Exhibit 10.1

 

EXECUTION VERSION

 

LOAN AND SECURITY AGREEMENT

 

between

 

BANK OF AMERICA, N.A.

(“Lender”)

 

and

 

FIVE OAKS ACQUISITION CORP.

(“Borrower”)

 

dated as of

 

July 18, 2014

 

 

 

 

TABLE OF CONTENTS

 

 

Page

    ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1     1.1 Defined Terms
1 1.2 Interpretation; Principles of Construction. 1       ARTICLE 2 AMOUNT AND
TERMS OF THE ADVANCE 2     2.1 Agreement to Make the Advance 2 2.2 Note 2 2.3
Advance Limits 3 2.4 Description of Pledged Mortgage Loans 3 2.5 Use of Proceeds
3 2.6 Interest 3 2.7 Terms and Conditions of Advance 3       ARTICLE 3
PROCEDURES FOR MAKING THE ADVANCE 4     3.1 Policies and Procedures 4 3.2
Request for Advance 4 3.3 Delivery of Mortgage Loan Documents 4 3.4 Payment of
Advance 4       ARTICLE 4 REPAYMENT; PREPAYMENTS 4     4.1 Repayment 4 4.2
Mandatory Prepayment Events 5 4.3 Optional Prepayments 5 4.4 Illegality or
Impracticability 6 4.5 Increased Costs 6 4.6 Payments Pursuant to Sale to
Approved Investors 7 4.7 Application of Payments from Borrower or Approved
Investors 7 4.8 Method of Payment 8 4.9 Reserved 8 4.10 Book Account 8 4.11 Full
Recourse 8       ARTICLE 5 FEES 8     5.1 Payment of Fees 8       ARTICLE 6
COLLATERAL SECURITY; SERVICING; BORROWING BASE MAINTENANCE; CUSTODY OF MORTGAGE
LOAN DOCUMENTS 9     6.1 Grant of Security Interest in Pledged Mortgage Loans
and Collateral 9 6.2 Further Documentation 10 6.3 Lender’s Appointment as
Attorney-in-Fact 10 6.4 Performance by Lender of Borrower’s Obligations 12

 

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6.5 Proceeds 12 6.6 Limitation on Duties Regarding Presentation of Collateral 12
6.7 Powers Coupled with an Interest 12 6.8 Release of Security Interest 12 6.9
Servicing 13 6.10 Custodial Account 14 6.11 Borrowing Base Maintenance 15 6.12
Custody of Mortgage Loan Documents 15 6.13 Release of Pledged Mortgage Loans 16
      ARTICLE 7 CONDITIONS PRECEDENT 17     7.1 Advance 17 7.2 Satisfaction of
Conditions 18       ARTICLE 8 REPRESENTATIONS AND WARRANTIES 19     8.1
Representations and Warranties Concerning Borrower 19 8.2 Representations and
Warranties Concerning Pledged Mortgage Loans. 22       ARTICLE 9 AFFIRMATIVE
COVENANTS 22     9.1 Financial Statements and Other Reports. 22 9.2 Periodic Due
Diligence 24 9.3 Notice 24 9.4 Existence, Etc. 25 9.5 Servicing of Mortgage
Loans 26 9.6 Evidence of Pledged Mortgage Loans 26 9.7 Defense of Title;
Protection of Collateral 26 9.8 Further Assurances 26 9.9 Fidelity Bonds and
Insurance 26 9.10 Sharing of Information. 26 9.11 ERISA. 27 9.12 Financial
Covenants and Ratios 27 9.13 Amendments, Waiver and Termination of Certain
Documents 27       ARTICLE 10 NEGATIVE COVENANTS 28     10.1 Debt 28 10.2 Lines
of Business 28 10.3 Debt and Subordinated Debt 28 10.4 Loss of Eligibility 28
10.5 Loans to Officers, Employees and Shareholders 28 10.6 Liens on Pledged
Mortgage Loans and Collateral 28 10.7 Transactions with Affiliates 28 10.8
Consolidation, Merger, Sale of Mortgage Loans and Change of Control 29 10.9
Payment of Dividends and Retirement of Stock 29 10.10 Collateral 29 10.11 No
Additional Facilities 29

 

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ARTICLE 11 DEFAULTS AND REMEDIES 29     11.1 Events of Default 29 11.2 Remedies
32 11.3 Treatment of Custodial Account 34 11.4 No Obligation to Pursue Remedy 34
11.5 No Judicial Process 34 11.6 Reimbursement of Costs and Expenses 34 11.7
Rights of Set-Off 34 11.8 Reasonable Assurances 35       ARTICLE 12
INDEMNIFICATION 36     12.1 Indemnification 36 12.2 Reimbursement 36 12.3
Payment of Taxes 36 12.4 Lender Payment 37 12.5 Agreement not to Assert Claims
37 12.6 Survival 38       ARTICLE 13 TERM AND TERMINATION 38     13.1 Term 38
13.2 Termination 38       ARTICLE 14 GENERAL 38     14.1 Integration 38 14.2
Amendments 38 14.3 No Waiver 38 14.4 Remedies Cumulative 39 14.5 Assignment 39
14.6 Successors and Assigns 39 14.7 Participations 39 14.8 Invalidity 39 14.9
Additional Instruments 39 14.10 Survival. 39 14.11 Notices 39 14.12 Governing
Law 41 14.13 Submission to Jurisdiction; Service of Process; Waivers 41 14.14
Waiver of Jury Trial 41 14.15 Counterparts 41 14.16 Headings 41 14.17
Confidential Information 41 14.18 Tax Treatment 42 14.19 Examination and
Oversight by Regulators 43

 

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EXHIBITS

 

Exhibit A: Glossary of Defined Terms Exhibit B: Form of Promissory Note Exhibit
C: Secretary’s Certificate Exhibit D: Corporate Resolutions Exhibit E: Officer’s
Certificate   Exhibit F: Form of Power of Attorney Exhibit G: Wiring
Instructions

 

 

SCHEDULES

 

Schedule 1: Filing Jurisdictions and Offices Schedule 2: List of Borrower’s
Existing Debt Schedule 3: List of Mortgage Loan Purchase Agreements

 

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LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as
of July 18, 2014, by and between Bank of America, N.A., a national banking
association (“Lender”), and Five Oaks Acquisition Corp., a Delaware corporation
(“Borrower”).

 

RECITALS

 

A.      Borrower wishes to obtain financing for the acquisition from Lender of
certain residential mortgage loans and/or other mortgage related assets and
interests, which assets shall secure the Advance to be made by Lender hereunder
and Borrower’s obligations in respect thereof.

 

B.       Lender has agreed, subject to the terms and conditions of this
Agreement, to make such Advance to Borrower, subject to the terms and conditions
set forth in this Agreement.

 

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, Borrower and Lender agree as follows:

 

ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

 

1.1Defined 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.

 

1.2Interpretation; 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 Loan
Document) is to the agreement or document as amended, modified, novated,
supplemented or replaced, except to the extent prohibited thereby or by any Loan
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 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”.

 

Except where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Borrower by Lender or an authorized officer of Lender provided for in this
Agreement is conclusive and binds the parties in the absence of manifest error.
A reference to an agreement includes a security interest, guarantee, agreement
or legally enforceable arrangement whether or not in writing related to such
agreement.

 

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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. Where Borrower is required to provide any document to Lender
under the terms of this Agreement, the relevant document shall be provided in
writing or printed form unless Lender requests otherwise. At the request of
Lender, the document shall be provided in electronic form or both printed and
electronic form.

 

This Agreement is the result of negotiations among, and has been reviewed by
counsel to, Lender and Borrower, 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, Lender 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 Lender shall not be construed to require Lender
to request or await receipt of information or documentation not immediately
available from or with respect to Borrower, a servicer of the Pledged Mortgage
Loans, any other Person or the Pledged Mortgage Loans themselves. All references
herein or in any Loan Document to “good faith” means good faith as defined in
Section 1-201(19) of the Uniform Commercial Code.

 

ARTICLE 2
AMOUNT AND TERMS OF THE ADVANCE

 

2.1Agreement to Make the Advance. Subject to the terms and conditions of this
Agreement and provided that no Event of Default or Potential Default has
occurred and is continuing, contemporaneous with, or subsequent to and in
connection with Borrower’s acquisition of Eligible Mortgage Loans, and in order
to facilitate the funding of such acquisition (including after such
acquisition), Lender shall make certain loans (the “Advance”) to Borrower;
provided, however, that (a) the unpaid principal amount of the Advance as of any
date of determination shall not exceed the lesser of (i) the Maximum Credit and
(ii) the Collateral Value of the Pledged Mortgage Loans calculated as of such
date of determination and (b) the unpaid principal amount of the Advance for any
Type shall not exceed the applicable Type Sublimit. Lender shall have no
obligation to enter into an Advance with an unpaid principal amount greater than
the Maximum Credit or make any other loan other than the Advance. Amounts
borrowed under this Section 2.1 and repaid or prepaid may not be reborrowed.

 

2.2Note.

 

(a)The Advance made by Lender shall be evidenced by a single promissory note of
Borrower substantially in the form of Exhibit B hereto (the “Note”), dated as of
the date hereof, payable to Lender in a principal amount not to exceed the
Maximum Credit as originally in effect and otherwise duly completed. Lender
shall have the right to have its Note subdivided, by exchange for promissory
notes of lesser denominations or otherwise.

 

(b)The date, amount and interest rate of the Advance made by Lender to Borrower,
and each payment made on account of the principal thereof, shall be recorded by
Lender on its books and, prior to any transfer of the Note, noted by Lender on
the grid attached to the Note or any continuation thereof; provided, that the
failure of Lender to make any such recordation or notation shall not affect the
obligations of Borrower to make a payment when due of any amount owing hereunder
or under the Note in respect of the Advance.

  

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2.3Advance Limits. The Maximum Credit and each Type Sublimit shall be as set
forth in the Loan Terms Letter.

 

2.4Description of Pledged Mortgage Loans. With respect to the Advance, Borrower
shall cause to be maintained with Lender the Pledged Mortgage Loans, which shall
have a Collateral Value not less than, at any date, the outstanding principal
amount of the Advance. With respect to the Advance, the type of Pledged Mortgage
Loans shall be the Type as specified in the Loan Terms Letter as the Type. If
there is uncertainty as to the Type of a Pledged Mortgage Loan, Lender shall
determine the correct Type for such Pledged Mortgage Loan.

 

2.5Use of Proceeds. Borrower shall use the Advance solely for the purpose of
acquiring and holding the Eligible Mortgage Loans from Lender (including after
the acquisition thereof).

 

2.6Interest.

 

(a)Interest. Borrower shall pay Lender interest on the unpaid principal amount
of the Advance (“Accrued Interest”) for the period from and including the
Advance Date to but excluding the date such Advance shall be paid in full, at a
rate per annum equal to the sum of the Applicable Interest Rate plus the
applicable Type Margin. Notwithstanding the foregoing, Borrower shall pay to
Lender Accrued Interest at a rate per annum equal to the Default Rate (i) on any
principal amount of the Advance and on any other amount payable by Borrower
hereunder or under the Note 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, and (ii) following the occurrence and during the
continuance of an Event of Default, which interest shall accrue daily and shall
be payable promptly upon receipt of invoice. Promptly after the determination of
any interest rate provided for herein or any change therein, Lender shall give
written notice thereof to Borrower. Accrued Interest will be calculated in
accordance with this Section 2.6.

 

(b)Time for Payment. Accrued Interest with respect to the Advance shall be due
and payable monthly in arrears on the Payment Date occurring in the month
following the Advance Date and thereafter on each subsequent Payment Date and on
the Maturity Date.

 

(c)Computations. All computations of interest 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.

 

2.7Terms and Conditions of Advance. The terms and conditions of the Advance as
set forth in the Loan Terms Letter, this Agreement, the Note or otherwise may be
changed from time to time by written agreement of Lender and Borrower. The terms
and conditions of the Loan 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 Loan
Terms Letter, the Loan Terms Letter shall control.

 

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ARTICLE 3
PROCEDURES FOR MAKING THE ADVANCE

 

3.1Policies and Procedures. In connection with the Advance contemplated
hereunder, Borrower shall comply with all applicable policies and procedures of
Lender as may currently exist or as hereafter created. Such policies and
procedures may be in writing, published on Lender’s website(s) or otherwise
contained in the Handbook. Lender 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 Lender practices by giving prior notice
to Borrower 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, this Agreement shall control.

 

3.2Request for Advance. To the extent not otherwise agreed to by the parties,
Borrower shall request that Lender make the Advance by delivering written notice
of such request to Lender, no later than 4:00 p.m. (New York City time) on the
Business Day prior to the requested Advance Date, which written notice will also
approve the Asset Data Record for each Mortgage Loan intended to be the subject
of the Advance. Assuming the satisfaction of all conditions precedent set forth
in Article 7 and as otherwise set forth in this Agreement, Lender shall confirm
to Borrower the terms of the Advance electronically or in writing. Lender
reserves the right to reject the Advance request if Lender determines it fails
to comply with the terms and conditions of this Agreement or Lender’s then
current policies and procedures.

 

3.3Delivery of Mortgage Loan Documents.

 

(a)Mortgage Loans. Prior to the Advance, Borrower shall deliver, or cause to be
delivered, the related Mortgage Loan Documents to Lender or its Custodian in
accordance with and pursuant to the terms of Section 7.1 hereof and the
Custodial Agreement (if any).

 

(b)Mortgage Loan Documents in Borrower’s Possession. At all times during which
the Mortgage Loan Documents related to any Pledged Mortgage Loan are in the
possession of Borrower, and until Lender releases its security interest in such
Pledged Mortgage Loan, Borrower shall hold such Mortgage Loan Documents in trust
separate and apart from Borrower’s own documents and assets and for the
exclusive benefit of Lender and shall act only in accordance with Lender’s
written instructions thereto.

 

3.4Payment of Advance. On the Advance Date, Lender shall make the Advance by
wire transfer in accordance with Borrower’s wire instructions set forth on
Exhibit G (or such other wire instructions as directed by Borrower in writing).
Any funds disbursed by Lender to Borrower 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. Borrower acknowledges that as a result of such applicable
laws, regulations and policies, equipment malfunction, Lender’s approval
procedures or circumstances beyond the reasonable control of Lender, the payment
of an Advance may be delayed.

 

ARTICLE 4
REPAYMENT; PREPAYMENTS

 

4.1Repayment.

 

(a)Repayment of Advance. Borrower shall repay in full the then outstanding
principal amount of the Advance (as evidenced by the Note) all unpaid Accrued
Interest and all other Secured Obligations then due and owing by wire transfer
in accordance with Lender’s wire instructions set forth on Exhibit G (or such
other wire instructions as directed by Lender in writing) on the Termination
Date. Upon the occurrence of a Mandatory Prepayment Event with respect to a
Pledged Mortgage Loan, Borrower shall remit to Lender the Release Amount for
such Pledged Mortgage Loan.

 

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(b)Effect of Payment of Repayment of the Advance. On any such date of repayment
in full of the Advance (or allocable portion thereof) and all other Secured
Obligations then due and owing as set forth in Section 4.1 of this Agreement,
Lender shall have released all of its rights, title and interests in the Pledged
Mortgage Loans (or the applicable Pledged Mortgage Loans, as the case may be);
provided that, in no event shall Lender be deemed to have released any such
rights, title or interests if an Event of Default shall then be continuing or
shall be caused by such release or if such release gives rise to or perpetuates
a Borrowing Base Deficiency that is not satisfied in accordance with Section
6.11(b). Borrower is obligated to obtain the related Mortgage Loan Documents
from the Custodian at Borrower’s expense on the date of any such release.

 

(c)Partial Prepayment Due to Borrowing Base Deficiency. In the event the
Collateral Value of any Pledged Mortgage Loan is marked to zero and Borrower
requests Lender to release its security interest in such Pledged Mortgage Loan
or any Collateral related thereto, Lender shall not release any such security
interest therein unless and until Borrower shall have repaid to Lender the
Release Amount for such Pledged Mortgage Loan.

 

4.2Mandatory Prepayment Events. The occurrence of any of the following events
shall be a Mandatory Prepayment Event with respect to one or more Pledged
Mortgage Loans, as the case may be:

 

(a)thirty (30) calendar days elapse from the date the related Mortgage Loan
Documents were delivered to an Approved Investor and such Approved Investor has
not returned such Mortgage Loan Documents or purchased such Pledged Mortgage
Loan, unless an extension is granted by Lender;

 

(b)ten (10) Business Days elapse from the date a related Mortgage Loan Document
was delivered to Borrower for correction or completion or for servicing
purposes, without being returned to Lender or its designee, unless such Mortgage
Loan Document is released to a Servicer pursuant to Section 6.12(b) of this
Agreement;

 

(c)a foreclosure or similar type of proceeding is initiated with respect to such
Pledged Mortgage Loan;

 

(d)the sale of such Pledged Mortgage Loan by Borrower to any party other than an
Approved Investor; or

 

(e)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 Lender
at any time, subject to any releases permitted under the terms of the Custodial
Agreement.

 

4.3Optional Prepayments. Borrower may prepay the Advance, in whole or in part,
on any date that such Advance is outstanding, and such prepayment shall be
without premium or penalty, and in the case of a partial prepayment shall
specify the Pledged Mortgage Loans to be released in connection therewith.
Notwithstanding the foregoing, in no event shall Borrower use selection
procedures in connection with any such optional prepayment which identifies
released Pledged Mortgage Loans as being more desirable or valuable than the
Pledged Mortgage Loans that will continue to be subject to the Advance. Any
amounts prepaid shall be applied to repay the outstanding principal amount of
the Advance (together with any unpaid Accrued Interest thereon) until paid in
full. Amounts repaid may not be reborrowed hereunder.

 

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4.4Illegality or Impracticability. Notwithstanding anything to the contrary in
this Agreement, if Lender determines 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 finance market for mortgage loans or mortgage-backed securities
market or the source or cost of Lender’s funds, shall make it:

 

(a)unlawful for Lender to enter into or maintain the Advance as contemplated by
this Agreement, (i) the commitment of Lender hereunder to enter into or to
continue to maintain the Advance shall be cancelled and (ii) the principal
amount together with all unpaid Accrued Interest and all other Secured
Obligations in respect of the Advance then outstanding shall be due and payable
upon the earlier to occur of (x) the date required by any financial institution
providing funds to Lender to fund Pledged Mortgage Loans and (y) the date as of
which Lender determines that the Advance is unlawful to maintain; or

 

(b)commercially unreasonable for Lender to enter into or maintain the Advance as
contemplated by this Agreement, (i) the commitment of Lender hereunder to enter
into or to continue to maintain the Advance shall be cancelled and (ii) the
principal amount together with all unpaid Accrued Interest and all other Secured
Obligations in respect of the Advance then outstanding shall be due and payable
upon the earlier to occur of (x) the date required by any financial institution
providing funds to Lender and (y) the date as of which Lender determines that
the Advance is commercially unreasonable to maintain.

