigger a
fallback from LIBO Rate.
For the avoidance of doubt, (i) if the event giving rise to the Index Replacement Date
occurs on the same day as, but earlier than, the Reference Time in respect of any
determination, the Index Replacement Date will be deemed to have occurred prior to the
Reference Time for such determination and (ii) the “Index Replacement Date” will be
deemed to have occurred in the case of clause (1) or (2) with respect to any Index upon
the occurrence of the applicable event or events set forth therein with respect to all then-
current Available Tenors of such Index (or the published component used in the
calculation thereof).
“Index Reserve Percentage” shall mean, for any day during any Calculation
Period, the reserve percentage in effect on such day under regulations issued from time to
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time by the Board of Governors of the Federal Reserve System of the United States for
determining the maximum reserve requirement (including any emergency, special,
supplemental or other marginal reserve requirement) with respect to eurocurrency
funding (currently referred to as “Eurocurrency liabilities” in Regulation D). The
Adjusted Index for each outstanding Transaction shall be adjusted automatically as of the
effective date of any change in the Index Reserve Percentage.
“Index Transition Event” shall mean the occurrence of one or more of the
following events with respect to the then-current Index:
(1) a public statement or publication of information by or on behalf of the
administrator of such Index (or the published component used in the calculation thereof)
announcing that such administrator has ceased or will cease to provide all Available
Tenors of such Index (or such component thereof), permanently or indefinitely, provided
that, at the time of such statement or publication, there is no successor administrator that
will continue to provide any Available Tenor of such Index (or such component thereof);
(2) a public statement or publication of information by the regulatory
supervisor for the administrator of such Index (or the published component used in the
calculation thereof), the Board of Governors of the Federal Reserve System, the Federal
Reserve Bank of New York, an insolvency official with jurisdiction over the
administrator for such Index (or such component), a resolution authority with jurisdiction
over the administrator for such Index (or such component) or a court or an entity with
similar insolvency or resolution authority over the administrator for such Index (or such
component), which states that the administrator of such Index (or such component) has
ceased or will cease to provide all Available Tenors of such Index (or such component
thereof) permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any
Available Tenor of such Index (or such component thereof); or
(3) a public statement or publication of information by the regulatory
supervisor for the administrator of such Index (or the published component used in the
calculation thereof) announcing that all Available Tenors of such Index (or such
component thereof) are no longer representative.
For the avoidance of doubt, an “Index Transition Event” will be deemed to have
occurred with respect to any Index if a public statement or publication of information set
forth above has occurred with respect to each then-current Available Tenor of such Index
(or the published component used in the calculation thereof).
“Location” shall mean, with respect to an eNote, the location of such eNote
which is established by reference to the MERS eRegistry.
“Master Servicer” shall mean, with respect to an eNote, the Person that is
designated in the MERS® eRegistry as the “Master Servicer”, and that in such capacity is
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authorized by the Controller to perform certain MERS® eRegistry transactions on behalf
of the Controller.
“Master Servicer Field” shall mean, with respect to an eNote, the field entitled,
“Master Servicer” in the MERS eRegistry.
“MERS eDelivery” shall mean the transmission system operated by the
Electronic Agent that is used to deliver eNotes, other Electronic Records and data from
one MERS eRegistry member to another using a system-to-system interface and
conforming to the standards of the MERS eRegistry.
“MERS eRegistry” shall mean the electronic registry operated by the Electronic
Agent that acts as the legal system of record that identifies the Controller and Location of
the Authoritative Copy of registered eNotes and the Delegatee, the Master Servicer and
the eNote Subservicer (if any) with respect thereto.
“MERS Org ID” shall mean a number assigned by the Electronic Agent that
uniquely identifies MERS members, or, in the case of a MERS Org ID that is a “Secured
Party Org ID”, uniquely identifies MERS eRegistry members, which assigned numbers
for each of Agent, Seller and Custodian have been provided to the parties hereto.
“MERS System” shall mean the mortgage electronic registry system operated
and maintained by the Electronic Agent that tracks changes in Mortgage ownership,
mortgage servicers and servicing rights ownership interests in Loans.
“Reference Time” with respect to any setting of the then-current Index means (1)
if such Index is LIBO Rate, 11:00 a.m. (London time) on the date of such setting, and (2)
if such Index is not LIBO Rate, the time determined by Buyer (or Agent on behalf of
Buyer) in accordance with the Index Replacement Conforming Changes.
“Relevant Governmental Body” shall mean the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of New York, or a committee
officially endorsed or convened by the Board of Governors of the Federal Reserve
System or the Federal Reserve Bank of New York, or any successor thereto.
“SOFR” shall mean, 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 Index, (or a successor administrator) on the Federal Reserve Bank of New York’s
Website.
“Subservicer Field” shall mean, with respect to an eNote, the field entitled
“Subservicer” in the MERS eRegistry.
“Term SOFR” shall mean, for the applicable Corresponding Tenor as of the
applicable Reference Time, the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.
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“Transfer of Control” shall mean, with respect to an eNote, a MERS eRegistry
transfer transaction used to request a change to the current Controller of such eNote.
“Transfer of Control and Location” shall mean, with respect to an eNote, a
MERS eRegistry transfer transaction used to request a change to the current Controller
and Location of such eNote.
“Transfer of Location” shall mean, with respect to an eNote, a MERS eRegistry
transfer transaction used to request a change to the current Location of such eNote.
“Transfer of Servicing” shall mean, with respect to an eNote, a MERS eRegistry
transfer transaction used to request a change to the current Master Servicer or Subservicer
(if any) of such eNote.
“Transferable Record” shall mean an Electronic Record under E-Sign and UETA
that (i) would be a “note” under the applicable version of the Uniform Commercial Code
adopted in the jurisdiction where the Electronic Record was executed if the Electronic
Record were in writing, (ii) the issuer of the Electronic Record has expressly agreed is a
“transferable record”, (iii) bears an “electronic signature” as such term is given meaning
under E-Sign and UETA, and (iv) for purposes of E-Sign, relates to a loan secured by real
property.
“UETA” shall mean the Uniform Electronic Transactions Act, as adopted in the
state where the Mortgaged Property is located, and as may be supplemented, amended or
replaced from time to time, any applicable state or local equivalent or similar laws and
regulations that is consistent with E-Sign, and any rules, regulations and guidelines
promulgated under any of the foregoing.
“Unadjusted Index Replacement” shall mean the applicable Index Replacement
excluding the Index Replacement Adjustment with respect thereto.
“Unauthorized Servicing Modification” shall mean, with respect to an eNote, an
unauthorized Transfer of Location, an unauthorized Transfer of Servicing or an
unauthorized change in any other information, status or data, including, without
limitation, a change of the Master Servicer Field or Subservicer Field with respect to such
eNote on the MERS eRegistry, initiated by the Master Servicer, eNote Subservicer (if
any) or a Vendor of the Master Servicer or eNote Subservicer (if any) with respect to
such eNote in the MERS eRegistry, in each case in contravention of the terms of this
Agreement; provided that the Location status of such eNote may be transferred pursuant
to the written request or instruction of Buyer or Agent (which may be via a Transmittal &
Bailment Letter or a Request for Release, in each case, signed by Buyer or Agent) or as
otherwise consented to in writing by Buyer or Agent, which may be via email).
“Vendor” shall mean, with respect to an eNote, a party recognized by MERS as a
“vendor” authorized to perform certain MERS® eRegistry transactions on behalf of a
MERS® eRegistry participant.
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(d) The definition of Eligible Loan in Section 2(a) of the Agreement is hereby
amended by deleting the “or” at the end of clause 8 thereof, deleting the “.” at the end of clause 9
and replacing it with a “;”, and by adding the following new clauses 10, 11, 12 and 13 in their
proper numerical order immediately following clause 9 thereof:
10. if such Loan is an eMortgage Loan which is not eligible for sale to (A)
Fannie Mae, or was not originated in accordance with the Fannie Mae Guides and/or does
not otherwise comply with any other requirements and/or guidelines of Fannie Mae
related to eMortgage Loans, eNotes and/or remote online notarization, or (B) Freddie
Mac, or was not originated in accordance with the Freddie Mac Guides and/or does not
otherwise comply with any other requirements and/or guidelines of Freddie Mac related
to eMortgage Loans, eNotes and/or remote online notarization;
11. if such Loan is an eMortgage Loan that is a CEMA Loan;
12. unless such eMortgage Loans are acceptable to Fannie Mae or Freddie
Mac, if such Loan is an eMortgage Loan that is originated in the state of Texas pursuant
to Article XVI, Section 50(a)(6) of the Texas Constitution; or
13. if such Loan is an eMortgage Loan and Seller, Buyer, Agent, Custodian
and Disbursement Agent shall not have amended the Custodial Agreement or entered into
an Amended and Restated Custodial and Disbursement Agreement to provide for
eMortgage Loans in a form acceptable to Buyer and Agent.
(e) Section 3(a) of the Agreement is hereby amended by adding the following
paragraph to the end of Section 3(a):
Notwithstanding anything in any of the Program Documents to the contrary, with
respect to any eMortgage Loan and any requirements to deliver the portion of any
Mortgage File or any Records with respect to any eMortgage Loan that is an Electronic
Record (including, without limitation, pursuant to this Section 3(a) and Sections 3(d)(iii)
and 16), Seller shall deliver to Custodian each of Agent’s and Seller’s MERS Org IDs,
and shall cause (on or prior to 2:00 p.m. (Eastern Time) on the requested Purchase Date)
(i) the Authoritative Copy of the related eNote to be delivered to the eVault via a secure
electronic file, (ii) the Controller status of the related eNote to be transferred to Agent,
(iii) the Location status of the related eNote to be transferred to Custodian, (iv) the
Delegatee status of the related eNote to be transferred to Custodian, and (v) the Master
Servicer status of the related eNote to be Seller in its capacity as Servicer, in each case
using MERS eDelivery and the MERS eRegistry (collectively, the “eNote Delivery
Requirements”). With respect to eMortgage Loans that are Eligible Loans, compliance
with the eNote Delivery Requirements shall satisfy the requirements hereunder and under
the Custodial Agreement applicable to Loans that are not eMortgage Loans of physical
delivery and physical possession of the corresponding Loan Documents for all purposes
under the Program Documents.
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(f) Section 3(e) of the Agreement is hereby amended to read in its entirety as
follows:
(e) Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Index:
(i) Buyer (or Agent on behalf of Buyer) determines, which
determination shall be conclusive, absent manifest error, if made in good faith
and if reasonable, that quotations of interest rates for the relevant deposits
referred to in the definition of “Index” in Section 2 are not being provided for the
relevant maturities for purposes of determining rates of interest for Transactions
as provided herein but that an Index Transition Event has not occurred; or
(ii) it becomes unlawful for Buyer to enter into Transactions with a
Pricing Rate based on such Index;
then Buyer (or Agent on behalf of Buyer) shall give Seller prompt notice thereof and, so
long as such condition remains in effect, Buyer shall be under no obligation to purchase
Loans hereunder, and Seller shall, at its option, either repurchase such Loans subject to
outstanding Transactions within [***] days of such notice or pay a Pricing Rate at a rate
per annum as determined by Buyer (or Agent on behalf of Buyer) in good faith taking
into account, among other factors Buyer (or Agent on behalf of Buyer) deems relevant,
the cost to Buyer of purchasing and holding the Loans.
(g) Section 3(f) of the Agreement is hereby amended by adding the following
paragraph to the end of Section 3(f):
Whenever under the Program Documents Agent, Buyer or any Repledgee is
required or permitted to transfer or release Purchased Loans back to Seller or its designee
or to deliver (including delivering physical possession of) any Mortgage File or any
Records to Seller in connection with a transfer of Purchased Loans back to Seller or its
designee, with respect to eMortgage Loans, and any related requirements to deliver the
portion of any Mortgage File or any Records with respect to any eMortgage Loan that is
an Electronic Record (including, without limitation, pursuant to this Sections 3(f), 10 and
16), Custodian or Agent, as applicable, shall, as directed by Seller, cause (i) the
Controller status of the related eNote to be transferred to Seller or its designee and (ii) the
Location status of the related eNote to be transferred to the Person designated by Seller
(which may include Custodian, Seller or its designee), and Seller shall cause (x) the
Delegatee status of the related eNote to be transferred to the Person designated by Seller
(which may include Custodian, Seller or its designee), and (y) the Master Servicer or
Subservicer, as applicable, status of the related eNote to be transferred to the Person
designated by Seller, in each case using MERS eDelivery and the MERS eRegistry. With
respect to eMortgage Loans, compliance with the immediately foregoing requirements
shall satisfy the requirements hereunder (if any) applicable to Loans that are not
eMortgage Loans of physical delivery and physical possession of the corresponding Loan
Documents for all purposes under the Program Documents. Upon such transfer of the
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Mortgage Loans back to Seller or its designee, ownership of each Mortgage Loan,
including each document in the related Mortgage File and Records, is vested in Seller or
such designee.
(h) Section 3(h)(ii) of the Agreement is hereby amended to read in its entirety as
follows:
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory advance or similar requirement against deposits or other
liabilities held on account of Transactions or extensions of credit by, or any other
acquisition of funds in connection with Transactions by, any office of Buyer
which is not otherwise included in the determination of the applicable Index
hereunder; or
(i) Section 3 of the Agreement is hereby amended by adding the following new
Section 3(j) to the end of such Section, to read in its entirety as follows:
(j) Index Replacement; Index Replacement Conforming Changes; Notices.
(a) Index Replacement. Notwithstanding anything to the contrary herein or
in any other Program Document, if:
(i)(A) an Index Transition Event or, as the case may be, an Early Opt-in
Election and (B) an Index Replacement Date with respect thereto have occurred
prior to the Reference Time in connection with any setting of the then-current
Index, then such Index Replacement will replace the then-current Index for all
purposes under this Agreement and under any other Program Document in
respect of such Index setting and subsequent Index settings without requiring any
amendment to, or requiring any further action by or consent of any other party to,
this Agreement or any other Program Document; provided that if upon either (A)
the occurrence of an Index Transition Event, or (B) in connection with
determining the Index Replacement relating to the LIBO Rate, a reasonable
determination is made by Buyer (or Agent on behalf of Buyer) that neither of the
alternatives under clause (1) or (2) of the definition of Index Replacement are
available, the Index Replacement selected under clause (3) or (4) of the definition
of Index Replacement will replace the then-current Index for all purposes under
this Agreement and under any other Program Document in respect of such Index
setting and subsequent Index settings on the thirtieth (30
th
) calendar day (or if
such day is not a Business Day, the next succeeding Business Day) after the date
notice of such Index Replacement is provided to Seller without requiring any
amendment to, or requiring any further action by or consent of any other party to,
this Agreement or any other Program Document, unless prior to such date Seller
shall notify Buyer of its election to terminate this Agreement pursuant to clause
(c) of this Section 3(j); provided that, for the avoidance of doubt, solely in the
event that the then-current Index at the time of such Index Transition Event is not
a SOFR-based rate, the Index Replacement therefor shall be determined in
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accordance with clause (1) or (2) of the definition of Index Replacement unless
Buyer (or Agent on behalf of Buyer) determines that neither of such alternative
rates is available, and, to the extent the Index Replacement is determined in
accordance with clause (1) or (2) of the definition of Index Replacement, such
Index Replacement will replace the then-current Index for all purposes hereunder
and under any Program Agreement in respect of such Index setting and
subsequent Index settings without requiring any amendment to, or requiring any
further action by or consent of any other party to, this Agreement or any other
Program Document, or
(ii)(A) an Index Transition Event or, as the case may be, an Early Opt-in
Election and the Index Replacement Date with respect thereto has already
occurred prior to the Reference Time for any setting of the then-current Index
and as a result the then-current Index is being determined in accordance with
clauses (2), (3) or (4) of the definition of “Index Replacement;” and (B) Buyer
(or Agent on behalf of Buyer) subsequently determines, that (w) Term SOFR and
an Index Replacement Adjustment with respect thereto is or has becomes
available and the Index Replacement Date with respect thereto has occurred, (x)
there is currently a market for U.S. dollar-denominated transactions utilizing
Term SOFR as an Index and for determining the Index Replacement Adjustment
with respect thereto, (y) Term SOFR is being recommended as the Index for U.S.
dollar-denominated syndicated credit facilities by the Relevant Government
Authority and (z) in any event, Term SOFR, the Index Replacement Adjustment
with respect thereto and the application thereof is administratively feasible for
Buyer (or Agent on behalf of Buyer) (as determined by Buyer (or Agent on
behalf of Buyer)), then clause (1) of the definition of “Index Replacement” will,
without requiring any amendment to, or requiring any further action by or
consent of any other party to, this Agreement or any other Program Document,
replace such then-current Index for all purposes hereunder and under any other
Program Document in respect of such Index setting and subsequent Index
settings on and from the beginning of the next Calculation Period or, as the case
may be, Available Tenor so long as Buyer (or Agent on behalf of Buyer) notifies
all the parties hereto prior to the commencement of such next Calculation Period
or, as the case may be, Available Tenor.
(b) Index Replacement Conforming Changes. In connection with the
implementation of an Index Replacement, Buyer (or Agent on behalf of Buyer) will have
the right to make Index Replacement Conforming Changes from time to time and,
notwithstanding anything to the contrary herein or in any other Program Document, any
amendments implementing such Index Replacement Conforming Changes will become
effective without requiring any further action by or consent of any other party to this
Agreement or any other Program Document.
(c) Right to Terminate. Seller may, within [***] days of Buyer’s notification
of the Index Replacement other than a SOFR-based rate, (i) give notice to Buyer or Agent
of its good faith determination that the Index Replacement is not consistent with the
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successor rate of interest implemented by the majority of financial institutions similar to
Buyer for assets similar to the Loans in warehouse facilities in the United States similar
to this Agreement and (ii) elect to terminate this Agreement on an elected termination
date that is on or after the date the Index Replacement is effective (such date, the “Elected
Facility Termination Date”). Upon such termination, (i) Buyer (or Agent on behalf of
Buyer) shall promptly refund to Seller the pro-rated portion of any prepaid Commitment
Fee relating to any period from (and including) and after the Elected Facility Termination
Date and (ii) Seller shall have no further liability for the Commitment Fee, non-utilization
fee or Minimum Price Differential Payment or to pay further installments thereof.
(d) Notices; Standards for Decisions and Determinations. Buyer (or Agent
on behalf of Buyer) will promptly notify all the parties hereto of (i) any occurrence of (A)
an Index Transition Event or, as the case may be, an Early Opt-in Election and (B) the
Index Replacement Date with respect thereto, (ii) the implementation of any Index
Replacement, and (iii) the effectiveness of any Index Replacement Conforming Changes.
Any determination, decision or election that may be made by Buyer (or Agent on behalf
of Buyer) pursuant to this Section, 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, will be
conclusive and binding absent manifest error and may be made in Buyer’s (or Agent’s on
behalf of Buyer) sole discretion and without consent from any other party to this
Agreement or any other Program Document.
(j) Section 9(b)(x) of the Agreement is hereby amended in its entirety to read as
follows:
(x) Either (i) there is no unpaid Margin Call (that is then due and payable
and of which Seller has received notice at or before 10:00 a.m. (Eastern
Time) on the proposed Purchase Date) at the time immediately prior to
entering into a new Transaction; or (ii) if there is an unpaid Margin Call
(that is then due and payable and of which Seller has received notice at
or before 10:00 a.m. (Eastern Time) on the proposed Purchase Date), (x)
Buyer (or Agent on behalf of Buyer) has provided Seller with written
consent (which may be via electronic transmission) to enter into
Transactions on such Business Day notwithstanding the existence of
such unpaid Margin Call, and (y) Buyer (or Agent on behalf of Buyer)
has not revoked the consent identified in clause (ii)(x) above;
(k) The first paragraph of Section 10 of the Agreement is hereby deleted and
replaced in its entirety with the following:
Upon timely payment in full of the Repurchase Price and all other Obligations (if
any) then owing with respect to a Purchased Loan, unless a Default or Event of Default
shall have occurred and be continuing, then (a) (i) Buyer shall be deemed to have
terminated and released any security interest that Buyer may have in such Purchased
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Loan and any Purchased Items solely related to such Purchased Loan, and (ii) with
respect to any eMortgage Loan, Agent shall initiate a Transfer of Location and a Transfer
of Control of the eNotes as may be requested by Seller or its designees and Seller or its
designees shall cause to be initiated a transfer of Delegatee and Master Servicer or
Subservicer, as applicable, with respect thereto, in each case using MERS eDelivery and
the MERS eRegistry, and (b) with respect to such Purchased Loan, Buyer (or Agent on
behalf of Buyer) shall direct Custodian to release such Purchased Loan and any
Purchased Items solely related to such Purchased Loan to Seller unless such release and
termination would give rise to or perpetuate a Margin Deficit. Except as set forth in
Section 16, Seller shall give at least one (1) Business Day’s prior written notice to Buyer
and Agent if such repurchase shall occur on any date other than the Repurchase Date in
Section 3(f).
(l) Section 12(t) of the Agreement is hereby deleted and replaced in its entirety with
the following:
(t) Origination and Acquisition of Loans. The Loans were originated or
acquired by Seller, and the origination and collection practices used by Seller or
Qualified Originator, as applicable, with respect to the Loans, including, but not limited
to, requirements related to remote online notarization, have been, in all material respects,
legal, proper, prudent and customary in the residential mortgage loan origination and
servicing business, and in accordance with the applicable Underwriting Guidelines or the
Agency Guidelines. With respect to Loans acquired by Seller, all such Loans are in
conformity with the applicable Agency Guidelines. Each of the Loans complies in all
material respects with the representations and warranties listed in Schedule 1 to this
Agreement.
(m) Section 12(x) of the Agreement is hereby deleted and replaced in its entirety with
the following:
(x) MERS; MERS eRegistry. Seller is a member of MERS in good
standing. Seller is a MERS® eRegistry Participant and is in compliance in all material
respects with the provisions of the MERS® eRegistry Addendum and MERS® eRegistry
Procedures Manual.
(n) Section 13 of the Agreement is hereby amended by adding the following new
clauses (gg) and (hh) in their proper alphabetical order immediately following clause (ff) thereof:
(gg) MERS; MERS eRegistry.
(i) Seller, including in its capacity as Servicer, is a member of
MERS in good standing. Following the occurrence of an Event of
Default, Seller shall, or shall cause the Servicer to, follow all instructions
provided by Buyer or Agent with respect to any MERS Loans that are
Purchased Loans, including without limitation, the removal of Purchased
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Loans from MERS and assignment out of MERS, within two (2)
Business Days of receipt of instructions from Buyer or Agent.
(ii) Seller, including in its capacity as Servicer, is and shall remain a
MERS® eRegistry Participant with respect to each eMortgage Loan that
is a Purchased Loan and is and shall remain in compliance in all material
respects with the provisions of the MERS® eRegistry Addendum and
MERS® eRegistry Procedures Manual in connection with the
maintenance of the related eNotes that are Purchased Loans on the
MERS eRegistry.
(hh) eMortgages. Seller shall immediately notify Buyer and Agent upon
becoming aware of any Control Failure, eNote Replacement Failure or Unauthorized
Servicing Modification with respect to eNotes that are Purchased Loans, other than with
respect to any such Control Failure, eNote Replacement Failure or Unauthorized
Servicing Modification (i) related to eNotes that are Purchased Loans with an aggregate
Purchase Price that is less than $3,000,000 and (ii) that is due to an administrative error
that is promptly cured.
(o) Section 16 of the Agreement is hereby deleted and replaced in its entirety with
the following:
16. SUBSTITUTION
Seller may, subject to agreement with and acceptance by Buyer upon one (1)
Business Day’s notice, substitute other assets, including U.S. Treasury Securities, which
are substantially the same as the Purchased Loans (the “Substitute Loans”) for any
Purchased Loans. Such substitution shall be made by transfer to Buyer of such Substitute
Loans and transfer to Seller of such Purchased Loans (the “Reacquired Loans”) along
with the other information to be provided with respect to the applicable Substitute Loan
as described in the form of Transaction Notice. Upon substitution, the Substitute Loans
shall be deemed to be Purchased Loans, the Reacquired Loans shall no longer be deemed
Purchased Loans, Buyer shall be deemed to have terminated any security interest that
Buyer may have had in the Reacquired Loans and any Purchased Items solely related to
such Reacquired Loans, with respect to any Reacquired Loans that are eMortgage Loans,
Agent shall initiate a Transfer of Location and a Transfer of Control of the eNotes and
Seller or its designees shall cause to be initiated a transfer of Delegatee and Master
Servicer or Subservicer, as applicable, status with respect thereto as may be directed by
Seller or its designees, in each case using MERS eDelivery and the MERS eRegistry, and
Buyer shall transfer any such Reacquired Loans and related Purchased Items to Seller
unless such termination and release would give rise to or perpetuate an unpaid, due and
payable Margin Call. Concurrently with any termination and release described in this
Section 16, Buyer shall execute and deliver to Seller upon request and Buyer hereby
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authorizes Seller to file and record such documents as Seller may reasonably deem
necessary or advisable in order to evidence such termination and release.
(p) The proviso at the end of Section 19(a)(i)(A) of the Agreement is hereby deleted
and replaced in its entirety with the following:
; provided, however, in the event that Seller repurchases any Purchased Loan pursuant to
this Section 19(a)(i), Buyer shall deliver to Seller any and all original papers, records and
files relating to such Purchased Loan then in its possession and/or control and with
respect to any such Purchased Loan that is an eMortgage Loan, Agent shall initiate a
Transfer of Location and a Transfer of Control of the eNotes and Seller or its designees
shall cause to be initiated a transfer of Delegatee and Master Servicer or Subservicer, as
applicable, status with respect thereto as may be directed by Seller or its designees, in
each case using MERS eDelivery and the MERS eRegistry.
(q) Section 19(c) of the Agreement is hereby deleted and replaced in its entirety with
the following:
(c) Buyer shall have the right to obtain physical possession of the Servicing
Records and all other files of Seller relating to the Purchased Loans and all documents
relating to the Purchased Loans (in each case, other than Electronic Records) which are
then or may thereafter come into the possession of Seller or any third party acting for
Seller and Seller shall deliver to Buyer such assignments as Buyer shall request; provided
that if such records and documents also relate to mortgage loans other than the Purchased
Loans, Buyer shall have a right to obtain copies of such records and documents, rather
than originals.
(r) Section 20 of the Agreement is hereby amended by adding the following
sentence to the end thereof:
Neither (x) the failure of Buyer (or Agent on behalf of Buyer), on any one or more
occasions, to exercise its rights hereunder with respect to a Margin Deficit nor (y) the
election of Buyer (or Agent on behalf of Buyer), on any one or more occasions, to enter
into Transactions notwithstanding the existence of an unpaid Margin Call in accordance
with Section 9(b)(x)(ii) herein, shall change or alter the terms and conditions to which
this Agreement is subject or limit the right of Buyer (or Agent on behalf of Buyer) to
exercise its rights hereunder with respect to such Margin Deficit at a later date.
(s) Section 21 of the Agreement is hereby amended by deleting the Buyer’s, the
Agent’s and Seller’s notice information in its entirety and replacing it with the following:
If to Buyer:
Morgan Stanley Bank, N.A.
[***]
Attention: [***]
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118109294\V-13
Telephone: [***]
Fax: [***]
Email: [***]
With a copy to:
[***]
With a copy to:
Morgan Stanley Mortgage Capital Holdings LLC.
[***]
Attention: [***]
Telephone: [***]
Fax: [***]
Email: [***]
If to Agent:
Morgan Stanley Mortgage Capital Holdings LLC
[***]
Attention: [***]
Telephone: [***]
Fax: [***]
Email: [***]
With a copy to:
Morgan Stanley Bank, N.A.
[***]
Attention: [***]
Telephone: [***]
Fax: [***]
Email: [***]
If to Seller:
Rocket Mortgage, LLC
1050 Woodward Ave.
Detroit, Michigan 48226-1906
Attention: [***]
Telephone: [***]
Fax: [***]
Email: [***]
With a copy to:
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118109294\V-13
Rocket Mortgage, LLC
1050 Woodward Ave.
Detroit, Michigan 48226-1906
Attention: [***]
Telephone: [***]
Fax: [***]
Email: [***]
(t) Section 24 of the Agreement is hereby amended by deleting the reference to
“Repurchase Documents” therein and replacing it with Program Documents.
(u) The Agreement is hereby amended by adding the following new Section 47
thereto to read in its entirety as follows:
47. ERRONEOUS PAYMENTS
(a) Each Buyer hereby agrees that (x) if Agent notifies such Buyer that
Agent has determined that any funds received by such Buyer from Agent or any of its
Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly
received by, such Buyer (whether or not known to such Buyer) (whether as a payment,
prepayment or repayment of principal, interest, fees or otherwise; individually and
collectively, an “Erroneous Payment”) and demands the return of such Erroneous
Payment (or a portion thereof), such Buyer shall promptly, but in no event later than one
(1) Business Day thereafter, return to Agent the amount of any such Erroneous Payment
(or portion thereof) as to which such a demand was made, in same day funds in Dollars,
and if such Buyer fails to return the amount of any such Erroneous Payment (or portion
thereof) to Agent by such Business Day, such Buyer shall also pay Agent interest thereon
in respect of each day after such Business Day to the date such amount is repaid to Agent
in same day funds at a rate determined by Agent in accordance with banking industry
rules on interbank compensation from time to time in effect and (y) to the extent
permitted by applicable law, such Buyer shall not assert any right or claim to the
Erroneous Payment, and hereby waives, any claim, counterclaim, defense or right of set-
off or recoupment with respect to any demand, claim or counterclaim by Agent for the
return of any Erroneous Payments received, including without limitation waiver of any
defense based on “discharge for value” or any similar doctrine. A notice of Agent to any
Buyer under this subsection (a) shall be conclusive, absent manifest error.