 

Lender shall not be liable to Borrower for any costs, losses or damages arising
from or relating from any actions taken by Lender pursuant to this Section 4.4.

 

4.5Increased Costs.

 

(a)Notwithstanding anything to the contrary in this Agreement, if Lender
determines that 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 Lender 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
(i) subjects Lender to any tax of any kind whatsoever with respect to this
Agreement or any Pledged Mortgage Loans (excluding Net Income taxes) or changes
the basis of taxation of payments to Lender 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 the Advance or extensions of credit by, or any other
acquisition of funds by any office of Lender which is not otherwise included in
the determination of the Applicable Interest Rate hereunder, or (iii) imposes on
Lender any other condition, the result of which is to increase the cost to
Lender, by an amount which Lender deems to be material, of effecting or
maintaining the Advance hereunder, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, Borrower shall promptly pay Lender
such additional amount or amounts as will compensate Lender for such increased
cost or reduced amount receivable thereafter incurred.

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(b)If Lender has determined 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 Lender or any corporation that provides
capital or funds to Lender 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 Lender’s or such corporation’s capital as a consequence of its
obligations hereunder to a level below that which Lender or such corporation but
for such adoption, change or compliance (taking into consideration Lender’s or
such corporation’s policies with respect to capital adequacy) by an amount
deemed by Lender to be material, then from time to time, Borrower shall promptly
pay to Lender such additional amount or amounts as will thereafter compensate
Lender for such reduction.

 

If Lender becomes entitled to claim any additional amounts pursuant to this
Section 4.5, it shall promptly notify Borrower of the event by reason of which
it has become so entitled. Lender shall provide Borrower with written notice as
to any additional amounts payable pursuant to this subsection, which notice
shall be conclusive in the absence of manifest error.

 

4.6Payments Pursuant to Sale to Approved Investors. Borrower shall direct each
Approved Investor purchasing a Pledged Mortgage Loan to pay directly to Lender,
by wire transfer of immediately available funds, the applicable Takeout Price in
full and without set-off on the date of such purchase. Borrower shall provide
Lender with a Wire Transfer Advice relating to such payment. Lender shall apply
all amounts received from an Approved Investor for the account of Borrower in
accordance with Section 4.7 below. In connection with any such sale, to the
extent that (a) Lender does not receive the full Takeout Price in respect of the
related Pledged Mortgage Loans, or (b) the amount received is not sufficient to
pay the Release Amount for such Pledged Mortgage Loans (in each case, the
“Takeout Shortfall”), Lender shall not release the related Pledged Mortgage
Loans until Lender has received from Borrower a wire transfer of immediately
available funds in an amount equal to the Takeout Shortfall without set-off. If
Borrower receives any funds intended for Lender, Borrower shall segregate and
hold such funds in trust for Lender and immediately pay to Lender all such
amounts by wire transfer of immediately available funds together with providing
Lender with a settlement statement for the transaction.

 

4.7Application of Payments from Borrower or Approved Investors. Unless Lender
determines otherwise, payments made directly by Borrower or an Approved Investor
to Lender shall be applied in the following order of priority:

 

(a)first, to any amounts due and owing to Lender pursuant to Section 6.11;

 

(b)second, to all costs, expenses and fees incurred or charged by Lender under
this Agreement that are due and owing and related to the Advance;

 

(c)third, to all costs, expenses and fees incurred or charged by Lender under
this Agreement that are due and owing and not related to the Advance;

 

(d)fourth, to the Accrued Interest then due and owing on the Pledged Mortgage
Loans in connection with which the payment is made;

 

(e)fifth, to the Accrued Interest then due and owing on any other Pledged
Mortgage Loans;

 

(f)sixth, to the outstanding principal amount of the Advance allocable to the
Pledged Mortgage Loans, pro rata based upon the Release Amount of the Pledged
Mortgage Loans as of the applicable date of determination in connection with
which the payment is made;

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(g)seventh, to the outstanding principal amount of the Advance allocable to any
other Pledged Mortgage Loans, pro rata based upon the Release Amount of such
other Pledged Mortgage Loans as of the applicable date of determination; and

 

(h)eighth, to the amount of all other obligations then due and owing by Borrower
to Lender under this Agreement and the other Loan Documents.

 

4.8Method of Payment. Except as otherwise specifically provided herein, all
payments hereunder must be received by Lender on the date when due and shall be
made in United States dollars by wire transfer of immediately available funds in
accordance with Lender’s wire instructions set forth on Exhibit G. 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. All payments made by or on behalf of Borrower with respect to the
Advance shall be applied to Borrower’s account in accordance with Section 4.7
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, levies, imports, duties or other similar charges of whatsoever nature
imposed by any government or any political subdivision or taxing authority
hereof, other than any taxes on or measured by the Net Income of Lender pursuant
to the state, federal and local tax laws of the jurisdiction where Lender’s
principal office or offices or lending office or offices are located, compensate
Lender for any additional cost or reduced amount receivable of making or
maintaining the Advance as a result of such taxes, imports, duties or other
charges. All payments to be made by or on behalf of Borrower with respect to the
Advance shall be made without set-off, counterclaim or other defense.

 

4.9Reserved.

 

4.10Book Account. Lender and Borrower shall maintain an account on their
respective books of the Advance entered into between Lender and Borrower. As a
courtesy to Borrower, Lender shall provide such information to Borrower upon
request by electronic mail, telephone or facsimile. Notwithstanding the
foregoing, Borrower shall be responsible for maintaining its own book account
and records of the Advance entered into with Lender, amounts due to Lender in
connection with the Advance and for paying such amounts when due. Failure of
Lender to provide Borrower with information regarding the Advance shall not
excuse Borrower’s timely performance of all obligations under this Agreement,
including, without limitation, payment obligations under this Agreement.

 

4.11Full Recourse. Notwithstanding the fact that the Note is secured by the
Collateral, the obligations of Borrower from time to time to make payments under
the Note, satisfy Borrowing Base Deficiencies and pay all other amounts due
under this Agreement shall be full recourse obligations of Borrower.

 

ARTICLE 5
FEES

 

5.1Payment of Fees. Borrower shall pay to Lender those fees set forth in this
Agreement when they become due and owing.

 

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ARTICLE 6
COLLATERAL SECURITY; SERVICING; BORROWING BASE MAINTENANCE; CUSTODY OF MORTGAGE
LOAN DOCUMENTS

 

6.1Grant of Security Interest in Pledged Mortgage Loans and Collateral. Each of
the following items or types of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the “Collateral”:

 

(a)all Pledged Mortgage Loans, including all Mortgage Notes and Mortgages
evidencing such Mortgage Loans and the related Mortgage Loan Documents, securing
the Advance 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 Lender
(including delivery to a custodian or other third party on behalf of Lender) as
additional security for the performance of Borrower’s obligations hereunder or
under the Note;

 

(b)all Income related to the Pledged Mortgage Loans and all rights to receive
such Income;

 

(c)the Custodial Account and all amounts on deposit therein;

 

(d)all rights of Borrower under all related purchase commitments (including the
right to receive the related Takeout Price), purchase agreements or other
hedging arrangements relating to or covering all or any portion of the Pledged
Mortgage Loans, 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 Pledged Mortgage Loans, and all rights to receive
documentation relating thereto, and all rights to deliver Pledged Mortgage Loans
to permanent investors and other purchasers pursuant thereto and all Proceeds
resulting from the disposition of such Pledged Mortgage Loans;

 

(e)all now existing and hereafter established accounts maintained with
broker-dealers by Borrower for the purpose of carrying out transactions under
purchase commitments relating to any part of the Pledged Mortgage Loans to the
extent of the funds or other assets applied to the acquisition of Pledged
Mortgage Loans;

 

(f)all now existing and hereafter arising rights of Borrower to service,
administer and/or collect on the Pledged Mortgage Loans hereunder and any and
all rights to the payment of monies on account thereof;

 

(g)with respect to any Pledged Mortgage Loan, all Servicing Rights related to
such Pledged Mortgage Loans, all related Servicing Records, and all rights of
Borrower to receive from any third party or to take delivery of any Servicing
Records or other documents or records which constitute a part of the Mortgage
Loan Files;

 

(h)all rights of Borrower to receive from any third party or to take delivery of
any records or other documents which constitute a part of the Mortgage Loan
Files, including, without limitation, the Other Mortgage Loan Documents related
to any Pledged Mortgage Loan;

 

(i)all now existing and hereafter arising accounts, contract rights and general
intangibles constituting or relating to any of the Pledged Mortgage Loans;

 

(j)all mortgage and other insurance and all commitments issued by Insurers, to
insure or guaranty any Pledged Mortgage Loan and the right to receive all
insurance proceeds and condemnation awards that may be payable in respect of the
premises encumbered by any Mortgage; and all other documents or instruments
delivered to Lender in respect of the Pledged Mortgage Loans;

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(k)all documents, files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other information
and data of Borrower relating to Pledged Mortgage Loans;

 

(l)all rights, but not any obligations or liabilities, of Borrower relating to
Pledged Mortgage Loans with respect to the Approved Investors;

 

(m)all property of Borrower comprising Proceeds of the Pledged Mortgage Loans in
any form or capacity now or at any time hereafter in the possession or control
of Lender, including, without limitation, all deposit accounts and any funds at
any time held therein, into which Proceeds of the Pledged Mortgage Loans are at
any time deposited; and

 

(n)all Proceeds of the Pledged Mortgage Loans.

 

Borrower hereby assigns, pledges and grants a security interest to the Lender in
all of its right, title and interest in, to and under all the Collateral,
whether now owned or hereafter acquired, now existing or hereafter created and
wherever located, to secure the repayment of principal of and interest on the
Advance and all other amounts owing to the Lender hereunder, under the Note and
under the other Loan Documents (collectively, the “Secured Obligations”).
Possession of any promissory notes, instruments or documents by the Custodian
shall constitute possession on behalf of Lender. Borrower agrees to mark its
computer records and tapes to evidence the security interests granted to the
Lender hereunder.

 

6.2Further Documentation. At any time and from time to time, upon the written
request of Lender, and at the sole expense of Borrower, Borrower 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 Lender 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 Pledged Mortgage Loans and related Collateral and the liens
created hereby. Borrower also hereby authorizes Lender 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.

 

6.3Lender’s Appointment as Attorney-in-Fact.

 

(a)Borrower hereby irrevocably constitutes and appoints Lender 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 Borrower and in the name of Borrower or in its own name, from time to
time, if an Event of Default shall have occurred and be continuing, in Lender’s
discretion, for the purpose of carrying out the terms of this Agreement,
including without limitation, protecting, preserving and realizing upon the
Collateral, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, including without limitation, to protect, preserve
and realize upon the Collateral, and, without limiting the generality of the
foregoing, Borrower hereby gives Lender the power and right, on behalf of
Borrower, without assent by, but with notice to, Borrower, if an Event of
Default shall have occurred and be continuing, to do the following:

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(i)in the name of Borrower or 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 under any mortgage insurance or with
respect to any other Collateral 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 Lender for the purpose of collecting any and all such moneys due
under any such mortgage insurance or with respect to any other Collateral
whenever payable;

 

(ii)to pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral; and

 

(iii)(A) to direct any party liable for any payment under any Collateral to make
payment of any and all moneys due or to become due thereunder directly to Lender
or as Lender shall direct; (B) in the name of Borrower, or in its own name, or
otherwise as appropriate, to directly send or cause the applicable servicer to
send “hello” letters and “goodbye” letters; (C) 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 Collateral;
(D) to sign and endorse any invoices, assignments, verifications, notices and
other documents in connection with any of the Collateral; (E) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral; (F) to defend any suit,
action or proceeding brought against Borrower with respect to any Collateral;
(G) to settle, compromise or adjust any suit, action or proceeding described in
clause (F) above and, in connection therewith, to give such discharges or
releases as Lender may deem appropriate; and (H) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender’s option and Borrower’s expense,
at any time, or from time to time, all acts and things which Lender deems
necessary to protect, preserve or realize upon the Collateral and Lender’s Liens
thereon and to effect the intent of this Agreement, all as fully and effectively
as Borrower might do.

 

Borrower 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 during the term of this Agreement.

 

(b)Borrower also authorizes Lender, at any time and from time to time, to
execute, in connection with the sale provided for in Section 11.2 of this
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.

 

(c)The powers conferred on Lender are solely to protect Lender’s interests in
the Collateral and shall not impose any duty upon Lender to exercise any such
powers. Lender shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and neither Lender nor any of its
officers, directors, or employees shall be responsible to Borrower for any act
or failure to act hereunder, except for its own gross negligence or willful
misconduct.

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6.4Performance by Lender of Borrower’s Obligations. If Borrower fails to perform
or comply with any of its material agreements contained in the Loan Documents
and Lender may itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the reasonable out-of-pocket expenses of Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Default Rate, shall be payable
by Borrower to Lender on demand and shall constitute Secured Obligations.

 

6.5Proceeds. If an Event of Default shall occur and be continuing, (a) Borrower
shall redirect all proceeds of Collateral to be delivered to Lender directly,
but if any such proceeds are otherwise received by Borrower consisting of cash,
checks and other near-cash items, such proceeds shall be held by Borrower in
trust for Lender, segregated from other funds of Borrower, and shall forthwith
upon receipt by such Borrower be turned over to Lender in the exact form
received by Borrower (duly endorsed by Borrower to Lender, if required) and (b)
any and all such proceeds received by Lender will be applied by Lender against,
the Secured Obligations (whether matured or unmatured), such application to be
in such order as Lender shall elect. Any balance of such proceeds remaining
after the Secured Obligations shall have been paid in full and this Agreement
shall have been terminated shall be promptly paid over to Borrower or to
whomsoever may be lawfully entitled to receive the same. For purposes hereof,
“proceeds” shall include, but not be limited to, all principal and interest
payments, all prepayments and payoffs, insurance claims, condemnation awards,
sale proceeds, real estate owned rents and any other Income and all other
amounts received with respect to the Collateral.

 

6.6Limitation on Duties Regarding Presentation of Collateral. Lender’s duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Uniform Commercial Code or
otherwise, shall be to deal with it in a commercially reasonable manner in
accordance with customary industry standards. Neither Lender nor any of its
directors, officers or employees shall be liable for failure to demand, collect
or realize upon all or any part of the Collateral or for any delay in doing so
or shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Borrower or otherwise.

 

6.7Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are irrevocable during the term of this
Agreement, and are powers coupled with an interest.

 

6.8Release of Security Interest. Upon termination of this Agreement and
repayment to Lender of all Secured Obligations and the performance of all
obligations under the Loan Documents Lender shall release its security interest
in any remaining Collateral and all powers of attorney, agencies and
authorizations herein contained or delivered hereby shall terminate; provided,
that if any payment, or any part thereof, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or a trustee or similar officer for Borrower or any substantial
part of its property, or otherwise, this Agreement, all rights hereunder and the
Liens created, and all powers of attorney, agencies and authorizations contained
or delivered, hereby shall continue to be effective, or be reinstated, until
such payments have been made.

 

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6.9Servicing.

 

(a)Servicing of Pledged Mortgage Loans. The Borrower has engaged Bank of
America, N.A. and New Penn Financial, LLC to subservice the Pledged Mortgage
Loans pursuant to certain subservicing agreements between the Borrower and Bank
of America, N.A. and New Penn Financial, LLC, respectively. On or about August
30, 2014 (or such other date as mutually agreed upon between Bank of America,
N.A. and Borrower (the “Servicing Transfer Date”), Bank of America, N.A. and New
Penn Financial, LLC shall transfer such subservicing responsibilities to PHH
Mortgage Corporation. The Borrower and Lender hereby acknowledge that the
servicing rights with respect to certain Pledged Mortgage Loans (which shall not
include those Pledged Mortgage Loans for which PHH Mortgage Corporation acts as
a subservicer) are owned by PHH Mortgage Corporation pursuant to that certain
Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of October 1,
2010, between PHH Mortgage Corporation and Borrower.

 

(b)Security Interest. During the term of this Agreement, Borrower (i) agrees
that Lender has a first priority perfected security interest in all Servicing
Records to the extent owned by Borrower, and (ii) grants to Lender a security
interest in all servicing fees and rights relating to the Pledged Mortgage Loans
and all Servicing Records to secure the obligation of Borrower or its designee
to service in conformity with this Section and any other obligation of Borrower
to Lender. To the extent Borrower obtains possession of any portion of the
Servicing Records it owns, Borrower covenants to safeguard such Servicing
Records and deliver them promptly to Lender or its designee (including
Custodian) at Lender’s request.

 

(c)Servicing Agreement. Borrower shall enter into a Servicing Agreement with
each Servicer, which such Servicing Agreement shall be on terms acceptable to
Lender in its discretion, and which shall include (either in the Servicing
Agreement or a Servicing Agreement Side Letter thereto), at a minimum (unless
otherwise acceptable to Lender in its discretion), (i) a recognition by the
Servicer of Lender’s interests and rights to the Pledged Mortgage Loans as
provided under this Agreement; (ii) an obligation for the Servicer to subservice
the Pledged Mortgage Loans 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 no 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 and (v)
an obligation to collect all Income in respect of the Pledged Mortgage Loans on
behalf of Lender, in trust, in segregated custodial accounts and remit such
Income to the Custodial Account within two (2) Business Days of receipt.

 

(d)Servicing Agreement Side Letter. On or prior to the Servicing Transfer Date,
Borrower, Lender and each Servicer shall enter into a Servicing Agreement Side
Letter, in such form that is acceptable to Lender that, at a minimum, includes
(a) an agreement by such Servicer to remit all collections it receives in
respect of the Pledged Mortgage Loans directly to the Custodial Account, and (b)
an agreement by such Servicer to comply exclusively with Lender’s instructions
with respect to the Pledged Mortgage Loans and collections thereon upon receipt
of a notice that an Event of Default has occurred.

 

(e)Notification of Servicer Defaults. If Borrower should discover that, for any
reason whatsoever, any entity responsible to Borrower by contract for managing
or servicing any Pledged Mortgage Loan has failed to perform fully any
obligations with respect to the management or servicing of such Pledged Mortgage
Loans as required under this Agreement or any of the obligations of such
entities with respect to the Pledged Mortgage Loan as delegated pursuant to any
Servicing Agreement, Borrower shall promptly notify Lender in writing.

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(f)Release of Mortgage Loan Files. Borrower shall release its custody of the
contents of any Mortgage Loan File only in accordance with the written
instructions of Lender, except when such release is required by law.

 

6.10Custodial Account.