(b) Without limiting the immediately preceding clause (a), each Buyer
hereby further agrees that if it receives an Erroneous Payment from Agent (or any of its
Affiliates) (i) that is in a different amount than, or on a different date from, that which is
required to be paid to such Buyer pursuant to the terms hereof or that which is specified
in a notice of payment sent by Agent (or any of its Affiliates) with respect to such
Erroneous Payment (a “Erroneous Payment Notice”), (ii) that was not preceded or
accompanied by an Erroneous Payment Notice, or (iii) that such Buyer otherwise
becomes aware was transmitted, or received, in error or mistake (in whole or in part), in
each case, an error has been made with respect to such Erroneous Payment, and to the
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extent permitted by applicable law, such Buyer shall not assert any right or claim to the
Erroneous Payment, and hereby waives, any claim, counterclaim, defense or right of set-
off or recoupment with respect to any demand, claim or counterclaim by Agent for the
return of any Erroneous Payments received, including without limitation waiver of any
defense based on “discharge for value” or any similar doctrine. Each Buyer agrees that,
in each such case, it shall promptly (and, in all events, within one (1) Business Day of its
actual knowledge of such error) notify Agent of such occurrence and, upon demand from
Agent, it shall promptly, but in all events no later than one (1) Business Day thereafter,
return to Agent the amount of any such Erroneous Payment (or portion thereof) as to
which such a demand was made in same day funds in Dollars, and if such Buyer fails to
return the amount of any such Erroneous Payment (or portion thereof) to Agent by such
Business Day, such Buyer shall also pay Agent interest thereon in respect of each day
after such Business Day to the date such amount is repaid to Agent in same day funds at a
rate determined by Agent in accordance with banking industry rules on interbank
compensation from time to time in effect. Each Buyer further authorizes and agrees that
in the event an Erroneous Payment (or portion thereof) is not recovered from such Buyer
that has received such Erroneous Payment (or portion thereof) and Agent has received
amounts that are due and owing to such Buyer which Agent is required to remit to such
Buyer, Agent may offset such amounts by the equivalent amount of Erroneous Payments
received by such Buyer and, as applicable, return such amounts to the applicable payor.
(c) Seller hereby agrees that (x) in the event an Erroneous Payment (or
portion thereof) is not recovered from any Buyer that has received such Erroneous
Payment (or portion thereof) for any reason, Agent shall be subrogated to all the rights of
such Buyer with respect to such amount, and (y) an Erroneous Payment shall not pay,
prepay, repay, discharge or otherwise satisfy any Obligations owed by Seller, except 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 Agent from Seller for the
purposes of satisfying an Obligation.
(d) Each party’s obligations under this Section 47 shall survive the
resignation or replacement of Agent, the termination of the Agreement or the repayment,
satisfaction or discharge of all Obligations (or any portion thereof) under any Program
Document.
(v) The first sentence of the loan level representation in Schedule 1, paragraph (d) of
the Agreement is hereby deleted and replaced in its entirety with the following:
(d) Original Terms Unmodified. The terms of the Note and Mortgage have
not been impaired, waived, altered or modified in any respect, from the date of
origination except by a written instrument or Electronic Record which has been recorded,
if necessary to protect the interests of Buyer, and which has been delivered as required by
this Agreement to Custodian or to such other Person as Buyer shall designate in writing,
and the terms of which are reflected in the Loan Schedule.
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(w) The loan level representation in Schedule 1, paragraph (j) of the Agreement is
hereby deleted and replaced in its entirety with the following:
(j) Validity of Mortgage Documents. The Note and the Mortgage and any
other agreement executed and delivered by a Mortgagor in connection with a Loan are
genuine (or in the case of an eNote, the copy of the eNote transmitted to Custodian’s
eVault is the Authoritative Copy), and each is the legal, valid and binding obligation of
the maker thereof enforceable in accordance with its terms, subject to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application affecting
the rights of creditors and by general equitable principles. All parties to the Note, the
Mortgage and any other such related agreement had legal capacity to enter into the Loan
and to execute and deliver the Note, the Mortgage and any such agreement, and the Note,
the Mortgage and any other such related agreement have been duly and properly executed
by other the applicable related parties. No fraud or error, omission, misrepresentation,
negligence or similar occurrence with respect to a Loan has taken place on the part of any
Person, including without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination or servicing of the Loan or in
any mortgage or flood insurance, if applicable, in relation to such Loan. Seller has
reviewed all of the documents constituting the Mortgage File and has made such inquiries
as they deem necessary to make and confirm the accuracy of the representations set forth
herein.
(x) The loan level representation in Schedule 1, paragraph (z) of the Agreement is
hereby deleted and replaced in its entirety with the following:
(z) Delivery of Mortgage Documents. The Note, the Mortgage, the
Assignment of Mortgage (other than for a MERS Loan) and any other documents
required to be delivered to the Custodian under the Custodial Agreement for each Loan
(other than Wet-Ink Loans) have been delivered to Custodian. Seller is, or an agent of
Seller is, in possession of a complete, true and materially accurate Mortgage File in
compliance with the Custodial Agreement, except for such documents the originals (or
Authoritative Copies) of which have been delivered to Custodian and except as otherwise
provided in the Custodial Agreement.
(y) The loan level representation in Schedule 1, paragraph (lll) of the Agreement is
hereby amended by adding the following at the end of such paragraph:
No CEMA Loan is an eMortgage Loan.
(z) Schedule 1 of the Agreement is hereby amended by adding the following new
paragraphs (mmm), (nnn) and (ooo) in their proper alphabetical order immediately following
paragraph (lll) thereof:
(mmm) eNote Legend. If the Mortgage Loan is an eMortgage Loan, the related
eNote contains the Agency-Required eNote Legend.
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(nnn) eNotes. With respect to each eMortgage Loan, immediately prior to the
sale to Buyer hereunder of such eMortgage Loan, Seller is registered on the MERS
eRegistry as the Controller of the related eNote designated to MERS, and the related
eNote satisfies all of the following criteria:
i. the eNote bears a digital or electronic signature;
ii. the Hash Value of the eNote indicated in the MERS eRegistry
matches the Hash Value of the eNote as reflected in the eVault;
iii. there is a single Authoritative Copy of the eNote, as applicable
and within the meaning of Section 9-105 of the UCC or Section 16 of the UETA
or Section 7021 of E-Sign, as applicable, that is held in the eVault;
iv. the Location status of the eNote on the MERS eRegistry reflects
the MERS Org ID of the Custodian;
v. the Controller status of the eNote on the MERS eRegistry
reflects the MERS Org ID of Agent;
vi. the Delegatee status of the eNote on the MERS eRegistry reflects
the MERS Org ID of Custodian;
vii. the Master Servicer Field status of the eNote on the MERS
eRegistry reflects the MERS Org ID of Seller in its capacity as Servicer until
being changed in connection with a permitted Transfer of Control to Seller, a
Takeout Investor or a designee of Seller;
viii. the Subservicer Field status of the eNote on the MERS eRegistry
is blank;
ix. there is no Control Failure, eNote Replacement Failure or
Unauthorized Servicing Modification with respect to such eNote;
x. the eNote is (A) a valid and enforceable Transferable Record or
(b)(i) acceptable to Fannie Mae or Freddie Mac and (ii) comprises “electronic
chattel paper”, a “general intangible” or a “payment intangible” within the
meaning of the UCC;
xi. there is no defect with respect to the eNote that would result in
Agent having less than full rights, benefits and defenses of “Control” (within the
meaning of the UETA or the UCC, as applicable) of the Transferable Record;
xii. there is no paper copy of the eNote in existence nor has the
eNote been papered-out;
24
118109294\V-13
xiii. the eNote is enforceable under the laws of the jurisdiction where
it was executed;
xiv. Seller has complied in all material respects with the rules and
procedures of MERS in connection with the servicing of all Purchased Loans that
are registered with MERS and, with respect to Purchased Loans that are
eMortgage Loans, the maintenance of the related eNotes on the MERS eRegistry
for as long as such Purchased Loans are so registered; and
xv. With respect to each Loan that was originated using remote
online notarization, upon Buyer’s or Agent’s request, Seller shall provide Buyer
and Agent with a copy of any recordings of such remote online notarizations by
any applicable county recorder in the county in which the Mortgaged Property is
located, if such documentation is recorded, and ensure that any such recordings
will be transferred to, or available for access by, Buyer and Agent or their
respective designees upon the occurrence of a Default hereunder.
(aa) Schedule 12(c) of the Agreement is hereby deleted in its entirety and replaced
with Exhibit A attached hereto.
Section 2. Seller Name Change. Seller has publicly announced that as of July 31,
2021, it has formally changed its name from Quicken Loans, LLC to Rocket Mortgage, LLC. It is
expressly agreed that no amendments to this Agreement or any other Program Document shall be required
in connection with such change of the Seller’s name; provided that any Uniform Commercial Code
financing statements filed in connection with the Program Documents shall be amended to the extent, and
within the timeframe, required by the Uniform Commercial Code. Following the effective date of such
name change by the Seller, all references in the Program Documents to Quicken Loans, LLC shall be
deemed to refer to Rocket Mortgage, LLC. Promptly following the date hereof, Seller agrees to deliver to
Buyer and Agent:
(a) an executed Officer’s Certificate of Rocket Mortgage, LLC certifying the name
change, together with documentation as to the name change reasonably required by the Buyer and
a Certificate of Good Standing of Rocket Mortgage, LLC; and
(b) an executed Power of Attorney in the form required under the Agreement from
Rocket Mortgage, LLC.
Section 3. Defined Terms. Any terms capitalized but not otherwise defined herein
shall have the respective meanings set forth in the Agreement.
Section 4. Effectiveness. This Amendment Number Four shall become effective as
of the date that the Agent shall have received:
(a) counterparts hereof duly executed by each of the parties hereto,
25
118109294\V-13
(b) counterparts of that certain Amendment Number Three to the Pricing Side Letter,
dated as of the date hereof, duly executed by each of the parties thereto, and
(c) counterparts of that certain Addendum to Electronic Tracking Agreement for
eNotes.
Section 5. Fees and Expenses. Seller agrees to pay to Buyer and Agent all
reasonable, documented out of pocket costs and expenses incurred by Buyer or Agent in connection with
this Amendment Number Four (including all reasonable fees and out of pocket costs and expenses of
Buyer’s or Agent’s legal counsel) in accordance with Section 25 of the Agreement.
Section 6. Representations. Seller hereby represents to Buyer and Agent that as of
the date hereof, Seller is in full compliance with all of the terms and conditions of the Agreement and
each other Program Document and no Default or Event of Default has occurred and is continuing under
the Agreement or any other Program Document.
Section 7. Binding Effect; Governing Law. THIS AMENDMENT NUMBER
FOUR SHALL BE BINDING AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND
THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS. THIS AMENDMENT
NUMBER FOUR SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WHICH SHALL GOVERN).
Section 8. Counterparts. This Amendment Number Four may be executed by each
of the parties hereto on any number of separate counterparts, each of which shall be an original and all of
which taken together shall constitute one and the same instrument. The parties intend that faxed
signatures, electronically imaged signatures such as .pdf files and electronic signatures shall constitute
original signatures and are binding on all parties.
Section 9. Limited Effect. Except as amended hereby, the Agreement shall
continue in full force and effect in accordance with its terms. Reference to this Amendment Number Four
need not be made in the Agreement 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
Agreement, any reference in any of such items to the Agreement being sufficient to refer to the
Agreement as amended hereby.
[Signature Page Follows]
26
118109294\V-13
IN WITNESS WHEREOF, Seller, Buyer and Agent have caused this Amendment Number Four
to be executed and delivered by their duly authorized officers as of the Amendment Effective Date.
ROCKET MORTGAGE, LLC (f/k/a QUICKEN
LOANS, LLC.)
(Seller)
By: /s/ Robert P Wilson
Name: Rob Wilson
Title: Treasurer
MORGAN STANLEY BANK, N.A.
(Buyer)
By: /s/ Todor Glogov
Name: Todor Glogov
Title: Authorized Signatory
MORGAN STANLEY MORTGAGE CAPITAL
HOLDINGS LLC
(Agent)
By: /s/ Michael Calandra
Name: Michael Calandra
Title: Authorized Signatory
118109294\V-13
EXHIBIT A
Schedule 12(c)
Litigation
(attached)
118109294\V-13
I. Standard Business Litigation
As a residential mortgage lender originating, closing and servicing loans in all 50 states, Quicken
Loans, LLC may, at any point in time, be named as a party to dozens of legal proceedings which arise in
the ordinary course of business, such as actions alleging improper lending practices, improper servicing,
quiet title actions, improper foreclosure practices, violations of consumer protection laws, etc. In many of
these actions, Quicken Loans may not be the real party of interest, but it may appear in the pleadings
because it is in the chain of title to property over which there may be a dispute. In other cases, such as
lien avoidance cases brought in bankruptcy, Quicken Loans is insured by title insurance and the case is
turned over to the title insurer who tenders our defense.
As to other matters that arise in the ordinary course, management does not believe that the amount of
liability, if any, for any of the pending matters individually or in the aggregate will materially affect
Quicken Loans’ consolidated financial position. However, litigation can have a significant effect on
Quicken Loans for other reasons such as defense costs, diversion of management focus and resources,
and other factors. To the best of Quicken Loans’ information and belief, there are no outstanding
judgments, liens or orders that have not been satisfied.
II. Non-Standard Business Litigation
Case Title Court Case Number Nature of Action Description of Claims Date Served
Phillip Alig, et al. v.
Quicken Loans Inc.,
et al.
US Court of
Appeals for the
Fourth Circuit
11-c-428 Lender Liability Class action lawsuit
alleging violation of state
consumer protection
statutes for including the
homeowners’ estimated
home values on appraisal
order forms.
06/25/2012
Erik Mattson v.
Quicken Loans Inc.,
et al.
US District Court
for the District of
Oregon
3:17-cv-01840 Consumer
Protection
Putative class action
alleges violations of the
Telephone Consumer
Protection Act by claiming,
among other things, that:
(a) QL called him, without
express consent, even
though his number was on
the national DNC list; and
(b) QL called him without
having the proper
procedures in place for
maintaining an internal do
not call list.
11/29/2017
Uzezi Ajomale v.
Quicken Loans, Inc.
and Corelogic Credco,
LLC
US Court of
Appeals for the
Eleventh Circuit
20-12952 Fair Credit
Reporting Act
Putative class action
alleging Quicken Loans
failed to provide plaintiff
(and a class of others) with
a credit score disclosure
notice as required by the
Fair Credit Reporting Act.
* This case was dismissed
by the district court and
affirmed on appeal (in
QL’s favor), but deadlines
for further appeal have not
expired.
12/15/2017
118109294\V-13
HouseCanary, Inc.
v. Quicken Loans
Inc., One Reverse
Mortgage, LLC, and
In-House Realty LLC
US District Court
for the Western
District of Texas, San
Antonio Division
5:18-cv-00519 Intellectual Property Lawsuit alleging that
Quicken Loans (and the
other defendants)
misappropriated
HouseCanary’s trade secret
information and
used the purported trade
secrets to their advantage.
03/21/2018
Amanda Hill v.
Quicken Loans Inc.
US District Court
for the Central
District of California
5:19-cv-00163 Consumer Protection Putative class action that
alleges Quicken Loans
violated the Telephone
Consumer Protection Act
by: (a) texting Plaintiff
(and a class of others),
without consent, through
the use of an automatic
telephone dialing system;
and (b) texting Plaintiff
(and a class of others) after
the individual revoked
consent.
01/28/2019
Richard Winters v.
Quicken Loans Inc.
US District Court for
the District of
Arizona
2:20-cv-00112 Consumer Protection Putative class action that
alleges Quicken Loans
violated the Telephone
Consumer Protection Act
by calling Plaintiff (and a
class of others), without
consent or after revoking
consent, through the use of
an automatic telephone
dialing system or an
artificial or prerecorded
voice.
01/23/2020
Samuel Voss v.
Quicken Loans LLC
and MERS
US District Court,
Southern District of
Ohio
1:20-cv-00756-
SJD
Consumer Protection Putative statewide class
action alleges Ohio
statutory violations for
failing to timely file
mortgage discharges.
08/24/2020
Donna Carter v.
Quicken Loans, LLC
US District Court,
District of
Massachusetts
20-11898 Consumer Protection Putative statewide class
action that alleges Quicken
Loans violated
Massachusetts state law by
placing more than two calls
to clients in a seven-day
period for purposes of debt
collection.
09/23/2020
Suzanne Viscuso v.
Quicken Loans, Inc.
Richland County
Circuit Court, South
Carolina
2021-CP-4001216 Consumer Protection Putative statewide class
action alleging data breach
and consumer protection
violations for email
disclosures.
03/22/2021
Mark Jordan, et al. v.
Quicken Loans Inc.,
et al.
Brooke County
Circuit Court, West
Virginia
19-C-27 Lender Liability/
Consumer Protection
Class action lawsuit
alleging violation of state
consumer protection
statutes for charging
illusory appraisal
management fee.
05/10/2021
III. Regulatory and Administrative Matters
As a non-depository mortgage company, Quicken Loans is regulated by and subject to various state
agencies that oversee and regulate mortgage lending and the activities of bank and/or non-bank financial
institutions. These state agencies are generally authorized to: issue licenses or registrations where state
law requires; conduct periodic on-site or remote audits or examinations of the regulated institution’s
books, files and practices; investigate consumer complaints; issue findings of audit or compliance
variances that may require refunds to borrowers for charges beyond those permitted under the state’s laws
118109294\V-13
or regulations; assess fines or penalties if administrative rules are not adhered to, and/or require other
corrective actions to be taken.
These agencies also have the authority to seek revocation of an institutions or individual’s license or
registration to operate as a mortgage lender or loan originator in the state. In the ordinary course of
business and in any given year, Quicken Loans participates in and responds to numerous regular periodic
state examinations. If the state agency issues a finding, Quicken Loans may dispute that finding or
attempt to reconcile any differences of opinion. In other instances, Quicken Loans may undertake
corrective action before being required to do so by the state regulator. In some states, the state’s attorney
general may also investigate consumer complaints regarding mortgage lending and issue subpoenas,
commence informal inquiries or formal investigations. As a licensed mortgage company Quicken Loans
is, in the ordinary course of business, subject to such inquiries and investigations. Although Quicken
Loans may currently be subject to various state examinations and consumer complaint inquiries,
management does not believe the outcomes of these examinations or inquiries, individually or in the
aggregate, will materially affect Quicken Loans consolidated financial position or operations.
Dated: July 12, 2021
118109294\V-13
REVOLVING CREDIT AGREEMENT
dated as of
August 10, 2021
among
ROCKET MORTGAGE, LLC,
as Borrower
The Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
___________________________
JPMORGAN CHASE BANK, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC.,
FIFTH THIRD BANK, NATIONAL ASSOCIATION
and
GOLDMAN SACHS BANK USA,
as Joint Lead Arrangers
JPMORGAN CHASE BANK, N.A.,
and
Exhibit 10.8
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH
NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
Execution Version
#94769971v22
MORGAN STANLEY SENIOR FUNDING, INC.,
as Joint Bookrunners
MORGAN STANLEY BANK, N.A.,
FIFTH THIRD BANK, NATIONAL ASSOCIATION
and
GOLDMAN SACHS BANK USA,
as Co-Syndication Agents
CREDIT SUISSE AG, NEW YORK BRANCH,
as Documentation Agent
2
2
#94769971v22
TABLE OF CONTENTS
Page
ARTICLE I Definitions........................................................................................................ 1
SECTION 1.01. Defined Terms.................................................................................. 1
SECTION 1.02. Classification of Loans and Borrowings.......................................... 43
SECTION 1.03. Terms Generally............................................................................... 43
SECTION 1.04. Accounting Terms; GAAP............................................................... 44
SECTION 1.05. Interest Rates; LIBOR Notification.................................................. 44
SECTION 1.06. [Reserved]........................................................................................ 45
SECTION 1.07. Divisions........................................................................................... 45
SECTION 1.08. Separate Administrative Account for any ECR Lenders................. 45
ARTICLE II The Credits...................................................................................................... 46
SECTION 2.01. Commitments................................................................................... 46
SECTION 2.02. Loans and Borrowings..................................................................... 46
SECTION 2.03. Requests for Revolving Borrowings................................................ 46
SECTION 2.04. [Reserved]........................................................................................ 47
SECTION 2.05. [Reserved]........................................................................................ 47
SECTION 2.06. [Reserved]........................................................................................ 47
SECTION 2.07. Funding of Borrowings.................................................................... 47
SECTION 2.08. Interest Elections.............................................................................. 48
SECTION 2.09. Termination and Reduction of Commitments.................................. 49
SECTION 2.10. Repayment of Loans; Evidence of Indebtedness............................. 49
SECTION 2.11. Prepayment of Loans........................................................................ 50
SECTION 2.12. Fees................................................................................................... 51
SECTION 2.13. Interest.............................................................................................. 51
SECTION 2.14. Alternate Rate of Interest................................................................. 52
SECTION 2.15. Increased Costs................................................................................. 54
SECTION 2.16. Break Funding Payments................................................................. 55
SECTION 2.17. Withholding of Taxes; Gross-Up Payments Free of Taxes.............. 56
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs......... 59
SECTION 2.19. Mitigation Obligations; Replacement of Lenders............................ 61
SECTION 2.20. Defaulting Lenders........................................................................... 62
SECTION 2.21. Incremental Revolving Facilities..................................................... 63
ARTICLE III Representations and Warranties.................................................................... 64
SECTION 3.01. Organization; Powers....................................................................... 65
SECTION 3.02. Authorization; Enforceability........................................................... 65
SECTION 3.03. Governmental Approvals; No Conflicts........................................... 65
SECTION 3.04. Financial Condition; No Material Adverse Change......................... 65
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SECTION 3.05. Properties.......................................................................................... 65
SECTION 3.06. Litigation and Environmental Matters............................................. 66
SECTION 3.07. Compliance with Laws and Agreements.......................................... 66
SECTION 3.08. Investment Company Status............................................................. 66
SECTION 3.09. Taxes................................................................................................ 66
SECTION 3.10. ERISA.............................................................................................. 67
SECTION 3.11. Disclosure......................................................................................... 67
SECTION 3.12. Anti-Corruption Laws and Sanctions............................................... 67
SECTION 3.13. Affected Financial Institutions......................................................... 67
SECTION 3.14. [Reserved]........................................................................................ 67
SECTION 3.15. Margin Regulations.......................................................................... 67
SECTION 3.16. Solvency........................................................................................... 68
SECTION 3.17. Subsidiaries...................................................................................... 68
SECTION 3.18. Employee Matters............................................................................ 68
SECTION 3.19. Approved Company......................................................................... 68
ARTICLE IV Conditions..................................................................................................... 68
SECTION 4.01. Effective Date................................................................................... 68
SECTION 4.02. Each Credit Event............................................................................. 70
ARTICLE V Affirmative Covenants................................................................................... 70
SECTION 5.01. Financial Statements; Ratings Change and Other Information........ 70
SECTION 5.02. Notices of Material Events............................................................... 73
SECTION 5.03. Existence; Conduct of Business....................................................... 73
SECTION 5.04. Payment of Obligations.................................................................... 74
SECTION 5.05. Maintenance of Properties; Insurance.............................................. 74
SECTION 5.06. Books and Records; Inspection Rights............................................. 74
SECTION 5.07. Compliance with Laws..................................................................... 74
SECTION 5.08. Use of Proceeds................................................................................ 74
SECTION 5.09. Approved Company......................................................................... 75
ARTICLE VI Negative Covenants...................................................................................... 75
SECTION 6.01. Indebtedness..................................................................................... 75
SECTION 6.02. Liens................................................................................................. 78
SECTION 6.03. Fundamental Changes...................................................................... 80
SECTION 6.04. [Reserved]........................................................................................ 80
SECTION 6.05. [Reserved]........................................................................................ 80
SECTION 6.06. [Reserved]........................................................................................ 80
SECTION 6.07. Restricted Payments......................................................................... 80
SECTION 6.08. Transactions with Affiliates............................................................. 81
SECTION 6.09. [Reserved]........................................................................................ 82
SECTION 6.10. Financial Covenants......................................................................... 82
ARTICLE VII Events of Default......................................................................................... 83
SECTION 7.01. Events of Default.............................................................................. 83
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SECTION 7.02. Remedies Upon an Event of Default................................................ 84
SECTION 7.03. Application of Payments.................................................................. 85
ARTICLE VIII The Administrative Agent.......................................................................... 86
SECTION 8.01. Authorization and Action................................................................. 86
SECTION 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc........ 88
SECTION 8.03. Posting of Communications............................................................. 89
SECTION 8.04. The Administrative Agent Individually........................................... 91
SECTION 8.05. Successor Administrative Agent...................................................... 91
SECTION 8.06. Acknowledgements of Lenders........................................................ 92
SECTION 8.07. Certain ERISA Matters.................................................................... 94
ARTICLE IX Miscellaneous................................................................................................ 95
SECTION 9.01. Notices.............................................................................................. 95
SECTION 9.02. Waivers; Amendments..................................................................... 96
SECTION 9.03. Expenses; Limitation of Liability; Indemnity, Etc........................... 97
SECTION 9.04. Successors and Assigns.................................................................... 99
SECTION 9.05. Survival............................................................................................ 103
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution...... 103
SECTION 9.07. Severability....................................................................................... 104
SECTION 9.08. [Reserved]........................................................................................ 104
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.......... 104
SECTION 9.10. WAIVER OF JURY TRIAL............................................................ 105
SECTION 9.11. Headings........................................................................................... 106
SECTION 9.12. Confidentiality.................................................................................. 106
SECTION 9.13. Material Non-Public Information..................................................... 106
SECTION 9.14. Interest Rate Limitation.................................................................... 107
SECTION 9.15. No Fiduciary Duty, Etc.................................................................... 107
SECTION 9.16. USA PATRIOT Act......................................................................... 108
SECTION 9.17. Acknowledgement and Consent to Bail-In of Affected Financial
Institutions............................................................................................................................
108
SCHEDULES:
Schedule 2.01A – Commitments
Schedule 3.06 – Disclosed Matters
Schedule 3.17 – Subsidiaries
Schedule 6.01 – Existing Indebtedness
Schedule 6.02 – Existing Liens
Schedule 6.08 – Existing Transactions with Affiliates
EXHIBITS:
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Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Borrowing Request
Exhibit C – Form of Interest Election Request
Exhibit D – [Reserved]
Exhibit E-1 – U.S. Tax Compliance Certificate (For Non-U.S. Lenders that are not Partnerships
for U.S. Federal Income Tax Purposes)
Exhibit E-2 – U.S. Tax Compliance Certificate (For Non-U.S. Participants that are not
Partnerships for U.S. Federal Income Tax Purposes)
Exhibit E-3 – U.S. Tax Compliance Certificate (For Non-U.S. Participants that are Partnerships
for U.S. Federal Income Tax Purposes)
Exhibit E-4 – U.S. Tax Compliance Certificate (For Non-U.S. Lenders that are Partnerships for
U.S. Federal Income Tax Purposes)
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REVOLVING CREDIT AGREEMENT (this “Agreement”), dated as of August 10,
2021, among ROCKET MORTGAGE, LLC, a Michigan limited liability company, the
LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION I.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the
Alternate Base Rate.
“Acquired Debt” means Indebtedness of a Person existing at the time the Person merges
with or into a the Borrower or a Subsidiary or becomes a Subsidiary and not incurred in
connection with, or in contemplation of, the Person merging with or into or becoming a
Subsidiary.
“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal
to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
“Administrative Agent” means JPMorgan Chase Bank, N.A. in its capacity as
administrative agent for the Lenders hereunder.
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK
Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
“Agency” means FHA, Fannie Mae, Ginnie Mae, Freddie Mac, RHS or VA, as the
context may require.
“Agent-Related Person” has the meaning assigned to it in Section 9.03(d).
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1%
and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is
not a Business Day, the immediately preceding Business Day) plus 1%; provided that for the
#94769971v22
purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO
Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the
Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO
Rate shall be effective from and including the effective date of such change in the Prime Rate,
the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being
used as an alternate rate of interest pursuant to Section 2.14 (for the avoidance of doubt, only
until the Benchmark Replacement has been determined pursuant to Section 2.14(b)), then the
Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined
without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as
determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be
1.00% for purposes of this Agreement.
“Ancillary Document” has the meaning assigned to it in Section 9.06(b).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction
applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to
bribery, corruption or anti-money laundering.
“Applicable Party” has the meaning assigned to it in Section 8.03(c).
“Applicable Percentage” means, with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment; provided that, in the case of Section
2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of
the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such
Lender’s Commitment. If the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Commitments most recently in effect, giving
effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of
determination.
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“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar
Revolving Loan, or with respect to the commitment fees payable hereunder, as the case may be,
the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurodollar
Spread” or “Commitment Fee Rate”, as the case may be, based upon the ratings by Moody’s and
S&P, respectively, applicable on such date to the Credit Rating:
Level
Credit Rating
(S&P / Moody’s)
Eurodollar Spread
ABR Spread
Commitment
Fee Rate
I > BBB / Baa2 [***] [***] [***]
II BBB- / Baa3 [***] [***] [***]
III BB+ / Ba1 [***] [***] [***]
IV < BB / Ba2 [***] [***] [***]
For the purposes of the foregoing, (a) the Credit Rating shall be deemed to be (i) Level
IV, if the Borrower has no public Credit Rating and (ii) if the Borrower has one public Credit
Rating, such Credit Rating, (b) if the Borrower shall maintain a public rating from two Rating
Agencies, then the higher of such Credit Ratings shall apply, unless there is a split in Credit
Ratings of more than one ratings level, in which case the Credit Rating that is one level lower
than the higher of the Borrower’s two Credit Ratings shall apply; provided that if the Credit
Ratings established or deemed to have been established by any Rating Agency shall be changed
(other than as a result of a change in the rating system of such Rating Agency), such change shall
be effective as of the date on which it is first announced by the applicable Rating Agency,
irrespective of when notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise; provided that if any
Lenders received interest for any period based on an Applicable Rate that is less than that which
would have been applicable had such ratings change been reflected, within five Business Days
after receipt of a written demand therefor by the Administrative Agent, the Borrower shall pay to
the Administrative Agent for the account of the Lenders the accrued additional interest as a result
of such increased Applicable Rate rates; provided, further, that if any Lenders received any
amounts for any period based on an Applicable Rate that is greater than that which would have
been applicable had such ratings change been reflected, within five Business Days after receipt
of a written demand therefor by the Borrower, the Lenders shall pay to the Administrative Agent
for the account of the Borrower the excess amounts paid as a result of such decreased Applicable
Rate rates, and the Administrative Agent shall promptly distribute such amounts to the Borrower.
Each change in the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective date of the next
such change. If the rating system of Moody’s or S&P shall change, or if any such Rating
Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and
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the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating
system or the unavailability of ratings from such Rating Agency and, pending the effectiveness
of any such amendment, the Applicable Rate shall be determined by reference to the rating most
recently in effect prior to such change or cessation.
“Approved Electronic Platform” has the meaning assigned to it in Section 8.03(a).
“Arrangers” means, individually or collectively, JPMorgan Chase Bank, N.A., Morgan
Stanley Senior Funding, Inc., Fifth Third Bank, National Association and Goldman Sachs Bank
USA, in their capacities as joint lead arrangers hereunder.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other
form (including electronic records generated by the use of an electronic platform) approved by
the Administrative Agent.