 

(a)Custodial Account. Borrower shall establish and maintain a segregated time or
demand deposit account for the benefit of Lender (the “Custodial Account”) with
an Eligible Bank. Borrower shall promptly deposit (but in no event later than
twenty-four (24) hours after receipt thereof), and cause Servicer to promptly
deposit (but in no event later two (2) Business Days of receipt after receipt
thereof), into the Custodial Account all Income received with respect to each
Pledged Mortgage Loan pledged hereunder. Under no circumstances shall Borrower
deposit any of its own funds into the Custodial Account or otherwise commingle
its own funds with funds belonging to Lender as owner of any Pledged Mortgage
Loan. If Borrower fails to segregate any funds and commingles them with any
source in breach of this Agreement, Borrower agrees that its share of the
commingled funds are assumed to have been spent first with any remaining balance
to be deemed to belong to Lender.

 

(b)Security Interest in Custodial Account. Borrower hereby grants to Lender a
continuing first priority security interest in all right, title, and interest in
and to the Custodial Account and all amounts on deposit therein.

 

(c)Income Payments. Any Income received with respect to a Pledged Mortgage Loan
pledged hereunder shall be segregated as described above and shall be applied by
Lender on the eighteenth (18th) day of each month, or if such date is not a
Business Day, the next succeeding Business Day of the month, as follows:

 

(i)first, to pay to Lender an amount equal to the Accrued Interest with respect
to the related Pledged Mortgage Loans;

 

(ii)second, to pay to Lender an amount sufficient to eliminate any outstanding
Borrowing Base Deficiency with respect to the Pledged Mortgage Loans (without
limiting Borrower’s obligation to satisfy a Borrowing Base Deficiency in a
timely manner as required by Section 6.11(b));

 

(iii)third, to pay to Lender an amount equal to all other fees, expenses and
indemnity amounts due and payable by Borrower to Lender under the Loan Documents
and allocable to the related Pledged Mortgage Loans;

 

(iv)fourth, to the outstanding principal amount of the Release Amount for the
Pledged Mortgage Loans in connection with which such Income payment is made; and

 

(v)fifth, any remaining amounts for the benefit of Borrower.

 

(e)Location of Custodial Account. The Custodial Account shall remain at Lender
at all times during the term of this Agreement. Borrower shall from time to
time, at its own cost and expense, execute such directions to the depository
Eligible Bank, and other papers, documents or instruments as may be reasonably
requested by Lender to reflect Lender’s security interest in the Custodial
Account.

 

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6.11Borrowing Base Maintenance.

 

(a)Collateral Value. Lender shall have the right to determine the Collateral
Value of each Pledged Mortgage Loan on a daily basis or more frequently in the
sole discretion of Lender.

 

(b)Borrowing Base Deficiency and Deficiency Notices. If Lender shall determine
at any time that (x) the Collateral Value of a Pledged Mortgage Loan subject to
the Advance is less than the Collateral Value for such Pledged Mortgage Loan as
calculated on the Advance Date (less any cash or other amounts previously
applied to reduce the Release Amount for such Pledged Mortgage Loan) or (y) the
aggregate Collateral Value of all Pledged Mortgage Loans subject to the Advance
is less than the aggregate Collateral Value for such Pledged Mortgage Loans as
calculated on the Advance Date (less any cash or other amounts previously
applied to reduce the Advance) (in any such case, a “Borrowing Base
Deficiency”), then Lender may, at its sole option and by notice to Borrower (as
such notice is more particularly set forth below, a “Deficiency Notice”),
require Borrower to repay the Advance in an amount sufficient to eliminate the
Borrowing Base Deficiency in full.

 

If Lender delivers a Deficiency Notice to Borrower on or prior to 12:00 p.m.
(New York City time) on any Business Day, then Borrower shall transfer cash, to
Lender no later than 5:00 p.m. (New York City time) that same day. If Lender
delivers a Deficiency Notice to Borrower after 12:00 p.m. (New York City time)
on any Business Day, Borrower shall be required to transfer cash no later than
5:00 p.m. (New York City time) on the next subsequent Business Day. A Deficiency
Notice may be provided by Lender to Borrower electronically or in writing, such
as via electronic mail.

 

(c)Lender’s Discretion. Lender’s election not to deliver a Deficiency Notice at
any time there is a Borrowing Base Deficiency shall not in any way limit or
impair its right to deliver a Deficiency Notice at any time a Borrowing Base
Deficiency exists.

 

(d)Credit to Advance. Any cash transferred to Lender pursuant to this Section
6.11 shall be used to reduce the amount outstanding on the Note in respect of
the Advance.

 

6.12Custody of Mortgage Loan Documents.

 

(a)Custodial Arrangements. With respect to Pledged Mortgage Loans, Lender may
appoint any Person to act as the Custodian to hold possession of the Mortgage
Loan Documents and to take actions at the direction of Lender. If any Person
other than Lender is appointed as Custodian, it shall be a condition precedent
to Lender entering into the Advance hereunder that Borrower, Lender and
Custodian enter into a Custodial Agreement acceptable to Lender. Borrower hereby
consents to any and all such appointments and agrees to deliver the Mortgage
Loan Documents to the Custodian upon the direction of Lender. Borrower further
agrees that (i) the Custodian shall be exclusively the agent, bailee and/or
custodian of Lender; (ii) receipt of the Mortgage Loan Documents by the
Custodian shall be constructive receipt by Lender of such documents; (iii)
Borrower shall not have and shall not attempt to exercise any degree of control
over the Custodian or any Mortgage Loan Document held by the Custodian; and (iv)
Lender shall not be liable for any act or omission by the Custodian selected by
Lender with reasonable care.

 

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(b)Temporary Withdrawal of Mortgage Loan Documents for Correction. Lender may
permit Borrower or Servicer to obtain from the Custodian, for a period not to
exceed ten (10) Business Days in the case of Borrower, specified Mortgage Loan
Documents for the purpose of correcting or completing such documents or
servicing the related Pledged Mortgage Loan; provided, however, that unless
otherwise agreed to by Lender in writing, in no event shall more than ten (10)
Mortgage Loan Files (or Mortgage Loan Documents from more than ten (10) Mortgage
Loan Files) be released from Custodian’s possession at any one time; provided
further, that any Mortgage Loan Documents that are withdrawn by or at the
request of Borrower (and delivered to a Person other than Borrower) or a
Servicer, 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 Lender.
Notwithstanding the foregoing, Lender shall be deemed to be in possession of any
Mortgage Loan Documents released pursuant to this Section 6.12(b), and the
interest of Lender in the related Pledged Mortgage Loan shall continue
unimpaired until the Mortgage Loan Documents are returned to, or the Release
Amount for such Pledged Mortgage Loan, is received by, Lender.

 

(c)Delivery of Mortgage Loan Documents to Approved Investors. Provided that no
Potential Default or Event of Default has occurred and is continuing, upon the
written request of Borrower, Lender may, at its option, deliver to an Approved
Investor or its custodian, the Mortgage Loan Documents relating to a specified
Pledged Mortgage Loan. All such Pledged Mortgage Loans and the related Mortgage
Loan Documents shall at all times be covered by one or more Bailee Agreements,
and Lender or its designee will not release Mortgage Loan Documents to an
Approved Investor unless Lender or its Custodian has received a true and
complete and fully executed Bailee Agreement from the Approved Investor.
Notwithstanding the foregoing, Lender shall be deemed to be in possession of any
Mortgage Loan Documents released pursuant to this Section 6.12(c), and the
interest of Lender in the related Pledged Mortgage Loan shall continue
unimpaired until the Mortgage Loan Documents are returned to, or the Release
Amount for such Pledged Mortgage Loan is received by, Lender. If the Approved
Investor does not purchase a Pledged Mortgage Loan, Borrower shall, upon the
request of Lender, assist Lender in the recovery of any Mortgage Loan Documents
not returned by the Approved Investor to Lender.

 

6.13Release of Pledged Mortgage Loans. Provided that no Event of Default or
Potential Default has occurred and is continuing, Borrower may request that
Lender release a Pledged Mortgage Loan by paying, or causing an Approved
Investor to pay, to Lender, subject to Sections 4.6 and 4.7 above, the Release
Amount for such Pledged Mortgage Loan. Upon receipt of the applicable amount, as
set forth above, Lender shall, deliver or shall cause the Custodian to deliver
the related Mortgage Loan Documents to Borrower or Borrower’s designee, if such
documents have not already been delivered pursuant to a Bailee Agreement. If any
such release gives rise to or perpetuates a Borrowing Base Deficiency, Lender
shall notify Borrower of the amount thereof and Borrower shall thereupon satisfy
the Borrowing Base Deficiency in the manner specified in Section 6.11(b). Lender
shall have no obligation to release a Pledged Mortgage Loan or terminate its
security interest in such Pledged Mortgage Loan until such Borrowing Base
Deficiency is satisfied.

 

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ARTICLE 7
CONDITIONS PRECEDENT

 

7.1Advance. As conditions precedent to Lender making the Advance hereunder:

 

(a)Borrower shall have delivered to Lender, in form and substance satisfactory
to Lender:

 

(i)the fully executed original Note;

 

(ii)each of the Loan Documents duly executed by each party thereto and in full
force and effect, free of any modification, breach or waiver;

 

(iii)an opinion of Borrower’s and Guarantor’s counsel as to such matters as
Lender may reasonably request, including, without limitation, with respect to
Lender’s first priority lien on and perfected security interest in the Pledged
Mortgage Loans and Collateral; a non-contravention, enforceability and corporate
opinion with respect to Borrower and Guarantor, if any; an opinion with respect
to the inapplicability of the Investment Company Act of 1940 to Borrower and
Guarantor, each in form and substance acceptable to Lender;

 

(iv)a Power of Attorney duly executed by Borrower and notarized;

 

(v)a certified copy of articles or certificate of incorporation and bylaws of
Borrower and any Guarantor (or corresponding organizational documents if such
Person is not a corporation) and, if required by Lender, a certificate of good
standing issued by the appropriate official in the jurisdiction of organization
of Borrower and Guarantor, in each case, dated no less recently than fourteen
(14) days prior to the Effective Date;

 

(vi)a certificate of the corporate secretary of Borrower and Guarantor, each
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
Borrower and Guarantor executing the Loan Documents and the resolutions of the
board of directors of Borrower and Guarantor (or its equivalent governing body
or Person), substantially in the form of Exhibit D hereto;

 

(vii)independently audited financial statements of Borrower and Guarantor (and
their 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 Lender, together with an auditor’s opinion that is
unqualified or otherwise is consented to in writing by Lender;

 

(viii)if more than six (6) months has passed since the close of the most
recently ended fiscal year, interim financial statements of Borrower and
Guarantor covering the period from the first day of the current fiscal year to
the last day of the most recently ended month;

 

(ix)financial statements of Borrower and Guarantor, signed by it, dated no less
recently than three (3) months prior to the date of the Advance;

 

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(x)copies of Borrower’s and Guarantor’s errors and omissions insurance policy or
mortgage impairment insurance policy and blanket bond coverage policy or
certificates of insurance for such policies, all in form and content
satisfactory to Lender, showing compliance by Borrower with Section 9.9 below;

 

(xi)any fees then due and owing hereunder or under any other Loan Document; and

 

(xii)such other documents as Lender or its counsel may reasonably request.

 

(b)Borrower shall have delivered, in form and substance satisfactory to Lender
and not later than 4:00 p.m. (New York City time) on the date prior to the
proposed Advance Date:

 

(i)to the Custodian, a complete Mortgage Loan File for each Mortgage Loan
subject to the proposed Advance;

 

(ii)to Lender, such other documents pertaining to the Advance as Lender may
reasonably request, from time to time;

 

(iii)to Lender, and Lender shall have received, satisfactory evidence, as
determined by Lender, that the appropriate Uniform Commercial Code Financial
Statements (UCC-1) and/or such other instruments as may be necessary in order to
create in favor of Lender, a perfected first- priority security interest in the
Pledged Mortgage Loans and related Collateral, and same shall have been duly
executed, if applicable, and appropriately filed or recorded (or prepared for
such filing or recordation) in each office of each jurisdiction in which such
filings and recordations are required to perfect such first-priority security
interest.

 

(c)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,
and the rescission period related to such Eligible Mortgage Loan shall have
expired.

 

(d)The representations and warranties of Borrower 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 the Advance. At the request of Lender, Lender shall have received an
officer’s certificate signed by a responsible officer of Borrower certifying as
to the truth and accuracy of same.

 

(e)If required by Lender, Borrower and Guarantor shall have performed all
agreements to be performed by them hereunder and under the Guaranty,
respectively, and after giving effect to the requested Advance, there shall
exist no Event of Default or Potential Default hereunder.

 

(f)No Potential Default, Event of Default or Material Adverse Effect shall have
occurred and be continuing.

 

7.2Satisfaction of Conditions. The entering into of the Advance prior to or
without the fulfillment by Borrower of all the conditions precedent thereto,
whether or not known to Lender, shall not constitute a waiver by Lender of the
requirements that all conditions, including the non- performed conditions, shall
be required to be satisfied with respect to the Advance. All conditions
precedent hereunder are imposed solely and exclusively for the benefit of Lender
and may be freely waived or modified in whole or in part by Lender. Any waiver
or modification asserted by Borrower to have been agreed by Lender must be in
writing. Lender shall not be liable to Borrower for any costs, losses or damages
arising from Lender’s determination that Borrower has not satisfactorily
complied with any applicable condition precedent.

 

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ARTICLE 8
REPRESENTATIONS AND WARRANTIES

 

8.1Representations and Warranties Concerning Borrower. Borrower represents and
warrants to and covenants with Lender that the following representations and
warranties are true and correct as of the Effective Date through and until the
date on which all Secured Obligations of Borrower under this Agreement are fully
satisfied.

 

(a)Due Formation and Good Standing. Borrower 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, 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.

 

(b)Authorization. The execution, delivery and performance by Borrower of the
Loan Documents and all other documents and transactions contemplated thereby,
are within Borrower’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 Borrower’s articles or
certificate of incorporation or bylaws (or corresponding organizational
documents if Borrower is not a corporation); (ii) a material breach of any legal
restriction or any agreement or instrument to which Borrower 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 Borrower or its property is subject.

 

(c)Enforceable Obligation. The Loan Documents and all other documents
contemplated thereby constitute legal, binding and valid obligations of
Borrower, enforceable against Borrower 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 Loan Documents and all other
documents contemplated thereby and the performance of Borrower’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.

 

(e)Compliance with Laws. Borrower is not in violation of any of its articles or
certificate of incorporation or bylaws (or corresponding organizational
documents if Borrower is not a corporation), 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 Borrower.

 

(f)Financial Condition. All financial statements of Borrower and Guarantor
delivered to Lender fairly and accurately present the financial condition of the
parties for whom such statements are submitted as of the date set forth therein.
The financial statements of Borrower have been prepared in accordance with GAAP
consistently applied throughout the periods involved, and there are no
contingent liabilities not disclosed thereby that would adversely affect the
financial condition of Borrower. Since the close of the period covered by the
latest financial statement delivered to Lender with respect to Borrower, there
has been no material adverse change in the assets, liabilities or financial
condition of Borrower nor is Borrower 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 or, to the
knowledge of Borrower, is threatened, that (i) might render Borrower unable to
perform its obligations under the Loan Documents and all other documents
contemplated thereby; (ii) would constitute a Potential Default or Event of
Default; or (iii) might have a Material Adverse Effect with respect to Borrower.

 

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(g)Credit Facilities. The only credit facilities, including repurchase
agreements for mortgage loans and mortgage-backed securities, of Borrower 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 with Persons
disclosed to Lender at the time of application, or thereafter disclosed to
Lender pursuant to Section 10.11 hereof.

 

(h)Title to Mortgage Loans. Borrower has good, valid, insurable (in the case of
real property) and marketable title to all of its properties and other assets,
whether real or personal, tangible or intangible, reflected on the financial
statements delivered to Lender with respect to Borrower, except for such
properties and other assets that have been disposed of in the ordinary course of
business of Borrower’s mortgage banking business, and all such properties and
other assets are free and clear of all liens except as disclosed in such
financial statements.

 

(i)Litigation. There are no actions, claims, suits, investigations or
proceedings pending, or to the knowledge of Borrower, threatened or reasonably
anticipated against or affecting Borrower, Guarantor or any of their respective
Subsidiaries or Affiliates or any of the property thereof in any court or before
or by any arbitrator, government commission, board, bureau or other
administrative agency that, if adversely determined, may reasonably be expected
to result in a Material Adverse Effect.

 

(j)Payment of Taxes. Borrower 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 that are due and
payable, including interest and penalties, or has provided adequate reserves for
the payment thereof. Any taxes, fees and other governmental charges payable by
Borrower in connection with the Advance and the execution and delivery of the
Loan Documents have been paid.

 

(k)No Defaults. Borrower is not 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. Borrower is in compliance in all material respects with the
requirements of ERISA and the Code, and no Reportable Event has occurred under
any Plan maintained by Borrower. The present value of all accumulated benefit
obligations under each Plan subject to Title IV of ERISA (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) 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 Statement of Financial Accounting Standards No.
87) 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.
Borrower and its Subsidiaries 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”) at no cost to the employer. The assets of Borrower are
not “plan assets” within the meaning of 29 CFR 2510.3-101 as modified by section
3(42) of ERISA.

 

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(m)Servicer. No Servicer is an Affiliate of Borrower or any Guarantor.

 

(n)True and Complete Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of Borrower or any
of its Subsidiaries to Lender in connection with the negotiation, preparation or
delivery of this Agreement and the other Loan 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 Borrower or any
of its Subsidiaries to Lender in connection with this Agreement and the other
Loan Documents and the transactions 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. There is no fact known to Borrower that,
after due inquiry, could reasonably be expected to have a Material Adverse
Effect that has not been disclosed herein, in the other Loan Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to Lender for use in connection with the transactions
contemplated hereby or thereby.

 

(o)Ownership; Priority of Liens. Borrower owns all Mortgage Loans identified in
the Loan Terms Letter that are to become Pledged Mortgage Loans, and shall
pledge all of Borrower’s right, title and interest in and to the related Pledged
Mortgage Loans and other Collateral to Lender, including the Servicing Rights
(to the extent owned by Borrower) related thereto. This Agreement creates in
favor of Lender, a valid, enforceable first priority lien and security interest
in the Pledged Mortgage Loans and other Collateral, prior to the rights of all
third Persons and subject to no other liens, except as limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditor’s rights.

 

(p)Investment Company Act. Neither Borrower 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.

 

(q)Filing Jurisdictions. Schedule 1 hereto sets forth all of the jurisdictions
and filing offices in which a financing statement should be filed in order for
Lender to perfect its security interest in the Pledged Mortgage Loans and other
Collateral.