“Availability Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitments.
“Available Tenor” means, as of any date of determination and with respect to the then-
current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest
calculated with reference to such Benchmark, as applicable, that is or may be used for
determining the length of an Interest Period pursuant to this Agreement as of such date and not
including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from
the definition of “Interest Period” pursuant to clause (f) of Section 2.14.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the
applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the
European Union, the implementing law, regulation rule or requirement for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation Schedule and (b)
with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as
amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other
financial institutions or their affiliates (other than through liquidation, administration or other
insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as
now and hereafter in effect, or any successor statute.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject
of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar
Person charged with the reorganization or liquidation of its business appointed for it, or, in the
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good faith determination of the Administrative Agent, has taken any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or
has had any order for relief in such proceeding entered in respect thereof; provided that a
Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of
any ownership interest, in such Person by a Governmental Authority or instrumentality thereof,
unless such ownership interest results in or provides such Person with immunity from the
jurisdiction of courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permits such Person (or such Governmental Authority or
instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by
such Person.
“Benchmark” means, initially, LIBO Rate; provided that if a Benchmark Transition
Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related
Benchmark Replacement Date have occurred with respect to LIBO Rate or the then-current
Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that
such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) or
clause (c) of Section 2.14.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth
in the order below that can be determined by the Administrative Agent for the applicable
Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement
Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by the
Administrative Agent and the Borrower as the replacement for the then-current Benchmark for
the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a replacement benchmark rate or the mechanism for determining such a rate
by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention
for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-
denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement
Adjustment; provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is
displayed on a screen or other information service that publishes such rate from time to time as
selected by the Administrative Agent in its reasonable discretion; provided further that,
notwithstanding anything to the contrary in this Agreement or in any other Loan Document,
upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR
Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall
revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark
Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso
above).
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If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above
would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the
purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the
then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest
Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement”, the
first alternative set forth in the order below that can be determined by the Administrative Agent:
(a) the spread adjustment, or method for calculating or determining such spread
adjustment (which may be a positive or negative value or zero), as of the Reference Time such
Benchmark Replacement is first set for such Interest Period that has been selected or
recommended by the Relevant Governmental Body for the replacement of such Benchmark with
the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
(b) the spread adjustment (which may be a positive or negative value or zero) as of the
Reference Time such Benchmark Replacement is first set for such Interest Period that would
apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be
effective upon an index cessation event with respect to such Benchmark for the applicable
Corresponding Tenor; and
(2) for purposes of clause (3) of the definition of “Benchmark Replacement”, 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 by the Administrative Agent and the
Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a spread adjustment, or method for calculating or determining such spread
adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement
Date or (ii) any evolving or then-prevailing market convention for determining a spread
adjustment, or method for calculating or determining such spread adjustment, for the
replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for
dollar-denominated syndicated credit facilities; provided that, in the case of clause (1) above,
such adjustment is displayed on a screen or other information service that publishes such
Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent
in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including changes to the
definition of “Alternate Base Rate,” the definition of “Business Day”, the definition of “Interest
Period,” timing and frequency of determining rates and making payments of interest, timing of
borrowing requests or prepayment, conversion or continuation notices, length of lookback
periods, the applicability of breakage provisions, and other technical, administrative or
operational matters) that the Administrative Agent decides in its reasonable discretion may be
appropriate to reflect the adoption and implementation of such Benchmark Replacement and to
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permit the administration thereof by the Administrative Agent in a manner substantially
consistent with market practice (or, if the Administrative Agent decides that adoption of any
portion of such market practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of such Benchmark Replacement exists,
in such other manner of administration as the Administrative Agent decides is reasonably
necessary in connection with the administration of this Agreement and the other Loan
Documents).
“Benchmark Replacement Date” means the earliest to occur of the following events with
respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the
later of (a) the date of the public statement or publication of information referenced therein and
(b) the date on which the administrator of such Benchmark (or the published component used in
the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of
such Benchmark (or such component thereof);
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date
of the public statement or publication of information referenced therein;
(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the
date a Term SOFR Notice is provided to the Lenders and the Borrower pursuant to Section
2.14(c); or
(4) in the case of an Early-Opt-in Election, the sixth (6th) Business Day after the date
notice of such Early Opt-in Election is provided to the Lenders, 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 Lenders, written notice of
objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement
Date occurs on the same day as, but earlier than, the Reference Time in respect of any
determination, the Benchmark Replacement Date will be deemed to have occurred prior to the
Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be
deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the
occurrence of the applicable event or events set forth therein with respect to all then-current
Available Tenors of such Benchmark (or the published component used in the calculation
thereof).
“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 such Benchmark (or the published component used in the calculation thereof) announcing that
such administrator has ceased or will cease to provide all Available Tenors of such Benchmark
(or such component thereof), permanently or indefinitely, provided that, at the time of such
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statement or publication, there is no successor administrator that will continue to provide any
Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof),
the Federal Reserve Board, the NYFRB, an insolvency official with jurisdiction over the
administrator for such Benchmark (or such component), a resolution authority with jurisdiction
over the administrator for such Benchmark (or such component) or a court or an entity with
similar insolvency or resolution authority over the administrator for such Benchmark (or such
component), which states that the administrator of such Benchmark (or such component) has
ceased or will cease to provide all Available Tenors of such Benchmark (or such component
thereof) permanently or indefinitely, provided that, at the time of such statement or publication,
there is no successor administrator that will continue to provide any Available Tenor of such
Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof)
announcing that all Available Tenors of such Benchmark (or such component thereof) are no
longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have
occurred with respect to any Benchmark if a public statement or publication of information set
forth above has occurred with respect to each then-current Available Tenor of such Benchmark
(or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time
that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred
if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all
purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y)
ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for
all purposes hereunder and under any Loan Document in accordance with Section 2.14.
“Beneficial Ownership Certification” means a certification regarding beneficial
ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code to
which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes
of the Plan Asset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of
the Code) the assets of any such “employee benefit plan” or “plan”.
“Bookrunners” means JPMorgan Chase Bank, N.A. and Morgan Stanley Senior Funding,
Inc., in their capacities as joint bookrunners hereunder.
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“Borrower” means Rocket Mortgage, LLC, a Michigan limited liability company.
“Borrowing” means a Revolving Borrowing.
“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03, which shall be substantially in the form of Exhibit B or any other
form approved by the Administrative Agent.
“Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall
also exclude any day on which banks are not open for dealings in dollar deposits in the London
interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases or financing leases on a balance sheet of such Person under
GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
“Cash Equivalents” means any of the following: (a) marketable direct obligations issued
by, or unconditionally guaranteed or insured by, the United States Government or issued by any
agency thereof, in each case maturing within ninety (90) days or less after the date of the
applicable financial statement reporting such amounts, (b) certificates of deposit, time deposits or
Eurodollar time deposits having maturities of ninety (90) days or less after the date of the
applicable financial statement reporting such amounts, or overnight bank deposits, issued by any
well-capitalized commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $500,000,000, (c) repurchase
obligations of any commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven (7) days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by
Moody’s and in either case maturing within ninety (90) days after the day of acquisition, (e)
securities with maturities of ninety (90) days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by S&P or A by
Moody’s, (f) securities with maturities of ninety (90) days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the requirements of
clause (b) of this definition, (g) shares of money market mutual or similar funds or (h) 70% of
the unencumbered marketable securities in the Borrower or its Subsidiaries’ accounts.
“Change in Control” means (a) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all the assets of the Borrower and its Subsidiaries, taken as a
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whole, to a person other than any of the Permitted Holders or (b) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group (within the meaning of
the Exchange Act and the rules of the SEC thereunder as in effect on the date hereof) other than
any of the Permitted Holders, of Equity Interests representing more than 40% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests of the
Borrower, unless the Permitted Holders have, at such time, the right or the ability by voting
power, contract or otherwise to elect or designate for election at least a majority of the members
of the board of directors or equivalent governing body of the Borrower.
Notwithstanding the foregoing: (i) the transfer of assets between or among the Borrower
and its Subsidiaries shall not itself constitute a Change in Control and (ii) a Person or group shall
not be deemed to have beneficial ownership of securities subject to a stock purchase agreement,
merger agreement or similar agreement (or voting or option agreement related thereto) prior to
the consummation of the transactions contemplated by such agreement.
In addition, notwithstanding the foregoing, a transaction in which the Borrower or a
parent entity of the Borrower becomes a subsidiary of another Person (such Person, the “New
Parent”) shall not constitute a Change in Control if the equityholders of the Borrower or such
parent entity immediately prior to such transaction beneficially own, directly or indirectly
through one or more intermediaries, at least a majority of the total voting power of the equity
interests of the Borrower or such New Parent immediately following the consummation of such
transaction.
“Change in Law” means the occurrence after the date of this Agreement of (a) the
adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation, implementation or application thereof
by any Governmental Authority or (c) compliance by any Lender (or, for purposes of Section
2.15(b), by any lending office of such Lender or by such Lender’s holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement; provided that, notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection
therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in
Law,” regardless of the date enacted, adopted, issued or implemented.
“Charges” has the meaning assigned to it in Section 9.14.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commitment” means, with respect to each Lender, the amount set forth on Schedule
2.01 opposite such Lender’s name, or in the Assignment and Assumption or other documentation
or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial
Code) as provided in Section 9.04(b)(ii)(C), pursuant to which such Lender shall have assumed
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its Commitment, as applicable, and giving effect to (a) any reduction in such amount from time
to time pursuant to Section 2.09, (b) any increases from time to time pursuant to an Increased
Commitment Supplement and (c) any reduction or increase in such amount from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04; provided that, at no time
shall the Revolving Credit Exposure of any Lender exceed its Commitment. The initial aggregate
amount of the Lenders’ Commitments is $1,000,000,000.
“Communications” has the meaning assigned to it in Section 8.03(c).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or branch profits
Taxes.
“Consolidated Net Income” means, for any period, the aggregate net income (or loss) of
the Borrower and its Subsidiaries for such period determined on a consolidated basis in
conformity with GAAP, provided that (without duplication):
(1) the net income or loss of any Person that is not a Subsidiary shall be excluded,
except to the extent of, in the case of net income, the dividends or other distributions actually
paid in cash to the Borrower or any of its Subsidiaries (subject to clause (3) below) by such
Person during such period;
(2) any net income (or loss) of any Person acquired in a pooling of interests
transaction shall be excluded for any period prior to the date of such acquisition;
(3) the net income (but not loss) of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of such net income would not
have been permitted for the relevant period by charter or by any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary
shall be excluded;
(4) any net after-tax gains or losses attributable to asset sales or the extinguishment of
Indebtedness shall be excluded;
(5) any net after-tax extraordinary, nonrecurring or unusual gains or losses or income
or expense or charge (less all fees and expenses relating thereto), any severance, relocation or
other restructuring expenses, curtailments or modifications to pension and post-retirement
employee benefit plans, excess pension charges (including, in each case, any cost or expense
related to employment of terminated employees), any expenses related to any reconstruction,
decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses and
fees, expenses or charges relating to closing costs, rebranding costs, acquisition integration costs,
opening costs, project start-up costs, business optimization costs, recruiting costs, signing,
retention or completion bonuses, litigation and arbitration costs, charges, fees and expenses
(including settlements), and expenses or charges related to any offering of Equity Interests or
debt securities, investment, acquisition, disposition, recapitalization or incurrence, issuance,
repayment, repurchase, refinancing, amendment or modification of Indebtedness (in each case,
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whether or not successful), and any fees, expenses, charges or change in control payments related
to the Transactions (including, with respect to the Transactions, any costs relating to auditing
prior periods, any transition-related expenses, and transaction expenses incurred before, on or
after the Effective Date), in each case, shall be excluded;
(6) the cumulative effect of a change in accounting principles shall be excluded;
(7) impairment charges or reversals shall be excluded;
(8) any net after-tax gains or losses (less all fees and expenses or charges relating
thereto) attributable to the early extinguishment or buy-back of Indebtedness, hedging
obligations or other derivative instruments shall be excluded;
(9) any (a) non-cash compensation charge or (b) costs or expenses realized or
resulting from stock option plans, employee benefit plans or post-employment benefit plans, or
grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock,
preferred stock or other rights shall be excluded; and
(10) to the extent covered by insurance and actually reimbursed, or, so long as such
Person has made a determination that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer and only to the extent that such amount is (i) not denied by the
applicable carrier in writing within 180 days and (ii) in fact reimbursed within 365 days
following the date of such evidence (with a deduction for any amount so added back to the extent
not so reimbursed within such 365 days), expenses with respect to liability or casualty events or
business interruption shall be excluded and (b) amounts estimated in good faith to be received
from insurance in respect of lost revenues or earnings in respect of liability or casualty events or
business interruption shall be included (with a deduction for amounts actually received up to
such estimated amount to the extent included in net income in a future period).
“Consolidated Total Assets” means the total assets of the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as shown on the balance sheet as
of the end of the most recent fiscal quarter for which financial statements have been delivered,
adjusted on a pro forma basis to reflect any acquisition or dispositions of assets.
“Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings
correlative thereto.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either
means a tenor (including overnight) or an interest payment period having approximately the
same length (disregarding business day adjustment) such Available Tenor.
“Credit Enhancement Agreements” means, collectively, any documents, instruments,
guarantees or agreements entered into by the Borrower, any of its Subsidiaries or any
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Securitization Entity for the purpose of providing credit support (that is Customary) with respect
to any Funding Indebtedness or Permitted Securitization Indebtedness.
“Credit Party” means the Administrative Agent or any Lender.
“Credit Rating” means the public rating that has been most recently announced by a
Rating Agency with respect to the corporate family rating or corporate rating of the Borrower.
“Currency Agreement” means, with respect to any specified Person, any foreign
exchange contract, currency swap agreement, futures contracts, options on futures contracts or
other similar agreement or arrangement designed to protect such Person or any of its subsidiaries
against fluctuations in currency values.
“Customary” means that in the good faith judgment of the Borrower’s senior
management, (a) the terms are customary in the market or (b) such terms are not customary but
are not materially worse for the Lenders than customary terms.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate
(which may include a lookback) being established by the Administrative Agent in accordance
with the conventions for this rate selected or recommended by the Relevant Governmental Body
for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative
Agent decides that any such convention is not administratively feasible for the Administrative
Agent, then the Administrative Agent may establish another convention in its reasonable
discretion.
“Debt-to-Equity Ratio” means, on any date of determination, the ratio of (1) (x) the
aggregate amount of Non-Funding Indebtedness of the Borrower and its Subsidiaries on a
consolidated basis on such date of determination less (y) Unrestricted Cash (but excluding in all
cases cash proceeds from Indebtedness incurred on the date of determination) of the Borrower
and its Subsidiaries to (2) Total Shareholders’ Equity on such date of determination.
“Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of
the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to any
Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i)
above, such Lender notifies the Administrative Agent in writing that such failure is the result of
such Lender’s good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied, (b) has notified the
Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does
not intend or expect to comply with any of its funding obligations under this Agreement (unless
such writing or public statement indicates that such position is based on such Lender’s good faith
determination that a condition precedent (specifically identified and including the particular
default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit, (c) has failed, within three Business Days
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after request by a Credit Party, acting in good faith, to provide a certification in writing from an
authorized officer of such Lender that it will comply with its obligations (and is financially able
to meet such obligations as of the date of certification) to fund prospective Loans under this
Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this
clause (c) upon such Credit Party’s receipt of such certification in form and substance
satisfactory to it and the Administrative Agent or (d) has become the subject of (A) a Bankruptcy
Event or (B) a Bail-In Action.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in
one transaction or in a series of transactions and whether effected pursuant to a division or
otherwise) of any property by any Person (including any sale and leaseback transaction and any
issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.
“Disqualified Equity Interests” means Equity Interests that by their terms or upon the
happening of any event are (a) required to be redeemed or redeemable at the option of the holder
prior to the Maturity Date for consideration other than Qualified Equity Interests or (b)
convertible at the option of the holder into Disqualified Equity Interests or exchangeable for
Indebtedness; provided that Equity Interests will not constitute Disqualified Equity Interests
solely because of provisions giving holders thereof the right to require repurchase or redemption
upon an “asset sale” or “change in control” occurring prior to the Maturity Date if those
provisions (i) are no more favorable to the holders thereof than to the Lenders under this
Agreement and (ii) specifically state that repurchase or redemption pursuant thereto will not be
required prior to any required prepayments under this Agreement.
“Documentation Agent” means Credit Suisse AG, New York Branch, in its capacity as a
documentation agent hereunder.
“dollars” or “$” refers to lawful money of the United States of America.
“Early Opt-in Election” means, if the then-current Benchmark is LIBO Rate, the
occurrence of:
(1) a notification by the Administrative Agent to (or the request by the Borrower to
the Administrative Agent to notify) each of the other parties hereto that at least
five
currently outstanding 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 syndicated credit facilities are identified in such notice
and are publicly available for review), and
(2) the joint election by the Administrative Agent and the Borrower to trigger a
fallback from LIBO Rate and the provision by the Administrative Agent of
written notice of such election to the Lenders.
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“Earnings Credit Agreement” means an agreement among a Lender, the Borrower and the
Administrative Agent, in a form acceptable to such parties, which such agreement is expressly
identified therein as an “Earnings Credit Agreement” and the relevant Lender as an “ECR
Lender”, each for purposes of this Agreement, providing that certain specified earnings
generated by such Lender under other arrangements with the Borrower are agreed by the
Borrower and such Lender to be the subject of “earnings credits” with respect to payments of
interest (as specified therein, but not with respect to principal, fees or other payments owing to
such Lender hereunder) to such Lender by the Borrower, all on and subject to the terms and
conditions therein. No Earnings Credit Agreement shall affect the rights or obligations of any
Credit Party other than such ECR Lender (and in the case of such ECR Lender, solely with
respect to the matters referred to therein), and any payments adjusted in accordance with the
terms thereof shall be deemed, for purposes of this Agreement and any provision providing for
“ratable” or “pro rata” payment or obligation among Lenders (including without limitation
Section 2.18), as being made in the amount thereof prior to such adjustment for such earnings
credit in accordance with the terms thereof.
“EBITDA” means, for any period, the sum of:
(1) Consolidated Net Income, plus
(2) Fixed Charges, to the extent deducted in calculating Consolidated Net Income,
plus
(3) to the extent included in calculating Consolidated Net Income and as determined
on a consolidated basis for the Borrower and its Subsidiaries in conformity with GAAP:
(A) income taxes;
(B) depreciation, amortization and all other non-cash items reducing Consolidated Net
Income (not including non-cash charges in a period which reflect accrued expenses paid or to be
paid in another period in cash), less all non-cash items increasing Consolidated Net Income (but
excluding any such amortization or non-cash items in respect of Funding Indebtedness);
(C) all non-recurring losses (and minus all non-recurring gains);
(D) costs associated with exit and disposal activities incurred in connection with a
restructuring as defined in ASC 420-10;
(E) non-controlling interest income (loss); and
(F) all losses (and minus all gains) resulting from any change in fair value of
Mortgage Servicing Rights due to (i) collection/realization of cash flows in respect of Mortgage
Servicing Rights and (ii) changes in model inputs and assumptions; plus
(4) business optimization expenses and other restructuring charges, reserves or
expenses (which, for the avoidance of doubt, shall include, without limitation, the effect of
inventory optimization programs, facility, branch, office or business unit closures, facility,
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#94769971v22
branch, office or business unit consolidations, retention, severance, systems establishment costs,
contract termination costs, future lease commitments and excess pension charges) and pre-
opening expenses, plus
(5) one-time costs associated with commencing Public Company Compliance; minus
(6) the fair value of Mortgage Servicing Rights capitalized by the Borrower and its
Subsidiaries during such period;
provided that, with respect to any Subsidiary, such items will be added only to the extent and in the same
proportion that the relevant Subsidiary’s net income was included in calculating Consolidated Net
Income.
“ECR Lender” means any Lender that has entered into an Earnings Credit Agreement.
“ECR Lender Account” has the meaning set forth in Section 1.08.
“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an EEA
Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of
an institution described in clause (a) of this definition, or (c) any financial institution established
in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b)
of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person
entrusted with public administrative authority of any EEA Member Country (including any
delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).
“Electronic Signature” means an electronic sound, symbol, or process attached to, or
associated with, a contract or other record and adopted by a Person with the intent to sign,
authenticate or accept such contract or record.
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered
into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation
or reclamation of natural resources, (iii) the management, release or threatened release of any
Hazardous Material or (iv) health and safety matters as they relate to exposure to Hazardous
Materials.
“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
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#94769971v22
Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest, but excluding any debt securities convertible into
any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the
Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an event for which the 30
day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans
or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the
Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt
by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the
Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in endangered or critical status, within
the meaning of Title IV of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published
by the Loan Market Association (or any successor Person), as in effect from time to time.
“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
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“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excess Spread Sale” means any sale in the ordinary course of business and for fair
market value of any excess servicing fee spread under any Mortgage Servicing Right.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a
Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes
imposed on or measured by net income (however denominated), franchise Taxes, and branch
profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the
laws of, or having its principal office or, in the case of any Lender, its applicable lending office
located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are
Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on
amounts payable to or for the account of such Lender with respect to an applicable interest in a
Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires
such interest in the Loan or Commitment (other than pursuant to an assignment request by the
Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each
case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were
payable either to such Lender’s assignor immediately before such Lender acquired the applicable
interest in a Loan or Commitment or to such Lender immediately before it changed its lending
office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and (d)
any withholding Taxes imposed under FATCA.
“Existing Credit Agreement” has meaning assigned to such term in Section 4.01(j).
“Fannie Mae” means the Federal National Mortgage Association or any successor.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively 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)(1) of the Code
and any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement, treaty or convention among Governmental Authorities and
implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB
based on such day’s federal funds transactions by depositary institutions, as determined in such
manner as shall be set forth on the NYFRB’s Website from time to time, and published on the
next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if
the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be
deemed to be zero for the purposes of this Agreement.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System
of the United States of America.
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“FHA” means the Federal Housing Administration, a subdivision of HUD, or any
successor.
“Financeable Assets” means (a) Receivables, (b) Residual Interests, (c) Servicing
Advances, (d) Securitization Assets, (e) REO Assets, and (f) to the extent not otherwise included,
any assets related thereto that are of the type transferred in connection with securitization
transactions involving assets such as, or similar to, such Receivables, Residual Interests,
Servicing Advances, Securitization Assets, or REO Assets, as the case may be, including, but not
limited to, related Securitization Securities, mortgage related securities and derivatives, other
mortgage related receivables or other similar assets, interests in any of the foregoing and any
collections or proceeds of any of the foregoing.
“Financial Covenant” has the meaning assigned to it in Section 6.10.
“Financial Covenant Compliance” means compliance with the Financial Covenant levels
set forth in Section 6.10 as of the last day of the most recent fiscal quarter for which financial
statements have been delivered, whether or not such Financial Covenant is required to be tested
on such date, and on the proposed Borrowing date or on a Transaction Date, as applicable, if
such compliance were determined on such date; provided that, with respect to a proposed
Borrowing or a Restricted Payment, Tangible Net Worth may be calculated as of the last day of
the most recent fiscal quarter for which financial statements have been delivered (or as of the last
day of the most recent fiscal month for which financial statements are internally available) but
adjusted on a pro forma basis to reflect any Restricted Payments made after such quarter end or
month end and the Borrower’s good faith estimate of net income after such quarter end or month
end.
“Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.
“Fixed Charge Coverage Ratio” means, on any date (the “Transaction Date”), the ratio of
(x) the aggregate amount of EBITDA for the four fiscal quarters immediately prior to
the Transaction Date for which internal financial statements are available (the “Reference
Period”) to
(y) the aggregate Fixed Charges during such Reference Period.
In making the foregoing calculation,
(1) pro forma effect will be given to any Indebtedness, Disqualified Equity Interests
or Preferred Stock incurred during or after the Reference Period to the extent the Indebtedness is
outstanding or is to be incurred on the Transaction Date as if the Indebtedness, Disqualified
Equity Interests or Preferred Stock had been incurred on the first day of the Reference Period;
(2) pro forma calculations of interest on Indebtedness bearing a floating interest rate
will be made as if the rate in effect on the Transaction Date had been the applicable rate for the
entire Reference Period;
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(3) Fixed Charges related to any Indebtedness, Disqualified Equity Interests or
Preferred Stock no longer outstanding or to be repaid or redeemed, defeased or otherwise
discharged on the Transaction Date, except for Interest Expense accrued during the Reference
Period under a revolving credit to the extent of the commitment thereunder (or under any
successor revolving credit) (including under this Agreement) in effect on the Transaction Date,
will be excluded;
(4) pro forma effect will be given to:
(A) the acquisition or disposition of companies, divisions or lines of businesses or
other investments or purchases of Mortgage Servicing Rights or Servicing Advances by the
Borrower and its Subsidiaries, including any such action since the beginning of the Reference
Period by a Person that became a Subsidiary after the beginning of the Reference Period, and
(B) the discontinuation of any discontinued operations but, in the case of Fixed Charges,
only to the extent that the obligations giving rise to the Fixed Charges will not be obligations of
the Borrower or any Subsidiary following the Transaction Date that have occurred since the
beginning of the Reference Period as if such events had occurred, and, in the case of any
disposition, the proceeds thereof applied, on the first day of the Reference Period. To the extent
that pro forma effect is to be given to an acquisition or disposition of a company, division or line
of business, the pro forma calculation will be based upon the most recent four full fiscal quarters
for which the relevant financial information is available. The pro forma calculations shall be
made by a responsible accounting officer of the Borrower in good faith based on the information
reasonably available to it at the time of such calculation and may include cost savings and
operating expense reductions resulting from such investment, acquisition or purchase (whether or
not such cost savings or expense reductions would be allowable under Regulation S-X
promulgated under the Securities Act or any other regulation or policy of the SEC related
thereto).
(5) Any such pro forma calculation may include adjustments appropriate, in the
reasonable good faith determination of the Borrower as set forth in an Officer’s Certificate, to
reflect operating expense reductions and other operating improvements, synergies or cost savings
reasonably expected to result from the applicable events specified in clause (4) above.
“Fixed Charges” means, for any period, the sum of
(1) Interest Expense (excluding amortization or write-off of deferred financing costs,
discounts or premiums) for such period; and
(2) the product of
(x) cash and non-cash dividends paid, declared, accrued or accumulated on any
Disqualified Equity Interests or Preferred Stock of the Borrower or a Subsidiary, except for
dividends payable in the Borrower’s Qualified Stock or paid to the Borrower or to a Subsidiary,
and
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(y) a fraction, the numerator of which is one and the denominator of which is one
minus the sum of the currently effective combined Federal, state, local and foreign tax rate
applicable to the Borrower and its Subsidiaries.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as
of the execution of this Agreement, the modification, amendment or renewal of this Agreement
or otherwise) with respect to the LIBO Rate.
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S.
Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under
the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor.
“Funding Indebtedness” means (i) any Permitted Servicing Advance Facility
Indebtedness, (ii) any Permitted Warehousing Indebtedness, (iii) any Permitted Residual
Indebtedness, (iv) any Permitted Securitization Indebtedness, (v) any Indebtedness of the type set
forth in clauses (i) through (iv) of this definition that is acquired by the Borrower or any of its
Subsidiaries in connection with an acquisition permitted under this Agreement, (vi) Indebtedness
under any Credit Enhancement Agreements, (vii) any facility that combines any Indebtedness
under clauses (i), (ii), (iii), (iv), (v) or (vi) of this definition, and (viii) any refinancing of the
Indebtedness under clauses (i), (ii), (iii), (iv), (v), (vi) or (vii) of this definition existing on the
Effective Date or created thereafter, provided however, solely as of the date of the incurrence of
such Funding Indebtedness, the amount of the excess (determined as of the most recent date for
which internal financial statements are available), if any, of (1) the amount of any Indebtedness
incurred in accordance with this clause (viii) for which the holder thereof has contractual
recourse to the Borrower or its Subsidiaries to satisfy claims with respect thereto (excluding
recourse for carve-out matters such as fraud, misappropriation, breaches of representations,
warranties and covenants and misapplication and customary indemnities in connection with such
transactions) over (2) the aggregate (without duplication of amounts) Realizable Value of the
assets that secure such Indebtedness shall not be Funding Indebtedness (but shall not be deemed
to be a new incurrence of Indebtedness subject to the provisions of the covenant restricting
incurrence of Indebtedness, except with respect to, and solely to the extent of, any such excess
that exists upon the initial incurrence of such Indebtedness incurred under this clause (viii)).
“GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time.
“Ginnie Mae” means the Government National Mortgage Association or any successor.
“Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
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“GSE” means a government sponsored enterprise of the United States of America,
including, but not limited to, Fannie Mae, Freddie Mac, Government National Mortgage
Association, any Federal Home Loan Bank, and any public or privately owned successor entity
to any of the foregoing.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of business.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, per- and
polyfluoroalkyl substances, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
“Hedging Agreement” means (i) any interest rate swap agreement, interest rate cap
agreement or other agreement designed to protect against fluctuations in interest rates or (ii) any
foreign exchange forward contract, currency swap agreement or other agreement designed to
protect against fluctuations in foreign exchange rates.
“Highest Owner Tax Amount” means, with respect to all direct or indirect owners of the
Borrower and the payment of any Tax Distribution, an amount with respect to the direct or
indirect owner receiving the greatest proportionate allocation of taxable income attributable to its
direct or indirect ownership of the Borrower and/or any of its Subsidiaries in the applicable tax
period (or portion thereof) to which such payment relates (as a result of the application of
Section 704(c) of the Code or otherwise) (such owner, the “Reference Owner”), calculated by
multiplying (x) the aggregate taxable income allocated to such owner (excluding the tax
consequences resulting from any adjustment under Sections 743(b) and 734(b) of the Code in
such applicable taxable period (or portion thereof), by (y) the Hypothetical Tax Rate.
“HUD” means the U.S. Department of Housing and Urban Development or any successor
department or agency.
“Hypothetical Tax Rate” means the greater of (a) the highest combined marginal U.S.
federal, state and local tax rate for an individual resident in Michigan, New York City or
California (whichever is higher) and (b) the highest combined marginal U.S. federal, state and
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#94769971v22
local tax rate for a corporation that conducts no activities other than the activities of the
Borrower and its Subsidiaries, in each case applicable to income and gain attributable to the
Borrower and its Subsidiaries, taking into account (where relevant) the holding period of assets
held by the Borrower and its Subsidiaries, the taxable year in which such income or gain is
recognized by the Borrower and its Subsidiaries and the character of such income or gain, at the
time for U.S. federal income tax purposes.
“IBA” has the meaning assigned to such term in Section 1.05.
“Impacted Interest Period” has the meaning assigned to it in the definition of “LIBO
Rate.”
“Increased Commitment Supplement” means a supplement to this Agreement executed
pursuant to the terms of Section 2.21.
“Incremental Revolving Commitment” has the meaning assigned to such term in
Section 2.21(a).
“Incremental Revolving Facility” has the meaning assigned to such term in
Section 2.21(a).
“Incremental Revolving Loans” has the meaning assigned to such term in
Section 2.21(a).
“Indebtedness” means, with respect to any Person, without duplication, (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) within 90 days of
the date the related goods are delivered or services are rendered, arising in the ordinary course of
business, and other than to pay accrued expenses incurred in the ordinary course of business, (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 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, (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) any other indebtedness of such Person evidenced by a note, bond,
debenture or similar instrument; provided that, for purposes of this definition, the following shall
not be included as “Indebtedness”: loan loss reserves, deferred taxes arising from capitalized
excess service fees, operating leases, Qualified Subordinated Indebtedness, liabilities associated
with the Borrower’s or its Subsidiaries’ securitized Home Equity Conversion Mortgage (HECM)
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loan inventory where such securitization does not meet the GAAP criteria for sale treatment,
obligations under Hedging Agreements or transactions for the sale of mortgage loans.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with
respect to any payment made by or on account of any obligation of the Borrower under any Loan
Document and (b) to the extent not otherwise described in (a) hereof, Other Taxes.
“Indemnitee” has the meaning assigned to it in Section 9.03(c).
“Ineligible Institution” has the meaning assigned to it in Section 9.04(b).
“Information” has the meaning assigned to it in Section 9.12.
“Interest Election Request” means a request by the Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.08, which shall be substantially in the form
of Exhibit C or any other form approved by the Administrative Agent.
“Interest Expense” means, for any period, (a) the consolidated interest expense of the
Borrower and its Subsidiaries, plus, to the extent not included in such consolidated interest
expense, and to the extent incurred, accrued or payable by the Borrower or its Subsidiaries,
without duplication, (i) interest expense attributable to Capital Lease Obligations, (ii)
amortization of debt discount and debt issuance costs, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing, (vi) net costs associated with Hedging
Agreements hedging interest rates in respect of Indebtedness for borrowed money (including the
amortization of fees), (vii) any of the above expenses with respect to Indebtedness of another
Person Guaranteed by the Borrower or any of its Subsidiaries to the extent paid by the Borrower
or any Subsidiary, and (viii) any premiums, fees, discounts, expenses, and losses on the sale of
accounts receivable (and any amortization thereof) payable by the Borrower or any Subsidiary in
connection with a Securitization, but (b) excluding any commissions, discounts and other fees
and charges, including interest, on Funding Indebtedness or Non-Recourse Indebtedness of the
Borrower or its Subsidiaries, as determined on a consolidated basis and in accordance with
GAAP.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December and the Maturity Date and (b) with respect to any
Eurodollar Loan, the last day of each Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months’ duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period, and the Maturity
Date.
“Interest Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in
the calendar month that is one, three or six months thereafter, as the Borrower may elect;
provided that, (i) if any Interest Period would end on a day other than a Business Day, such
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Interest Period shall be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last Business Day of the
last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of
such Borrowing.
“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum
(rounded to the same number of decimal places as the LIBO Screen Rate) determined by the
Administrative Agent (which determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from interpolating on a linear basis between: (a) the
LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is
shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period
(for which that LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each
case, at such time.
“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 by the International Swaps and Derivatives Association, Inc. or such successor
thereto.
“IRS” means the United States Internal Revenue Service.
“Lender Parent” means, with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a subsidiary.
“Lender-Related Person” has the meaning assigned to it in Section 9.03(b).
“Lenders” means the Persons listed on Schedule 2.01A and any other Person that shall
have become a party hereto pursuant to an Assignment and Assumption or otherwise, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or
otherwise.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or
liabilities of any kind.
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be
available at such time for such Interest Period (an “Impacted Interest Period”), then the LIBO
Rate shall be the Interpolated Rate.
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“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar
Borrowing for any Interest Period, the London interbank offered rate as administered by ICE
Benchmark Administration (or any other Person that takes over the administration of such rate
for U.S. Dollars for a period equal in length to such Interest Period as displayed on such day and
time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the
event such rate does not appear on a Reuters page or screen, on any successor or substitute page
on such screen that displays such rate, or on the appropriate page of such other information
service that publishes such rate from time to time as selected by the Administrative Agent in its
reasonable discretion); provided that if the LIBO Screen Rate as so determined would be less
than zero, such rate shall be deemed to zero for the purposes of this Agreement.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any
of the foregoing) relating to such asset; provided that in no event shall an operating lease be
deemed to constitute a Lien.
“Liquidity” means, in each case, of the Borrower and its Subsidiaries, (a) Unrestricted
Cash, (b) unfunded advance capacity under committed and uncommitted Warehousing Facilities
(calculated as (x) the lesser of (i) the credit, funding, or aggregate outstanding purchase price
limit and (ii) aggregate borrowing base value of pledged, sold, or assigned assets less (y) the
aggregate purchase price or advanced and unpaid principal amount of all outstanding
transactions or advances against the related pledged, sold, or assigned assets), (c) self-funded
originations to the extent that there is sufficient additional capacity to fund such assets under
committed and uncommitted Warehousing Facilities, without duplication with part (b) above and
(d) availability under committed facilities other than the Revolving Facility, and subject to
borrowing base or collateral availability if secured.
“LLC” means any Person that is a limited liability company under the laws of its
jurisdiction of formation.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, the
promissory notes executed under this Agreement and any agreements entered into in connection
herewith by the Borrower with or in favor of the Administrative Agent and/or the Lenders.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
“Margin Stock” means margin stock within the meaning of Regulations T, U and X, as
applicable.
“Material Adverse Change” means any event, development or circumstances that has had
or would reasonably be expected to have a Material Adverse Effect.
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“Material Adverse Effect” means a material adverse effect on (a) the business, assets,
property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a
whole or (b) the validity or enforceability of this Agreement or any other Loan Document or the
rights or remedies of the Administrative Agent and the Lenders hereunder or thereunder;
provided that any impact, direct or indirect, arising as a result of or related to (or could
reasonably be expected to arise out of or result from) COVID-19 on the business, operations,
property or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a
whole, that were disclosed to the Administrative Agent and the Lenders prior to the Effective
Date shall not constitute, result in or otherwise have (or reasonably be expected to constitute,
result or otherwise have) such material adverse effect.
“Material Indebtedness” means Indebtedness (other than the Loans) of any one or more
of the Borrower and its Subsidiaries in an aggregate principal amount equal to or exceeding
[***] of Tangible Net Worth of the Borrower.
“Maturity Date” means August 10, 2024; provided however, if such date is not a Business
Day, the Maturity Date shall be the next preceding Business Day.
“Maximum Rate” has the meaning assigned to it in Section 9.14.
“Moody’s” means Moody’s Investors Service, Inc. (or any successor thereto).
“Mortgage Servicing Right” or “MSR” means, with respect to any Person, the right of
such Person to receive cash flows in its capacity as servicer of any receivable or pool of
receivables, and any interests in such right including, but not limited to, participation certificates
or excess fee strips, together with any assets related thereto that are of the type transferred in
connection with securitization transactions involving assets such as, or similar to, Mortgage
Servicing Rights, and any collections or proceeds thereof, including all contracts and contract
rights, security interests, financing statements or other documentation in respect of such
Mortgage Servicing Rights, all general intangibles under or arising out of or relating to such
Mortgage Servicing Rights, and any guarantees, indemnities, warranties or other obligations in
respect of such Mortgage Servicing Rights. For purposes of determining the amount of a
Mortgage Servicing Right at any time, such amount shall be determined in accordance with
GAAP, consistently applied, as of the most recent practicable date.
“MSR Indebtedness” means any Indebtedness secured by MSRs.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Net Corporate Indebtedness” means, with respect to the Borrower and its Subsidiaries,
Non-Funding Indebtedness less Unrestricted Cash.
“Net Indebtedness” means, with respect to the Borrower and its Subsidiaries,
Indebtedness less Unrestricted Cash.
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“New Lender” has the meaning assigned to such term in Section 2.21(c).
“Non-Funding Indebtedness” means all Indebtedness other than Funding Indebtedness of
the Borrower or its Subsidiaries and shall include Indebtedness such as unsecured lines of credit,
MSR Indebtedness and unsecured senior notes.
“Non-Recourse Indebtedness” means with respect to any specified Person, Indebtedness
that is:
(1) specifically advanced to finance the acquisition of investment assets and secured
only by the assets to which such Indebtedness relates without recourse to such Person or any of
its subsidiaries (other than subject to such customary carve-out matters for which such Person or
its subsidiaries acts as a guarantor in connection with such Indebtedness, such as fraud,
misappropriation, breach of representation and warranty and misapplication, unless, until and for
so long as a claim for payment or performance has been made thereunder against such Person
(which has not been satisfied) at which time the obligations with respect to any such customary
carve-out shall not be considered Non-Recourse Indebtedness, to the extent that such claim is a
liability of such Person for GAAP purposes);
(2) advanced to (i) such Person or its subsidiaries that holds investment assets or (ii)
any of such Person’s Subsidiaries or group of such Person’s Subsidiaries formed for the sole
purpose of acquiring or holding investment assets, in each case, against which a loan is obtained
that is made without recourse to, and with no cross-collateralization against, such Person’s or any
of such Person’s subsidiaries’ other assets (other than: (A) cross-collateralization against assets
which serve as collateral for other Non-Recourse Indebtedness; and (B) subject to such
customary carve-out matters for which such Person or its subsidiaries acts as a guarantor in
connection with such Indebtedness, such as fraud, misappropriation, breach of representation and
warranty and misapplication, unless, until and for so long as a claim for payment or performance
has been made thereunder against such Person (which has not been satisfied) at which time the
obligations with respect to any such customary carve-out shall not be considered Non-Recourse
Indebtedness, to the extent that such claim is a liability of such Person for GAAP purposes) and
upon complete or partial liquidation of which the loan must be correspondingly completely or
partially repaid, as the case may be; or
(3) specifically advanced to finance the acquisition of real property and secured by
only the real property to which such Indebtedness relates without recourse to such Person or any
of its subsidiaries (other than subject to such customary carve-out matters for which such Person
or any of its subsidiaries acts as a guarantor in connection with such Indebtedness, such as fraud,
misappropriation, breach of representation and warranty and misapplication, unless, until and for
so long as a claim for payment or performance has been made thereunder against such Person
(which has not been satisfied) at which time the obligations with respect to any such customary
carve-out shall not be considered Non-Recourse Indebtedness, to the extent that such claim is a
liability of such Person for GAAP purposes);
provided that (A) no Non-Recourse Indebtedness shall be secured by Mortgage Servicing
Rights, other than Mortgage Servicing Rights acquired with the proceeds of such Non-Recourse
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Indebtedness, and (B) notwithstanding the foregoing, to the extent that any Non-Recourse
Indebtedness is made with recourse to other assets of a Person or its subsidiaries, only that
portion of such Non-Recourse Indebtedness that is recourse to such other assets or subsidiaries
shall be deemed not to be Non-Recourse Indebtedness.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or
any successor source.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in
effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day
that is not a Business Day, for the immediately preceding Business Day); provided that if none of
such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the
rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the
Administrative Agent from a federal funds broker of recognized standing selected by it; provided
further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be
deemed to be zero for purposes of this Agreement.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and
duties of, the Borrower arising under any Loan Document or otherwise with respect to any Loan,
whether direct or indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against the Borrower or any Affiliate thereof of any proceeding
under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed or allowable claims in such proceeding. Without
limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest,
charges, expenses, fees, indemnities and other amounts payable by the Borrower under any Loan
Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of
the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion,
may elect to pay or advance on behalf of the Borrower.
“Officer’s Certificate” means a certificate signed by a Responsible Officer.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a
result of a present or former connection between such Recipient and the jurisdiction imposing
such Tax (other than connections arising from such Recipient having executed, delivered,
become a party to, performed its obligations under, received payments under, received or
perfected a security interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from the execution,
delivery, performance, enforcement or registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are
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Other Connection Taxes imposed with respect to an assignment (other than an assignment made
pursuant to Section 2.19).
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight
federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of
depository institutions, as such composite rate shall be determined by the NYFRB as set forth on
the NYFRB’s Website from time to time, and published on the next succeeding Business Day by
the NYFRB as an overnight bank funding rate.
“Parent Expenses” means:
(1) costs (including all professional fees and expenses) incurred by any direct or
indirect parent of the Borrower in connection with reporting obligations under or otherwise
incurred in connection with compliance with applicable laws, rules or regulations of any
governmental, regulatory or self-regulatory body or stock exchange, this Agreement or any other
agreement or instrument, including in respect of all financial statements, audits, tax returns, and
administration of benefit plans, in each case to the extent that such costs, fees and expenses (after
giving effect to any reimbursement thereof from Affiliates of the Borrower) are allocated,
consistent with past practice, to the ownership or operation of the Borrower and its Subsidiaries;
(2) customary indemnification obligations of any direct or indirect parent of the
Borrower owing to directors, officers or employees under its charter or by-laws or pursuant to
written agreements with any such Person;
(3) obligations of any direct or indirect parent of the Borrower in respect of
customary director and officer insurance (including premiums therefor);
(4) general corporate overhead expenses, including professional fees and expenses
and other operational expenses of any direct or indirect parent of the Borrower, in each case, to
the extent that such fees and expenses (after giving effect to any reimbursement thereof from
Affiliates of the Borrower) are allocated, consistent with past practice, to the ownership or
operation of the Borrower and its Subsidiaries;
(5) compensation (other than bonuses) to directors, officers and employees of any
direct or indirect parent of the Borrower related to services rendered to the Borrower and its
Subsidiaries, which compensation is customary and consistent with past practice; and
(6) expenses incurred by any direct or indirect parent of the Borrower in connection
with any public offering or other sale of Equity Interests or Indebtedness of any direct or indirect
parent of the Borrower, (x) where the net proceeds of such offering or sale are received by or
contributed to the Borrower or a Subsidiary, (y) in a pro-rated amount of such expenses in
proportion to the amount of such net proceeds intended to be so received or contributed, or (z)
otherwise on an interim basis prior to completion of such offering so long as such direct or
indirect parent of the Borrower shall cause the amount of such expenses to be repaid to the
Borrower or the relevant Subsidiary out of the proceeds of such offering promptly if completed.
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“Participant” has the meaning assigned to such term in Section 9.04(c).
“Participant Register” has the meaning assigned to such term in Section 9.04(c).
“Patriot Act” has the meaning assigned to it in Section 9.16.
“Payment” has the meaning assigned to it in Section 8.06(c).
“Payment Notice” has the meaning assigned to it in Section 8.06(c).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
“Permitted Business” means any of the businesses in which the Borrower and its
Subsidiaries are engaged on the Effective Date, and any business reasonably related, incidental,
complementary or ancillary thereto or any business deemed strategically desirable by the
Borrower in good faith in connection therewith.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in
compliance with Section 5.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security laws or
regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of
Default under Section 7.01(k);
(f) survey exceptions, title exceptions, encumbrances, easements or reservations
of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as to the use of
real property, not interfering in any material respect with the conduct of the business of
the Borrower and its Subsidiaries;
(g) leases, licenses, subleases or sublicenses granted to third parties in the
ordinary course of business, including of intellectual property;
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(h) customary Liens in favor of trustees and escrow agents, Liens to secure cash
management services or to implement pooling arrangements and netting and setoff rights,
banker’s liens and the like in favor of financial institutions, depositories, securities
intermediaries and counterparties to financial obligations and instruments;
(i) Liens securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the proceeds
thereof;
(j) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods in the
ordinary course of business so long as such Liens only cover the related goods; and
(k) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage accounts
incurred in the ordinary course of business and not for speculative purposes;
provided that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.
“Permitted Holder Group” means any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision) the members of which include
any of the Permitted Holders specified in clauses (i), (ii), (iii), (iv) and (v) of the definition of
“Permitted Holders” and that, directly or indirectly, hold or acquire beneficial ownership of the
voting stock of the Borrower, so long as (1) each member of the Permitted Holder Group has
voting rights proportional to the percentage of ownership interests held or acquired by such
member (or more favorable voting rights, in the case of any Permitted Holders specified in
clauses (i), (ii), (iii), (iv) and (v) of the definition of “Permitted Holders”) and (2) no person or
other “group” (other than Permitted Holders specified in clauses (i), (ii), (iii), (iv) and (v) of the
definition of “Permitted Holders”) beneficially owns more than 40% on a fully diluted basis of
the voting stock held by the Permitted Holder Group.
“Permitted Holders” means, at any time, each of (i) Daniel Gilbert, his spouse, children
(natural or adopted), lineal descendants or the estates, heirs, executors, personal representatives,
successors or administrators upon or as a result of the death, incapacity or incompetency of such
Person, or any trust established for the benefit of (or any charitable trust or non-profit entity
established by) any Gilbert family member mentioned in this clause (i), or any trustee, protector
or similar person of such trust or non-profit entity or any “person” (as such term is used in
Section 13(d) or 14(d) of the Exchange Act), directly or indirectly, controlling, controlled by or
under common control with any Permitted Holder mentioned in this clause (i), (ii) Jay Farner, his
spouse, children (natural or adopted), lineal descendants or heirs, or any trust established for the
benefit of (or any charitable trust or non-profit entity established by) any Farner family member
mentioned in this clause (ii), or any trustee, protector or similar person of such trust or non-profit
entity or any “person” (as such term is used in Section 13(d) or 14(d) of the Exchange Act),
directly or indirectly, controlling, controlled by or under common control with any Permitted
Holder mentioned in this clause (ii), (iii) RKT Holdings, LLC, (iv) any person that has no
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material assets other than the capital stock of the Borrower and any direct or indirect parent of
the Borrower and, directly or indirectly, holds or acquires 100% of the total voting power of the
voting stock of the Borrower, and of which no other person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than
any of the other Permitted Holders, holds more than 40% of the total voting power of the voting
stock thereof (unless the other Permitted Holders have, at such time, the right or the ability by
voting power, contract or otherwise to elect or designate for election at least a majority of the
members of the board of directors or equivalent governing body of the Borrower), (v) any New
Parent and its Subsidiaries, (vi) any person who is acting solely as an underwriter in connection
with a public or private offering of equity interests of the Borrower or any of its direct or indirect
parent companies, acting in such capacity and (vii) any Permitted Holder Group.
“Permitted Refinancing Indebtedness” means an extension or renewal of, replacement of,
or substitution for, or issued in exchange for, or the net proceeds of which are used to repay,
prepay, defease, retire, redeem, repurchase, refinance or refund, including by way of defeasance
(all of the above, for purposes of this clause, “refinance”) in whole or in part then outstanding
Indebtedness in an amount (after deduction of any original issue discount) not to exceed the
principal amount of the Indebtedness so refinanced, plus premiums, accrued interest, fees and
expenses; provided that, (A) in case the Indebtedness to be refinanced is Subordinated Debt, the
new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which
it is outstanding, is expressly made subordinate in right of payment to the Revolving Facility at
least to the extent that the Indebtedness to be refinanced is subordinated to the Revolving Facility
and (B) the new Indebtedness does not have a stated maturity prior to the earlier of (x) the stated
maturity of the Indebtedness to be refinanced and (y) 91 days following the final scheduled
maturity of the Revolving Facility (provided that this subclause (B) will not apply to any
refunding or refinancing of any secured Indebtedness).
“Permitted Residual Indebtedness” means any Indebtedness of the Borrower or any of its
Subsidiaries under a Residual Funding Facility; provided that the excess (determined as of the
most recent date for which internal financial statements are available), if any of (x) the amount of
any such Permitted Residual Indebtedness for which the holder thereof has contractual recourse
to the Borrower or its Subsidiaries to satisfy claims with respect to such Permitted Residual
Indebtedness (excluding recourse for carve-out matters such as fraud, misappropriation, breaches
of representations, warranties and covenants and misapplication and customary indemnities in
connection with such transactions) over (y) the aggregate (without duplication of amounts)
Realizable Value of the assets that secure such Permitted Residual Indebtedness shall be deemed
not to be Permitted Residual Indebtedness (but shall not be deemed to be a new incurrence of
Indebtedness subject to the provisions of the covenant restricting incurrence of Indebtedness,
except with respect to, and solely to the extent of, any such excess that exists upon the initial
incurrence of such Indebtedness).
“Permitted Securitization Indebtedness” means Securitization Indebtedness; provided (i)
that in connection with any Securitization, any Warehousing Indebtedness or other Funding
Indebtedness used to finance the purchase, origination or pooling of any Receivables or other
asset subject to such securitization is repaid in connection with such securitization to the extent
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of the net proceeds received by the Borrower and its Subsidiaries from the applicable
Securitization Entity or other purchaser of Receivables, Securitization Securities or other
Financeable Assets, and (ii) the excess (determined as of the most recent date for which internal
financial statements are available), if any, of (x) the amount of any such Securitization
Indebtedness for which the holder thereof has contractual recourse to the Borrower or its
Subsidiaries (other than any Securitization Entity) to satisfy claims with respect to such
Securitization Indebtedness (excluding recourse for carve-out matters such as fraud,
misappropriation, breaches of representations, warranties, and covenants, and misapplication and
customary indemnities in connection with such transactions and excluding recourse in the form
of Liens on the Equity Interests of a Securitization Entity) over (y) the aggregate (without
duplication of amounts) Realizable Value of the assets that secure such Securitization
Indebtedness shall not be Permitted Securitization Indebtedness (but shall not be deemed to be a
new incurrence of Indebtedness subject to the provisions of the covenant restricting incurrence of
Indebtedness, except with respect to, and solely to the extent of, any such excess that exists upon
the initial incurrence of such Indebtedness).
“Permitted Servicing Advance Facility Indebtedness” means any Indebtedness of the
Borrower or any of its Subsidiaries incurred under a Servicing Advance Facility; provided
however, that the excess (determined as of the most recent date for which internal financial
statements are available), if any of (x) the amount of any such Permitted Servicing Advance
Facility Indebtedness for which the holder thereof has contractual recourse to the Borrower or its
Subsidiaries to satisfy claims with respect to such Permitted Servicing Advance Facility
Indebtedness (excluding recourse for carve-out matters such as fraud, misappropriation, breaches
of representations, warranties and covenants and misapplication and customary indemnities in
connection with such transactions) over (y) the aggregate (without duplication of amounts)
Realizable Value of the assets that secure such Permitted Servicing Advance Facility
Indebtedness shall not be Permitted Servicing Advance Facility Indebtedness (but shall not be
deemed to be a new incurrence of Indebtedness subject to the provisions of the covenant
restricting incurrence of Indebtedness, except with respect to, and solely to the extent of, any
such excess that exists upon the initial incurrence of such Indebtedness).
“Permitted Warehousing Indebtedness” means Warehousing Indebtedness; provided
however, that the excess (determined as of the most recent date for which internal financial
statements are available), if any, of (x) the amount of any such Warehousing Indebtedness for
which the holder thereof has contractual recourse to the Borrower or its Subsidiaries to satisfy
claims with respect to such Warehousing Indebtedness (excluding recourse for carve-out matters
such as fraud, misappropriation, breaches of representations, warranties and covenants and
misapplication and customary indemnities in connection with such transactions) over (y) the
aggregate (without duplication of amounts) Realizable Value of the assets which secure such
Warehousing Indebtedness shall not be Permitted Warehousing Indebtedness (but shall not be
deemed to be a new incurrence of Indebtedness subject to the provisions of the covenant
restricting incurrence of Indebtedness, except with respect to, and solely to the extent of, any
such excess that exists upon the initial incurrence of such Indebtedness).
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“Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section
3(42) of ERISA, as amended from time to time.
“Preferred Stock” means, with respect to any Person, any and all Equity Interests which
is preferred as to the payment of dividends or distributions, upon liquidation or otherwise, over
another class of Equity Interests of such Person.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the
“Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per
annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical
Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no
longer quoted therein, any similar rate quoted therein (as determined by the Administrative
Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative
Agent). Each change in the Prime Rate shall be effective from and including the date such
change is publicly announced or quoted as being effective.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or
administrative, judicial or regulatory action or proceeding in any jurisdiction.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of
Labor, as any such exemption may be amended from time to time.
“Public Company Compliance” means compliance with the requirements of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith,
the provisions of the Securities Act and the Exchange Act, and the rules of national securities
exchange listed companies (in each case, as applicable to companies with equity or debt
securities held by the public), including procuring directors’ and officers’ insurance, legal and
other professional fees, and listing fees.
“Qualified Equity Interests” means all Equity Interests of a Person other than
Disqualified Equity Interests.
“Qualified Subordinated Indebtedness” means, with respect to any Person, all unsecured
Indebtedness of such Person, for borrowed money, that is, by its terms or by the terms of a
subordination agreement (which terms shall have been approved by the Administrative Agent),
in form and substance satisfactory to the Administrative Agent, effectively subordinated in right
of payment to all other present and future obligations and all indebtedness of such Person, of
every kind and character, owed to Administrative Agent and the Lenders under the Loan
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Documents and which terms or subordination agreement, as applicable, include, among other
things, standstill and blockage provisions approved by the Administrative Agent, restrictions on
amendments without the consent of the Administrative Agent, non-petition provisions and
maturity date or dates for any principal thereof at least 12 months after the Maturity Date.
“Rating Agency” means each of S&P and Moody’s.
“Realizable Value” of an asset means (i) with respect to any REO Asset, the value
realizable upon the disposition of such asset as determined by the Borrower in its reasonable
discretion and consistent with customary industry practice and (ii) with respect to any other asset,
the lesser of (x) the face value of such asset and (y) the market value of such asset as determined
by the Borrower in accordance with the agreement governing the applicable Warehousing
Indebtedness or Permitted Residual Indebtedness, as the case may be (or, if such agreement does
not contain any related provision, as determined by senior management of the Borrower in good
faith); provided however, that the Realizable Value of any asset described in clause (i) or (ii)
above which an unaffiliated third party has a binding contractual commitment to purchase from
the Borrower or any of its Subsidiaries shall be the minimum price payable to the Borrower or
such Subsidiary for such asset pursuant to such contractual commitment.
“Receivables” means mortgage loans and other mortgage related receivables arising in
the ordinary course of business, together with any assets related thereto that are of the type
transferred in connection with securitization transactions involving assets such as, or similar to,
such Receivables, and any collections or proceeds of any of the foregoing, including all collateral
securing such Receivables, all contracts and contract rights, security interests, financing
statements or other documentation in respect of such Receivables, all general intangibles under
or arising out of or relating to such Receivables and any guarantees, indemnities, warranties or
other obligations in respect of such Receivables; provided however, that (i) for purposes of
determining the amount of a Receivable at any time, such amount shall be determined in
accordance with GAAP, consistently applied, as of the most recent practicable date and (ii)
“Receivables” shall exclude Residual Interests and Servicing Advance Receivables.
“Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if
such Benchmark is LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking
days preceding the date of such setting, and (2) if such Benchmark is not LIBO Rate, the time
determined by the Administrative Agent in its reasonable discretion.
“Reference Owner” has the meaning assigned to it in the definition of “Highest Owner
Tax Amount.”
“Reference Period” has the meaning assigned to it in the definition of “Fixed Charge
Coverage Ratio.”
“Register” has the meaning assigned to such term in Section 9.04(b).
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“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such Person and such
Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, or
a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB
or, in each case, any successor thereto.
“REO Asset” of a person means a real estate asset owned by such person and acquired as
a result of the foreclosure or other enforcement of a lien on such asset securing a Receivable or
Servicing Advance Receivable.
“Required Lenders” means, subject to Section 2.20, (a) at any time prior to the earlier of
the Loans becoming due and payable pursuant to Section 7.01 or the Commitments terminating
or expiring, Lenders having Revolving Credit Exposures and Unfunded Commitments
representing more than [***] of the sum of the Total Revolving Credit Exposure and Unfunded
Commitments at such time, provided that, solely for purposes of declaring the Loans to be due
and payable pursuant to Section 7.01, the Unfunded Commitment of each Lender shall be
deemed to be zero; and (b) for all purposes after the Loans become due and payable pursuant to
Section 7.01 or the Commitments expire or terminate, Lenders having Revolving Credit
Exposures representing more than [***] of the Total Revolving Credit Exposure at such time.
“Residual Funding Facility” means any funding arrangement with a financial institution
or institutions or other lenders or purchasers under which advances are made to the Borrower or
any Subsidiary secured by Residual Interests.
“Residual Interest” means (i) any residual, subordinated, reserve accounts and ownership,
participation or equity interest held by the Borrower or a Subsidiary in Securitization Entities
and/or Warehousing Facility Trusts or their assets, regardless of whether required to appear on
the face of the consolidated financial statements in accordance with GAAP or (ii), with respect to
any Securitization Entity, the residual right (which may be represented by an equity interest or a
subordinated debt obligation of such entity) owned or held by the Borrower or a Subsidiary
(other than a Securitization Entity) to receive cash flows from the Financeable Assets sold to
such Securitization Entity in excess of amounts needed to pay principal of, interest on and other
amounts in respect of Securitization Indebtedness of such entity, servicing expenses of such
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entity, costs in respect of hedging obligations of such entity (if any) and other fees and
obligations in respect of the third-party securities issued by such entity and secured by such
Financeable Assets.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK
Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, the chief financial officer, the
president or the treasurer of the Borrower.
“Restricted Payment” means (a) any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests or any option, warrant or other right to
acquire any such Equity Interests and (b) any repayment, redemption, repurchase, defeasance,
retirement or any payment with respect to any Subordinated Debt.
“Reuters” means, as applicable, Thomson Reuters Corp., Refinitiv, or any successor
thereto.
“Revolving Borrowing” means Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.
“Revolving Credit Exposure” means, with respect to any Lender at any time, the
outstanding principal amount of such Lender’s Revolving Loans at such time.
“Revolving Facility” means the Commitments and the Revolving Loans made thereunder.
“Revolving Loan” means a Loan made pursuant to Section 2.03 and any Incremental
Revolving Loan.
“RHS” means the Rural Housing Service of the Rural Development Agency of the United
States Department of Agriculture or any successor.
“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial
Services LLC business (or any successor thereto).
“Sanctioned Country” means, at any time, a country, region or territory which is the
target of comprehensive Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North
Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related
list of designated Persons maintained by the Office of Foreign Assets Control of the U.S.