 

(r)Borrower Solvent; Fraudulent Conveyance. As of the date hereof and
immediately after giving effect to the Advance, the fair value of the assets of
Borrower 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 Borrower in accordance with GAAP)
of Borrower and Borrower is and will be solvent, is and will be able to pay its
debts as they mature and does not and will not have an unreasonably small
capital to engage in the business in which it is engaged and proposes to engage.
Borrower does not intend to incur, or believe that it has incurred, debts beyond
its ability to pay such debts as they mature. Borrower is not contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of Borrower or any of its assets. Borrower is not
transferring any Mortgage Loans with any intent to hinder, delay or defraud any
of its creditors.

 

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(s)Custodial Account. All funds required to be segregated and deposited into the
Custodial Account have been so segregated and deposited.

 

(t)Chief Executive Office. Borrower’s chief executive office on is located at
540 Madison Avenue, 19th Floor, New York, New York 10022.

 

(u)Reserved.

 

(v)Reserved.

 

(w)Custodian. If the Custodian is a Person other than Lender, such Custodian is
not an Affiliate of Borrower.

  

8.2Representations and Warranties Concerning Pledged Mortgage Loans. Borrower
represents and warrants to and covenants with Lender that the representations
and warranties contained in each applicable Mortgage Loan Purchase Agreement are
true and correct with respect to each Pledged Mortgage Loan as of the related
Advance Date through and until the date that such Pledged Mortgage Loan is
released from the Agreement pursuant to the terms hereof and the representations
and warranties contained in each applicable Mortgage Loan Purchase Agreement are
hereby incorporated by reference.

  

ARTICLE 9
AFFIRMATIVE COVENANTS

 

Borrower hereby covenants and agrees with Lender that during the term of this
Agreement and for so long as there remain any obligations of Borrower to be paid
or performed under the Loan Documents:

 

9.1Financial Statements and Other Reports. 

 

(a)Interim Statements. Within thirty (30) days after the end of each calendar
month, Borrower shall deliver to Lender financial statements of Borrower and
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
Borrower and Guarantor, as applicable, subject, however, to year-end audit
adjustments;

 

(b)Annual Statements. Within ninety (90) days following the end of each fiscal
year of Borrower and Guarantor, Borrower shall deliver to Lender audited
financial statements of Borrower and 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 opinion of a certified public accounting firm
reasonably satisfactory to Lender including a management representation letter
signed by the chief financial officer of Borrower or Guarantor, as applicable,
stating that the financial statements fairly present the financial condition and
results of operations of Borrower or Guarantor, as applicable, as of the end of,
and for, such year;

 

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(c)Officer’s Certificate. Together with the financial statements required to be
delivered pursuant to Sections 9.1(a) and (b), Borrower shall deliver to Lender
an officer’s certificate substantially in a form to be provided by Lender, in
which Borrower shall, among other things, (i) certify that no Potential Default
or Event of Default has occurred and is continuing, (ii) demonstrate Guarantor’s
compliance with financial covenants and provide support calculations in
connection therewith, and (iii) include funding and production volume reports
for the previous month;

 

(d)Reports of Auditors. Borrower shall deliver to Lender promptly upon receipt,
any other report submitted by an independent public accountant in connection
with any annual, interim or special audit of Guarantor and/or Borrower.

 

(e)Monthly Collateral Tape. Upon reasonable request, Borrower shall, or shall
cause Servicer to, deliver within five (5) days after the end of each month, (i)
a collateral tape including the data fields (to be determined) representing the
Pledged Mortgage Loans subject to the Advance as of the end of such month,
acceptable to Lender in its good faith discretion, and (ii) any additional
information as reasonably requested.

 

(f)Hedging Reports. Borrower shall deliver to Lender, or cause to be delivered
to Lender, by not later than 1:00 p.m. (New York City time) on each Monday, or
Tuesday if Monday is not a Business Day, or as reasonably requested by Lender, a
loan and rate lock position report and hedge report containing product level
pricing and interest rate sensitivity analysis (shocks) or as requested by
Lender (data elements to be agreed upon). To the extent Borrower retains any
Person(s) to perform hedging services on behalf of Borrower, Borrower hereby
grants Lender authority to contact, request and receive hedging reports directly
from such Person(s) at no cost to Lender. Further, Borrower shall instruct such
Person(s), upon reasonable notice from Lender and during normal business hours,
to answer candidly and fully, at no cost to Lender, any and all questions that
Lender may address to them in reference to the hedging reports of Borrower.
Borrower may have its representatives in attendance at any meetings between
Lender and such Person(s) held in accordance with this authorization.

 

(g)Reports and Information Regarding Pledged Mortgage Loans. Borrower shall
deliver to Lender, with reasonable promptness, (i) copies of any reports related
to the Pledged Mortgage Loans, (ii) with respect to Pledged Mortgage Loans with
an application date on or after January 10, 2014, copies of all documentation in
connection with the underwriting and origination of any Pledged Mortgage Loan
that evidences compliance with the Ability to Repay Rule and the QM Rule, as
applicable, and (iii) any other information in Borrower’s possession related to
the Pledged Mortgage Loans as Lender may request.

 

(h)Other Reports. As may be reasonably requested by Lender from time to time,
Borrower shall deliver to Lender, within thirty (30) days of filing or receipt
(i) copies of all regular or periodic financial or other reports, if any, that
Borrower files with any governmental, regulatory or other agency and (ii) copies
of all audits, examinations and reports concerning the operations of Borrower
from any Approved Investor, any Insurer or licensing authority. Borrower shall
also deliver to Lender, with reasonable promptness, (x) if requested by Lender,
a detailed aging report of all outstanding loans on warehouse/ purchase/
repurchase facilities, and detail of all uninsured government loans in a form
reasonably acceptable to Lender and (y) such further information reasonably
related to the business, operations, properties or financial condition of
Borrower, in such detail and at such times as Lender may request. Borrower
understands and agrees that all reports and information provided to Lender by or
relating to Borrower may be disclosed to Lender’s Affiliates.

 

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9.2Periodic Due Diligence. Borrower acknowledges that Lender has the right at
any time during the term of this Agreement to perform continuing due diligence
reviews with respect to the Pledged Mortgage Loans, Borrower and Guarantor, for
purposes of verifying compliance with the representations, warranties, covenants
and specifications made hereunder or under any other Loan Document, or
otherwise, and Borrower agrees that upon reasonable (but no less than one (1)
Business Day’s prior notice to Borrower (provided that upon the occurrence of a
Potential Default or an Event of Default, no such prior notice shall be
required), Lender or its authorized representatives will be permitted during
normal business hours to examine, inspect, make copies of, and make extracts of
any and all books and records of Borrower or Guarantor. Further, Borrower and
Guarantor will make available to Lender a knowledgeable financial or accounting
officer and will instruct such officer to answer candidly and fully, at no cost
to Lender, any and all questions that any authorized representative of Lender
may address to them in reference to the foregoing. Borrower and Lender further
agree that all reasonable out-of-pocket costs and expenses incurred by Lender in
connection with Lender’s activities pursuant to this Section 9.2 shall be paid
by Borrower.

 

9.3Notice. Borrower shall give Lender prompt (but in no event later than three
(3) Business Days after becoming aware) written notice, in reasonable detail,
of:

 

(a)any action, suit or proceeding instituted by or against Borrower or Guarantor
in any federal or state court or before any commission or other regulatory body
(federal, state or local, foreign or domestic), or any such action, suit or
proceeding threatened against Borrower, in any case, if such action, suit or
proceeding, or any such action, suit or proceeding threatened against Borrower
or Guarantor, (i) involves a potential liability, on an individual or aggregate
basis, reasonably expected to be equal to or greater than ten percent (10%) of
the Tangible Net Worth of Guarantor, (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 Loan Documents or (iv) questions or
challenges compliance of any Pledged Mortgage Loan (other than Pledged Mortgage
Loans with an application date prior to January 10, 2014) with the Ability to
Repay Rule or the QM Rule;

 

(b)the filing or recording of any federal, state or local tax lien against (i)
any Pledged Mortgage Loan, or (ii) Borrower or any of its assets;

 

(c)the occurrence of any Potential Default or Event of Default;

 

(d)the actual or threatened suspension, revocation or termination of Borrower’s
licensing or eligibility, in any respect, as an approved, licensed seller or
mortgagee;

 

(e)the suspension, revocation or termination of any existing credit or investor
relationships to facilitate the sale and/or origination of residential mortgage
loans or residential mortgage-backed securities;

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(f)the resignation or termination of any Servicer under a Servicing Agreement or
Custodian under the Custodial Agreement;

 

(g)a default or breach under the applicable Servicing Agreement or Custodial
Agreement;

 

(h)any amendment to any Servicing Agreement or the Custodial Agreement without
the prior written consent of Lender;

 

(i)any Pledged Mortgage Loan where a director, officer, shareholder, member,
partner or owner of Borrower or any Guarantor is the Mortgagor or guarantor or
where the related Mortgaged Property is being sold by a director, officer,
shareholder, member, partner or owner of Borrower or any Guarantor;

 

(j)any Pledged Mortgage Loan ceases to be an Eligible Mortgage Loan;

 

(k)any Approved Investor that threatens to set-off amounts owed by Borrower to
such Approved Investor against the purchase proceeds owed by the Approved
Investor to Borrower for the Pledged Mortgage Loans (excluding amounts owed by
Borrower to the Approved Investor which are directly related to Pledged Mortgage
Loans and which are expressly allowed to be set-off by the Approved Investor
pursuant to the Bailee Agreement);

 

(l)any change in the Executive Management of Borrower or Guarantor;

 

(m)any other action, event or condition of any nature that may reasonably be
expected to lead to or result in a Material Adverse Effect with respect to
Borrower or Guarantor;

 

(n)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 Borrower maintains its records with respect to the Pledged Mortgage Loans
or any Collateral, or (iii) reincorporation or reorganization of Borrower under
the laws of another jurisdiction;

 

(o)any change to the date on which the fiscal year of Borrower or Guarantor
begins from the current fiscal year beginning date of Borrower or Guarantor; and

 

(p)(i) the receipt of a written commitment by an Approved Investor to purchase a
Pledged Mortgage Loan, (ii) the name of such Approved Investor and (iii) any
other related information as requested by Lender in its sole good faith
discretion.

 

9.4Existence, Etc. Borrower shall (i) preserve and maintain its legal existence
and all of its material rights, privileges, licenses and franchises necessary
for Borrower to conduct its business and to perform its obligations under the
Loan Documents, (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.

 

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9.5Servicing of Mortgage Loans. Subject to Section 6.9 above, Borrower shall
cause each Servicer to subservice or service, as applicable, all Pledged
Mortgage Loans at Borrower’s expense and without charge of any kind to Lender.

 

9.6Evidence of Pledged Mortgage Loans. Borrower shall indicate on its books and
records (including its computer records) that each Pledged Mortgage Loan has
been included in the Collateral.

 

9.7Defense of Title; Protection of Collateral. Borrower warrants and will defend
the security interest of Lender in and to all Collateral against all adverse
claims and demands of all Persons whomsoever. Borrower will comply with all
applicable laws, rules and regulations of any Governmental Authority applicable
to Borrower or relating to the Collateral and cause the Collateral to comply
with all applicable laws, rules and regulations of any such Governmental
Authority. Borrower shall allow Lender (a) to inspect any Mortgaged Property
relating to a Pledged Mortgage Loan; (b) to appear in or intervene in any
proceeding or matter affecting any Pledged Mortgage Loan or other Collateral or
the value thereof; (c) to initiate, commence, appear in and defend any
foreclosure, action, bankruptcy or proceeding which could affect Lender’s
security interest in the Collateral or the value thereof, or the rights and
powers of Lender; (d) to contest by litigation or otherwise any lien asserted
against any Pledged Mortgage Loan (or against the related Mortgaged Property) or
against any other Collateral, 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 Pledged Mortgage Loans and take any action
it may deem appropriate to collect all amounts due and owing with respect to any
Collateral or any part thereof or to enforce any rights with respect thereto.
All reasonable costs and expenses, including reasonable attorneys’ fees
(including, but not limited to, those incurred on appeal), that Lender may incur
with respect to any of the foregoing and any expenditures it may make to protect
or preserve the Collateral or the rights of Lender, shall be payable by
Borrower. Borrower shall repay the same to Lender upon demand with interest, at
the Default Rate, from the date any such expenditure shall have been made until
the day it is repaid.

 

9.8Further Assurances. Borrower shall, at its expense, promptly procure, execute
and deliver to Lender, upon request, all such other and further documents,
agreements and instruments in compliance with or accomplishment of the covenants
and agreements of Borrower in this Agreement.

 

9.9Fidelity Bonds and Insurance. Borrower shall maintain an insurance policy, in
a form and substance satisfactory to Lender, covering against loss or damage
relating to or resulting from any breach of fidelity by Borrower, or any
officer, director, employee or agent of Borrower, any loss or destruction of
documents (whether written or electronic), fraud, theft, misappropriation and
errors and omissions, such that Lender 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 Lender as a loss payee with an unlimited right of action
and shall provide coverage in an amount as required by the Fannie Mae Guide.
Following approval by Lender of a specific insurance policy, Borrower shall not
amend, cancel, suspend or otherwise change such policy without the prior written
consent of Lender.

 

9.10Sharing of Information. Notwithstanding anything herein or in any other Loan
Document to the contrary, upon receipt of prior written notice from Lender,
Borrower shall allow Lender to exchange information related to Borrower, the
Advance hereunder and the terms and conditions of the Loan Documents with
Persons who are providing or are, at the invitation of Borrower, contemplating
providing credit of any kind to Borrower and Borrower shall permit each such
Person to share such information with Lender.

 

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9.11ERISA. As soon as reasonably possible, and in any event within fifteen (15)
days after Borrower 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 Borrower setting forth details
respecting such event or condition and the action, if any, that Borrower 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 Borrower 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 Borrower 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 Borrower, 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 Borrower, any
Subsidiary or any ERISA Affiliate that results in 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 Borrower, 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 Borrower, any Subsidiary or any ERISA Affiliate to enforce Section 515
of ERISA, which proceeding is not dismissed within 30 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 Borrower, any Subsidiary or an ERISA Affiliate fails to
timely provide security to such Plan in accordance with the provisions of said
Sections.

 

9.12Financial Covenants and Ratios. Borrower and Guarantor shall at all times
comply with any financial covenants and/or financial ratios set forth in the
Loan Terms Letter.

 

9.13Amendments, Waiver and Termination of Certain Documents. Borrower shall
obtain Lender’s written consent, prior to (i) the effectuation of any amendment,
modification, supplement or restatement of any Servicing Agreement or the
Custodial Agreement (ii) the waiver of any default by Borrower occurring under
any Servicing Agreement or the Custodial Agreement and (iii) the termination by
Borrower of any Servicing Agreement or the Custodial Agreement.

 

27

 

 

ARTICLE 10
NEGATIVE COVENANTS

 

Borrower hereby covenants and agrees with Lender that during the term of this
Agreement and for so long as there remain any obligations of Borrower to be paid
or performed under this Agreement, Borrower shall comply with the following:

 

10.1Debt. Except as otherwise set forth in Section 10.11 of this Agreement,
Borrower shall not incur any additional material Debt without the prior written
consent of Lender, other than (i) the Existing Debt, (ii) Debt incurred with
Lender or its Affiliates, and (iii) usual and customary accounts payable for a
mortgage company.

 

10.2Lines of Business. Borrower shall not engage to any substantial extent in
any line or lines of business activity other than the businesses generally
carried on by it as of the Effective Date.

 

10.3Debt and Subordinated Debt. Borrower shall not, either directly or
indirectly, without the prior written consent of Lender, pay any Debt or
Subordinated Debt if such payment shall cause a Potential Default or Event of
Default. Further, if a Potential Default or an Event of Default shall have
occurred and for as long as such is occurring, Borrower shall not, either
directly or indirectly, without the prior written consent of Lender, make any
payment of any kind thereafter on such Debt or Subordinated Debt until all
obligations of Borrower hereunder have been paid and performed in full.

 

10.4Loss of Eligibility. Borrower shall not, either directly or indirectly,
without the prior written consent of Lender, take, or fail to take, any action
that would cause Borrower to lose all or any part of its status as an eligible
seller or mortgagee or willfully terminate its status as an eligible seller or
mortgagee without forty-five (45) days prior written notice to Lender.

 

10.5Loans to Officers, Employees and Shareholders. Borrower shall not, either
directly or indirectly, without the prior written consent of Lender, make any
personal loans or advances to any officers, employees, shareholders, members,
partners or owners of Borrower or any Guarantor in an aggregate amount exceeding
ten percent (10%) of Borrower’s Tangible Net Worth; provided, however, that
Borrower shall be entitled to make a personal loan or advance to a majority
shareholder, member, partner or owner of Borrower without the prior written
consent of Lender provided that (i) a Potential Default or an Event of Default
is not existing and will not occur as a result thereof, (ii) such Person is also
a Guarantor and (iii) such loan or advance is clearly reflected on Borrower’s
financial reports provided to Lender.

 

10.6Liens on Pledged Mortgage Loans and Collateral. Borrower acknowledges that
with respect to the Advance it shall have pledged the Pledged Mortgage Loans and
related Collateral and shall have granted to Lender a first priority security
interest in such assets. Accordingly, Borrower shall not create, incur, assume
or suffer to exist any lien upon the Pledged Mortgage Loans or the Collateral,
other than as granted to Lender herein.

 

10.7Transactions with Affiliates. Borrower shall not, directly or indirectly,
enter into any transaction with its Affiliates, if any, without the prior
written consent of Lender, 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 Borrower may, without the prior written consent of
Lender, and provided that a Potential Default or 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) such transaction is in the ordinary course
of Borrower’s mortgage conduit business, and (ii) such transaction is upon fair
and reasonable terms no less favorable to Borrower had Borrower entered into a
comparable arm length’s transaction with a Person which is not an Affiliate.

 

28

 

 

10.8Consolidation, Merger, Sale of Mortgage Loans and Change of Control.
Borrower shall not, 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 Borrower, without prior written
consent of Lender; provided, however, that Borrower may, without the prior
written consent of Lender, and provided that a Potential Default or an Event of
Default is not existing and will not occur as a result thereof: (i) merge or
consolidate with any Person if Borrower is the surviving and controlling entity,
and (ii) in the ordinary course of Borrower’s mortgage conduit business, sell
equipment that is uneconomic or obsolete and acquire Mortgage Loans for resale
and sell Mortgage Loans.

 

10.9Payment of Dividends and Retirement of Stock. If a Potential Default or an
Event of Default has occurred and is continuing or will occur as a result of
such payments, Borrower shall not pay any dividends or distributions with
respect to any capital stock or other equity interests in Borrower, 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
Borrower.

 

10.10Collateral. Borrower shall not attempt to sell, assign, transfer or
otherwise dispose of, or grant any option with respect to, or pledge or
otherwise encumber (except pursuant to this Agreement) any of the Pledged
Mortgage Loans or other Collateral or any interest therein. Borrower shall not,
without prior written consent of Lender, amend or modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect of, any
Pledged Mortgage Loan.

 

10.11No Additional Facilities. Borrower shall not, without prior written
notification to Lender, enter into any mortgage or mortgage servicing rights
financing facility (including, without limitation, any warehouse, repurchase,
purchase or off-balance sheet facility).

 

ARTICLE 11
DEFAULTS AND REMEDIES

 

11.1Events of Default. The occurrence of any of the following conditions or
events shall be an Event of Default:

 

(a)failure of Borrower to make any payment of Accrued Interest on the Advance on
any Payment Date;

 

(b)failure of Borrower to (i) pay any portion of the Repayment Amount when due
on the Maturity Date, upon acceleration or pursuant to Section 4.2, or (ii)
perform its obligations under Section 6.11(b);

 

(c)failure of Borrower to pay any other amount due under the Loan Documents
within two (2) Business Days following the applicable due date;

 

(d)Borrower, any Guarantor or any of their respective Subsidiaries or Affiliates
shall default under, or fail to perform as required under, or shall otherwise
breach the terms of any instrument, agreement or contract between Borrower, any
Guarantor or any of their respective Subsidiaries or Affiliates, on the one
hand, and Lender or any of Lender’s Affiliates on the other;

29

 

 

(e)Borrower, Guarantor or any of their respective Subsidiaries or Affiliates
shall default under, or fail to perform as required under, the terms of (i) any
repurchase agreement, loan and security agreement or similar credit facility or
agreement for borrowed funds or Debt obligation entered into by Borrower,
Guarantor or any of their respective Subsidiaries or Affiliates, on the one
hand, and any third party on the other, which default or failure entitles any
party to require acceleration or prepayment of any indebtedness thereunder or
(ii) any other material agreement entered into by Borrower, Guarantor or any of
their respective Subsidiaries or Affiliates, on the one hand, and any third
party on the other, which default or failure entitles any party to require
acceleration or prepayment of any indebtedness thereunder;

 

(f)Borrower shall fail to remit Income to the Custodial Account in strict
accordance with the provisions of Section 6.10;

 

(g)any representation, warranty or certification made or deemed made herein or
in any other Loan Document by Borrower or any certificate furnished to Lender
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 five (5) Business Days (other than the
representations and warranties set forth in Section 8.2 which shall be
considered solely for the purpose of determining the Collateral Value of the
Pledged Mortgage Loans; unless (i) Borrower 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 Lender to be materially false or misleading on a regular
basis, in which case there shall be no such cure period);

 

(h)(i) the failure of Borrower or Guarantor to perform, comply with or observe
any term, covenant or agreement applicable to Borrower or Guarantor as contained
in Articles 9 and 10 of this Agreement (other than a failure to give notice
pursuant to Section 9.3(l)), irrespective of any cure period, or (ii) the
failure of Borrower or Guarantor to perform, comply with or observe any other
term, covenant or agreement applicable to Borrower or Guarantor as contained in
this Agreement and such occurrence shall not have been remedied within the cure
period provided therein;

 

(i)an Insolvency Event shall have occurred with respect to Borrower, any
Guarantor, any of their respective Subsidiaries or Affiliates; or Borrower shall
admit in writing its inability to, or intention not to, perform any of its
obligations under this Agreement or any of the other Loan Documents; or Lender
shall have determined that Borrower is unable to meet its financial commitments
as they come due;

 

(j)one or more judgments or decrees shall be entered against Borrower, any
Guarantor or any of their respective Subsidiaries or Affiliates involving a
liability of $500,000 or more (to the extent that it is, in the reasonable
determination of Lender, 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 thirty (30) days after entry
thereof;

30

 

 

(k)any Plan maintained by Borrower, any Subsidiary of Borrower 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 Borrower’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 Borrower
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)Borrower 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 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 Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (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
Lender 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 Lender, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of
Title IV of ERISA, (v) Borrower or any Subsidiary or any ERISA Affiliate shall,
or in the reasonable opinion of Lender is likely to, incur any liability in
connection with a withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan, (vi) Borrower 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, (vii) any obligation for
post-retirement medical costs (other than as required by COBRA) exists, or
(viii) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (viii) 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, or (ix) the assets of Borrower
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 Borrower, any Guarantor or any
of their respective Affiliates or Subsidiaries; (ii) displace the management of
Borrower, any Guarantor or any of their respective Affiliates or Subsidiaries or
to curtail its authority in the conduct of their respective business; or (iii)
to remove, limit or restrict the approval of Borrower, any Guarantor or any of
their respective Affiliates or Subsidiaries as a buyer or a seller 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;

31

 

 

(o)Borrower shall purport to disavow its obligations hereunder or shall contest
the validity or enforceability of the Loan Documents or Lender’s interest in any
Pledged Mortgage Loan or other Collateral;

 

(p)a default shall occur under the Guaranty that continues beyond the expiration
of any applicable grace period or the Guarantor shall otherwise fail to perform
its obligations under the Guaranty;

 

(q)Reserved;

 

(r)a Material Adverse Effect shall occur with respect to Borrower or any
Guarantor;

 

(s)Reserved;

 

(t)any Loan Document shall for whatever reason (including an event of default
thereunder) be terminated, without the consent of Lender (other than, with
respect to the Custodial Agreement or Servicing Agreement, due to the
resignation of the Custodian or Servicer for reasons other than a breach by
Borrower of the Custodial Agreement or Servicing Agreement (subject to Section
11.1(v) below)), 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 Collateral;

 

(u)a Change of Control shall occur with respect to Borrower or any Guarantor
without the consent of Lender; or

 

(v)a material breach by any Servicer under the applicable Servicing Agreement
shall have occurred and be continuing and Borrower has not (A) appointed a
successor servicer acceptable to Lender and (B) delivered a fully executed
Servicing Agreement Side Letter with such successor servicer, in each case
within thirty (30) days following the occurrence of such breach.

 

With respect to any Event of Default which requires a determination to be made
as to whether such Event of Default has occurred, such determination shall be
made in Lender’s good faith discretion and Borrower hereby agrees to be bound by
and comply with any such determination by Lender. An Event of Default shall be
deemed to be continuing unless expressly waived by Lender in writing.

 

11.2Remedies. Upon the occurrence of an Event of Default, Lender may, by notice
to Borrower, (i) immediately declare all or any portion of the principal amount
of the Advance then outstanding under the Note together with all Accrued
Interest thereon and any applicable fees and out-of-pocket expenses (including,
without limitation, reasonable fees and disbursements of counsel) accruing under
the Note, this Agreement and any other Loan Document to be due and payable;
provided, that such acceleration shall immediately occur upon the occurrence of
an Event of Default under Section 11.1(i), (n) or (o), notwithstanding that
Lender may not have provided any such notice to Borrower, and (ii) exercise, in
addition to all other rights and remedies granted to it in this Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the
Uniform Commercial Code.

 

32

 

 

Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind (except any notice
required by law referred to below), all of which are hereby expressly waived by
Borrower, and Lender shall have the right to exercise any remedies available to
it at law and pursuant to the Loan Documents including, but not limited to,
collecting, receiving, appropriating and realizing upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing) on a servicing released basis,
in one or more parcels or as an entirety at public or private sale or sales, at
any exchange, broker’s board or office of Lender or elsewhere upon such terms
and conditions and at prices that are consistent with the prevailing market for
similar collateral as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. Lender shall act in good faith to obtain the best execution
possible under prevailing market conditions. Because Borrower recognizes that it
may not be possible to purchase or sell all of the Collateral on a particular
Business Day, or in a transaction with the same purchaser, or in the same manner
because the market for such Collateral may not be liquid, Borrower agrees that
liquidation of the Collateral 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, Lender may elect, in its sole
discretion, the time and manner of liquidating any Collateral and nothing
contained herein shall (A) obligate Lender to liquidate any Collateral on the
occurrence of an Event of Default or to liquidate all Collateral in the same
manner or on the same Business Day or (B) constitute a waiver of any of Lender’s
rights or remedies. Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in Borrower, which right or equity is hereby waived or
released. Borrower agrees, at Lender’s request, to assemble the Collateral and
make it available to Lender at places which Lender shall reasonably select,
whether at Borrower’s premises or elsewhere. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least ten (10) days before such sale or
other disposition.

 

Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of Lender hereunder, including, without limitation, reasonable out-of-pocket
attorneys’ fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as Lender may elect, and only after such
application and after the payment by Lender of any other amount required or
permitted by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need Lender account for the surplus,
if any, to Borrower. Borrower shall remain liable for any deficiency (plus
Accrued Interest thereon at the Default Rate as contemplated pursuant to Section
2.6 of this Agreement) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and/or the reasonable
fees and disbursements incurred by Lender, including reasonable fees and
expenses of any attorneys employed by Lender to collect such deficiency.

 

It is understood and agreed that upon the occurrence of an Event of Default,
Borrower shall strictly comply with the negative covenants contained in Article
10 hereunder and in no event shall Borrower declare and pay any dividends, incur
additional Debt or Subordinated Debt, make payments on existing Debt or
Subordinated Debt or otherwise distribute or transfer any of Borrower’s property
and assets to any Person without the prior written consent of Lender. To the
extent permitted by applicable law, Borrower waives all claims, damages and
demands it may acquire against Lender arising out of the exercise by Lender of
any of its rights hereunder, other than those claims, damages and demands
arising from the gross negligence or willful misconduct of Lender.

 

33

 

 

11.3Treatment of Custodial Account. During the existence of a Potential Default
or an Event of Default, notwithstanding any other provision of this Agreement,
Borrower shall have no right to withdraw or release any funds in the Custodial
Account to itself or for its benefit, nor shall it have any right to set-off any
amount owed to it by Lender against funds held by it for Lender in the Custodial
Account. During the existence of an Event of Default, Borrower shall promptly
remit to or at the direction of Lender all funds related to the Pledged Mortgage
Loans in the Custodial Account.

 

11.4No Obligation to Pursue Remedy. Lender 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 Borrower. Borrower further waives any right to
require Lender to (a) proceed against any Person, (b) proceed against or exhaust
all or any of the Pledged Mortgage Loans or pursue its rights and remedies as
against the Pledged Mortgage Loans in any particular order, or (c) pursue any
other remedy in its power. Lender shall not be required to take any steps
necessary to preserve any rights of Borrower against holders of mortgages prior
in lien to the lien of any Pledged Mortgage Loan or to preserve rights against
prior parties. No failure on the part of Lender 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
Lender 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. Without intending to limit the foregoing, all defenses
based on the statute of limitations are hereby waived by Borrower. The remedies
herein provided are cumulative and are not exclusive of any remedies provided at
law or in equity.

 

11.5No Judicial Process. Lender may enforce its rights and remedies hereunder
without prior judicial process or hearing, and Borrower hereby expressly waives,
to the extent permitted by law, any right Borrower might otherwise have to
require Lender to enforce its rights by judicial process. Borrower also waives,
to the extent permitted by law, any defense Borrower 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 Pledged Mortgage Loans or from
any other election of remedies. Borrower 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.

 

11.6Reimbursement of Costs and Expenses. Lender 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 Pledged
Mortgage Loan, including, without limitation, payment of delinquent taxes or
assessments and insurance premiums. All advances, charges, reasonable costs and
expenses, including reasonable attorneys’ fees and disbursements and losses
resulting from any hedging arrangements entered into by Lender pursuant to
Section 11.2, incurred or paid by Lender 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 Secured Obligations.

 

11.7Rights of Set-Off. Lender shall have the following rights of set-off:

 

(a)If Borrower shall default in the payment or performance of any of its
obligations under this Agreement, Lender 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 Lender to or for the credit of the account of Borrower against
and on account of the obligations and liabilities of Borrower under this
Agreement, irrespective of whether or not Lender shall have made any demand
hereunder and whether or not said obligations and liabilities shall have become
due; 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 Pledged Mortgage Loans or other third parties. Lender may set off cash, the
proceeds of any liquidation of the Pledged Mortgage Loans and all other sums or
obligations owed by Lender to Borrower against all of Borrower’s obligations to
Lender, whether under this Agreement, under the Advance, or under any other
agreement between the parties, or otherwise, whether or not such obligations are
then due, without prejudice to Lender’s right to recover any deficiency. Lender
agrees promptly to notify Borrower after any such set-off and application made
by Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application.

 

34

 

 

(b)In addition to the rights in subsection (a), Lender and its Affiliates
(collectively, the “Bank of America Related Entities”), shall have the right to
set-off and to appropriate or apply any and all deposits of money or property or
any other indebtedness at any time held or owing by the Bank of America Related
Entities to or for the credit of the account of Borrower and Guarantor against
and on account of the obligations of Borrower under any agreement(s) between
Borrower and/or Guarantor, on the one hand, and the Bank of America Related
Entities, on the other hand, irrespective of whether or not the Bank of America
Related Entity shall have made any demand hereunder and whether or not said
obligations shall have matured. In exercising the foregoing right to set-off,
any Bank of America Related Entity shall be entitled to withdraw funds which are
being held for or owing to Borrower to set-off against any amounts due and owing
by Borrower to the Bank of America Related Entity. If a Bank of America Related
Entity other than Lender intends to exercise its right to set-off in this
subsection (b), such Bank of America Related Entity shall provide Borrower prior
notice thereof, and upon Borrower’s receipt of such notice, if the basis for
such right to set-off is Borrower’s breach or default of its obligations to the
Bank of America Related Entity, Borrower shall have three (3) Business Days to
cure any such breach or default in order to avoid such set-off.

 

11.8Reasonable Assurances. If, at any time during the term of the Agreement,
Lender has reason to believe that Borrower 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 Insurers and
prudent industry standards or (ii) all applicable requirements of Lender, as set
forth in this Agreement, then, Lender shall have the right to demand, pursuant
to notice from Lender to Borrower specifying with particularity the alleged act,
error or omission in question, reasonable assurances from Borrower that such a
belief is in fact unfounded, and any failure of Borrower to provide to Lender
such reasonable assurances in form and substance reasonably satisfactory to
Lender, within the time frame specified in such notice, shall itself constitute
an Event of Default hereunder, without a further cure period. Borrower hereby
authorizes Lender to take such actions as may be necessary or appropriate to
confirm the continued eligibility of Borrower for Advance hereunder, including
without limitation (i) ordering credit reports and/or appraisals with respect to
any Pledged Mortgage Loan, (ii) contacting Mortgagors, licensing authorities and
Approved Investors or Insurers, and (iii) performing due diligence reviews on
Borrower and Guarantor pursuant to Section 9.2 of this Agreement.

 

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ARTICLE 12
INDEMNIFICATION

 

12.1Indemnification. Borrower shall indemnify and hold harmless the Bank of
America Related Entities and any of their respective officers, directors,
employees, agents and advisors (each, an “Indemnified Party”) from and against
any and all liabilities, obligations, losses, damages, penalties, judgments,
suits, 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 Loan Documents or any of the transactions contemplated
thereby, or any Pledged Mortgage Loans or Borrower’s obligations thereunder,
except to the extent that such liabilities, obligations, losses, damages,
penalties, judgments, suits, costs, expenses or disbursements are the direct
result of such Indemnified Party’s gross negligence, bad faith or willful
misconduct. Borrower also agrees to reimburse an Indemnified Party as and when
billed by such Indemnified Party for all such Indemnified Party’s costs and
expenses incurred in connection with the enforcement or the preservation of such
Indemnified Party’s rights under this Agreement, any other Loan Document
(provided that if the terms of any Loan Document conflict with the foregoing,
the terms of the Loan Document shall control) or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel.

 

12.2Reimbursement. Borrower shall reimburse the Bank of America Related Entities
for all expenses required in the Loan Terms Letter to be reimbursed when they
become due and owing. In addition, Borrower agrees to pay as and when billed by
Lender all of the reasonable out-of pocket costs and expenses incurred by Lender
in connection with (i) the consummation and administration of the transactions
contemplated hereby including, without limitation, all the due diligence,
inspection, testing and review costs and expenses incurred by Lender with
respect to Pledged Mortgage Loans and Borrower prior to the Effective Date or
pursuant to Section 9.2, or otherwise, (ii) the development, preparation and
execution of, and any amendment, supplement or modification to, any Loan
Document or any other documents prepared in connection therewith, and (iii) all
the reasonable fees, disbursements and expenses of counsel to Lender incurred in
connection with any of the foregoing.

 

12.3Payment of Taxes.

 

(a)All payments made by Borrower 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, deductions, charges or withholdings, and all
liabilities (including penalties, interest and additions to tax) with respect
thereto imposed by any Governmental Authority, excluding income taxes, branch
profits taxes, franchise taxes or any other tax imposed on the Net Income by the
United States, a state or a foreign jurisdiction under the laws of which Lender
is organized or of its applicable lending office, or any political subdivision
thereof (collectively, “Taxes”), all of which shall be paid by Borrower for its
own account not later than the date when due. If Borrower 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 Lender, promptly, original tax
receipts and other evidence satisfactory to Lender of the payment when due of
the full amount of such Taxes; and (iv) pay to Lender such additional amounts as
may be necessary so that such Lender receives, free and clear of all Taxes, 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, Borrower agrees
to pay to the relevant Governmental Authority in accordance with applicable law
any current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies (including, without limitation, mortgage
recording taxes, transfer taxes and similar fees) imposed by the United States
or any taxing authority thereof or therein that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement (“Other Taxes”).

 

36

 

 

(b)Borrower shall pay and hold Lender harmless from and against any and all
Taxes and Other Taxes arising with respect to the Pledged Mortgage Loans, the
Loan Documents and other documents related thereto and hold Lender harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission to pay such taxes.

 

(c)Any Lender that is not incorporated under the laws of the United States, any
State thereof, or the District of Columbia (a “Foreign Lender”) shall provide
Borrower with properly completed United States Internal Revenue Service (“IRS”)
Form W-8BEN or W-8ECI or any successor form prescribed by the IRS, certifying
that such Foreign Lender is entitled to benefits under an income tax treaty to
which the United States is a party which reduces 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 Lender
becomes a Lender. Each Foreign Lender will resubmit the appropriate form on the
earliest of (A) the third anniversary of the prior submission or (B) on or
before the expiration of thirty (30) days after there is a “change in
circumstances” with respect to such Foreign Lender as defined in Treas. Reg.
Section 1.1441(e)(4)(ii)(D). For any period with respect to which a Foreign
Lender has failed to provide Borrower with the appropriate form or other
relevant document pursuant to 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 a form originally was required to be provided), such Foreign Lender shall
not be entitled to any “gross-up” of Taxes or indemnification under Section
12.3(b) with respect to Taxes imposed by the United States; provided, however,
that should a Foreign Lender, which is otherwise exempt from a withholding tax,
become subject to Taxes because of its failure to deliver a form required
hereunder, Borrower shall take such steps as such Foreign Lender shall
reasonably request to assist such Foreign Lender to recover such Taxes.