Department of the Treasury, the U.S. Department of State, the United Nations Security Council,
the European Union, any European Union member state or Her Majesty’s Treasury of the United
Kingdom, (b) any Person located, organized or resident in a Sanctioned Country, (c) any Person
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owned 50% or more by, or controlled by, any such Person or Persons described in the foregoing
clauses (a) or (b), or (d) any Person otherwise the target of Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including those
administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or
the U.S. Department of State, or (b) the United Nations Security Council, the European Union,
any European Union member state or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission of the United State of America.
“Securities Act” means the Securities Act of 1933, as amended.
“Securitization” means a public or private transfer, pledge, re-pledge, sale or financing,
on a fixed or revolving basis, (collectively, “financing”) of (i) Servicing Advances, (ii) mortgage
loans, (iii) installment contracts, (iv) deferred servicing fees, (v) warehouse loans secured by
mortgage loans, (vi) mortgage backed and other asset backed securities, including interest only
securities, and Securitization Securities, (vii) dealer floorplan loans, (viii) other loans and related
assets, and/or (ix) other receivables (including, but not limited to, Receivables), Residual
Interests, REO Assets, other Financeable Assets, collections or proceeds of any of the foregoing
or similar assets (or any interests in any of the foregoing or in Securitization Entities owning any
of the foregoing, including, but not limited to, Securitization Securities) and any other asset
capable of being securitized or transferred, pledged, re-pledged or sold in connection with
Securitizations (clauses (i)-(ix) above, collectively, the “Securitization Assets”), in each case
where such financing of Securitization Assets is done in a manner by which the Borrower or any
of its Subsidiaries directly or indirectly securitizes a pool of Securitization Assets including, but
not limited to, any such transaction involving the sale, transfer, contribution, pledge or re-pledge
of Securitization Assets to a Securitization Entity or the issuance by a Securitization Entity of
Securitization Securities that are used to directly or indirectly finance Securitization Assets.
“Securitization Assets” has the meaning specified in the definition of “Securitization.”
“Securitization Entity” means (i) any Warehousing Facility Trust, and any other person
(whether or not a subsidiary of the Borrower) established for the purpose of issuing asset-backed
or mortgaged-backed or mortgage pass-through securities of any kind (including collateralized
mortgage obligations, net interest margin securities, certificates of beneficial or participation
interests or other Securitization Securities), (ii) any special purpose subsidiary established for the
purpose of selling, depositing, or contributing Securitization Assets into a person described in
clause (i) or holding securities in any related Securitization Entity, regardless of whether such
person is an issuer of securities; provided that such person is not an obligor with respect to any
Indebtedness of the Borrower, and (iii) any special purpose subsidiary of the Borrower formed
exclusively for the purpose of satisfying the requirements of Credit Enhancement Agreements
and regardless of whether such subsidiary is an issuer of securities; provided that such person is
not an obligor with respect to any Indebtedness of the Borrower other than under Credit
Enhancement Agreements.
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“Securitization Indebtedness” means (i) Indebtedness (including Securitization
Securities) of the Borrower or any of its Subsidiaries incurred pursuant to on-balance sheet
Securitizations and (ii) any Indebtedness (including Securitization Securities) consisting of
advances or other loans made to the Borrower or any of its Subsidiaries based upon securities
(including Securitization Securities) issued by a Securitization Entity pursuant to a Securitization
and acquired or retained by the Borrower or any of its Subsidiaries. Without limiting the
foregoing, it is expressly understood and agreed that each of the following transactions are
Securitization Indebtedness: (i) the sale of loans to Fannie Mae, Freddie Mac, or the Federal
Home Loan Bank, (ii) the issuance of securities by the Borrower or a Subsidiary under one of
Ginnie Mae’s mortgage backed securities programs, including a home equity conversion
mortgage program, and (iii) liabilities associated with the Borrower or its Subsidiaries’ Home
Equity Conversion Mortgage loan inventory where the securitization of such loan inventory does
not meet the GAAP criteria for sale treatment; provided that the foregoing transactions shall be
deemed to be Securitization Indebtedness only to the extent that such transactions continue to
satisfy the terms described in the first sentence of this definition.
“Securitization Securities” means, with respect to any Securitization, Funding
Indebtedness, permitted refinancing indebtedness, notes, bonds or other debt instruments,
beneficial interests in a trust, undivided ownership or participation interests in an entity or in a
pool or pools of Financeable Assets, or any interest in any of the foregoing or other securities
issued, sold, pledged or re-pledged by the Borrower, the relevant subsidiary or Securitization
Entity to banks, investors, other financing sources, the Borrower or its Subsidiaries.
“Servicing Advance Facility” means any funding arrangement with lenders collateralized
in whole or in part by Servicing Advances under which advances are made to the Borrower or
any of its Subsidiaries based on such collateral.
“Servicing Advance Receivables” means rights to collections under mortgage related
receivables of or other rights to reimbursement of Servicing Advances that the Borrower or a
Subsidiary of the Borrower has made in the ordinary course of business and on customary
industry terms.
“Servicing Advances” means advances made by the Borrower or any of its Subsidiaries
in its capacity as servicer of any mortgage-related receivables to fund principal, interest, escrow,
foreclosure, insurance, tax or other payments or advances when the borrower on the underlying
receivable is delinquent in making payments on such receivable; to enforce remedies, manage
and liquidate REO Assets; or that the Borrower or any of its Subsidiaries otherwise advances in
its capacity as servicer.
“Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary”
of the Borrower within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC
(or any successor provision).
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured
overnight financing rate for such Business Day published by the SOFR Administrator on the
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SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the
immediately succeeding Business Day.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured
overnight financing rate).
“SOFR Administrator’s Website” means the NYFRB’s Website, currently at http://
www.newyorkfed.org, or any successor source for the secured overnight financing rate identified
as such by the SOFR Administrator from time to time.
“Solvent” means, as to any Person as of any date of determination, that on such date
(a) the fair value of the property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person, (b) the present fair saleable value of such Person
is not less than the amount that will be required to pay the probable liability of such Person on its
debts, including contingent debts, as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities, including contingent debts
and liabilities, beyond such Person’s ability to pay such debts and liabilities as they mature and
(d) such Person is not engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person’s property would constitute an unreasonably
small capital. The amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
“Standard Securitization Undertakings” means all representations, warranties, covenants
and indemnities (including obligations to repurchase any Financeable Assets sold in such
securitization and any margin calls under any Warehousing Facilities or MSR Facilities) entered
into by the Borrower or a Subsidiary (other than a Securitization Entity) in connection with
Funding Indebtedness or MSR Indebtedness.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of
the maximum reserve percentage (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Federal Reserve Board to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Such reserve
percentage shall include those imposed pursuant to Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any change in any reserve
percentage.
“Subordinated Debt” means any Indebtedness of the Borrower which is subordinated in
right of payment to the Loans, pursuant to a written agreement to that effect.
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“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date,
as well as any other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than
50% of the general partnership interests are, as of such date, owned, controlled or held, or
(b) that is, as of such date, otherwise Controlled by the parent and/or one or more subsidiaries of
the parent.
“Subsidiary” means any subsidiary of the Borrower.
“Syndication Agents” means Morgan Stanley Bank, N.A., Fifth Third Bank, National
Association and Goldman Sachs Bank USA, in their capacities as syndication agents hereunder.
“Tangible Net Worth” means, with respect to the Borrower and its Subsidiaries at any
date, the excess of the total assets over the total liabilities of the Borrower and its Subsidiaries on
such date, each to be determined in accordance with GAAP consistent with those applied in the
preparation of the Borrower’s financial statements less the sum of the following (without
duplication): (a) the book value of all investments (including loans to) in non-consolidated
subsidiaries, and (b) any other assets of the Borrower and consolidated Subsidiaries that would
be treated as intangibles under GAAP including, without limitation, goodwill, research and
development costs, trademarks, trade names, copyrights, patents, rights to refunds and
indemnification and unamortized debt discount and expenses. Notwithstanding the foregoing,
Mortgage Servicing Rights shall be included in the calculation of total assets.
“Tax Amount” means the Highest Owner Tax Amount divided by such Reference
Owner’s proportionate direct or indirect economic ownership interest in the Borrower.
“Tax Distributions” means, (A) in respect of any taxable period for which the Borrower is
treated as a partnership (or other pass-through entity) or disregarded entity for U.S. federal and/
or applicable state, local or foreign tax purposes except in the case in which the Borrower is
treated as a disregarded entity for U.S. federal income tax purposes that is wholly owned
(directly or indirectly) by a C corporation for U.S. federal and/or applicable state or local income
tax purposes, distributions to any owners of the Borrower in an amount not to exceed each
owner’s proportionate share of the Tax Amount or (B) in respect of any taxable period for which
the Borrower and/or any of its Subsidiaries are members of a consolidated, combined, affiliated,
unitary or similar tax group for U.S. federal and/or applicable state, local or foreign tax purposes
of which a direct or indirect parent of the Borrower is the common parent, or for which the
Borrower is a disregarded entity for U.S. federal income tax purposes that is wholly owned
(directly or indirectly) by a C corporation for U.S. federal and/or applicable state or local income
tax purposes, distributions to any direct or indirect parent of the Borrower in an amount not to
exceed the amount of any U.S. federal, state, local or foreign taxes that the Borrower and/or its
Subsidiaries, as applicable, would have paid for such taxable period had the Borrower and/or its
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Subsidiaries, as applicable, been a stand-alone corporate taxpayer or a stand-alone corporate
group.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), value added taxes, or any other goods and
services, use or sales taxes, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable
Reference Time, the forward-looking term rate based on SOFR that has been selected or
recommended by the Relevant Governmental Body.
“Term SOFR Notice” means a notification by the Administrative Agent to the Lenders
and the Borrower of the occurrence of a Term SOFR Transition Event.
“Term SOFR Transition Event” means the determination by the Administrative Agent
that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the
administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a
Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred
resulting in a Benchmark Replacement in accordance with Section 2.14 that is not Term SOFR.
“Total Net Corporate Indebtedness Ratio” means the ratio of Net Corporate Indebtedness
of the Borrower and its Subsidiaries to Tangible Net Worth of the Borrower and its Subsidiaries.
“Total Net Leverage Ratio” means the ratio of Net Indebtedness of the Borrower and its
Subsidiaries to Tangible Net Worth of the Borrower and its Subsidiaries.
“Total Revolving Credit Exposure” means, at any time, the outstanding principal amount
of the Revolving Loans at such time.
“Total Shareholders’ Equity” means, at any date of determination, the consolidated
shareholders’ equity of the Borrower and its Subsidiaries, calculated excluding (a) any amounts
attributable to Disqualified Equity Interests, (b) treasury stock, (c) the cumulative effect of a
change in accounting principles and (d) any non-controlling interest owned by any Person in any
Subsidiary of the Borrower.
“Transaction Date” has the meaning assigned to it in the definition of “Fixed Charge
Coverage Ratio.”
“Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans and the use of the proceeds thereof.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to
the Adjusted LIBO Rate or the Alternate Base Rate.
“UK Financial Institutions” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom
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Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook
(as amended from time to time) promulgated by the United Kingdom Financial Conduct
Authority, which includes certain credit institutions and investment firms, and certain affiliates
of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement
excluding the related Benchmark Replacement Adjustment.
“Unfunded Commitment” means, with respect to each Lender, the Commitment of such
Lender less its Revolving Credit Exposure.
“Unrestricted Cash” means the unencumbered and unrestricted cash and Cash
Equivalents of the Borrower and its Subsidiaries.
“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30)
of the Code.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.17(f)(ii)(B)(3).
“VA” means the U.S. Department of Veterans Affairs or any successor department or
agency.
“Warehousing Facility” means any financing arrangement of any kind, including
financing arrangements in the form of purchase facilities, repurchase facilities, early purchase
facilities, early buyout facilities, required modification buyout facilities, re-pledge facilities, loan
agreements, note and/or other security issuance facilities and commercial paper facilities (and
excluding, in all cases, Securitizations), with a financial institution or other lender (including, but
not limited to, any GSE) or purchaser, in each case exclusively to finance or refinance (i) the
purchase, origination, pooling or funding of Receivables or other Financeable Assets by the
Borrower or any Subsidiary prior to sale to a third party, (ii) Servicing Advances, (iii) the
carrying of REO Assets related to Receivables or other Financeable Assets, (iv) funded debt
draws with respect to mortgages that have not yet cleared (drafts payable) that will be funded by
such facility, or (v) Financeable Assets in any other manner; provided that such purchase,
origination, pooling, funding, refinancing, carrying and/or draw is in the ordinary course of
business.
“Warehousing Facility Trusts” means any person (whether or not a subsidiary of the
Borrower) established for the purpose of issuing notes or other securities (including, but not
limited to, Securitization Securities) or holding, pledging or repledging any of the assets
described in clauses (i) through (iv) below, or interests therein or pledges thereof, or entering into
a Warehousing Facility with the Borrower or a Subsidiary, in each case in connection with a
Warehousing Facility, which notes and securities are backed by, or represent interests in, (i)
loans, mortgage-related securities, Financeable Assets or other receivables originated or
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purchased by, and/or contributed to, such person from the Borrower or any subsidiary of the
Borrower; (ii) specified Servicing Advances originated or purchased by, and/or contributed to,
such person from the Borrower or any subsidiary of the Borrower; (iii) the carrying of REO
Assets related to loans and other receivables originated or purchased by, and/or contributed to,
such person from the Borrower or any subsidiary of the Borrower; or (iv) interests in other
Warehousing Facility Trusts.
“Warehousing Indebtedness” means Indebtedness in connection with a Warehousing
Facility.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority from time
to time under the Bail-In Legislation for the applicable EEA Member Country, which write-
down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with
respect to the United Kingdom, any powers of the applicable Resolution Authority under the
Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK
Financial Institution or any contract or instrument under which that liability arises, to convert all
or part of that liability into shares, securities or obligations of that person or any other person, to
provide that any such contract or instrument is to have effect as if a right had been exercised
under it or to suspend any obligation in respect of that liability or any of the powers under that
Bail-In Legislation that are related to or ancillary to any of those powers.
SECTION I.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”).
Borrowings also may be classified and referred to Type (e.g., a “Eurodollar Borrowing”).
SECTION I.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) any reference to any law, rule or regulation herein shall, unless otherwise
specified, refer to such law, rule or regulation as amended, modified or supplemented from time
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to time and (f) the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
SECTION I.04. Accounting Terms; GAAP.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from time to time;
provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision shall be interpreted
on the basis of GAAP as in effect and applied immediately before such change shall have
become effective until such notice shall have been withdrawn or such provision amended in
accordance herewith. Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all computations of amounts
and ratios referred to herein shall be made, without giving effect to (i) any election under
Financial Accounting Standards Board Accounting Standards Codification 825 (or any other
Financial Accounting Standard having a similar result or effect) to value any Indebtedness or
other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any
treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any
other Accounting Standards Codification or Financial Accounting Standard having a similar
result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described
therein, and such Indebtedness shall at all times be valued at the full stated principal amount
thereof.
SECTION I.05. Interest Rates; LIBOR Notification. The interest rate on
Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the
London interbank offered rate. The London interbank offered rate is intended to represent the
rate at which contributing banks may obtain short-term borrowings from each other in the
London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that,
after the end of 2021, it would no longer persuade or compel contributing banks to make rate
submissions to the ICE Benchmark Administration (together with any successor to the ICE
Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank
offered rate. As a result, it is possible that commencing in 2022, the London interbank offered
rate may no longer be available or may no longer be deemed an appropriate reference rate upon
which to determine the interest rate on Eurodollar Loans. In light of this eventuality, public and
private sector industry initiatives are currently underway to identify new or alternative reference
rates to be used in place of the London interbank offered rate. Upon the occurrence of a
Benchmark Transition Event, Term SOFR Transition Event or an Early Opt-in Election, Section
2.14(b) and (c) provide the mechanism for determining an alternative rate of interest. The
Administrative Agent will promptly notify the Borrower, pursuant to Section 2.14(e), of any
change to the reference rate upon which the interest rate on Eurodollar Loans is based. However,
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the Administrative Agent does not warrant or accept any responsibility for, and shall not have
any liability with respect to, the administration, submission or any other matter related to the
London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to
any alternative or successor rate thereto, or replacement rate thereof (including, without
limitation, (i) any such alternative, successor or replacement rate implemented pursuant to
Section 2.14(b) or (c), whether upon the occurrence of a Benchmark Transition Event, Term
SOFR Transition Event or an Early Opt-in Election, and (ii) the implementation of any
Benchmark Replacement Conforming Changes pursuant to Section 2.14(d)), including without
limitation, whether the composition or characteristics of any such alternative, successor or
replacement reference rate will be similar to, or produce the same value or economic equivalence
of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate
prior to its discontinuance or unavailability.
SECTION I.06. [Reserved].
SECTION I.07. Divisions. For all purposes under the Loan Documents, in
connection with any division or plan of division under Delaware law (or any comparable event
under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person
becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to
have been transferred from the original Person to the subsequent Person, and (b) if any new
Person comes into existence, such new Person shall be deemed to have been organized and
acquired on the first date of its existence by the holders of its Equity Interests at such time.
SECTION I.08. Separate Administrative Account for any ECR Lenders. The
Administrative Agent may, in its discretion, establish for each ECR Lender a separate account
(each, an “ECR Lender Account”) solely to track payments otherwise due and owing hereunder
for the account of such ECR Lender that are subject to potential payment offset in accordance
with and subject to the terms and conditions of such ECR Lender’s Earnings Credit Agreement.
For the avoidance of doubt, any ECR Lender Account the Administrative Agent may choose to
establish is solely for the administrative convenience of the Administrative Agent and the other
parties to the relevant Earnings Credit Agreement in effecting the terms hereof and thereof.
ARTICLE II
The Credits
SECTION II.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender severally and not jointly agrees to make Revolving Loans in dollars to the
Borrower from time to time during the Availability Period in an aggregate principal amount that
will not result (after giving effect to any application of proceeds of such Borrowing pursuant to
Section 2.10) in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s
Commitment or (b) the Total Revolving Credit Exposure exceeding the total Commitments.
Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans.
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SECTION II.02. Loans and Borrowings.
(a) Each Revolving Loan shall be made as part of a Borrowing consisting of
Revolving Loans made by the Lenders ratably in accordance with their respective Commitments.
The failure of any Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms
of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving
Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple
of $500,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing may be
in an aggregate amount that is equal to the entire unused balance of the total Commitments.
Borrowings of more than one Type may be outstanding at the same time; provided that there
shall not at any time be more than a total of five Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
SECTION II.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by submitting a
Borrowing Request (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m.,
New York City time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, on the date of the
proposed Borrowing. Each such Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and
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(v) the location and number of the Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.07.
If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request
in accordance with this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION II.04. [Reserved].
SECTION II.05. [Reserved].
SECTION II.06. [Reserved].
SECTION II.07. Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof solely by wire transfer of immediately available funds, by 2:00 p.m.,
New York City time, to the account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly (and in no event later than 4:00 p.m., New York City
time) crediting the funds so received in the aforesaid account of the Administrative Agent to an
account of the Borrower maintained with the Administrative Agent in New York City and
designated by the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may
assume that such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of
the applicable Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the NYFRB Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If
the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or
an overlapping period, the Administrative Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period. If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in
such Borrowing.
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SECTION II.08. Interest Elections.
(a) Each Revolving Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have
an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the
case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each such Interest Election
Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower.
(c) Each Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such Lender’s
portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest
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Period such Borrowing shall, if not repaid, be continued as a Eurodollar Revolving Borrowing
with an Interest Period of the same duration as the Interest Period then ended. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so
long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
SECTION II.09. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Commitments shall terminate on the
Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is
an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.11, (A) any Lender’s Revolving Credit Exposure would
exceed its Commitment or (B) the sum of the Total Revolving Credit Exposure would exceed the
total Commitments.
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least three Business
Days prior to the effective date of such termination or reduction, specifying such election and the
effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to
this Section shall be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, indentures or similar agreements or other transactions specified therein, in
which case such notice may be revoked by the Borrower (by notice to the Administrative Agent
on or prior to the specified effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be
made ratably among the Lenders in accordance with their respective Commitments.
SECTION II.10. Repayment of Loans; Evidence of Indebtedness.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder.
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(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder and the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof (which may, in the case of clause (iii), be separately maintained in an
ECR Lender Account for each ECR Lender).
(d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory notes in such
form.
SECTION II.11. Prepayment of Loans.
(a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy or electronic mail) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an
ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of the Commitments
as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice
of termination is revoked in accordance with Section 2.09. Promptly following receipt of any
such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be
in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13 and any break funding
payments required by Section 2.16.
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SECTION II.12. Fees.
(a) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily
amount of the Unfunded Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates. Commitment
fees accrued through and including the last day of March, June, September and December of
each year shall be payable in arrears on the fifteenth day following such last day and on the date
on which the Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in dollars in
immediately available funds, to the Administrative Agent for distribution, in the case of
commitment fees, to the Lenders. Fees paid shall not be refundable under any circumstances.
SECTION II.13. Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the
Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate.
(c) [Reserved].
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any
Loan, [***] plus the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount, [***] plus the rate applicable to
ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest
accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan
prior to the end of the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
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(f) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at times when the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365
days (or 366 days in a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION II.14. Alternate Rate of Interest.
(a) Subject to clauses (b), (c), (d), (e), (f) and (g) of this Section 2.14, if prior
to the commencement of any Interest Period for a Eurodollar Borrowing:
(i) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including because the
LIBO Screen Rate is not available or published on a current basis), for such Interest Period;
provided that no Benchmark Transition Event shall have occurred at such time; or
(ii) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (A) any Interest Election Request that requests the conversion of any
Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar
Borrowing shall be ineffective and (B) if any Borrowing Request requests a Eurodollar
Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if the
circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type
of Borrowings shall be permitted.
(b) Notwithstanding anything to the contrary herein or in any other Loan
Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its
related Benchmark Replacement Date have occurred prior to the Reference Time in respect of
any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined
in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such
Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for
all purposes hereunder and under any Loan Document in respect of such Benchmark setting and
subsequent Benchmark settings without any amendment to, or further action or consent of any
other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement
is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for
such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark
for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at
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or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of
such Benchmark Replacement is provided to the Lenders without any amendment to, or further
action or consent of any other party to, this Agreement or any other Loan Document so long as
the Administrative Agent has not received, by such time, written notice of objection to such
Benchmark Replacement from Lenders comprising the Required Lenders.
(c) Notwithstanding anything to the contrary herein or in any other Loan
Document and subject to the proviso below in this paragraph, if a Term SOFR Transition Event
and its related Benchmark Replacement Date have occurred prior to the Reference Time in
respect of any setting of the then-current Benchmark, then the applicable Benchmark
Replacement will replace the then-current Benchmark for all purposes hereunder or under any
Loan Document in respect of such Benchmark setting and subsequent Benchmark settings,
without any amendment to, or further action or consent of any other party to, this Agreement or
any other Loan Document; provided that, this clause (c) shall not be effective unless the
Administrative Agent has delivered to the Lenders and the Borrower a Term SOFR Notice. For
the avoidance of doubt, the Administrative Agent shall not be required to deliver a Term SOFR
Notice after a Term SOFR Transition Event and may do so in its sole discretion.
(d) In connection with the implementation of a Benchmark Replacement, the
Administrative Agent will have the right to make Benchmark Replacement Conforming Changes
from time to time and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming Changes
will become effective without any further action or consent of any other party to this Agreement
or any other Loan Document.
(e) The Administrative Agent will promptly notify the Borrower and the
Lenders of (i) any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event
or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the
implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark
Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a
Benchmark pursuant to clause (d) below and (v) the commencement or conclusion of any
Benchmark Unavailability Period. Any determination, decision or election that may be made by
the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this
Section 2.14, 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, will be conclusive and binding absent manifest
error and may be made in its or their sole discretion and without consent from any other party to
this Agreement or any other Loan Document, except, in each case, as expressly required pursuant
to this Section 2.14.
(f) Notwithstanding anything to the contrary herein or in any other Loan
Document, at any time (including in connection with the implementation of a Benchmark
Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or LIBO
Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other
information service that publishes such rate from time to time as selected by the Administrative
Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such
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Benchmark has provided a public statement or publication of information announcing that any
tenor for such Benchmark is or will be no longer representative, then the Administrative Agent
may modify the definition of “Interest Period” for any Benchmark settings at or after such time
to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed
pursuant to clause (i) above either (A) is subsequently displayed on a screen or information
service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer,
subject to an announcement that it is or will no longer be representative for a Benchmark
(including a Benchmark Replacement), then the Administrative Agent may modify the definition
of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously
removed tenor.
(g) Upon the Borrower’s receipt of notice of the commencement of a
Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar
Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or
continued during any Benchmark Unavailability Period and, failing that, the Borrower will be
deemed to have converted any such request into a request for a Borrowing of or conversion to
ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the
then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-
current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any
determination of ABR.
SECTION II.15. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit,
liquidity or similar requirement (including any compulsory loan requirement, insurance charge or
other assessment) against assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate);
(ii) impose on any Lender or the London interbank market any other
condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such
Lender; or
(iii) subject any Recipient to any Taxes (other than (A) Indemnified
Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C)
Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its
deposits, reserves, other liabilities or capital attributable thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other
Recipient of making, continuing, converting or maintaining any Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or receivable by
such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender or such other Recipient, as the case may be, such
additional amount or amounts as will compensate such Lender or such other Recipient, as the
case may be, for such additional costs incurred or reduction suffered.
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(b) If any Lender determines that any Change in Law regarding capital or
liquidity requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of
this Agreement or the Loans made by such Lender to a level below that which such Lender or
such Lender’s holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s policies and the policies of such Lender’s holding company with
respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such
Lender, as the case may be, such additional amount or amounts as will compensate such Lender
or such Lender’s holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to compensate a Lender pursuant
to this Section for any increased costs or reductions incurred more than 90 days prior to the date
that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor.
SECTION II.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is
revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant
to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.
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The Borrower shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION II.17. Withholding of Taxes; Gross-Up Payments Free of Taxes.
(a) Any and all payments by or on account of any obligation of the Borrower
under any Loan Document shall be made without deduction or withholding for any Taxes, except
as required by applicable law. If any applicable law (as determined in the good faith discretion
of an applicable withholding agent) requires the deduction or withholding of any Tax from any
such payment by a withholding agent, then the applicable withholding agent shall be entitled to
make such deduction or withholding and shall timely pay the full amount deducted or withheld
to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an
Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that
after such deduction or withholding has been made (including such deductions and withholdings
applicable to additional sums payable under this Section) the applicable Recipient receives an
amount equal to the sum it would have received had no such deduction or withholding been
made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay
to the relevant Governmental Authority in accordance with applicable law, or at the option of the
Administrative Agent timely reimburse it for the payment of, Other Taxes.
(c) Evidence of Payments. As soon as practicable after any payment of Taxes
by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d) Indemnification by the Borrower. The Borrower shall indemnify each
Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts payable under
this Section) payable or paid by such Recipient or required to be withheld or deducted from a
payment to such Recipient and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify
the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes
attributable to such Lender (but only to the extent that the Borrower has not already indemnified
the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the
Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the
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Administrative Agent in connection with any Loan Document, and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of
such payment or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any Loan Document
or otherwise payable by the Administrative Agent to the Lender from any other source against
any amount due to the Administrative Agent under this paragraph (e).
(f) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall deliver to the
Borrower and the Administrative Agent, at the time or times reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such documentation set
forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s
reasonable judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the legal or commercial
position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that
the Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the
Borrower and the Administrative Agent on or prior to the date on which such Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), an executed copy of
IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup
withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled
to do so, deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter upon
the reasonable request of the Borrower or the Administrative Agent), whichever of the
following is applicable:
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(1) in the case of a Foreign Lender claiming the
benefits of an income tax treaty to which the United States is a party (x) with
respect to payments of interest under any Loan Document, an executed copy of
IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “interest” article of
such tax treaty and (y) with respect to any other applicable payments under any
Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“business profits” or “other income” article of such tax treaty;
(2) in the case of a Foreign Lender claiming that its
extension of credit will generate U.S. effectively connected income, an executed
copy of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the Code,
(x) a certificate substantially in the form of Exhibit E-1 to the effect that such
Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the
Code, a “10 percent shareholder” of the Borrower within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” related to the
Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) an executed copy of IRS Form W-8BEN-E or
IRS Form W-8BEN; or
(4) to the extent a Foreign Lender is not the beneficial
owner, an executed copy of IRS Form W-8IMY, accompanied by IRS Form
W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance
Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS Form W-9,
and/or other certification documents from each beneficial owner, as applicable;
provided that if the Foreign Lender is a partnership and one or more direct or
indirect partners of such Foreign Lender are claiming the portfolio interest
exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate
substantially in the form of Exhibit E-4 on behalf of each such direct and indirect
partner;
(C) any Foreign Lender shall, to the extent it is legally entitled
to do so, deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter upon
the reasonable request of the Borrower or the Administrative Agent), executed copies of
any other form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrower or the Administrative Agent to determine the withholding or deduction required
to be made; and
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(D) if a payment made to a Lender under any Loan Document
would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times prescribed
by law and at such time or times reasonably requested by the Borrower or the
Administrative Agent such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be necessary
for the Borrower and the Administrative Agent to comply with their obligations under
FATCA and to determine that such Lender has complied with such Lender’s obligations
under FATCA or to determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or certification or
promptly notify the Borrower and the Administrative Agent in writing of its legal
inability to do so.
(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes as to which it has
been indemnified pursuant to this Section (including by the payment of additional amounts
pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund
(but only to the extent of indemnity payments made under this Section with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over pursuant to this
paragraph (g) (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary in this
paragraph (g), in no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (g) the payment of which would place the
indemnified party in a less favorable net after-Tax position than the indemnified party would
have been in if the Tax subject to indemnification and giving rise to such refund had not been
deducted, withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. This paragraph shall not be construed to
require any indemnified party to make available its Tax returns (or any other information relating
to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Survival. Each party’s obligations under this Section shall survive the
resignation or replacement of the Administrative Agent or any assignment of rights by, or the
replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or
discharge of all obligations under any Loan Document.
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(i) Defined Terms. For purposes of this Section, the term “applicable law”
includes FATCA.
SECTION II.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) The Borrower shall make each payment or prepayment required to be
made by it hereunder (whether of principal, interest, fees or of amounts payable under
Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date
when due or the date fixed for any prepayment hereunder, in immediately available funds,
without setoff, recoupment or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such payments shall be
made to the Administrative Agent at its offices at 383 Madison Avenue, New York, New York.
The Administrative Agent shall distribute any such payments received by it for the account of
any other Person to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments hereunder shall
be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder,
such funds shall be applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of principal then due to
such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans
resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Revolving Loans; provided that
(i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or participant, other
than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with
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respect to such participation as fully as if such Lender were a direct creditor of the Borrower in
the amount of such participation.