 

(d)Nothing contained in this Section 12.3 shall require Lender to make available
any of its tax returns or other information that it deems to be confidential or
proprietary.

 

12.4Lender Payment. If Borrower 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 Borrower by Lender, in its discretion and Borrower shall remain liable
for any such payments by Lender. No such payment by Lender shall be deemed a
waiver of any of Lender’s rights under any of the Loan Documents.

 

12.5Agreement not to Assert Claims. Borrower agrees not to assert any claim
against any Indemnified Party, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Loan Documents, the actual or proposed use of the proceeds of the
Advance, this Agreement or any of the transactions contemplated hereby or
thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

 

37

 

 

12.6Survival. Without prejudice to the survival of any other agreement of
Borrower hereunder, the covenants and obligations of Borrower contained in this
Article 12 shall survive the repayment in full of the Secured Obligations and
all other amounts payable hereunder and delivery of the Pledged Mortgage Loans
by Lender against full payment therefor.

 

ARTICLE 13
TERM AND TERMINATION

 

13.1Term. Provided that no Event of Default or Potential 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 Termination Date.
Following expiration or termination of this Agreement, all amounts due Lender
under the Loan Documents shall be immediately due and payable without notice to
Borrower and without presentment, demand, protest, notice of protest or
dishonor, or other notice of default, and without formally placing Borrower in
default, all of which are hereby expressly waived by Borrower.

 

13.2Termination.

 

(a)Lender may terminate this Agreement for cause at any time by providing notice
to Borrower. For the avoidance of doubt, cause shall be deemed to exist if
Lender determines that there has been fraud, misrepresentation or any similar
intentional conduct on behalf of Borrower, its officers, directors, employees,
agents and/or its representatives with respect to any of Borrower’s obligations,
responsibilities or actions undertaken in connection with this Agreement.

 

(b)Upon termination of this Agreement for any reason, all outstanding amounts
due to Lender under the Loan Documents shall be immediately due and payable
without notice to Borrower and without presentment, demand, protest, notice of
protest or dishonor, or other notice of default, and without formally placing
Borrower in default, all of which are hereby expressly waived by Borrower.
Further, any termination of this Agreement shall not affect the outstanding
obligations of Borrower under this Agreement or any other Loan Document and all
such outstanding obligations and the rights and remedies afforded Lender in
connection therewith, including, without limitation, those rights and remedies
afforded Lender under this Agreement, shall survive any termination of this
Agreement. Lender shall not be liable to Borrower for any costs, loss or damages
arising from or relating to a termination by Lender in accordance with
subsection (a) of this Section 13.2.

 

ARTICLE 14
GENERAL

 

14.1Integration. This Agreement, together with the other Loan Documents, and all
other documents executed pursuant to the terms hereof 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.

 

14.2Amendments. 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.

 

14.3No Waiver. No failure or delay on the part of Borrower or Lender in
exercising any right, power or privilege hereunder and no course of dealing
between Borrower and Lender 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.

 

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14.4Remedies Cumulative. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies that Borrower or Lender
would otherwise have. No notice or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Lender to any other or
further action in any circumstances without notice or demand.

 

14.5Assignment. The Loan Documents may not be assigned by Borrower. The Loan
Documents, along with Lender’s right, title and interest, including its security
interest, in any or all of the Pledged Mortgage Loans and other Collateral, may,
at any time, be transferred or assigned, in whole or in part, by Lender, and
upon providing notice to Borrower of such transfer or assignment, together with
an acknowledgement from assignee accepting Lender’s rights and/or obligations
hereunder, any transferee or assignee thereof may enforce the Loan Documents and
such security interest directly against Borrower.

 

14.6Successors 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.

 

14.7Participations. Lender 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 Lender 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 Borrower were directly obligated to the holder of such
participation in the amount of such participation; provided, however, that
Borrower shall not be required to send or deliver to any of the participants
other than Lender 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 Lender.

 

14.8Invalidity. 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.

 

14.9Additional Instruments. Borrower shall execute and deliver such further
instruments and shall do and perform all matters and things necessary or
expedient 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.

 

14.10Survival. All representations, warranties, covenants and agreements herein
contained on the part of Borrower shall survive Advance and shall be effective
so long as this Agreement is in effect or there remains any obligation of
Borrower hereunder to be performed.

 

14.11Notices.

 

(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:

39

 

 

If to Borrower:The address set forth in the Loan Terms Letter

 

If to Lender:Bank of America, N.A.
4500 Park Granada

Mail Code: CA7-910-02-38

Calabasas, California 91302

Attention: Adam Gadsby, Managing Director

Telephone: (818) 225-6541

Facsimile: (213) 457-8707

Email: Adam.Gadsby@baml.com

 

With copies to:

 

Bank of America, N.A.

One Bryant Park, 11th Floor

Mail Code: NY1-100-11-01

New York, New York 10036

Attention: Eileen Albus, Director, Mortgage Finance

Telephone:  (646) 855-0946

Facsimile:  (646) 855-5050

Email: Eileen.Albus@baml.com

 

Bank of America, N.A.

One Bryant Park

New York, New York 10036

Mail Code: NY1-100-17-01

Attention: Michael J. Berg, Assistant General Counsel

Telephone: (646) 855-0706

Fax: (212) 378-3460

E-mail: Michael.J.Berg@bankofamerica.com

 

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 receipt.

 

(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 Lender, via a posting of such notice on Lender’s customer website(s).

 

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If to Borrower:The email address(es) specified in the Loan Terms Letter, if any.

 

If to Lender:Adam.Gadsby@baml.com, Adam.Robitshek@baml.com,
Eileen.Albus@baml.com and Michael.J.Berg@bankofamerica.com.

 

14.12Governing 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
Section 5-1401 of the New York General Obligations Law).

 

14.13Submission 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 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.

 

14.14Waiver of Jury Trial. Each of Borrower and Lender 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 Loan Document or the transactions contemplated hereby or
thereby.

 

14.15Counterparts. This Agreement may be executed in any number of counterparts
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.

 

14.16Headings. 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.

 

14.17Confidential Information. To effectuate this Agreement, Lender and Borrower
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 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;

 

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(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; (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, Lender may share any Confidential Information
of Borrower with an Affiliate of Lender for any valid business purpose, such as,
but not limited to, to assist an Affiliate in evaluating a current or potential
business relationship with Borrower.

 

In addition, the Loan Documents 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
Lender and shall be held by Borrower in strict confidence and shall not be
disclosed to any third party without the consent of Lender except for (i)
disclosure to Borrower’s 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
Lender, disclosure required by law, rule, regulation or order of a court or
other regulatory body; (iii) upon prior written notice to Lender, 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 (vi) 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), Borrower shall take reasonable
actions to provide Lender with prior written notice; provided further that in
the case of (iv), Borrower shall not file any of the Loan Documents other than
the Agreement with the SEC or state securities office unless Borrower has (x)
provided at least fifteen (15) days (or such lesser time as may be demanded by
the SEC or state securities office) prior written notice of such filing to
Lender, and (y) redacted all pricing information and other commercial terms to
the extent permitted.

 

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 nonbreaching party(ies) shall be
entitled to all remedies available at law and/or in equity, including, without
limitation, injunctive relief.

 

14.18Tax Treatment. Each party to this Agreement acknowledges that it is its
intent, solely for purposes of United States federal, state and local income and
franchise taxes, and not for bankruptcy or any other purpose, to treat the
Advance as indebtedness of Borrower that is secured by the Pledged Mortgage
Loans and that the Pledged Mortgage Loans are owned by Borrower in the absence
of an Event of Default by Borrower. All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.

 

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14.19Examination and Oversight by Regulators. Borrower agrees that the
transactions with Lender under this Agreement may be subject to regulatory
examination and oversight, including, without limitation, examination and
oversight by the Office of the Comptroller of the Currency (“OCC”). Borrower
shall comply with all regulatory requirements of Lender and Borrower shall grant
regulatory agencies, including, but not limited to, the OCC, the right to audit
the books and records of Borrower in order to monitor or verify Borrower’s
performance under and compliance with the terms of this Agreement.

 

(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.

 

    BANK OF AMERICA, N.A., as Lender             By: /s/ Adam Robitshek    
Name: Adam Robitshek     Title: Vice President           FIVE OAKS ACQUISITION
CORP.,     as Borrower             By: /s/ Darren Comisso     Name: Darren
Comisso     Title: Executive Vice President

 

Signature Page to Loan and Security Agreement

 

 

 

 

EXHIBIT A

 

GLOSSARY OF DEFINED TERMS

 

Ability to Repay Rule: 12 CFR 1026.43(c), including all applicable official
staff commentary.

 

Accepted Servicing Practices: With respect to any Mortgage Loan, those mortgage
servicing practices of prudent mortgage lending institutions which service
mortgage loans of the same type as such Mortgage Loan in the jurisdiction where
the related Mortgaged Property is located.

 

Accrued Interest: Shall have the meaning specified in Section 2.6(a) of this
Agreement.

 

Advance: Shall have the meaning specified in Section 2.1 of this Agreement.

 

Advance Date: The date on which an Advance is made hereunder. If the Advance is
paid by wire transfer, the Advance Date shall be the date such funds are wired.
If the Advance is paid by a cashier’s check, the Advance Date shall be the date
such check is issued by the bank. If the Advance is paid by a funding draft, the
Advance Date shall be the date that the draft is posted by the bank on which the
draft is drawn.

 

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” have
meanings correlative to the foregoing.

 

Agency: Fannie Mae, Freddie Mac or Ginnie Mae, as applicable.

 

Applicable Interest Rate: With respect to any date of determination, the greater
of (i) LIBOR, and (ii) the LIBOR Floor. It is understood that the Applicable
Interest Rate shall be adjusted on a daily basis.

 

Approved Investor: A Person, mutually agreed upon between Borrower and Lender,
who shall purchase any Pledged Mortgage Loans from Borrower.

 

Asset Data Record: The data tape setting forth information regarding the
Mortgage Loans intended to be sold to Borrower and subject to the Advance that
is prepared by Bank of America, N.A. and delivered to Borrower in an electronic
format prior to the Advance Date.

 

Assignment: A duly executed assignment to Lender in recordable form of a Pledged
Mortgage Loan, of the indebtedness secured thereby and of all documents and
rights related to such Pledged Mortgage Loan.

 

Bailee Agreement: A bailee agreement or bailee letter that is in a form
acceptable to Lender.

 

Bankruptcy Code: Title 11 of the United States Code, now or hereafter in effect,
as amended, or any successor thereto.

 

Borrowing Base Deficiency: A borrowing base deficiency, as defined and described
in Section 6.11 of this Agreement.

 

Business Day: Any day, excluding Saturday, Sunday and any day that is a legal
holiday under the laws of the State of New York and the State of California or
as may otherwise be published on Lender’s website(s).

  

Exhibit A-1

 

 

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 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, or (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.

 

Change of Control: Change of Control shall mean any of the following with
respect to any Person:

 

(a) if such Person is a corporation, any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than a trustee or other fiduciary holding securities of
Borrower under an employee benefit plan of such Person, becomes the “beneficial
owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of such Person representing 50% or more of (A) the
outstanding shares of common stock of such Person or (B) the combined voting
power of such Person’s then-outstanding securities;

 

(b)      if such Person is a legal entity other than a corporation, the majority
voting control of such Person, or its equivalent, under such Person’s governing
documents is transferred to any Person;

 

(c)      such Person is party to a merger or consolidation, or series of related
transactions, which results in the voting securities or majority voting control
interest of such Person outstanding immediately prior thereto failing to
continue to represent (either by remaining outstanding or by being converted
into voting securities or a majority voting controlling interest of the
surviving or another entity) at least fifty (50%) percent of the combined voting
power of the voting securities or majority voting control interest of such
Person or such surviving or other entity outstanding immediately after such
merger or consolidation;

 

(d)      the sale or disposition of all or substantially all of such Person’s
assets (or consummation of any transaction, or series of related transactions,
having similar effect);

 

(e)      there occurs a change in the composition of the Board of Directors or
governing body of such Person within a six (6) month period, as a result of
which fewer than a majority of the directors or governing body members are
incumbent; provided, however, that this provision (e) shall not apply in the
event that the composition of the Board of Directors or governing body changes
as a result of such Person availing itself of the public or private debt or
equity markets;

 

(f)      the dissolution or liquidation of such Person; or

 

(g)     any transaction or series of related transactions that has the
substantial effect of any one or more of the foregoing.

 

Exhibit A-2

 

 

COBRA: As defined in Section 8.1(l) of this Agreement.

 

Code: The Internal Revenue Code of 1986, as amended.

 

Collateral: As defined and described in Section 6.1 of this Agreement.

 

Collateral Value: With respect to each Pledged Mortgage Loan on any date of
determination, an amount equal to the following, as the same may be reduced in
accordance with Section 4.3: the product of the related Type Collateral
Percentage and the least of: (i) the Market Value of such Pledged Mortgage Loan;
(ii) the unpaid principal balance of such Pledged Mortgage Loan; (iii) the
purchase price paid by Borrower for such Pledged Mortgage Loan; and (iv) the
Takeout Price committed by the related Approved Investor, if applicable.

 

Contingent Obligations: As of any date of determination, with respect to any
Person, any obligation of such 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
Lender.

 

Co-op Corporation: With respect to any Co-op Loan, the cooperative apartment
corporation that holds legal title to the related Co-op Project and grants
occupancy rights to units therein to stockholders through Proprietary Leases or
similar arrangements.

 

Co-op Loan: A Mortgage Loan that is secured by a first lien on and a perfected
security interest in Co-op Shares and the related Proprietary Lease granting
exclusive rights to occupy the related Co-op Unit in the building owned by the
related Co-op Corporation.

 

Co-op Project: With respect to any Co-op Loan, all real property and
improvements thereto and rights therein and thereto owned by a Co-op Corporation
including without limitation the land, separate dwelling units and all common
elements.

 

Co-op Shares: With respect to any Co-op Loan, the shares of stock issued by a
Co-op Corporation and allocated to a Co-op Unit and represented by a Stock
Certificate.

 

Co-op Unit: The specific dwelling unit relating to a Co-op Loan.

 

Cumulative Equity Proceeds: As of any date of determination, the aggregate
amount of all cash received on or prior to such date of determination by
Guarantor and its Subsidiaries in respect of any issuance of Equity effected
after Effective Date net of expenses incurred by Guarantor and its Subsidiaries
in connection therewith.

 

Custodial Account: The account described in Section 6.10 of this Agreement.

 

Custodial Agreement: The Custodial Agreement (if any) executed among Lender,
Borrower and Custodian with respect to this Agreement, as the same shall be
modified and supplemented and in effect from time to time.

 

Custodian: Wells Fargo Bank, National Association, or such other custodian
selected by Lender.

 

Exhibit A-3

 

 

Debt: As of any date of determination, with respect to any Person, the debt of
such 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 such 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 acquire, or otherwise assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to above; and (h) all Contingent Obligations.

 

Debt-to-Equity Ratio: As of any date of determination, with respect to any
Person, a ratio equal to (i) the Debt of such Person, divided by (ii) the Equity
of such Person.

 

Default Rate: As set forth in the Loan Terms Letter.

 

Deficiency Notice: A deficiency notice, as defined and described in Section 6.11
of this Agreement.

 

Effective Date: That effective date set forth in the Loan Terms Letter.

 

Electronic Tracking Agreement: An Electronic Tracking Agreement in a form
acceptable to Lender.

 

Eligible Bank: Either (i) Lender, or (ii) a bank selected by Borrower and
approved by Lender in writing and authorized to conduct trust and other banking
business in any state in which Borrower conducts operations.

 

Eligible Mortgage Loan: A Mortgage Loan that meets the eligibility criteria set
forth in the Loan Terms Letter.

 

Equity: As of any date of determination, with respect to any Person, the common
stock and retained earnings of such Person, determined in accordance with GAAP,
as reported on such Person’s balance sheet.

 

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 Borrower or any of its Subsidiaries would be a member of the same
“controlled group” within the meaning of Section 414(b), (m), (c) and (o) of the
Internal Review Code of 1986, as amended.

 

Event of Default: Any of the conditions or events set forth in Section 11.1.

 

Executive Management: Borrower’s or any Guarantor’s (i) chairman of the board of
directors, (ii) chief executive officer, (iii) president, (iv) chief financial
officer, (v) chief operations officer and (vi) Head of Aggregation and
Securitization of Mortgage Loans.

 

Existing Debt: Debt of Borrower existing on the date of this Agreement, as set
forth on Schedule 2 hereto.

 

Extended Maturity Date: Shall mean any date selected by Borrower and Lender in
connection with the extension of the term of this Agreement.

 

Exhibit A-4

 

 

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.

 

Foreign Lender: As defined in Section 12.3(c) of this Agreement.

 

Freddie Mac: The Federal Home Loan Mortgage Corporation and any successor
thereto.

 

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.

 

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 a Guarantor in favor of Lender, in a form
acceptable to Lender.

 

Guarantor: As set forth in the Loan Terms Letter, if any.

 

Handbook: The guide prepared by Lender containing additional policies and
procedures, as same may be amended from time to time.

 

Income: With respect to any Pledged Mortgage Loan at any time, any principal
and/or interest thereon and all Proceeds and other collections and distributions
thereon.

 

Indemnified Party or Indemnified Parties: As defined in Section 12.1 of this
Agreement.

 

Insolvency Event: The occurrence of any of the following events:

 

(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

 

Exhibit A-5

 

 

(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, assists or business of such Person, and such proceeding or petition
shall not be 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 Lender.

 

Jumbo Mortgage Loan: Unless defined otherwise in the Loan Terms Letter, a first
lien mortgage loan or Co-op Loan that is acquired by Borrower pursuant to the
Mortgage Loan Purchase Agreement and subject to this Agreement.

 

Lender’s Correspondent Guidelines: The standards, procedures and guidelines of
Lender and its Affiliates for underwriting Mortgage Loans, a copy of which has
been made available to Borrower.

 

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;
provided, that if Lender determines 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, shall make it unlawful, impractical or commercially unreasonable for
Lender to make Advances as contemplated by this Agreement using LIBOR, then
Lender may, in addition to its rights under Section 4.4 herein, select an
alternative rate of interest or index in its discretion which alternative rate
shall be substantially similar to those rates implemented by Buyer in
substantially similar facilities as this Agreement.

 

LIBOR Floor: As defined in the Loan Terms Letter.

 

Lien: Any mortgage, lien, pledge, charge, security interest or similar
encumbrance.

 

Linked Transactions: Those transactions identified in Guarantor’s financial
statements as forward purchase (derivative) contracts where the initial transfer
of a financial asset and contemporaneous repurchase financing of such
mortgage-backed security with the same counterparty is considered part of the
same arrangement.

 

Liquidity: As of any date of determination, the sum of Borrower’s unrestricted
and unencumbered cash and Cash Equivalents exclusive of funds held due to a
Borrowing Base Deficiency. By way of example but not limitation, cash in escrow
and/or impound accounts shall not be included in this calculation.

 

Loan Documents: This Agreement, the Note, the Loan Terms Letter, the Custodial
Agreement, the Electronic Tracking Agreement, the Guaranty (if any), each
Servicing Agreement Side Letter and all other documents and instruments
evidencing the Advance, as same may from time to time be supplemented, modified
or amended, and any other agreement entered into between Lender and Borrower in
connection herewith or therewith.

 

Loan Terms Letter: The document executed by Lender, Borrower and Guarantor,
referencing this Agreement and setting forth certain specific terms, and any
additional terms, with respect to this Agreement.

 

Exhibit A-6

 

 

Mandatory Prepayment Event: Any of the conditions or events set forth in Section
4.2 of this Agreement.

 

Market Value: With respect to a Mortgage Loan, the lesser of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the committed purchase price of the
Mortgage Loan, and (iii) the fair market value of the Mortgage Loan as
determined by Lender in its sole discretion without regard to any market value
assigned to such Mortgage Loan by Borrower. Lender’s determination of Market
Value shall be conclusive upon the parties, absent manifest error on the part of
Lender. At no time and in no event will the Market Value of a Pledged Mortgage
Loan be greater than the Market Value of such Pledged Mortgage Loan on the
Advance Date. Any Mortgage Loan that is not an Eligible Mortgage Loan shall have
a Market Value of zero.

 

Material Adverse Effect: Any of the following: (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of Borrower, Guarantor or any of their
respective Subsidiaries or Affiliates that is a party to any Loan Document taken
as a whole; (b) a material impairment of the ability of Borrower, Guarantor or
any of their respective Subsidiaries or Affiliates that is a party to any Loan
Document to perform under any Loan Document and to avoid any Event of Default;
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document against Borrower, Guarantor or any of their
respective Subsidiaries or Affiliates that is a party to any Loan Document; (d)
a material adverse effect on the rights and remedies of Lender under any of the
Loan Documents; or (e) a material adverse effect on the marketability,
collectability, value or enforceability of a material portion of the Pledged
Mortgage Loans, in each case as determined by Lender in its sole good faith
discretion.

 

Maturity Date: Shall mean, (a) the Maturity Date set forth in the Loan Terms
Letter, or (b) or in the event that Borrower and Lender exercise the option to
extend this Agreement, the Extended Maturity Date.

 

Maximum Credit: The maximum principal amount of the Advance that may be
outstanding at any one time, as set forth in the Loan Terms Letter.

 

Maximum Dwell Time: The maximum number of days such Pledged Mortgage Loan can be
subject to the Advance, as set forth in the Loan Terms Letter.

 

Moody’s: Moody’s Investors Service, Inc. or any successors 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
Co-op Loan, improved real property or (ii) with respect to a Co-op Loan, the
Proprietary Lease and related Co-op Shares.

 

Mortgage Loan: A Jumbo Mortgage Loan, as further specified in the Loan Terms
Letter.

 

Mortgage Loan Documents: With respect to each Mortgage Loan, the related
documents in the Mortgage Loan File.

 

Mortgage Loan File: With respect to each Mortgage Loan, as defined in the
Custodial Agreement.

 

Mortgage Loan Purchase Agreement: Those certain Flow Sale and Interim Servicing
Agreements and Mortgage Loan Flow Purchase, Sale and Servicing Agreements and
the related Assignment, Assumption and Recognition Agreements (each as amended,
supplemented or otherwise modified and in effect from time to time), by and
among the Lender, the Borrower and the applicable Originator/Seller as set forth
on Schedule 3 hereto.

 

Exhibit A-7

 

 

Mortgage Note: A promissory note secured by a Mortgage and evidencing a Mortgage
Loan.

 

Mortgaged Property: (a) With respect to each Mortgage Loan, the Mortgagor’s real
property securing repayment of the debt evidenced by the related Mortgage Note,
and (b) with respect to each Co-op Loan, the Co-op Shares and Proprietary Lease.

 

Mortgagor: The obligor of a Mortgage Loan.

 

Multiemployer Plan: A multiemployer plan within the meaning of Section
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.

 

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.

 

Note: Shall mean the promissory note provided for by Section 2.2(a) of this
Agreement for the Advance and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.

 

Originator/Seller: The entities listed as “Company” or “Seller” under the
applicable Mortgage Loan Purchase Agreements.

 

Other Mortgage Loan Documents: In addition to the Mortgage Loan Documents, with
respect to any Pledged Mortgage Loan, 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 of any assumption,
modification, consolidation or extension agreements, with evidence of recording
thereon or copies stamp certified by an authorized officer of Borrower 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; (xiv) the original executed disclosure statement; (xv) Tax
receipts, insurance premium receipts, ledger sheets, payment records, insurance
claim files and correspondence, current and historical computerized data files,
underwriting standards used for origination and all other related papers and
records; (xvi) 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
and (xix) all other documents relating to the Pledged Mortgage Loan.

 

Other Taxes: As defined in Section 12.3(a).

 

Payment Date: The fifth (5th) day of each month, or if such date is not a
Business Day, the Business Day immediately succeeding the fifth (5th) day of the
month; provided, however, Lender may change the Payment Date from time to time
upon thirty (30) days prior notice to Borrower.

 

PBGC: The Pension Benefit Guaranty Corporation and any successor thereto.

 

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.

 

Exhibit A-8

 

 

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), Borrower or by a Subsidiary of
Borrower or an ERISA Affiliate.

 

Pledged Mortgage Loan: A Mortgage Loan that has been pledged by Borrower to
Lender in connection with the Advance.

 

Potential Default: The occurrence of any event or existence of any condition
that, but for the giving of notice, the lapse of time, or both, would constitute
an Event of Default.

 

Power of Attorney: A power of attorney, substantially in the form attached
hereto as Exhibit F.

 

Proceeds: The meaning set forth in Section 9-102(a) of the Uniform Commercial
Code.

 

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 Co-op Unit evidencing the possessory interest
of the owner of the Co-op Shares in such Co-op Unit.

 

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.

 

Recognition Agreement: An agreement among a Co-op Corporation, a lender and a
Mortgagor with respect to a Co-op Loan whereby such parties (i) acknowledge that
such lender may make, or intends to make, such Co-op Loan, and (ii) make certain
agreements with respect to such Co-op Loan.

 

Release Amount: That portion of the Advance equal to the Collateral Value of a
Pledged Mortgage Loan determined as of the Advance Date (less any cash or other
amounts applied to reduce the Advance for such Pledged Mortgage Loan) together
with all related Accrued Interest thereon.

 

Repayment Amount: An amount equal to (a) the sum of (i) the related outstanding
Advance, (ii) the unpaid Accrued Interest due pursuant to Section 2.6 as of the
date of such determination, and (iii) any applicable fees, expenses and
indemnities owed to Lender under the Note or the other Loan Documents less (b)
the amount of any cash transferred by the Borrower to Lender pursuant to Section
6.11 of this Agreement.

 

Reportable Event: An event described in Section 4043(b) of ERISA with respect to
a Plan as to which the thirty (30) days’ notice requirement has not been waived
by the PBGC.

 

S&P: Standard & Poor’s Ratings Services, or any successor thereto.

 

Secured Obligations: As defined in Section 6.1 of this Agreement.

 

Servicer: Bank of America, N.A., New Penn Financial, LLC d/b/a Shellpoint
Mortgage Servicing and PHH Mortgage Corporation or such other entities
responsible for servicing or subservicing, as the case may be, the Pledged
Mortgage Loans and that have been approved by Lender in writing, or, in each
case, any successor or permitted assigns thereof.

 

Exhibit A-9

 

 

Servicing Agreement: If the Pledged Mortgage Loans are serviced by any third
party servicer, the agreement with that third party in form and substance
acceptable to Lender.

 

Servicing Agreement Side Letter: (i) Servicing Agreement Side Letter, dated as
of the date hereof, by and among Lender, Borrower and PHH Mortgage Corporation
and (ii) Subservicing Agreement Side Letter, dated as of the date hereof, by and
among Lender, Borrower and PHH Mortgage Corporation, and in each case, all
amendments, modifications and supplements thereto.

 

Servicing Records: 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 a
Mortgage Loan.

 

Servicing Rights: The contractual, possessory or other rights of Borrower, the
applicable 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.

 

Stock Certificates: The certificates evidencing ownership of the Co-op Shares
issued by the Co-op Corporation.

 

Subordinated Debt: Debt of Borrower that either (i) has been subordinated to
Lender as provided in this Agreement or (ii) that has been otherwise approved by
Lender.

 

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 or by such Person and one or more Subsidiaries of such Person.

 

Takeout Price: The purchase price to be paid for a Pledged Mortgage Loan by the
related Approved Investor.

 

Takeout Shortfall: As defined in Section 4.6 of this Agreement.

 

Tangible Net Worth: As of any date of determination, (i) the Net Worth of
Borrower 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, and minus (iii) loans held for investment and real estate
owned properties net of acceptable financing (financing must be deemed
acceptable by Lender in its sole discretion).

 

Taxes: As defined in Section 12.3(a) of this Agreement.

 

Termination Date: The earliest to occur of (i) the Maturity Date, (ii) at
Lender’s option, upon the occurrence of an Event of Default, or (iii) the date
on which this Agreement shall terminate in accordance with the provisions hereof
or by operation of law.

 

Exhibit A-10

 

 

Total Adjusted Assets: As of any date of determination, the sum of (i) the total
assets of Borrower on any given date of determination, to be determined in
accordance with GAAP consistent with those applied in the preparation of
Borrower’s financial statements, plus (ii) the gross fair value of securities
related to Linked Transactions, minus (iii) the net value of Linked
Transactions.

 

Total Adjusted Liabilities: As of any date of determination, the sum of (i) the
total liabilities of Borrower on any given date of determination, to be
determined in accordance with GAAP consistent with those applied in the
preparation of Borrower’s financial statements, plus (ii) to the extent not
already included under GAAP, the total aggregate outstanding amount owed by
Borrower under any purchase, repurchase, refinance or other similar credit
arrangements, plus (iii) to the extent not already included under GAAP, any “off
balance sheet” purchase, repurchase, refinance or other similar credit
arrangements, plus (iv) the gross amount of repurchase financing related to
Linked Transactions, minus (v) non-recourse debt.

 

Type: A specific type of Pledged Mortgage Loan, as set forth in the Loan Terms
Letter.

 

Type Collateral Percentage: With respect to each Type of Pledged Mortgage Loan,
the corresponding collateral percentage for such Type, as set forth in the Loan
Terms Letter.

 

Type Margin: With respect to each Type of Pledged Mortgage Loan, the
corresponding annual rate of interest for such Type as set forth in the Loan
Terms Letter that shall be added to the Applicable Interest Rate to determine
the annual rate of interest for the Advance.

 

Type Sublimit: Any of the applicable Type Sublimits, as set forth in the Loan
Terms Letter.

 

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.

 

Wire Transfer Advice: In connection with each wire transfer to be made to Lender
by Borrower or an Approved Investor, a written or electronic notification
setting forth (a) the loan number assigned by Borrower or last name of the
Mortgagor for each Mortgage Loan that is related to the Advance in connection
with which a payment is being made; (b) the amount of the wire transfer to be
applied in the Advance; and (c) the total amount of the wire.

 

Exhibit A-11

 

 

EXHIBIT B

 

FORM OF PROMISSORY NOTE

 

$100,000,000   July 18, 2014 New York, New York

 

 

FOR VALUE RECEIVED, Five Oaks Acquisition Corp., a Delaware corporation,
(“Borrower”), hereby promises to pay to the order of Bank of America, N.A.
(“Lender”), at the principal office of Lender located at One Bryant Park – 11th
floor, NY1-100-11-01, New York, New York 10036, in lawful money of the United
States, and in immediately available funds, the principal sum of ONE HUNDRED
MILLION ($100,000,000) (or such lesser amount as shall equal the unpaid
principal amount of the Advance made by Lender to Borrower under the Loan
Agreement), on the dates and in the principal amounts provided in the Loan
Agreement, and to pay interest on the unpaid principal amount of such Advance,
at such office, in like money and funds, for the period commencing on the date
of such Advance until such Advance shall be paid in full, at the rates per annum
and on the dates provided in the Loan Agreement.

 

The date, amount and interest rate of the Advance made by Lender to Borrower,
and each payment made on account of the principal thereof, shall be recorded by
Lender on its books and, prior to any transfer of this Note, endorsed by Lender
on the schedule attached hereto or any continuation thereof; provided, that the
failure of Lender to make any such recordation or endorsement shall not affect
the obligations of Borrower to make a payment when due of any amount owing under
the Loan Agreement or hereunder in respect of the Advance made by Lender.

 

This Note is the Note referred to in the Loan and Security Agreement, dated as
of July 18, 2014 (as amended, supplemented or otherwise modified and in effect
from time to time, the “Loan Agreement”), between Borrower and Lender, and
evidences the Advance made by Lender thereunder. Terms used but not defined in
this Note have the respective meanings assigned to them in the Loan Agreement.

 

Borrower agrees to pay all of Lender’s costs of collection and enforcement
(including reasonable attorneys’ fees and disbursements of Lender’s counsel) in
respect of this Note when incurred, including, without limitation, reasonable
attorneys’ fees through appellate proceedings.

 

Notwithstanding the pledge of the Collateral, Borrower hereby acknowledges,
admits and agrees that Borrower’s obligations under this Note are recourse
obligations of Borrower to which Borrower pledges its full faith and credit.

 

Borrower, and any indorsers or guarantors hereof, (a) severally waive diligence,
presentment, protest and demand and also notice of protest, demand, dishonor and
nonpayments of this Note, (b) expressly agree that this Note, or any payment
hereunder, may be extended from time to time, and consent to the acceptance of
further Collateral, the release of any Collateral for this Note, and the release
of any party primarily or secondarily liable hereon, and (c) expressly agree
that it will not be necessary for Lender, in order to enforce payment of this
Note, to first institute or exhaust Lender’s remedies against Borrower or any
other party liable hereon or against any Collateral for this Note. No extension
of time for the payment of this Note, or any installment hereof, made by
agreement by Lender with any person now or hereafter liable for the payment of
this Note, shall affect the liability under this Note of Borrower, even if such
Borrower is not a party to such agreement; provided, however, that Lender and
Borrower, by written agreement between them, may affect the liability of
Borrower.

 

Any reference herein to Lender shall be deemed to include and apply to every
subsequent holder of this Note. Reference is made to the Loan Agreement for
provisions concerning optional and mandatory prepayments, Collateral,
acceleration and other material terms affecting this Note.

 

Exhibit B-1

 

 

Any enforcement action relating to this Note may be brought by motion for
summary judgment in lieu of a complaint pursuant to Section 3213 of the New York
Civil Practice Law and Rules. Borrower hereby submits to New York jurisdiction
with respect to any action brought with respect to this Note and waives any
right with respect to the doctrine of forum non conveniens with respect to such
transactions.

 

This Note shall be governed by and construed under the laws of the State of New
York (without reference to choice of law doctrine but with reference to Section
5-1401 of the New York General Obligations Law, which by its terms applies to
this Note) whose laws Borrower expressly elects to apply to this Note. Borrower
agrees that any action or proceeding brought to enforce or arising out of this
Note may be commenced in the Supreme Court of the State of New York, Borough of
Manhattan, or in the District Court of the United States for the Southern
District of New York.

 

  Five Oaks Acquisition Corp., as Borrower         By:     Name:   Title:

 

Exhibit B-2

 

 

SCHEDULE OF ADVANCES

 

This Note evidences each Advance made under the within-described Loan Agreement
to Borrower, on the dates, in the principal amounts and bearing interest at the
rates set forth below, and subject to the payments and prepayments of principal
set forth below:

  

Date Made Principal Amount
of Loan Amount Paid
or Prepaid Unpaid Principal
Amount Notation
Made by          

 

Exhibit B-3

 

 

EXHIBIT C

 

FORM OF SECRETARY’S CERTIFICATE

 

I, _______________________, am the duly elected Secretary of Five Oaks
Acquisition Corp. (“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 (or its equivalent if the Company is not a
corporation), as in full force and effect. No amendment or other document
relating to or affecting the Articles of Incorporation (or its equivalent) 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 (or its equivalent if the Company is not a corporation), 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 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 Loan and Security Agreement between the Company 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

 

Exhibit C-1

 

 

EXHIBIT D

 

FORM OF RESOLUTIONS

 

WHEREAS, Five Oaks Acquisition Corp. (the “Company”) desires to obtain financing
for its purchase of mortgage loan (the “Advance”) in an aggregate amount not to
exceed the Maximum Credit with Bank of America, N.A. (“Lender”) pursuant to a
Loan and Security Agreement substantially in the form attached hereto (the
“Agreement”).

 

NOW, THEREFORE, IT IS RESOLVED BY THE BOARD OF DIRECTORS (OR ITS EQUIVALENT) OF
THE COMPANY THAT:

 

1.Company is hereby authorized and directed to enter into and execute each of
the following documents:

 

(a)the Agreement between Company and Lender, attached hereto; and

 

(b)any and all other agreements and documents in connection with the Advance,

 

2.Any one of the following officers are separately and independently authorized
and directed to execute and deliver the Agreement and any and all other
agreements and documents related to the Advance, and to do any and all things
which he or she may deem necessary or desirable in connection with the Advance,
including approving, executing and delivering any amendments or modifications to
the Agreement.

 

Name/Title      Specimen Signature                                              
             

 

3.Any one of the following officers, directors and/or employees is separately
and independently authorized to take the following actions in connection with
the Agreement and Advance: (a) request an Advance; (b) sign receipts
acknowledging delivery of funds and documents from Lender; (c) request and
effect transfers of funds; and (d) ship and release documents to Lender:

 

Name/Title   Specimen Signature   Restrictions, if any                          
                                                     

 

Exhibit D-1

 

 

I, ___________________, being the Secretary of Borrower, hereby certify that the
foregoing is a true copy of the Resolutions duly adopted by the Board of
Directors (or its equivalent) of Borrower, effective as of _________________,
which is in full force and effect on this date and does not conflict with
Borrower’s governing documents.