(d) Unless the Administrative Agent shall have received, prior to any date on
which any payment is due to the Administrative Agent for the account of the Lenders pursuant to
the terms hereof or any other Loan Document (including any date that is fixed for prepayment by
notice from the Borrower to the Administrative Agent pursuant to Section 2.11(b)), notice from
the Borrower that the Borrower will not make such payment or prepayment, the Administrative
Agent may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.
In such event, if the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the Administrative Agent, at
the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
SECTION II.19. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for funding or booking
its Loans hereunder or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17, as the case may
be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such designation
or assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender
becomes Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its
interests, rights (other than its existing rights to payments pursuant to Sections 2.15 or 2.17) and
obligations under this Agreement and the other Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for compensation
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under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender
or otherwise, the circumstances entitling the Borrower to require such assignment and delegation
cease to apply. Each party hereto agrees that (i) an assignment required pursuant to this
paragraph may be effected pursuant to an Assignment and Assumption executed by the
Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement
incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic
Platform as to which the Administrative Agent and such parties are participants), and (ii) the
Lender required to make such assignment need not be a party thereto in order for such
assignment to be effective and shall be deemed to have consented to an be bound by the terms
thereof; provided that, following the effectiveness of any such assignment, the other parties to
such assignment agree to execute and deliver such documents necessary to evidence such
assignment as reasonably requested by the applicable Lender; provided that any such documents
shall be without recourse to or warranty by the parties thereto.
SECTION II.20. Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) fees shall cease to accrue on the unfunded portion of the Commitment of
such Defaulting Lender pursuant to Section 2.12(a);
(b) any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether voluntary or
mandatory, at maturity, pursuant to Section 7.03 or otherwise) or received by the Administrative
Agent from a Defaulting Lender pursuant to Section 9.08 shall be applied at such time or times
as may be determined by the Administrative Agent as follows: first, to the payment of any
amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the
Borrower may request (so long as no Default or Event of Default exists), to the funding of any
Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Administrative Agent; third, if so determined by the
Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in
order to satisfy such Defaulting Lender’s potential future funding obligations with respect to
Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a
result of any judgment of a court of competent jurisdiction obtained by any Lender against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this
Agreement or under any other Loan Document; fifth, so long as no Default or Event of Default
exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a
court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a
result of such Defaulting Lender's breach of its obligations under this Agreement or under any
other Loan Document; and sixth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of
any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share,
and (y) such Loans were made at a time when the conditions set forth in Section 4.02 were
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satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting
Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting
Lender until such time as all Loans are held by the Lenders pro rata in accordance with the
Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting
Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this
Section shall be deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto; and
(c) the Commitment and Revolving Credit Exposure of such Defaulting
Lender shall not be included in determining whether the Required Lenders have taken or may
take any action hereunder (including any consent to any amendment, waiver or other
modification pursuant to Section 9.02); provided that this clause (c) shall not apply to the vote of
a Defaulting Lender except (i) such Defaulting Lender’s Commitment may not be increased or
extended without its consent and (ii) the principal amount of, or interest or fees payable on,
Loans may not be reduced or excused or the scheduled date of payment may not be postponed as
to such Defaulting Lender without such Defaulting Lender’s consent.
(d) In the event that the Administrative Agent and the Borrower agree that a
Defaulting Lender has adequately remedied all matters that caused such Lender to be a
Defaulting Lender, then the Revolving Credit Exposure of the Lenders shall be readjusted to
reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase
at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Loans in accordance with its Applicable
Percentage.
SECTION II.21. Incremental Revolving Facilities.
(a) The Borrower may, on no more than five occasions, pursuant to an
Increased Commitment Supplement increase the aggregate amount of the Commitments (the
commitment of any Lender to provide such increase, an “Incremental Revolving Commitment”
and such increase, an “Incremental Revolving Facility” and any loans made pursuant to an
Incremental Revolving Facility, “Incremental Revolving Loans”) in an aggregate outstanding
principal amount not to exceed [***], which increase shall be requested in Dollars.
(b) Each Incremental Revolving Facility shall be subject to the following
provisions:
(i) each Incremental Revolving Commitment must be in an aggregate
amount equal to any integral multiple of $5,000,000 and not less than $25,000,000 (provided that
such amount may be less than $25,000,000 if such amount represents all remaining availability
for Incremental Revolving Facilities under the limit set forth above),
(ii) except as the Borrower and any Lender may separately agree, no
Lender shall be obligated to provide any Incremental Revolving Commitment, and the
determination to provide any Incremental Revolving Commitment shall be within the sole
discretion of such Lender,
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(iii) no Incremental Revolving Facility, Incremental Revolving
Commitment or Incremental Revolving Loan (nor the creation, provision or implementation
thereof) shall require the approval of any existing Lender other than in its capacity, if any, as a
lender providing all or part of any Incremental Revolving Commitment,
(iv) the terms and conditions of any Incremental Revolving Facility
shall be identical to the existing Revolving Loans and Commitments (other than with respect to
fees) and, for purposes of this Agreement and the other Loan Documents, all Revolving Loans
made under any Incremental Revolving Commitment shall be deemed to be Revolving Loans,
(v) to the extent applicable, any fees payable in connection with any
Incremental Revolving Facility shall be determined by the Borrower and the arrangers and/or
lenders providing such Incremental Revolving Facility,
(vi) no Incremental Revolving Facility may be guaranteed by any
Person and no Incremental Revolving Facility shall be secured,
(vii) the proceeds of any Incremental Revolving Facility shall be used
for general corporate purposes and any other use permitted by this Agreement, and
(viii) (A) no Default or Event of Default shall exist immediately prior to
or after giving effect to such Incremental Revolving Facility and (B) the representations and
warranties of the Borrower set forth in the Loan Documents shall be true and correct in all
material respects (or, in the case of any representation and warranty qualified by materiality, all
respects) on and as of the date of the effectiveness of such Incremental Revolving Facility after
giving effect to the Loans made on such date, except to the extent such representations and
warranties specifically relate to any earlier date in which case such representations and
warranties shall have been true and correct in all material respects as of such earlier date (or, in
the case of any representation and warranty qualified by materiality, in all respects as of such
earlier date).
(c) Incremental Revolving Commitments may be provided by any existing
Lender, or by one or more new banks, financial institutions or other entities that are not
Ineligible Institutions (any such other lender, a “New Lender”); provided that the Administrative
Agent shall have a right to consent (such consent not to be unreasonably withheld or delayed) to
the relevant New Lender’s provision of Incremental Revolving Commitments.
(d) Each Lender or New Lender providing a portion of any Incremental
Revolving Commitment shall execute and deliver to the Administrative Agent and the Borrower
all such documentation (including the relevant Increased Commitment Supplement) as may be
reasonably required by the Administrative Agent to evidence and effectuate such Incremental
Revolving Commitment. On the effective date of such Incremental Revolving Commitment,
each New Lender shall become a Lender for all purposes in connection with this Agreement.
(e) The Lenders hereby irrevocably authorize the Administrative Agent to
enter into any Increased Commitment Supplement and/or any amendment to this Agreement and/
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or to any other Loan Document as may be necessary or appropriate in the reasonable opinion of
the Administrative Agent and the Borrower to effect the provisions of this Section 2.21.
(f) This Section 2.21 shall supersede any provision in Section 9.02 to the
contrary.
(g) Each increase and addition consummated under this Section 2.21 shall be
effective upon the delivery of an Increased Commitment Supplement (herein so called) executed
by the Borrower, the Administrative Agent and the Lenders willing to increase their respective
Revolving Commitments and/or the New Lenders (if any).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION III.01. Organization; Powers. Each of the Borrower and its Subsidiaries
is duly organized or formed, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and
is in good standing in, every jurisdiction where such qualification is required.
SECTION III.02. Authorization; Enforceability. The Transactions are within the
Borrower’s corporate or other organizational powers and have been duly authorized by all
necessary corporate or other organizational and, if required, stockholder action. This Agreement
has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
SECTION III.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and
effect (unless the failure to obtain such consents or approval will not have a Material Adverse
Effect), (b) will not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any indenture, agreement
or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise
to a right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, unless such violation or default will not have a Material Adverse Effect and (d) will
not result in the creation or imposition of, or the requirement to create, any Lien on any asset of
the Borrower or any of its Subsidiaries.
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SECTION III.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders (i) its audited
consolidated balance sheet and statements of income, stockholders equity and cash flows as of
and for the fiscal year ended December 31, 2020 and (ii) its unaudited consolidated balance sheet
and statements of income and cash flows as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2021, certified by a Financial Officer. Such financial statements
present fairly, in all material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the
case of the statements referred to in clause (ii) above.
(b) Since December 31, 2020, there has been no Material Adverse Change
with respect to the Borrower and its Subsidiaries, taken as a whole.
SECTION III.05. Properties.
(a) Each of the Borrower and its Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property, except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes, except where the failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the
rights of any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION III.06. Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse Effect (other than as
set forth on Schedule 3.06 (the “Disclosed Matters”)) or (ii) that involve this Agreement or the
Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit, license or other
approval required under any Environmental Law, (ii) is subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows
of any basis for any Environmental Liability.
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(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
SECTION III.7. Compliance with Laws and Agreements. Each of the Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
SECTION III.8. Investment Company Status. Neither the Borrower nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.
SECTION III.9. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material Adverse Effect.
SECTION III.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, would reasonably be expected to result in a Material Adverse
Effect.
SECTION III.11. Disclosure.
(a) None of the reports, lender presentations, information memorandum,
financial statements, certificates or other information furnished by or on behalf of the Borrower
or any Subsidiary to the Administrative Agent or any Lender in connection with the negotiation
of this Agreement or delivered hereunder (as modified or supplemented by other information so
furnished) contains, at the time furnished, any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.
(b) As of the Effective Date, to the best knowledge of the Borrower, the
information included in the Beneficial Ownership Certification provided on or prior to the
Effective Date to any Lender in connection with this Agreement is true and correct in all
respects.
SECTION III.12. Anti-Corruption Laws and Sanctions. The Borrower has
implemented and maintains in effect policies and procedures reasonably designed to promote
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compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees
and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its
Subsidiaries and their respective officers and directors and, to the knowledge of the Borrower, its
employees and agents (when acting in their role as directors, officers, employees and agents), are
in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
None of (a) the Borrower, any Subsidiary, any of their respective directors or officers or, to the
Borrower’s knowledge, employees or (b) to the Borrower’s knowledge, any agent of the
Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the
credit facility established hereby, is a Sanctioned Person.
No Borrowing, use of proceeds or
other Transaction contemplated by this Agreement will violate any Anti-Corruption Law or
applicable Sanctions.
SECTION III.13. Affected Financial Institutions. The Borrower is not an Affected
Financial Institution.
SECTION III.14. [Reserved].
SECTION III.15. Margin Regulations. The Borrower is not engaged and will not
engage, principally or as one of its important activities, in the business of purchasing or carrying
Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and
no part of the proceeds of any Borrowing hereunder will be used to buy or carry any Margin
Stock. Following the application of the proceeds of each Borrowing, not more than [***] of the
value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a
consolidated basis) will be Margin Stock.
SECTION III.16. Solvency. The Borrower and its Subsidiaries, taken as a whole, are
Solvent.
SECTION III.17. Subsidiaries. Schedule 3.17 contains an accurate list of all
Subsidiaries of the Borrower as of the Effective Date, setting forth their respective jurisdictions
of organization and the percentage of their respective Equity Interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding Equity Interests of such Subsidiaries have
been (to the extent such concepts are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and nonassessable.
SECTION III.18. Employee Matters. None of the Borrower or its Subsidiaries is
engaged in any unfair labor practice that would reasonably be expected to have a Material
Adverse Effect. There is (a) no unfair labor practice complaint pending against Borrower or any
of its Subsidiaries, or to the knowledge of the Borrower, threatened against the Borrower or any
of its Subsidiaries and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement that is so pending against Borrower or any of its Subsidiaries or
to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries, (b)
no strike, work stoppage or other labor controversy in existence or threatened involving the
Borrower or any of its Subsidiaries, and (c) no violation of any laws or regulations, foreign or
domestic, with respect to any employee, union or related matters by the Borrower or its
Subsidiaries, except (with respect to any matter specified in clause (a), (b) or (c) above, either
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individually or in the aggregate) such as is not reasonably likely to have a Material Adverse
Effect.
SECTION III.19. Approved Company. The Borrower and applicable Subsidiaries
each have all requisite Agency Approvals and are in good standing with each Agency, to the
extent necessary to conduct their business as then being conducted.
ARTICLE IV
Conditions
SECTION IV.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each
party hereto a counterpart of this Agreement signed on behalf of such party (which, subject to
Section 9.06(b), may include any Electronic Signatures transmitted by telecopy, emailed pdf. or
any other electronic means that reproduces an image of an actual executed signature page).
(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Paul,
Weiss, Rifkind, Wharton & Garrison LLP, counsel for the Borrower, in form and substance
acceptable to the Administrative Agent and covering matters relating to the Borrower, this
Agreement or the Transactions as the Required Lenders shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, and the authorization of this
Agreement and the Transactions, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the president or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a), (b) and (c) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out of pocket expenses and fees of counsel to the
Administrative Agent and the Lenders required to be reimbursed or paid by the Borrower.
(f) [Reserved].
(g) (i) The Administrative Agent shall have received, at least five days prior to
the Effective Date, all documentation and other information regarding the Borrower requested in
connection with applicable “know your customer” and anti-money laundering rules and
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regulations, including the Patriot Act, to the extent requested in writing of the Borrower at least
10 Business Days prior to the Effective Date and (ii) to the extent the Borrower qualifies as a
“legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the
Effective Date, any Lender that has requested, in a written notice to the Borrower at least 10
Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the
Borrower shall have received such Beneficial Ownership Certification (provided that, upon the
execution and delivery by such Lender of its signature page to this Agreement, the condition set
forth in this clause (ii) shall be deemed to be satisfied).
(h) All governmental and third party approvals necessary in connection with
the financing contemplated hereby and the continuing operations of the Borrower and its
Subsidiaries shall have been obtained and be in full force and effect.
(i) [Reserved].
(j) All commitments under that certain Revolving Credit Agreement dated as
of August 10, 2020 among the Borrower, the lenders party thereto and JPMorgan Chase Bank,
N.A., as administrative agent (the “Existing Credit Agreement”) shall have been terminated, and
all principal of and interest on any loans outstanding and other amounts owing thereunder shall
have been paid in full.
The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and
such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of
the Lenders to make Loans hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 11:59 p.m., New York
City time, on August 21, 2021 (and, in the event such conditions are not so satisfied or waived,
the Commitments shall terminate at such time). Subject to the occurrence of the Effective Date,
(i) the “Commitments” (as defined in the Existing Credit Agreement) of the lenders under the
Existing Credit Agreement in effect immediately prior to the effectiveness of this Agreement
shall terminate pursuant to Section 2.09 thereof and (ii) the Commitments of the Lenders shall be
as set forth in Schedule 2.01A. The Lenders that are also party to the Existing Credit Agreement,
comprising the “Required Lenders” as defined therein, hereby waive any requirement of notice
of termination of the commitments pursuant to Section 2.09(c) of the Existing Credit Agreement
and waive any additional notice or other requirements that might apply to such termination to the
extent necessary to give effect to the foregoing.
SECTION IV.02. Each Credit Event. The obligation of each Lender to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Borrowing.
(b) At the time of and immediately after giving effect to such Borrowing, no
Default or Event of Default shall have occurred and be continuing.
(c) The Borrower shall be in Financial Covenant Compliance at the time of
and immediately after giving effect to such Borrowing, and the Administrative Agent shall have
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received a certificate, dated as of the date of such Borrowing and signed by the President or a
Financial Officer of the Borrower, certifying to the Financial Covenant Compliance.
(d) The Borrower shall have delivered a Borrowing Request by the deadlines
specified in Section 2.03.
Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on
the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest
on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants
and agrees with the Lenders that:
SECTION V.01. Financial Statements; Ratings Change and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within the earlier of (x) 120 days after the end of each fiscal year of the
Borrower and (y) the date by which the Borrower is required by the SEC to file such financial
statements (including any period as would be permitted by Rule 12b-25 under the Exchange Act
or any special order of the SEC) (commencing with the fiscal year ending December 31, 2021),
its audited consolidated balance sheet and related statements of operations, stockholders’ equity
and cash flows as of the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other
independent public accountants of recognized national standing (without a “going concern” or
like qualification commentary or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) within the earlier of (x) 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower and (y) the date by which the Borrower is
required by the SEC to file such financial statements (including any time period as would be
permitted by Rule 12b-25 under the Exchange Act or any special order of the SEC)
(commencing with the fiscal quarter ended June 30, 2021), its consolidated balance sheet and
related statements of operations and cash flows as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting forth in each case in comparative form the
figures as of the end of and for the corresponding period or periods of the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
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(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a
Default or Event of Default has occurred and, if a Default or Event of Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations of the Financial Covenants set forth in Section
6.10, whether or not such Financial Covenants are required to be tested, and (iii) stating whether
any change in GAAP or in the application thereof has occurred since the date of the audited or
unaudited financial statements referred to in Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying such certificate;
(d) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary
with the SEC or any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange;
(e) [reserved];
(f) promptly following any request therefor, copies of accountant letters
submitted to the board of directors (or the audit committee of the board of directors) of the
Borrower by independent accountants in connection with the accounts or books of the Borrower
or any Subsidiary;
(g) promptly after any Rating Agency shall have announced a change in the
rating established or deemed to have been established for the Credit Rating, written notice of
such rating change; provided that failure to provide such notice shall not be a Default or Event of
Default; and
(h) promptly following any request therefor, (x) such other information
regarding the operations, business affairs and financial condition of the Borrower or any
Subsidiary as the Administrative Agent or any Lender (through the Administrative Agent) may
reasonably request and (y) information and documentation reasonably requested by the
Administrative Agent or any Lender for purposes of compliance with applicable “know your
customer” and anti-money laundering rules and regulations, including the Patriot Act and the
Beneficial Ownership Regulation.
Documents required to be delivered pursuant to Section 5.01(a), (b) or (d) (to the extent
any such documents are included in materials otherwise filed with the SEC) may be delivered
electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on
which such materials are publicly available as posted on the Electronic Data Gathering, Analysis
and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether made available by the
Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or
any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper
copies of such documents to the Administrative Agent or such Lender until a written request to
cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the
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Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic
mail) of the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative
Agent shall have no obligation to request the delivery of or to maintain paper copies of the
documents referred to above, and in any event shall have no responsibility to monitor compliance
by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely
responsible for timely accessing posted documents or requesting delivery of paper copies of such
document to it and maintaining its copies of such documents.
The financial statements, information and other documents required to be provided
pursuant to Section 5.01(a), (b) or (d) may be those of (i) the Borrower or (ii) any direct or
indirect parent of the Borrower (any such entity described in clause (i) or (ii), a “Reporting
Entity”), so long as in the case of clause (ii) either (1) such direct or indirect parent of the
Borrower shall not conduct, transact or otherwise engage, or commit to conduct, transact or
otherwise engage, in any business or operations other than its direct or indirect ownership of all
of the Equity Interests in, and its management, of the Borrower or (2) if otherwise, the financial
information so delivered shall be accompanied by the consolidating financial statements of the
Borrower and its Subsidiaries prepared in accordance with GAAP and a reasonably detailed
description of the material quantitative differences between the information relating to such
parent, on the one hand, and the information relating to the Borrower and its Subsidiaries on a
standalone basis, on the other hand.
If at any time the Borrower or any direct or indirect parent of the Borrower has made a
good faith determination to file a registration statement with the SEC with respect to a public
offering of such entity’s capital stock, the Borrower will not be required to disclose any
information or take any actions that, in the good faith view of the Borrower, would violate the
securities laws or the SEC’s “gun jumping” rules.
Notwithstanding the foregoing, (a) neither the Borrower nor another Reporting Entity
will be required to deliver any information, certificates or reports that would otherwise be
required by (i) Section 302 or Section 404 of the Sarbanes-Oxley Act of 2002, or related Items
307 or 308 of Regulation S-K or (ii) Item 10(e) of Regulation S-K promulgated by the SEC with
respect to any non-generally accepted accounting principles financial measures contained
therein, (b) such reports will not be required to contain financial information required by Rule
3-09, Rule 3-10 or Rule 3-16 (or any successor provision, including Rule 13-01 and Rule 13-02)
of Regulation S-X or include any exhibits or certifications required by Form 10-K, Form 10-Q or
Form 8-K (or any successor or comparable forms) or related rules under Regulation S-K and (c)
such reports shall be subject to exceptions, exclusions and other differences consistent with the
presentation of financial and other information to the Lenders prior to the date of this Agreement
and shall not be required to present compensation or beneficial ownership information.
SECTION V.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
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(b) the filing or commencement of any Proceeding by or before any arbitrator
or Governmental Authority against or affecting the Borrower or any Significant Subsidiary as to
which there is a reasonable possibility of an adverse determination and which, if adversely
determined, would reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse
Effect;
(d) notice of any action arising under any Environmental Law or of any
noncompliance by the Borrower or any Subsidiary with any Environmental Law or any permit,
approval, license or other authorization required thereunder as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined, would reasonably be
expected to result in a Material Adverse Effect;
(e) the cessation by a credit rating agency of, or its intent to cease, rating the
Borrower’s debt; provided that failure to provide such notice shall not be a Default or Event of
Default; and
(f) any other development that results in, or would reasonably be expected to
result in, a Material Adverse Effect.
Each notice delivered under this Section (i) shall be in writing and (ii) shall be
accompanied by a statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and any action taken or
proposed to be taken with respect thereto.
SECTION V.03. Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses, permits, privileges
and franchises material to the conduct of its business, including the Borrower’s eligibility as
lender, seller/servicer and issuer described under Section 5.09; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION V.04. Payment of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, would
reasonably be expected to result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, and (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP.
SECTION V.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, and except if
failure to do so would not reasonably be expected to have a Material Adverse Effect, and
(b) maintain, with financially sound and reputable insurance companies, insurance in such
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amounts and against such risks as are customarily maintained by companies engaged in the same
or similar businesses operating in the same or similar locations.
SECTION V.06. Books and Records; Inspection Rights. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon at least 3 Business
Days’ notice, to visit and inspect its properties, to examine and make extracts from its books and
records, to discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION V.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect. The
Borrower will maintain in effect and enforce policies and procedures reasonably designed to
promote compliance by the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions.
SECTION V.08. Use of Proceeds. The proceeds of the Loans will be used only for
general corporate purposes of the Borrower and its Subsidiaries in the ordinary course of
business. No part of the proceeds of any Loan will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the regulations of the Federal Reserve Board,
including Regulations T, U and X. The Borrower will not request any Borrowing, and the
Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors,
officers, employees and agents shall not use, the proceeds of any Borrowing (A) in furtherance of
an offer, payment, promise to pay, or authorization of the payment or giving of money, or
anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the
purpose of funding, financing or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, except to the extent permitted for a Person
required to comply with Sanctions, or (C) in any manner that would result in the violation of any
Sanctions applicable to any party hereto.
SECTION V.09. Approved Company. To the extent previously approved and
necessary for the Borrower and any applicable Subsidiary to conduct their business in all
material respects as it is then being conducted, the Borrower and applicable Subsidiaries shall
each maintain its status with Fannie Mae and Freddie Mac as an approved seller/servicer, with
Ginnie Mae as an approved issuer and an approved servicer, and as an RHS lender and an RHS
servicer in each case in good standing (each such approval, an “Agency Approval”); provided
that, should the Borrower or any applicable Subsidiary decide to no longer maintain an Agency
Approval (as opposed to an Agency withdrawing an Agency Approval, but including an Agency
ceasing to exist), the Borrower shall notify the Administrative Agent in writing. Should the
Borrower or any applicable Subsidiary, for any reason, cease to possess all such applicable
Agency Approvals to the extent necessary, the Borrower shall so notify the Administrative Agent
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promptly in writing. Notwithstanding the previous sentence and to the extent previously
approved, the Borrower and applicable Subsidiaries shall take all necessary action to maintain all
of their applicable Agency Approvals at all times during the term of this Agreement.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and interest on
each Loan and all fees payable hereunder have been paid in full, the Borrower covenants and
agrees with the Lenders that:
SECTION VI.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness (including Preferred
Stock of the Subsidiaries), except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing or committed on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof above the balances outstanding as of the
Effective Date;
(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to
the Borrower or any other Subsidiary;
(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary;
(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
development, acquisition, construction, purchase, lease, repair, maintenance or improvement of
any fixed or capital assets (real or personal, including but not limited to, assets consisting of
Financeable Assets, mortgage related securities or derivatives, consumer receivables, and other
similar assets (or any interests in any of the foregoing), and whether through the direct purchase
of assets or the Equity Interest of any person owning such assets), including Capital Lease
Obligations and purchase money indebtedness and any Indebtedness assumed in connection with
the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or
within 365 days after the consummation of such development, acquisition, construction,
purchase, lease, repair, maintenance or improvement;
(f) Funding Indebtedness;
(g) MSR Indebtedness, provided that the aggregate principal amount of drawn
MSR Indebtedness on a cumulative basis as of the date of testing does not exceed [***] of the
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total value of all MSRs as of such date (provided that such testing shall only be made upon each
drawdown of MSR Indebtedness, and not on an ongoing basis);
(h) Indebtedness incurred from borrowings by the Borrower and its
Subsidiaries from Rock Holdings Inc. (or any successor entity of Rock Holdings Inc.) or RKT
Holdings, LLC (or any successor entity of RKT Holdings, LLC);
(i) Indebtedness so long as, after giving effect to the incurrence of such
indebtedness on a pro forma basis, either (x) the Fixed Charge Coverage Ratio of the Borrower
and its Subsidiaries is at least [***] or (y) the Debt-to-Equity Ratio of the Borrower and its
Subsidiaries is no greater than [***];
(j) Indebtedness in connection with an acquisition of a Permitted Business or
of assets to be used in a Permitted Business (including Financeable Assets) or Acquired Debt
(including in each case through a merger otherwise permitted under this Agreement) in an
aggregate principal amount at any time outstanding under this clause (j) not to exceed (1) the
greater of (x) [***] and (y) [***] of Consolidated Total Assets and (2) an amount that after
giving effect to such acquisition or merger or other transaction (x) the Fixed Charge Coverage
Ratio of the Borrower and its Subsidiaries would be no less than immediately prior to the
incurrence of such Indebtedness or (y) the Debt-to-Equity Ratio of the Borrower and its
Subsidiaries would be no greater than immediately prior to the incurrence of such Indebtedness,
in each case on a pro forma basis;
(k) Indebtedness of the Borrower or any Subsidiary in an aggregate principal
amount of up to [***] of the net cash proceeds received by the Borrower after the Effective Date
from the issue or sale of Equity Interests of the Borrower or cash contributed to the capital of the
Borrower to the extent that (i) such net cash proceeds has not been applied to permitted payments
under Section 6.07 and (ii) such net cash proceeds do not constitute proceeds received from the
initial public offering of Rocket Companies, Inc.;
(l) Indebtedness under Hedging Agreements;
(m) unsecured Indebtedness;
(n) Indebtedness of the Borrower or any Subsidiary with respect to (i)
performance, bid, appeal, customs or surety bonds and completion guarantees in the ordinary
course of business or in connection with judgments that do not result in an Event of Default,
obligations in respect of any workers’ compensation claims, early retirement or termination
obligations, deferred compensatory or employee or director equity plans, pension fund
obligations or contributions or similar claims, obligations or contributions or social security or
wage taxes, payment obligations in connection with self-insurance, or similar requirements,
including letters of credit and bankers’ acceptances supporting any of the foregoing or anything
else that is not Indebtedness, or supporting any of the following items in clauses (ii) or (iii), (ii)
financing insurance premiums or (iii) indemnification, adjustment of purchase price or similar
obligations incurred in connection with the acquisition or disposition of any business or assets;
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(o) to the extent otherwise constituting Indebtedness, Indebtedness deemed to
exist as a result of Standard Securitization Undertakings or Credit Enhancement Agreements;
(p) Non-Recourse Indebtedness;
(q) to the extent otherwise constituting Indebtedness, obligations arising from
agreements providing for indemnification, adjustment of purchase price, earn-outs or similar
obligations, in each case, incurred or assumed in connection with the acquisition or disposition of
any business, assets or a Subsidiary, including, but not limited to, any Servicing Advances,
Mortgage Servicing Rights, Receivables, mortgage related securities or derivatives, consumer
receivables, REO Assets, Residual Interests, other Financeable Assets and other similar assets (or
any interests in any of the foregoing) purchased or originated by the Borrower or any of its
Subsidiaries arising in the ordinary course of business;
(r) to the extent constituting Indebtedness, Indebtedness under Excess Spread
Sales incurred in the ordinary course of business;
(s) Indebtedness arising out of or to fund purchases of all remaining
outstanding asset-backed securities of any Securitization Entity in the ordinary course of
business or for the purpose of relieving the Borrower or a Subsidiary of the administrative
expense of servicing such Securitization Entity;
(t) Indebtedness in respect of netting services, overdraft protections,
automated clearing house transactions, and otherwise in connection with treasury and/or cash
management services, including, but not limited to, controlled disbursement services, overdraft
facilities, foreign exchange facilities, deposit and other accounts and merchant services;
(u) guarantees by the Borrower or any of its Subsidiaries to owners of
servicing rights in the ordinary course of business;
(v) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which are related to Indebtedness, such Currency Agreements do not
increase the Indebtedness of the Borrower and its Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder; and
(w) Permitted Refinancing Indebtedness in respect of Indebtedness incurred
pursuant to Section 6.01(a), (b), (e), (i), (j) or (k).
SECTION VI.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it (including on Equity Interests of the Subsidiaries), or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
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(b) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not
apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall
secure only those obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount thereof;
(c) Liens on fixed or capital assets developed, acquired, constructed,
purchased, leased, repaired, maintained or improved by the Borrower or any Subsidiary;
provided that (i) such security interests secure Indebtedness permitted by clause (e) of
Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurred prior
to or within 365 days after the consummation of such development, acquisition, construction,
purchase, lease, repair, maintenance or improvement and (iii) such security interests shall not
apply to any other property or assets of the Borrower or any Subsidiary;
(d) (i) Liens (including on Equity Interests of Securitization Entities) securing
Permitted Warehousing Indebtedness, Permitted Securitization Indebtedness, Permitted
Servicing Advance Facility Indebtedness, Permitted Residual Indebtedness and Indebtedness
under Credit Enhancement Agreements and (ii) Liens on Residual Interests, Securitization
Assets, any intangible contract rights and other accounts, documents, records and assets directly
related to the foregoing assets and the proceeds thereof incurred in connection with any
Securitization not covered by clause (i) securing obligations in respect of Securitization
Securities; provided, however, that recourse to such Residual Interests, Securitization Assets,
intangible contract rights and other accounts, documents, records and assets described in this
clause (ii) is limited in a manner consistent with Standard Securitization Undertakings and the
ratio of the amount of such Residual Interests to the amount of such Securitization Securities is
not significantly greater than the ratio of sellers’ retained interests to the financed portion of
assets in similar securitization transactions;
(e) Liens securing MSR Indebtedness;
(f) Liens securing Indebtedness of the Borrower or any Subsidiary incurred
under Section 6.01(j);
(g) Liens securing Hedging Agreements;
(h) other Liens securing Indebtedness of the Borrower and its Subsidiaries in
an aggregate amount not exceeding at any time the greater of (x) [***] and (y) [***] of
Consolidated Total Assets;
(i) Liens on Financeable Assets or any part thereof or interests therein, assets
originated, acquired or funded with the proceeds of the Indebtedness secured by such assets, any
intangible contract rights and other accounts, documents, records and other property or rights
directly related to the foregoing assets and any proceeds thereof and rights under related hedging
obligations (and, in the case of any Funding Indebtedness, cash, restricted accounts or securities
held in any account with the counterparty to the applicable facility pledged to secure such
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facility) and Standard Securitization Undertakings, securing any Funding Indebtedness of the
Borrower or any Subsidiary (and obligations in respect thereof);
(j) Liens on assets pursuant to merger agreements, stock or asset purchase
agreements and similar agreements in respect of the disposition of such assets, including, but not
limited to, such Liens that are the subject of an Excess Spread Sale entered into in the ordinary
course of business securing obligations under such Excess Spread Sale;
(k) options, put and call arrangements, rights of first refusal and similar rights
relating to investments in joint ventures, partnerships and the like;
(l) Liens incurred in the ordinary course of business not securing
Indebtedness and not in the aggregate materially detracting from the value of the properties or
their use in the operation of the business of the Borrower and its Subsidiaries;
(m) Liens securing Indebtedness or other obligations of a Subsidiary to the
Borrower or another Subsidiary;
(n) Liens arising from the recourse that a GSE may have with respect to an
alleged breach of any representation or warranty given to such GSE in respect of, and upon the
sale of a Receivable;
(o) Liens securing Non-Recourse Indebtedness so long as such Lien shall
encumber only (i) any Equity Interests of the Subsidiary which owes such Indebtedness, (ii) the
assets originated, acquired or funded with the proceeds of such Indebtedness and (iii) any
intangible contract rights and other accounts, documents, records and other property directly
related to the foregoing;
(p) Liens on client deposits securing the obligation to such client;
(q) Liens on spread accounts and credit enhancement assets, Liens on the
Equity Interests of Subsidiaries substantially all of which are spread accounts and credit
enhancement assets and Liens on interests in Securitization Entities, in each case incurred in
connection with Credit Enhancement Agreements;
(r) Liens on cash, cash equivalents or other property arising in connection
with the discharge, redemption or defeasance of Indebtedness or pursuant to Customary escrow
arrangements pending the release thereof;
(s) Liens on insurance policies and the proceeds thereof securing the
financing of premiums with respect thereto, provided that such Liens shall not exceed the amount
of such premiums so financed;
(t) Liens securing Indebtedness under Currency Agreements; and
(u) extensions, renewals or replacements of any Liens referred to in Section
6.02(b), (c) or (f) in connection with the refinancing, refunding, extension, renewal, or
replacement of the obligations secured thereby, provided that such Lien does not extend to any
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other property (other than improvements on such property) and, except as contemplated by the
definition of “Permitted Refinancing Debt”, the amount secured by such Lien is not increased.
SECTION VI.03. Fundamental Changes.
(a) The Borrower will not, and will not permit any Subsidiary to, merge into
or consolidate with any other Person, or permit any other Person to merge into or consolidate
with it, or otherwise Dispose of all or substantially all of its assets, or all or substantially all of
the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto
no Default or Event of Default shall have occurred and be continuing, (i) any Subsidiary may
merge into the Borrower in a transaction in which the Borrower is the surviving corporation,
(ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity
is a Subsidiary, (iii) any Subsidiary may Dispose of its assets to the Borrower or to another
Subsidiary, (iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders, (v) the Borrower may merge into another Person or
another person may merge into the Borrower if (x) the Borrower is the surviving Person and (y)
the Borrower (1) could incur at least $1.00 of additional Indebtedness pursuant to Section 6.01(i)
or (2) has a Debt-to-Equity Ratio equal to or lower than the Debt-to-Equity Ratio of the
Borrower immediately prior to such transaction or (3) has a Fixed Charge Coverage Ratio no less
than the Fixed Charge Coverage Ratio of the Borrower immediately prior to such transaction;
provided the Borrower shall not be required to comply with this subclause (y) if the surviving
Person has an investment grade rating and (vi) the Borrower may merge or consolidate with a
newly formed or incorporated Affiliate of the Borrower formed or incorporated solely for the
purpose of changing the form of organization of the Borrower or reincorporating or reorganizing
the Borrower in another state of the United States or may convert into a corporation, partnership
or limited liability company, so long as the amount of Indebtedness of the Borrower is not
increased thereby and there are no material adverse tax consequences from such conversion as
reasonably determined by the Borrower. For the avoidance of doubt, this Section 6.03(a) shall
not apply to any sale, assignment, transfer, conveyance or other disposition of Securitization
Assets pursuant to a Securitization and any other Financeable Assets.
SECTION VI.04. [Reserved].
SECTION VI.05. [Reserved].
SECTION VI.06. [Reserved].
SECTION VI.07. Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, unless (a) no Default or Event of Default has occurred and is continuing or
shall occur from the making of such Restricted Payment and (b) the Borrower and its
Subsidiaries are in Financial Covenant Compliance at the time of and immediately after giving
effect to such Restricted Payment. [***].
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SECTION VI.08. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any
other transactions involving an aggregate payment or consideration in excess of [***] with, any
of its Affiliates, except:
(a) in the ordinary course of business;
(b) at prices and on terms and conditions not less favorable to the Borrower or
such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties;
(c) transactions between or among the Borrower and its Subsidiaries not
involving any other Affiliate;
(d) any Restricted Payment permitted by Section 6.07;
(e) transactions pursuant to any contract or agreement or investment
(including guarantee) in effect on the Effective Date and set forth on Schedule 6.07, as amended,
modified or replaced from time to time, or similar transactions, so long as the amended, modified
or new agreements, taken as a whole, are no more disadvantageous to the Lenders in any
material respect than those in effect on the Effective Date (as determined by the Borrower in
good faith); provided that with respect to the modification, amendment or replacement of any
such transaction in existence as of the Effective Date on substantially comparable terms, such
threshold shall be calculated only with respect to the amount of any net increase in the value of
such transaction as a result of such modification, amendment or replacement rather than the
aggregate value;
(f) the payment of reasonable and customary regular fees to directors of the
Borrower who are not employees of the Borrower and the provision of customary indemnities to
directors, officers or employees of the Borrower and its Subsidiaries in their capacities as such;
(g) transactions, agreements, plans, arrangements or payments pursuant to any
employee, officer or director compensation or benefit, travel, relocation or expense advance
plans or arrangements;
(h) transactions in connection with any Securitization or Funding
Indebtedness;
(i) mortgage loans provided to officers, directors or employees on terms
consistent with past practice;
(j) licensing of intellectual property rights (whether as licensor or licensee);
(k) transactions (including pursuant to joint venture agreements) with
customers, clients, suppliers, any Person in which the Borrower or any Subsidiary has made an
investment or holds an interest as a joint venture partner (and such Person is an Affiliate solely
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because of such Investment or interest) or others that are Affiliates of the Borrower, in each case
in the ordinary course of business;
(l) leases of real property entered into in the ordinary course of business on
terms not materially less favorable to the Borrower and its Subsidiaries than could be obtained at
the time in an arm’s length transaction with a Person who was not an Affiliate (as determined in
good faith by management of the Borrower);
(m) sales of Qualified Equity Interests by the Borrower or any Subsidiary and
capital contributions to the Borrower from Affiliates;
(n) any transaction in which the Borrower or any Subsidiary delivers to the
Administrative Agent a written opinion from a nationally or regionally recognized investment
banking, accounting or appraisal firm as to (i) the fairness of the transaction to the Borrower and
its Subsidiaries from a financial point of view or (ii) that such transaction is not materially less
favorable to the Borrower and its Subsidiaries than could be obtained at the time in an arm’s
length transaction with a Person who was not an Affiliate; or
(o) any agreement between a Person and an Affiliate of such Person existing
at the time such Person is acquired by, or merged into, the Borrower or a Subsidiary and not
entered into in contemplation of such acquisition or merger.
SECTION VI.9. [Reserved].
SECTION VI.10. Financial Covenants. The Borrower will not permit, on the last
day of each fiscal quarter after the date hereof (each of the clauses (a) through (d) below, a
“Financial Covenant”):
(a) Total Net Leverage Ratio. the Total Net Leverage Ratio of the Borrower
and its Subsidiaries on a consolidated basis to exceed [***].
(b) Total Net Corporate Indebtedness Ratio. the Total Net Corporate
Indebtedness Ratio of the Borrower and its Subsidiaries on a consolidated basis to exceed [***].
(c) Minimum Liquidity. Liquidity of the Borrower and its Subsidiaries to be
less than [***].
(d) Minimum Tangible Net Worth. Tangible Net Worth of the Borrower and
its Subsidiaries to be less than [***];
provided that, if no Revolving Loans are outstanding on such last day of each fiscal quarter, the
Borrower shall not be required to comply with this Section 6.10 on such day (but without
limitation of any independent provision of “Financial Covenant Compliance” as used in this
Agreement).
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ARTICLE VII
Events of Default
SECTION VII.01. Events of Default. If any of the following events (“Events of
Default”) shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as the
same shall become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article) payable under this
Agreement or any other Loan Document, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of [***];
(c) any representation or warranty made or deemed made by or on behalf of
the Borrower or any Subsidiary in this Agreement, any other Loan Document, or any amendment
or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection with this
Agreement, any other Loan Document, or any amendment or modification hereof or thereof or
waiver hereunder or thereunder, shall prove to have been incorrect in any material respect when
made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02(a), 5.03 (with respect to the Borrower’s existence) or 5.08
or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this
Article or the covenants contained in Section 5.01(g) or 5.02(e)) or any other Loan Document,
and such failure shall continue unremedied for a period of [***] after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment in respect
of the principal of any Material Indebtedness when due and payable at the final scheduled
maturity of such Material Indebtedness;
(g) any event, condition or default occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity; provided that this clause (g) shall not
apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or
any Significant Subsidiary (other than a Securitization Entity) or its debts, or of a substantial
part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or
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similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Significant Subsidiary (other
than a Securitization Entity) or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for [***]or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary (other than a Securitization
Entity) shall (i) voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of
this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding or (v) make a general assignment for the benefit of
creditors;
(j) the Borrower or any Significant Subsidiary (other than a Securitization
Entity) shall become unable, admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate amount
equal to or exceeding [***] of Tangible Net Worth of the Borrower shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged
for a period of [***] during which execution shall not be effectively stayed;
(l) an ERISA Event shall have occurred that, when taken together with all
other ERISA Events that have occurred, would reasonably be expected to result in a Material
Adverse Effect;
(m) a Change in Control shall occur; or
(n) the Borrower claims in writing that this Agreement or any other Loan
Document (or any material provision thereof) is not in full force and effect.
SECTION VII.02. Remedies Upon an Event of Default. If an Event of Default occurs
(other than an event with respect to the Borrower described in Sections 7.01(h) or 7.01(i)), and at
any time thereafter during the continuance of such Event of Default, the Administrative Agent
may with the consent of the Required Lenders, and shall at the request of the Required Lenders,
by notice to the Borrower, take any or all of the following actions, at the same or different times:
(a) terminate the Commitments, and thereupon the Commitments shall
terminate immediately;
(b) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so declared to be due
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and payable, together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder and under any other Loan Document, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower;
(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents and Applicable Law.
If an Event of Default described in Sections 7.01(h) or 7.01(i) occurs with respect to the
Borrower, the Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder and under any other Loan Document including any break funding
payment or prepayment premium, shall automatically become due and payable, in each case,
without presentment, demand, protest or other notice of any kind, all of which are hereby waived
by the Borrower.
SECTION VII.03. Application of Payments. Notwithstanding anything herein to the
contrary, following the occurrence and during the continuance of an Event of Default, and notice
thereof to the Administrative Agent by the Borrower or the Required Lenders, all payments
received on account of the Obligations shall, subject to Section 2.20, be applied by the
Administrative Agent as follows:
(i) first, to payment of that portion of the Obligations constituting
fees, indemnities, expenses and other amounts payable to the Administrative Agent (including
fees and disbursements and other charges of counsel to the Administrative Agent payable under
Section 9.03 and amounts pursuant to Section 2.12(b) payable to the Administrative Agent in its
capacity as such);
(ii) second, to payment of that portion of the Obligations constituting
fees, expenses, indemnities and other amounts (other than principal and interest) payable to the
Lenders (including fees and disbursements and other charges of counsel to the Lenders payable
under Section 9.03) arising under the Loan Documents, ratably among them in proportion to the
respective amounts described in this clause (ii) payable to them;
(iii) third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause (iii) payable to them;
(iv) fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans;
(v) fifth, to the payment in full of all other Obligations, in each case
ratably among the Administrative Agent and the Lenders based upon the respective aggregate
amounts of all such Obligations owing to them in accordance with the respective amounts
thereof then due and payable; and
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(vi) finally, the balance, if any, after all Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by law.
ARTICLE VIII
The Administrative Agent
SECTION VIII.01. Authorization and Action.
(a) Each Lender hereby irrevocably appoints the entity named as
Administrative Agent in the heading of this Agreement and its successors and assigns to serve as
the administrative agent under the Loan Documents and each Lender authorizes the
Administrative Agent to take such actions as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the Administrative
Agent under such agreements and to exercise such powers as are reasonably incidental thereto.
Without limiting the foregoing, each Lender hereby authorizes the Administrative Agent to
execute and deliver, and to perform its obligations under, each of the Loan Documents to which
the Administrative Agent is a party, and to exercise all rights, powers and remedies that the
Administrative Agent may have under such Loan Documents.
(b) As to any matters not expressly provided for herein and in the other Loan
Documents (including enforcement or collection), the Administrative Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon the written instructions
of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in
writing, such instructions shall be binding upon each Lender; provided however, that the
Administrative Agent shall not be required to take any action that (i) the Administrative Agent in
good faith believes exposes it to liability unless the Administrative Agent receives an
indemnification and is exculpated in a manner satisfactory to it from the Lenders with respect to
such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law,
including any action that may be in violation of the automatic stay under any requirement of law
relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a
forfeiture, modification or termination of property of a Defaulting Lender in violation of any
requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors;
provided further, that the Administrative Agent may seek clarification or direction from the
Required Lenders prior to the exercise of any such instructed action and may refrain from acting
until such clarification or direction has been provided. Except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower, any Subsidiary or any
Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as
Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall
require the Administrative Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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(c) In performing its functions and duties hereunder and under the other Loan
Documents, the Administrative Agent is acting solely on behalf of the Lenders (except in limited
circumstances expressly provided for herein relating to the maintenance of the Register), and its
duties are entirely mechanical and administrative in nature. Without limiting the generality of the
foregoing:
(i) the Administrative Agent does not assume and shall not be deemed
to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee
of or for any Lender, other than as expressly set forth herein and in the other Loan Documents,
regardless of whether a Default or an Event of Default has occurred and is continuing (and it is
understood and agreed that the use of the term “agent” (or any similar term) herein or in any
other Loan Document with reference to the Administrative Agent is not intended to connote any
fiduciary duty or other implied (or express) obligations arising under agency doctrine of any
applicable law, and that such term is used as a matter of market custom and is intended to create
or reflect only an administrative relationship between contracting parties); additionally, each
Lender agrees that it will not assert any claim against the Administrative Agent based on an
alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement
and/or the transactions contemplated hereby;
(ii) nothing in this Agreement or any Loan Document shall require the
Administrative Agent to account to any Lender for any sum or the profit element of any sum
received by the Administrative Agent for its own account;
(d) The Administrative Agent may perform any of its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-
agent may perform any of their respective duties and exercise their respective rights and powers
through their respective Related Parties. The exculpatory provisions of this Article shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-
agent, and shall apply to their respective activities pursuant to this Agreement. The
Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent
except to the extent that a court of competent jurisdiction determines in a final and nonappealable
judgment that the Administrative Agent acted with gross negligence or willful misconduct in the
selection of such sub-agent.
(e) None of any Syndication Agent, any Documentation Agent, any
Bookrunner or any Arranger shall have obligations or duties whatsoever in such capacity under
this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder
in such capacity, but all such persons shall have the benefit of the indemnities provided for
hereunder.
(f) In case of the pendency of any proceeding with respect to the Borrower
under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan
shall then be due and payable as herein expressed or by declaration or otherwise and irrespective
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of whether the Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim under Sections 2.12,
2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in
any such proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making
of such payments directly to the Lenders to pay to the Administrative Agent any amount due to
it, in its capacity as the Administrative Agent, under the Loan Documents (including under
Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or
to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.
(g) The provisions of this Article are solely for the benefit of the
Administrative Agent, and the Lenders, and, except solely to the extent of the Borrower’s rights
to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower
or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party
beneficiary under any such provisions.
SECTION VIII.02. Administrative Agent’s Reliance, Limitation of Liability, Etc.
(a) Neither the Administrative Agent nor any of its Related Parties shall be (i)
liable for any action taken or omitted to be taken by such party, the Administrative Agent or any
of its Related Parties under or in connection with this Agreement or the other Loan Documents
(x) with the consent of or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in
the absence of its own gross negligence or willful misconduct (such absence to be presumed
unless otherwise determined by a court of competent jurisdiction by a final and non-appealable
judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s
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reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic
means that reproduces an image of an actual executed signature page) or for any failure of the
Borrower to perform its obligations hereunder or thereunder.
(b) The Administrative Agent shall be deemed not to have knowledge of any
(i) notice of any of the events or circumstances set forth or described in Section 5.02 unless and
until written notice thereof stating that it is a “notice under Section 5.02” in respect of this
Agreement and identifying the specific clause under said Section is given to the Administrative
Agent by the Borrower, or (ii) notice of any Default or Event of Default unless and until written
notice thereof (stating that it is a “notice of Default” or a “notice of an Event of Default”) is
given to the Administrative Agent by the Borrower or a Lender. Further, the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii) the contents
of any certificate, report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms or conditions
set forth in any Loan Document or the occurrence of any Default or Event of Default, (iv) the
sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any
other agreement, instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm receipt of items (which on
their face purport to be such items) expressly required to be delivered to the Administrative
Agent or satisfaction of any condition that expressly refers to the matters described therein being
acceptable or satisfactory to the Administrative Agent.
(c) Without limiting the foregoing, the Administrative Agent (i) may treat the
payee of any promissory note as its holder until such promissory note has been assigned in
accordance with Section 9.04, (ii) may rely on the Register to the extent set forth in Section
9.04(b), (iii) may consult with legal counsel (including counsel to the Borrower), independent
public accountants and other experts selected by it, and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts, (iv) makes no warranty or representation to any Lender and shall not be responsible to
any Lender for any statements, warranties or representations made by or on behalf of the
Borrower in connection with this Agreement or any other Loan Document, (v) in determining
compliance with any condition hereunder to the making of a Loan that by its terms must be
fulfilled to the satisfaction of a Lender, may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received notice to the contrary from such
Lender sufficiently in advance of the making of such Loan and (vi) shall be entitled to rely on,
and shall incur no liability under or in respect of this Agreement or any other Loan Document by
acting upon, any notice, consent, certificate or other instrument or writing (which writing may be
a fax, any electronic message, Internet or intranet website posting or other distribution) or any
statement made to it orally or by telephone and believed by it to be genuine and signed or sent or
otherwise authenticated by the proper party or parties (whether or not such Person in fact meets
the requirements set forth in the Loan Documents for being the maker thereof).
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SECTION VIII.03. Posting of Communications.
(a) The Borrower agrees that the Administrative Agent may, but shall not be
obligated to, make any Communications available to the Lenders by posting the Communications
on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by
the Administrative Agent to be its electronic transmission system (the “Approved Electronic
Platform”).
(b) Although the Approved Electronic Platform and its primary web portal are
secured with generally-applicable security procedures and policies implemented or modified by
the Administrative Agent from time to time (including, as of the Effective Date, a user ID/
password authorization system) and the Approved Electronic Platform is secured through a per-
deal authorization method whereby each user may access the Approved Electronic Platform only
on a deal-by-deal basis, each of the Lenders and the Borrower acknowledges and agrees that the
distribution of material through an electronic medium is not necessarily secure, that the
Administrative Agent is not responsible for approving or vetting the representatives or contacts
of any Lender that are added to the Approved Electronic Platform, and that there may be
confidentiality and other risks associated with such distribution. Each of the Lenders and the
Borrower hereby approves distribution of the Communications through the Approved Electronic
Platform and understands and assumes the risks of such distribution.
(c) THE APPROVED ELECTRONIC PLATFORM AND THE
COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE
APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY
OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE
APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE
COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE
APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE
AGENT, ANY ARRANGER, ANY BOOKRUNNER, ANY DOCUMENTATION AGENT,
ANY SYNDICATION AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES
(COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO THE
BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF
ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH
THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM.
“Communications” means, collectively, any notice, demand, communication, information,
document or other material provided by or on behalf of the Borrower pursuant to any Loan
Document or the transactions contemplated therein which is distributed by the Administrative
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Agent or any Lender or by means of electronic communications pursuant to this Section,
including through an Approved Electronic Platform.
(d) Each Lender agrees that notice to it (as provided in the next sentence)
specifying that Communications have been posted to the Approved Electronic Platform shall
constitute effective delivery of the Communications to such Lender for purposes of the Loan
Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (which could
be in the form of electronic communication) from time to time of such Lender’s (as applicable)
email address to which the foregoing notice may be sent by electronic transmission and (ii) that
the foregoing notice may be sent to such email address.
(e) Each of the Lenders and the Borrower agrees that the Administrative
Agent may, but (except as may be required by applicable law) shall not be obligated to, store the
Communications on the Approved Electronic Platform in accordance with the Administrative
Agent’s generally applicable document retention procedures and policies.
(f) Nothing herein shall prejudice the right of the Administrative Agent or
any Lender to give any notice or other communication pursuant to any Loan Document in any
other manner specified in such Loan Document.
SECTION VIII.04. The Administrative Agent Individually. With respect to its
Commitment and Loans, the Person serving as the Administrative Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The terms “Lenders”,
“Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates,
include the Administrative Agent in its individual capacity as a Lender or as one of the Required
Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may
accept deposits from, lend money to, own securities of, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of banking, trust or other business
with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was
not acting as the Administrative Agent and without any duty to account therefor to the Lenders.
SECTION VIII.05. Successor Administrative Agent.
(a) The Administrative Agent may resign at any time by giving 30 days’ prior
written notice thereof to the Lenders and the Borrower, whether or not a successor
Administrative Agent has been appointed. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent’s giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, which shall be a bank with an office in New York, New York or
an Affiliate of any such bank. In either case, such appointment shall be subject to the prior
written approval of the Borrower (which approval may not be unreasonably withheld and shall
not be required while an Event of Default under Sections 7.01(a), (b), (h) or (i) has occurred and
is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor
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Administrative Agent, such successor Administrative Agent shall succeed to, and become vested
with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the
acceptance of appointment as Administrative Agent by a successor Administrative Agent, the
retiring Administrative Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such
action as may be reasonably necessary to assign to the successor Administrative Agent its rights
as Administrative Agent under the Loan Documents.
(b) Notwithstanding paragraph (a) of this Section, in the event no successor
Administrative Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the
retiring Administrative Agent may give notice of the effectiveness of its resignation to the
Lenders and the Borrower, whereupon, on the date of effectiveness of such resignation stated in
such notice, (i) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents; and (ii) the Required Lenders shall
succeed to and become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent; provided that (A) all payments required to be made hereunder or under
any other Loan Document to the Administrative Agent for the account of any Person other than
the Administrative Agent shall be made directly to such Person and (B) all notices and other
communications required or contemplated to be given or made to the Administrative Agent shall
directly be given or made to each Lender. Following the effectiveness of the Administrative
Agent’s resignation from its capacity as such, the provisions of this Article and Section 9.03, as
well as any exculpatory, reimbursement and indemnification provisions set forth in any other
Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as Administrative
Agent.
SECTION VIII.06. Acknowledgements of Lenders.
(a) Each Lender represents and warrants that (i) the Loan Documents set forth
the terms of a commercial lending facility, (ii) it is engaged in making, acquiring or holding
commercial loans and in providing other facilities set forth herein as may be applicable to such
Lender, in each case in the ordinary course of business, and not for the purpose of purchasing,
acquiring or holding any other type of financial instrument (and each Lender agrees not to assert
a claim in contravention of the foregoing), (iii) it has, independently and without reliance upon
the Administrative Agent, any Arranger, any Bookrunner, any Syndication Agent, any
Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing,
and based on such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold
Loans hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or
hold commercial loans and to provide other facilities set forth herein, as may be applicable to
such Lender, and either it, or the Person exercising discretion in making its decision to make,
acquire and/or hold such commercial loans or to provide such other facilities, is experienced in
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making, acquiring or holding such commercial loans or providing such other facilities. Each
Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent, any Arranger, any Bookrunner, any Syndication Agent, any
Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing,
and based on such documents and information (which may contain material, non-public
information within the meaning of the United States securities laws concerning the Borrower and
its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.
(b) Each Lender, by delivering its signature page to this Agreement on the
Effective Date, or delivering its signature page to an Assignment and Assumption or any other
Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have
acknowledged receipt of, and consented to and approved, each Loan Document and each other
document required to be delivered to, or be approved by or satisfactory to, the Administrative
Agent or the Lenders on the Effective Date.
(c) (i) Each Lender hereby agrees that (x) if the Administrative Agent
notifies such Lender that the Administrative Agent has determined in its sole discretion that any
funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as
a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and
collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known
to such Lender), and demands the return of such Payment (or a portion thereof), such Lender
shall promptly, but in no event later than one Business Day thereafter, return to the
Administrative Agent the amount of any such Payment (or portion thereof) as to which such a
demand was made in same day funds, together with interest thereon in respect of each day from
and including the date such Payment (or portion thereof) was received by such Lender to the date
such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation from time to time in effect, and (y) to the extent permitted by applicable law, such
Lender shall not assert, and hereby waives, as to the Administrative Agent, 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 Payments received, including
without limitation any defense based on “discharge for value” or any similar doctrine. A notice
of the Administrative Agent to any Lender under this Section 8.06(c) shall be conclusive, absent
manifest error.
(ii) Each Lender hereby further agrees that if it receives a Payment from the
Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a
different date from, that specified in a notice of payment sent by the Administrative Agent (or
any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not
preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an
error has been made with respect to such Payment. Each Lender agrees that, in each such case,
or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error,
such Lender shall promptly notify the Administrative Agent of such occurrence and, upon
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demand from the Administrative Agent, it shall promptly, but in no event later than one Business
Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion
thereof) as to which such a demand was made in same day funds, together with interest thereon
in respect of each day from and including the date such Payment (or portion thereof) was
received by such Lender to the date such amount is repaid to the Administrative Agent at the
greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation from time to time in effect.
(iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an
erroneous Payment (or portion thereof) are not recovered from any Lender that has received such
Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all
the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not
pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any
other Loan Party, 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 Borrower or any other Loan Party for the purpose of making such
erroneous Payment.
(iv) Each party’s obligations under this Section 8.06(c) shall survive the resignation or
replacement of the Administrative Agent or any transfer of rights or obligations by, or the
replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or
discharge of all Obligations under any Loan Document.
SECTION VIII.07. Certain ERISA Matters.
(a) Each Lender (x) represents and warrants, as of the date such Person
became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender
party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, each Arranger and each Bookrunner and their respective Affiliates, and
not, for the avoidance of doubt, to or for the benefit of the Borrower, that at least one of the
following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of the
Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans or the
Commitments,
(ii) the transaction exemption set forth in one or more PTEs, such as
PTE 84-14 (a class exemption for certain transactions determined by independent qualified
professional asset managers), PTE 95-60 (a class exemption for certain transactions involving
insurance company general accounts), PTE 90-1 (a class exemption for certain transactions
involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for
certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption
for certain transactions determined by in-house asset managers), is applicable with respect to
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such Lender’s entrance into, participation in, administration of and performance of the Loans, the
Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender to enter into,
participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the
entrance into, participation in, administration of and performance of the Loans, the Commitments
and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE
84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I
of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in,
administration of and performance of the Loans, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed
in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is
true with respect to a Lender or such Lender has provided another representation, warranty and
covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender
further (x) represents and warrants, as of the date such Person became a Lender party hereto, to,
and (y) covenants, from the date such Person became a Lender party hereto to the date such
Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, each
Bookrunner and each Arranger and their respective Affiliates, and not, for the avoidance of
doubt, to or for the benefit of the Borrower, that none of the Administrative Agent, or any
Arranger, Bookrunner, any Syndication Agent, any Documentation Agent or any of their
respective Affiliates is a fiduciary with respect to the assets of such Lender (including in
connection with the reservation or exercise of any rights by the Administrative Agent under this
Agreement, any Loan Document or any documents related to hereto or thereto).
(c) The Administrative Agent, and each Arranger, Bookrunner, Syndication
Agent and Documentation Agent hereby informs the Lenders that each such Person is not
undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection
with the transactions contemplated hereby, and that such Person has a financial interest in the
transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive
interest or other payments with respect to the Loans, the Commitments, this Agreement and any
other Loan Documents (ii) may recognize a gain if it extended the Loans, or the Commitments
for an amount less than the amount being paid for an interest in the Loans or the Commitments
by such Lender or (iii) may receive fees or other payments in connection with the transactions
contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment
fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees,
administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit
fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees,
term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees
similar to the foregoing.
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ARTICLE IX
Miscellaneous
SECTION IX.01. Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at Rocket Mortgage, LLC, 1050
Woodward Avenue, Detroit, MI 48226, Attention of Rob Wilson (Telecopy No. (313)
782-9165);
(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A.,
JPMorgan Loan Services, 500 Stanton Christiana Road, Ops 2, 3
rd
Floor Newark, DE 19713,
Attention of Loan and Agency Services Group (Fax No. 1 (302) 634-3301); and
(iii) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by facsimile shall be deemed to have
been given when sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next business day for the
recipient). Notices delivered through Approved Electronic Platforms, to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Borrower and the Lenders
hereunder may be delivered or furnished by using Approved Electronic Platforms pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant
to procedures approved by it; provided that approval of such procedures may be limited to
particular notices or communications.
(c) Unless the Administrative Agent otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written acknowledgement), and
(ii) notices or communications posted to an Internet or intranet website shall be deemed received
upon the deemed receipt by the intended recipient, at its e-mail address as described in the
foregoing clause (i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such
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notice, email or other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the opening of
business on the next business day for the recipient.
(d) Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto.
SECTION IX.02. Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Administrative Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any departure by
the Borrower therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of
Default, regardless of whether the Administrative Agent or any Lender may have had notice or
knowledge of such Default or Event of Default at the time.
(b) Subject to Section 2.14(b) and (c) and Section 9.02(c) below, neither this
Agreement nor any provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required Lenders or by
the Borrower and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written consent of each
Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section 2.09(c) or
2.18(b) or (c) in a manner that would alter the ratable reduction of Commitments or the pro rata
sharing of payments required thereby, without the written consent of each Lender, (v) change the
payment waterfall provisions of Section 2.20(b) or 7.03 without the written consent of each
Lender or (vi) change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent.
(c) If the Administrative Agent and the Borrower acting together identify any
ambiguity, omission, mistake, typographical error or other defect in any provision of this
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Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall
be permitted to amend, modify or supplement such provision to cure such ambiguity, omission,
mistake, typographical error or other defect, and such amendment shall become effective without
any further action or consent of any other party to this Agreement.
SECTION IX.03. Expenses; Limitation of Liability; Indemnity, Etc.
(a) Expenses. The Borrower shall pay (i) all reasonable and documented out
of pocket expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative Agent, in
connection with the administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof and (ii) all reasonable
and documented out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for the Administrative Agent or any
Lender, in connection with the enforcement or protection of its rights in connection with this
Agreement and the other Loan Documents, including its rights under this Section, or in
connection with the Loans made hereunder, including all such reasonable and documented out-
of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such
Loans.
(b) Limitation of Liability. To the extent permitted by applicable law (i) the
Borrower shall not assert, and the Borrower hereby waives, any claim against the Administrative
Agent, any Arranger, any Bookrunner, any Syndication Agent, any Documentation Agent and
any Lender, and any Related Party of any of the foregoing Persons (each such Person being
called a “Lender-Related Person”) for any Liabilities arising from the use by others of
information or other materials (including, without limitation, any personal data) obtained through
telecommunications, electronic or other information transmission systems (including the
Internet), and (ii) no party hereto shall assert, and each such party hereby waives, any Liabilities
against any other party hereto, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document, or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof,
except, in the case of clause (i), to the extent such Liabilities are found in a final, non-appealable
judgment of a court of competent jurisdiction to have resulted from the fraud, willful
misconduct, bad faith or gross negligence or material breach of material obligations in this
Agreement by such Lender-Related Person; provided that, nothing in this Section 9.03(b) shall
relieve the Borrower of any obligation it may have to indemnify an Indemnitee, as provided in
Section 9.03(c), against any special, indirect, consequential or punitive damages asserted against
such Indemnitee by a third party.
(c) Indemnity. The Borrower shall indemnify the Administrative Agent, each
Arranger, each Bookrunner, each Syndication Agent, each Documentation Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such Person being called
an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and
related expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or
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as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any
agreement or instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries or (iv) any actual or
prospective Proceeding relating to any of the foregoing, whether or not such Proceeding is
brought by the Borrower or its equity holders, Affiliates, creditors or any other third Person and
whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the
extent that such Liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted primarily from the fraud, bad
faith, gross negligence, willful misconduct or material breach of material obligations of such
Indemnitee. This Section 9.03(c) shall not apply with respect to Taxes other than any Taxes that
represent losses, claims or damages arising from any non-Tax claim.
(d) Lender Reimbursement. Each Lender severally agrees to pay any amount
required to be paid by the Borrower under paragraphs (a), (b) or (c) of this Section 9.03 to the
Administrative Agent, and each Related Party of any of the foregoing Persons (each, an “Agent-
Related Person”) (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective Applicable Percentage
in effect on the date on which such payment is sought under this Section (or, if such payment is
sought after the date upon which the Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with such Applicable Percentage immediately prior
to such date), from and against any and all Liabilities and related expenses, including the fees,
charges and disbursements of any kind whatsoever that may at any time (whether before or after
the payment of the Loans) be imposed on, incurred by or asserted against such Agent-Related
Person in any way relating to or arising out of the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by such Agent-
Related Person under or in connection with any of the foregoing; provided that the unreimbursed
expense or Liability or related expense, as the case may be, was incurred by or asserted against
such Agent-Related Person in its capacity as such; provided further that no Lender shall be liable
for the payment of any portion of such Liabilities, costs, expenses or disbursements that are
found by a final and nonappealable decision of a court of competent jurisdiction to have resulted
primarily from such Agent-Related Party’s gross negligence or willful misconduct. The
agreements in this Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(e) Payments. All amounts due under this Section 9.03 shall be payable
promptly after written demand therefor.
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SECTION IX.04. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns permitted hereby, except
that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in accordance with this
Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of
its rights and obligations under this Agreement (including all or a portion of its Commitment and
the Loans at the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld or delayed) of:
(A) the Borrower; provided that the Borrower shall be deemed
to have consented to an assignment of all or a portion of the Revolving Loans and
Commitments unless it shall have objected thereto by written notice to the Administrative
Agent within ten (10) Business Days after having received notice thereof; provided
further, that Goldman Sachs Bank USA may assign all or a portion of its Revolving
Loans and Commitments to Goldman Sachs Lending Partners LLC without consent of
the Borrower on 30 days’ prior notice to the Borrower, and that no consent of the
Borrower shall be required for an assignment to a Lender or, if an Event of Default under
Sections 7.01(a), (b), (h) or (i) has occurred and is continuing, any other assignee;
(B) the Administrative Agent; and
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and
the Administrative Agent otherwise consent; provided that no such consent of the
Borrower shall be required if an Event of Default under Sections 7.01(a), (b), (h) or (i)
has occurred and is continuing;
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(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under this
Agreement;
(C) the parties to each assignment shall execute and deliver to
the Administrative Agent (x) an Assignment and Assumption or (y) to the extent
applicable, an agreement incorporating an Assignment and Assumption by reference
pursuant to an Approved Electronic Platform as to which the Administrative Agent and
the parties to the Assignment and Assumption are participants, together with a processing
and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee designates
one or more credit contacts to whom all syndicate-level information (which may contain
material non-public information about the Borrower and its related parties or its
securities) will be made available and who may receive such information in accordance
with the assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.
For the purposes of this Section 9.04(b), the term “Ineligible Institution” has the
following meanings:
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender
Parent, (c) a holding company, investment vehicle or trust for, or owned and operated for the
primary benefit of, a natural person or relative(s) thereof or (d) the Borrower or any of its
Affiliates; provided that, with respect to clause (c), such holding company, investment vehicle or
trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary
purpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who
is not such natural person or a relative thereof, having significant experience in the business of
making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a
significant part of its activities consist of making or purchasing commercial loans and similar
extensions of credit in the ordinary course of its business.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned
by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not comply with this
Section shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of this Section.
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(iv) The Administrative Agent, acting for this purpose as a non-
fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive absent manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(v) Upon its receipt of (x) a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee or (y) to the extent applicable, an
agreement incorporating an Assignment and Assumption by reference pursuant to an Approved
Electronic Platform as to which the Administrative Agent and the parties to the Assignment and
Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register; provided that if either
the assigning Lender or the assignee shall have failed to make any payment required to be made
by it pursuant to 2.07(b), 2.18(d) or 9.03(d), the Administrative Agent shall have no obligation to
accept such Assignment and Assumption and record the information therein in the Register
unless and until such payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of, or notice to, the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities (a “Participant”),
other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the Loans owing to
it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged;
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations; and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver described
in clauses (i), (ii) or (iii) the first proviso to Section 9.02(b) that affects such Participant. The
Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and
2.17 (subject to the requirements and limitations therein, including the requirements under
Sections 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall
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be delivered to the participating Lender and the information)) to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of Section 2.19 as if it
were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any
greater payment under Section 2.15 or 2.17, with respect to any participation, than its
participating Lender would have been entitled to receive, except to the extent such entitlement to
receive a greater payment results from a Change in Law that occurs after the Participant acquired
the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s
request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the
provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender;
provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent
of the Borrower, maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that no Lender
shall have any obligation to disclose all or any portion of the Participant Register (including the
identity of any Participant or any information relating to a Participant’s interest in any
Commitments, Loans or its other obligations under any Loan Document) to any Person except to
the extent that such disclosure is necessary to establish that such Commitment, Loan, or other
obligation is in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement notwithstanding any notice to the
contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative
Agent) shall have no responsibility for maintaining a Participant Register.
(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION IX.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the other Loan Documents and in the certificates
or other instruments delivered in connection with or pursuant to this Agreement or any other
Loan Documents shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of any Default
or Event of Default or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not expired or terminated. The provisions of
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Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby, the repayment of
the Loans and the Commitments or the termination of this Agreement or any provision hereof.
SECTION IX.06. Counterparts; Integration; Effectiveness; Electronic Execution.
(a) This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement, the other Loan
Documents and any separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
(b) Delivery of an executed counterpart of a signature page of (x) this
Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval,
consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant
to Section 9.01), certificate, request, statement, disclosure or authorization related to this
Agreement, any other Loan Document and/or the transactions contemplated hereby and/or
thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy,
emailed pdf. or any other electronic means that reproduces an image of an actual executed
signature page shall be effective as delivery of a manually executed counterpart of this
Agreement, such other Loan Document or such Ancillary Document, as applicable. The words
“execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this
Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to
include Electronic Signatures, deliveries or the keeping of records in any electronic form
(including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an
image of an actual executed signature page), each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature, physical delivery thereof or the use
of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall
require the Administrative Agent to accept Electronic Signatures in any form or format without
its prior written consent and pursuant to procedures approved by it; provided further, without
limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any
Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely
on such Electronic Signature purportedly given by or on behalf of the Borrower without further
verification thereof and without any obligation to review the appearance or form of any such
Electronic signature and (ii) upon the request of the Administrative Agent or any Lender, any
Electronic Signature shall be promptly followed by a manually executed counterpart. Without
limiting the generality of the foregoing, the Borrower hereby (i) agrees that, for all purposes,
including without limitation, in connection with any workout, restructuring, enforcement of
remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and
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the Borrower, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic
means that reproduces an image of an actual executed signature page and/or any electronic
images of this Agreement, any other Loan Document and/or any Ancillary Document shall have
the same legal effect, validity and enforceability as any paper original, (ii) the Administrative
Agent and each of the Lenders may, at its option, create one or more copies of this Agreement,
any other Loan Document and/or any Ancillary Document in the form of an imaged electronic
record in any format, which shall be deemed created in the ordinary course of such Person’s
business, and destroy the original paper document (and all such electronic records shall be
considered an original for all purposes and shall have the same legal effect, validity and
enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal
effect, validity or enforceability of this Agreement, any other Loan Document and/or any
Ancillary Document based solely on the lack of paper original copies of this Agreement, such
other Loan Document and/or such Ancillary Document, respectively, including with respect to
any signature pages thereto and (iv) waives any claim against any Lender-Related Person for any
Liabilities arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use
of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic
means that reproduces an image of an actual executed signature page, including any Liabilities
arising as a result of the failure of the Borrower to use any available security measures in
connection with the execution, delivery or transmission of any Electronic Signature.
SECTION IX.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION IX.08. [Reserved].
SECTION IX.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement and the other Loan Documents shall be construed in
accordance with and governed by the law of the State of New York.
(b) Each of the Lenders and the Administrative Agent hereby irrevocably and
unconditionally agrees that, notwithstanding the governing law provisions of any applicable
Loan Document, any claims brought against the Administrative Agent by any Lender relating to
this Agreement, any other Loan Document or the consummation or administration of the
transactions contemplated hereby or thereby shall be construed in accordance with and governed
by the law of the State of New York.
(c) Each of the parties hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the United States District Court for the
Southern District of New York sitting in the Borough of Manhattan (or if such court lacks
subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough
of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or any other Loan Document or the transactions relating hereto
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or thereto, or for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding may (and any such claims, cross-claims or third party claims brought against the
Administrative Agent or any of its Related Parties may only) be heard and determined in such
Federal (to the extent permitted by law) or New York State court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or in any other Loan Document shall affect any right that the
Administrative Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.
(d) Each of the parties hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in paragraph (c) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(e) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other manner permitted by law.
SECTION IX.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION IX.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION IX.12. Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
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any Governmental Authority (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), subject to informing the Borrower promptly prior to
such disclosure to the extent practicable and not prohibited by applicable law, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal process, subject to
informing the Borrower promptly prior to such disclosure to the extent practicable and not
prohibited by applicable law, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder or under any other
Loan Document, (f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) on a confidential basis to (1) any rating agency in connection
with rating the Borrower or its Subsidiaries or the credit facilities provided for herein or (2) the
CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of
identification numbers with respect to the credit facilities provided for herein, (h) with the
consent of the Borrower or (i) to the extent such Information (1) becomes publicly available
other than as a result of a breach of this Section, (2) is independently developed by the
Administrative Agent or any Lender or any of their Affiliates or (3) becomes available to the
Administrative Agent or any Lender on a non-confidential basis from a source other than the
Borrower. For the purposes of this Section, “Information” means all information received from
the Borrower relating to the Borrower or its business, other than any such information that is
available to the Administrative Agent or any Lender on a non-confidential basis prior to
disclosure by the Borrower and other than information pertaining to this Agreement routinely
provided by arrangers to data service providers, including league table providers, that serve the
lending industry. Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION IX.13. Material Non-Public Information.
(a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS
DEFINED IN SECTION 9.12 FURNISHED TO IT PURSUANT TO THIS AGREEMENT
MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE
BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES,
AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT
IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS
AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE
ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
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ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL
INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS
SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN
ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY
RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND
APPLICABLE LAW.
SECTION IX.14. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively
the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in respect of such
Loan but were not payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the NYFRB Rate to the date of repayment, shall have been received by
such Lender.
SECTION IX.15. No Fiduciary Duty, Etc.
(a) The Borrower acknowledges and agrees, and acknowledges its
Subsidiaries’ understanding, that no Credit Party will have any obligations except those
obligations expressly set forth herein and in the other Loan Documents and each Credit Party is
acting solely in the capacity of an arm’s length contractual counterparty to the Borrower with
respect to the Loan Documents and the transactions contemplated herein and therein and not as a
financial advisor or a fiduciary to, or an agent of, the Borrower or any other person. The
Borrower agrees that it will not assert any claim against any Credit Party based on an alleged
breach of fiduciary duty by such Credit Party in connection with this Agreement and the
transactions contemplated hereby. Additionally, the Borrower acknowledges and agrees that no
Credit Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or
any other matters in any jurisdiction. The Borrower shall consult with its own advisors
concerning such matters and shall be responsible for making its own independent investigation
and appraisal of the transactions contemplated herein or in the other Loan Documents, and the
Credit Parties shall have no responsibility or liability to the Borrower with respect thereto.
(b) The Borrower further acknowledges and agrees, and acknowledges its
Subsidiaries’ understanding, that each Credit Party, together with its Affiliates, is a full service
securities or banking firm engaged in securities trading and brokerage activities as well as
providing investment banking and other financial services. In the ordinary course of business,
any Credit Party may provide investment banking and other financial services to, and/or acquire,
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hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities
and financial instruments (including bank loans and other obligations) of, the Borrower and other
companies with which the Borrower may have commercial or other relationships. With respect
to any securities and/or financial instruments so held by any Credit Party or any of its customers,
all rights in respect of such securities and financial instruments, including any voting rights, will
be exercised by the holder of the rights, in its sole discretion.
(c) In addition, the Borrower acknowledges and agrees, and acknowledges its
Subsidiaries’ understanding, that each Credit Party and its affiliates may be providing debt
financing, equity capital or other services (including financial advisory services) to other
companies in respect of which the Borrower may have conflicting interests regarding the
transactions described herein and otherwise. No Credit Party will use confidential information
obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents
or its other relationships with the Borrower in connection with the performance by such Credit
Party of services for other companies, and no Credit Party will furnish any such information to
other companies. The Borrower also acknowledges that no Credit Party has any obligation to
use in connection with the transactions contemplated by the Loan Documents, or to furnish to the
Borrower, confidential information obtained from other companies.
SECTION IX.16. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA PATRIOT Act of 2001 (the “Patriot Act”) hereby notifies the Borrower
that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender to identify the Borrower in
accordance with the Patriot Act.
SECTION IX.17. Acknowledgement and Consent to Bail-In of Affected Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party hereto
acknowledges that any liability of any Affected Financial Institution arising under any Loan
Document may be subject to the Write-Down and Conversion Powers of the applicable
Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an the
applicable Resolution Authority to any such liabilities arising hereunder which may be payable
to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if
applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such Affected Financial Institution, its parent entity, or a
bridge institution that may be issued to it or otherwise conferred on it, and that such shares or
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other instruments of ownership will be accepted by it in lieu of any rights with respect to any
such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the day and year
first above written.
ROCKET MORTGAGE, LLC
By:
/s/ Robert P Wilson
Name: Robert Wilson
Title: Treasurer
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JPMORGAN CHASE BANK, N.A.,
individually and as Administrative Agent,
By:
/s/ Carolyn Johnson
Name: Carolyn Johnson
Title: Authorized Officer
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BARCLAYS BANK PLC, as a Lender
By:
/s/ Ronnie Glenn
Name: Ronnie Glenn
Title: Director
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CREDIT SUISSE AG, NEW YORK BRANCH, as a
Lender
By: /s/ Doreen Barr
Name: Doreen Barr
Title: Authorized Signatory
By: /s/ Komal Shah
Name: Komal Shah
Title: Authorized Signatory
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FIFTH THIRD BANK, NATIONAL
ASSOCIATION, as a Lender
By: /s/ Yasmeen Jasey
Name: Yasmeen Jasey
Title: VP Corporate Banking
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GOLDMAN SACHS BANK USA, as a Lender
By: /s/ Rebecca Kratz
Name: Rebecca Kratz
Title: Authorized Signatory
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[THE HUNTINGTON NATIONAL BANK], as a
Lender
By: /s/ Ryan Benefiel
Name: Ryan Benefiel
Title: Assistant Vice President
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MORGAN STANLEY BANK, N.A., as a Lender
By: /s/ Michael King
Name: Michael King
Title: Authorized Signatory
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EXHIBIT D-4
RBC CAPITAL MARKETS, as a Lender
By: /s/ Glenn Van Allen
Name: Glenn Van Allen
Title: Authorized Signatory
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UBS AG, STAMFORD BRANCH, as a Lender
By: /s/ Anthony N Joseph
Name: Anthony N Joseph
Title: Associate Director
By: /s/ Dionne Robinson
Name: Dionne Robinson
Title: Associate Director
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Schedule 2.01A
Commitments
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Schedule 3.06
Disclosed Matters
125
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Schedule 3.17
Subsidiaries
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Schedule 6.01
Existing Indebtedness
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Schedule 6.02
Existing Liens
#94769971v22
Schedule 6.08
Existing Transactions with Affiliates
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EXHIBIT A
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement identified below
(as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor,
subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement,
as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the
Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based on or related to
any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i)
and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
3. Borrower(s): ______________________________
4. Administrative Agent: __________________________, as the administrative agent under
the Credit Agreement
5. Credit Agreement: The Revolving Credit Agreement dated as of August 10, 2021
among Rocket Mortgage, LLC, the Lenders parties thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent.
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6. Assigned Interest:
Facility Assigned
1
Aggregate Amount of
Commitment/Loans for
all Lenders
Amount of
Commitment/Loans
Assigned
Percentage Assigned of
Commitment/Loans
2
$ $ %
$ $ %
$ $ %
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
The Assignee, if not an existing Lender, agrees to deliver to the Administrative Agent a
completed Administrative Questionnaire in which the Assignee designates one or more credit
contacts to whom all syndicate-level information (which may contain material non-public
information about the Borrower and its Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the Assignee’s
compliance procedures and applicable laws, including Federal and state securities laws.
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
Title:
ASSIGNEE
By:
Title:
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#94769971v22
1
Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned
under this Assignment.
2
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
Consented to and Accepted:
JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By_________________________________
Title:
[Consented to:
ROCKET MORTGAGE, LLC
By________________________________
Title: ]
3
A-3
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3
To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any
of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement,
(iv) any requirements under applicable law for the Assignee to become a lender under the Credit
Agreement or to charge interest at the rate set forth therein from time to time or (v) the
performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under the Credit Agreement.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender
under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit
Agreement and under applicable law that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound
by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with
respect to decisions to acquire assets of the type represented by the Assigned Interest and either
it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant to Section 5.01
thereof, as applicable, and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Administrative Agent, any Arranger, the Assignor or
any other Lender or any of their respective Related Parties, and (vi) attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, any Arranger, any Bookrunner,
Syndication Agent or Documentation Agent, the Assignor or any other Lender or any of their
respective Related Parties, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement, and (ii) it will perform in accordance with their terms all of the
ANNEX 1
Annex 1-1
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obligations which by the terms of the Credit Agreement are required to be performed by it as a
Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal, interest, fees and
other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and
Assumption by the Assignee and the Assignor by Electronic Signature or delivery of an executed
counterpart of a signature page of this Assignment and Assumption by any Approved Electronic
Platform shall be effective as delivery of a manually executed counterpart of this Assignment
and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the law of the State of New York.
Annex 1-2
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EXHIBIT B
[FORM OF] BORROWING REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
[ADDRESS]
Telephone: [ ]
Email: [ ]
Fax: [ ]
Attention: [ ]
Copy to:
JPMorgan Chase Bank, N.A.,
as Administrative Agent
[ADDRESS]
Attention: [ ]
[Date]
Ladies and Gentlemen:
Reference is hereby made to the Revolving Credit Agreement dated as of August 10,
2021 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among ROCKET MORTGAGE, LLC, as borrower, each lender from time to time
party thereto and JPMorgan Chase Bank, N.A. as Administrative Agent. Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement. This notice constitutes a Borrowing Request and the
Borrower hereby gives you notice, pursuant to Section 2.03 of the Credit Agreement, that it
requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies
the following information with respect to such Borrowing:
(A) Aggregate principal amount of Borrowing:
4
$_________________
(B) Date of Borrowing (which is a Business Day):________________
(C) Type of Borrowing:
5
____________________________________
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4
Must comply with Section 2.02(c) of the Credit Agreement.
5
Specify ABR Borrowing or Eurodollar Borrowing. If no election as to the Type of Borrowing is specified, then
the requested Borrowing shall be an ABR Borrowing.
(D) Interest Period:
6
_____________________
(E) Location and number of the Borrower’s account to which proceeds of the
requested Borrowing are to be disbursed: [NAME OF BANK] (Account No.:
______________)
The Borrower hereby certifies that the conditions specified in paragraphs (a), (b) and (c)
of Section 4.02 of the Credit Agreement have been satisfied and that, after giving effect to the
Borrowing requested hereby, the Total Revolving Credit Exposure shall not exceed the
maximum amount thereof specified in Section 2.01 of the Credit Agreement.
Very truly yours,
ROCKET MORTGAGE, LLC,
by
Name:
Title:
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6
Applicable to Eurodollar Borrowings only. Shall be subject to the definition of “Interest Period” and can be a
period of one, three or six months. Cannot extend beyond the Maturity Date. If an Interest Period is not
specified, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
EXHIBIT C
[FORM OF] INTEREST ELECTION REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
[ADDRESS]
Telephone: [ ]
Email: [ ]
Fax: [ ]
Attention: [ ]
Copy to:
JPMorgan Chase Bank, N.A.,
as Administrative Agent
[ADDRESS]
Attention: [ ]
[Date]
Ladies and Gentlemen:
Reference is hereby made to the Revolving Credit Agreement dated as of August 10, 2021 (as
amended, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Rocket Mortgage, LLC, as borrower, each lender from time to time party thereto and
JPMorgan Chase Bank, N.A. as Administrative Agent. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement. This notice constitutes an Interest Election Request and the Borrower hereby
gives you notice, pursuant to Section 2.08 of the Credit Agreement, that it requests to convert an
existing Borrowing under the Credit Agreement, and in that connection the Borrower specifies
the following information with respect to such conversion requested hereby:
(A) List date, Type, principal amount, and Interest Period (if applicable) of existing
Borrowing: ___________
(B) Aggregate principal amount of resulting Borrowing:
7
$_________________
(C) Effective date of interest election (which is a Business Day):________________
(D) Type of Borrowing:
8
____________________________________
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7
Must comply with Section 2.02(c) of the Credit Agreement.
8
Specify ABR Borrowing or Eurodollar Borrowing.
(E) Interest Period and last day thereof (if a Eurodollar Borrowing):
9
_____________________
Very truly yours,
ROCKET MORTGAGE, LLC,
by
Name:
Title:
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9
Applicable to Eurodollar Borrowings only. Shall be subject to the definition of “Interest Period” and can be a
period of one, three or six months. Cannot extend beyond the Maturity Date. If an Interest Period is not
specified, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
EXHIBIT E-1
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement dated as of August 10,
2021 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among ROCKET MORTGAGE, LLC, a Michigan limited liability company,
JPMORGAN CHASE BANK, N.A., as Administrative Agent, and each lender from time to time
party thereto.
Pursuant to the provisions of Section 2.17(f) of the Credit Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any
promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate,
(ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code
and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By
executing this certificate, the undersigned agrees that (1) if the information provided in this
certificate changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and
the Administrative Agent with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
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EXHIBIT E-2
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement dated as of August 10,
2021 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among ROCKET MORTGAGE, LLC, a Michigan limited liability company,
JPMORGAN CHASE BANK, N.A., as Administrative Agent, and each lender from time to time
party thereto.
Pursuant to the provisions of Section 2.17(f) of the Credit Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of
which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of the Borrower within the
meaning of Section 881(c)(3)(B) of the Code, and (iv) it is not a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S.
Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the
undersigned agrees that (1) if the information provided in this certificate changes, the
undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have
at all times furnished such Lender with a properly completed and currently effective certificate in
either the calendar year in which each payment is to be made to the undersigned, or in either of
the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
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EXHIBIT E-3
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement dated as of August 10,
2021 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among ROCKET MORTGAGE, LLC, a Michigan limited liability company,
JPMORGAN CHASE BANK, N.A., as Administrative Agent, and each lender from time to time
party thereto.
Pursuant to the provisions of Section 2.17(f) of the Credit Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the participation in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial
owners of such participation, (iii) with respect such participation, neither the undersigned nor any
of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan
agreement entered into in the ordinary course of its trade or business within the meaning of
Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code
and (v) none of its direct or indirect partners/members is a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that is claiming
the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each
of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.
By executing this certificate, the undersigned agrees that (1) if the information provided in this
certificate changes, the undersigned shall promptly so inform such Lender and (2) the
undersigned shall have at all times furnished such Lender with a properly completed and
currently effective certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
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EXHIBIT E-4
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement dated as of August 10,
2021 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among ROCKET MORTGAGE, LLC, a Michigan limited liability company,
JPMORGAN CHASE BANK, N.A., as Administrative Agent, and each lender from time to time
party thereto.
Pursuant to the provisions of Section 2.17(f) of the Credit Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any promissory
note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct
or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any
promissory note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant
to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement
entered into in the ordinary course of its trade or business within the meaning of Section
881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v)
none of its direct or indirect partners/members is a “controlled foreign corporation” related to the
Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its partners/members
that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form
W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the
portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the
information provided in this certificate changes, the undersigned shall promptly so inform the
Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished
the Borrower and the Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to the undersigned, or
in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
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[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Jay Farner, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Rocket Companies, Inc. (the
“Registrant”) for the quarterly period ended June 30, 2021;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant's other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the Registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) Omitted pursuant to SEC Release No. 34-54942;
(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the Registrant's internal control over financial
reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control over financial
reporting; and
5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant's auditors and the
audit committee of the Registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
Registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the Registrant's internal control over financial reporting.
Date: August 13, 2021 By: /s/ Jay Farner
Name: Jay Farner
Title: Chief Executive Officer
Exhibit 31.1
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Julie Booth, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Rocket Companies, Inc. (the
“Registrant”) for the quarterly period ended June 30, 2021;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant's other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the Registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) Omitted pursuant to SEC Release No. 34-54942;
(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the Registrant's internal control over financial
reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control over financial
reporting; and
5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant's auditors and the
audit committee of the Registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
Registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the Registrant's internal control over financial reporting.
Date: August 13, 2021 By: /s/ Julie Booth
Name: Julie Booth
Title: Chief Financial Officer and Treasurer
Exhibit 31.2
Exhibit 32.1
ROCKET COMPANIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Jay Farner, Chief Executive Officer of Rocket Companies, Inc. (the “Company”), do hereby
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that to the best of my knowledge:
• the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
• information contained in the Report fairly presents, in all material respects, the financial
condition and results of the operations of the Company.
Date: August 13, 2021
By: /s/ Jay Farner
Name: Jay Farner
Title: Chief Executive Officer
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item
601(b)(32) of Regulation S-K and Section 1350 of Title 18 of the United States Code and,
accordingly, is not being filed with the U.S. Securities and Exchange Commission as part of the
Report and is not to be incorporated by reference into any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the
date of the Report, irrespective of any general incorporation language contained in such filing).
Exhibit 32.2
ROCKET COMPANIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Julie Booth, Chief Financial Officer and Treasurer of Rocket Companies, Inc. (the
“Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
• the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
• information contained in the Report fairly presents, in all material respects, the financial
condition and results of the operations of the Company.
Date: August 13, 2021
By: /s/ Julie Booth
Name: Julie Booth
Title: Chief Financial Officer and Treasurer
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item
601(b)(32) of Regulation S-K and Section 1350 of Title 18 of the United States Code and,
accordingly, is not being filed with the U.S. Securities and Exchange Commission as part of the
Report and is not to be incorporated by reference into any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the
date of the Report, irrespective of any general incorporation language contained in such filing).