 

 

By:           Name:       

 

Tile:  Secretary  

 

Exhibit D-2

 

 

EXHIBIT E

 

FORM OF OFFICER’S CERTIFICATE

 

Period:
[DATE]

 

OFFICER CERTIFICATE

 

 

Period Ending: [DATE] Borrower Name: Five Oaks Acquisition Corp. Guarantor Name:
Five Oaks Investment Corp.

 

I, ___________________________, do hereby certify that I am the duly elected
authorized Chief Financial Officer of Five Oaks Acquisition Corp. (“Borrower”)
and Five Oaks Investment Corp. (“Guarantor”). This certificate in connection
with Section 9.1(c) of the Loan and Security Agreement, dated as of July 18,
2014, by and between Borrower and Bank of America, N.A. (“Bank of America” or
“Lender”) (as amended, supplemented or otherwise modified from time to time, the
“Agreement”) and the Guaranty, dated as of July 18, 2014 by Five Oaks Investment
Corp. (“Guarantor”) to and for the benefit of Bank of America. I do hereby
certify that, as of the date of the financial statements attached hereto and as
of the date hereof, Borrower and Guarantor are and have been in compliance with
all the terms of the Agreement and Guaranty and, without limiting the generality
of the foregoing, I certify that:

 

1.Representations and Warranties: The representations and warranties made by
Borrower and Guarantor under the Agreement, Guaranty, and other Loan Documents
(between Bank of America and Borrower and Bank of America and Guarantor) are
accurate and true on and as of the date hereof with the same effect as though
such representations and warranties had been made on and as of the date hereof,
including, without limitation, the following:

 

1.1.    Financial Condition: All financial statements of Borrower and Guarantor
delivered to Bank of America fairly and accurately present the financial
condition of the parties for whom such statements are submitted as of the date
set forth therein. The financial statements of Borrower and Guarantor have been
prepared in accordance with GAAP consistently applied throughout the periods
involved, and there are no contingent liabilities not disclosed thereby that
would adversely affect the financial condition of Borrower and/or Guarantor.
Since the close of the period covered by the latest financial statement
delivered to Bank of America with respect to Borrower and Guarantor, there has
been no material adverse change in the assets, liabilities or financial
condition of Borrower and Guarantor nor is Borrower or Guarantor 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 or, to the knowledge of Borrower or Guarantor, is threatened,
that (i) might render Borrower or Guarantor unable to perform its obligations
under the Loan Documents and all other documents contemplated thereby; (ii)
would constitute a Potential Default or Event of Default; or (iii) is reasonably
likely to have a Material Adverse Effect with respect to Borrower or Guarantor.

 

Exhibit E-1

 

 

1.2.    Solvency: The fair value of the assets of Borrower and Guarantor 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 Borrower and Guarantor, respectively,
in accordance with GAAP) of Borrower and Borrower is and will be solvent, is and
will be able to pay its debts as they mature and does not and will not have an
unreasonably small capital to engage in the business in which it is engaged and
proposes to engage. Borrower does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Borrower
and Guarantor are not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of Borrower and
Guarantor or any of its assets. Borrower and Guarantor are not transferring any
Mortgage Loans with any intent to hinder, delay or defraud any of its creditors.

 

2.Compliance with Agreement and other Loan Documents: Borrower and Guarantor are
in full compliance with all of the terms and provisions set forth in the
Agreement, Guaranty and other Loan Documents on its part to be performed and
observed, and no Event of Default or Potential Default has occurred and is
continuing.

 

3.Compliance with Other Agreements: Borrower and Guarantor are in full
compliance with all of the terms and provisions set forth in any agreements
between Borrower or Guarantor, Bank of America and/or Bank of America affiliates
on its part to be performed and observed, and no Event of Default or Potential
Default has occurred and is continuing.

 

4.No Change in Executive Management: Other than as previously disclosed to
Lender, no material change in the Executive Management has occurred.

 

5.Reserved.

 

6.No Changes in Structure of Borrower or Guarantor: Other than as previously
disclosed to Lender, there has been no (i) change to the location of Borrower or
Guarantor’s chief executive office/chief place of business from that specified
in Section 8.1(t) of the Agreement, (ii) change in the name, identity or
corporate structure (or the equivalent) of the Borrower or Guarantor or change
in the location where Borrower or Guarantor maintains its records with respect
to the Pledged Mortgage Loans or any Collateral, or (iii) reincorporation or
reorganization of Borrower or Guarantor under the laws of another jurisdiction.

 

7.Escrow and Mortgage Insurance Proceeds: To the extent applicable, Borrower and
Guarantor has segregated all escrow and mortgage insurance proceeds into an
individual custodial account and is in compliance with all applicable laws.

 

8.Liabilities and Advances: Except as otherwise permitted under the Agreement,
Borrower has not, either directly or indirectly, without the prior written
consent of Bank of America, made any personal loans or advances to any officers,
employees, shareholders, members, partners or owners of Borrower or any
Guarantor in an aggregate amount exceeding ten percent (10%) of Borrower’s
Tangible Net Worth. Except as otherwise permitted under the Agreement, Borrower
has not incurred any additional material Debt without the prior written consent
of Bank of America.

 

Exhibit E-2

 

 

9.Regulatory Action: Borrower has not, either directly or indirectly, without
the prior written consent of Bank of America, taken, or failed to take, any
action that would cause Borrower to lose all or any part of its status as an
eligible seller or mortgagee or willfully terminate its status as an eligible
seller or mortgagee by an Agency or Government Authority without forty-five (45)
days prior written notice to Bank of America.

 

10.Attachments: The following attachments and information contained therein are
accurate and true in all respects and do not fail to include any information
which is necessary to not make such attachments and the information contained
therein misleading.

 

11.Capitalized Terms: All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Agreement, Guaranty and
Loan Documents between Bank of America and Borrower and between Bank of America
and Guarantor.

 

Exhibit E-3

 

 

Officer Certificate for: Five Oaks Investment Corp. as of:

 

Financial Ratios: The following financial ratios are accurate and true and are
calculated in accordance with the Agreement and Loan Documents between Bank of
America and Borrower and Bank of America and Guarantor as of the date hereof:

 

Covenant Calculations           Minimum Tangible Net Worth   %       Total
Equity        [INPUT]  Less: Receivables Due from Officers, Employees, and
Shareholders        [INPUT]  Less: Other Intangibles not acceptable under GAAP 
      [INPUT]  Less: Loans Held for Investment        [INPUT]  Less: Real Estate
Owned        [INPUT]  Plus: Cumulative Equity Proceeds   50%   [INPUT]  Covenant
TNW (a)        #VALUEl  Liquidity   %       Unrestricted and unencumbered cash
and Cash Equivalents        [INPUT]  Less: Funds Held due to Borrowing Base
Deficiency        [INPUT]  Actual Liquidity (b)        #VALUEl  Total Assets 
      [INPUT]  Plus: Gross Assets related to Linked Transactions        [INPUT] 
Less: Linked Transactions, Net        [INPUT]  Total Adjusted Assets (c)      
 #VALUEl  Minimum Liquidity: 3% of (c)   3%      Leverage           Total
Liabilities on Balance Sheet        [INPUT]  Plus Gross Liabilities related to
Linked Transactions        [INPUT]  Plus Aggregate amount owned by borrower
under any credit arrangement        [INPUT]  Plus Any "off balance sheet" credit
arrangements not included under GAAP        [INPUT]  Less non-recourse debt 
      [INPUT]  Adjusted Total Liabilities (d)        #VALUEI  Covenant TNW (e) 
      #VALUEI  Leverage Ratio (d/f)        #VALUEl 

 

Covenant Compliance   As of: 07/31/14 Minimum Ratio of Total Equity to Required
Capital        

Minimum Tangible Net Worth:

The sum of (i) $150,000,000 plus (ii) 50% of Cumulative Equity Proceeds.

Cumulative Equity Proceeds: As of any date of determination, the aggregate
amount of all cash received on or prior to such date of determination by
Guarantor and its Subsidiaries in respect of any issuance of Equity effected
after Effective Date net of expenses incurred by Guarantor and its Subsidiaries
in connection therewith.

Tangible Net Worth: As of any date of determination, (i) the Net Worth of
Borrower 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, and minus (iii) loans held for investment and real estate
owned properties net of acceptable financing (financing must be deemed
acceptable by Lender in its sole discretion).

  #VALUE! Minimum   $150,000,000 In Compliance?     Liquidity    

Minimum Liquidity: Not less than 3% of Total Adjusted Assets less cash and Cash
Equivalents.

Liquidity: As of any date of determination, the sum of Borrower's unrestricted
and unencumbered cash and Cash Equivalents exclusive of funds held due to a
Borrowing Base Deficiency. By way of example but not limitation, cash in escrow
and/or impound accounts shall not be included in this calculation.

Total Adjusted Assets: As of any date of determination, the sum of (i) the total
assets of Borrower on any given date of determination, to be determined in
accordance with GAAP consistent with those applied in the preparation of
Borrower's financial statements, plus (ii) the gross fair value of securities
related to Linked Transactions, minus (iii) the net value of Linked
Transactions.

  #VALUEl Minimum   3% In Compliance?     Leverage    

Borrower's ratio of Total Adjusted Liabilities to Tangible Net Worth has not
exceeded 8:1

Total Adjusted Liabilities: As of any date of determination, the sum of (i) the
total liabilities of Borrower on any given date of determination, to be
determined in accordance with GAAP consistent with those applied in the
preparation of Borrower's financial statements, plus (ii) to the extent not
already included under GAAP, the total aggregate outstanding amount owed by
Borrower under any purchase, repurchase, refinance or other similar credit
arrangements, plus (iii) to the extent not already included under GAAP, any "off
balance sheet" purchase, repurchase, refinance or other similar credit
arrangements, plus (iv) the gross amount of repurchase financing related to
Linked Transactions, minus (v) non-recourse debt.

  #VALUEl Maximum   8.0x In Compliance?     Compliance with other agreements    
Is the Company in compliance with the terms of all other agreements pertaining
to borrowed funds?   [INPUT Y or N] Permitted Distributions     Did the Company
make distributions during the reporting period?   [INPUT Y or N] Was the Company
permitted to make distributions, i.e. No Default or Potential Event of Default?
  [INPUT Y or N] In Compliance?    

 

Exhibit E-4

 

 

Officer Certificate for: Five Oaks Investment Corp. as of:

 

Repurchases/Indemnifications  UPB  Year to Date:  Billable / Actual or
Estimated Losses Open repurchase requests  [INPUT]  [INPUT]  [INPUT] Open
repurchases being contested  [INPUT]  [INPUT]  [INPUT] Repurchases settled YTD
in 2014  [INPUT]  [INPUT]  [INPUT]

 

Repurchase Settlement Method YTD  Total # of
Loans  Indemnifications ($)  Cash ($)  Payment Installment Plan
($) All Investors  [INPUT]  [INPUT]  [INPUT]  [INPUT]

 

Description of applicable settlement terms, duration etc:

 

To the extent applicable, please provide the values for the following (if not
provided explicitly in the Balance Sheet):

 

Escrow or Liability  Value  Balance Sheet line item where data is recorded
Escrow Assets    Escrow Liabilities    Loans Held For Investment (LHFI)      
Real Estate Owned (REO)       Loan Loss Reserves       UPB of Loans Held for
Sale      

  

Hedging / Derivative Assets and Liabilities         Fair value portion of Loans
Held For Sale  [INPUT] Fair value of interest rate lock commitments (IRLC's) -
Asset / (Liability)  [INPUT] Notional Balance of IRLC's  [INPUT] Fair value of
pipeline hedging instruments - Asset / (Liability)  [INPUT] Notional balance of
hedging instruments  [INPUT] Accounting methodology for MSR (Fair Value or
LOCOM)  [INPUT] If applicable - Fair value adjustment of MSR Asset - Gain /
(Loss)  [INPUT] If applicable - Fair value adjustment of MSR hedging instrument
- Gain / (Loss)  [INPUT]

 

Servicing Portfolio as of period ending date: (as applicable)         Servicing
portfolio UPB  [INPUT] Servicing sold (UPB of bulk sale)  [INPUT] Value of
servicing sold  [INPUT] Cash proceeds of servicing sold  [INPUT] Servicing
acquired (UPB of bulk purchase)  [INPUT] Value of servicing purchased  [INPUT]
Sub-servicer (If Applicable)  [INPUT] Third party conducting valuation  [INPUT]
Most recent valuation date  [INPUT] MSR valuation (at midpoint, if applicable) 
[INPUT]

 

Exhibit E-5

 

 

Officer Certificate for: Five Oaks Investment Corp. as of:

 

To the extent that the necessary data is provided in a different format that
contains the same information - the below summary informatioin may be ommitted.
Please insert / "drop" MTD and YTD origination data on "Origination" tab, or in
a separate file.

  

   Month to Date:  Year to Date: Originations  $  # units  $  # units Conv Conf 
[INPUT  [INPUT UNITS]  [INPUT  [INPUT UNITS] Govt.  [INPUT  [INPUT UNITS] 
[INPUT  [INPUT UNITS] Jumbo  [INPUT  [INPUT UNITS]  [INPUT  [INPUT UNITS] Other 
[INPUT  [INPUT UNITS]  [INPUT  [INPUT UNITS] % Retail ($)  [INPUT %]     [INPUT
%]    % TPO ($)  [INPUT %]     [INPUT %]    % Correspondent ($)  [INPUT %]    
[INPUT %]    % Refi ($)  [INPUT %]     [INPUT %]    Loans Banked within the
Period  [INPUT  [INPUT UNITS]  [INPUT  [INPUT UNITS] Loans Brokered within the
Period ($)  [INPUT  [INPUT UNITS]  [INPUT  [INPUT UNITS] Total Banked and
Brokered  -  -  -  -

 

Warehouse Facilities as of period ending date:

 

Lender Name  Line
Amount  Amount Outstanding  Line Maturity [INPUT]  [INPUT]  [INPUT]  [INPUT]
[INPUT]  [INPUT]  [INPUT]  [INPUT] [INPUT]  [INPUT]  [INPUT]  [INPUT] [INPUT] 
[INPUT]  [INPUT]  [INPUT] [INPUT]  [INPUT]  [INPUT]  [INPUT]            Total 
0  0   

 

Other Indebtedness:  Total Facility
Size  Outstanding
Indebtedness  Expiration Date 1) [LENDER NAME]  [INPUT]  [INPUT]  [INPUT] 2)
[LENDER NAME]  [INPUT]  [INPUT]  [INPUT] Total  [INPUT]  [INPUT]   

 

Description of Other Indebtedness (Type of facility, security/collateral, etc.):

 

IN WITNESS WHEREOF, the undersigned has here unto signed his/her name on
_________________, 201___.

 

Five Oaks Acquisition Corp.

Five Oaks Investment Corp.

 

 

By:     

 

Name:

 

Title: Chief Financial Officer

 

Exhibit E-6

 

 

EXHIBIT F

 

FORM OF POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS:

 

WHEREAS, Bank of America, N.A. (“Lender”) and Five Oaks Acquisition Corp.
(“Borrower”) have entered into the Loan and Security Agreement, dated as of July
18, 2014 (the “Agreement”), pursuant to which Borrower has agreed to pledge
certain mortgage loans to Lender as collateral security for a loan, subject to
the terms and conditions set forth therein;

 

WHEREAS, Borrower has agreed to give to Lender a power of attorney on the terms
and conditions contained herein in order for Lender to take any action that
Lender may deem necessary or advisable to accomplish the purposes of the
Agreement;

 

NOW, THEREFORE, in accordance with the terms of the Agreement, Borrower hereby
irrevocably constitutes and appoints Lender 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 Lender from Borrower under the Agreement
(the “Pledged Mortgage Loans”) or as otherwise provided below:

 

(1)to receive, endorse and collect all checks made payable to the order of
Borrower representing any payment on account of the Pledged Mortgage Loans;

 

(2)to assign or endorse any mortgage, deed of trust, promissory note or other
instrument relating to the Pledged Mortgage Loans;

 

(3)to correct any assignment, mortgage, deed of trust or promissory note or
other instrument relating to the Pledged Mortgage Loans;

 

(4)to complete and execute lost note affidavits or other lost document
affidavits relating to the Pledged Mortgage Loans;

 

(5)to issue title requests and instructions relating to the Pledged Mortgage
Loans;

 

(6)to give notice to any individual or entity of its interest in the Pledged
Mortgage Loans under the Agreement;

 

(7)to receive and enforce all of the Borrower’s rights and interests under the
related Mortgage Loan Purchase Agreements, including, without limitation, the
right to require the related Originator/Seller thereunder to repurchase the
Pledged Mortgage Loans pursuant to the terms thereof;

 

(8)upon termination of Borrower by Lender as permitted under the Agreement, to
service and administer the Pledged Mortgage Loans, including, without
limitation, the receipt and collection of all sums payable in respect of the
Pledged Mortgage Loans.

 

Borrower hereby ratifies and confirms all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.

 

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.

 

Exhibit F-1

 

 

Five Oaks Acquisition Corp.

  

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 F-2

 

 

EXHIBIT G

 

WIRING INSTRUCTIONS

 

Borrower’s Wire Instructions:

 

Bank: Bank of America, N.A.
ABA No.: 026009593
Account No.: 0012913-41686
Account Name: Bank of America, N.A.

Credit: Trade Support Operations Account

Reference: A. Mahendru – Five Oaks

Lender’s Wire Instructions:

 

Bank: Bank of America, N.A.
ABA No.: 026009593
Account No.: 4426457864
Credit Account Name: Bilateral Trading Account

Reference: Whole Loans

Attention: Sec Finance Ops

 

These wiring instructions may not be changed except by an authorized
representative of Lender or Borrower, as applicable. Lender shall be entitled to
rely on these wiring instructions without further inquiry or verification.

 

Exhibit G-1

 

 

SCHEDULE 1

 

Filing Jurisdictions and Offices

 

Delaware

 

Schedule 1

 

 

SCHEDULE 2

 

List of Borrower’s Existing Debt

 

As of July 18, 2014

 

1.Master Repurchase Agreement, dated February 25, 2014, among Credit Suisse
First Boston Mortgage Capital LLC, as buyer, Five Oaks Acquisition Corp., as
seller, and Five Oaks Investment Corp., as guarantor, with a maximum amount of
$125 million.

 

Schedule 2

 

 

SCHEDULE 3

 

List of Mortgage Loan Purchase Agreements

 

1.(a) Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as of
October 1, 2010, as amended, between Bank of America, National Association and
PHH Mortgage Corporation

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., and
PHH Mortgage Corporation

 

2.(a) Flow Sale and Interim Servicing Agreement, dated as of January 1, 2011, as
amended, between Bank of America, National Association and RPM Mortgage, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and RPM Mortgage, Inc.

 

3.(a) Flow Sale and Interim Servicing Agreement, dated as of September 1, 2012,
as amended, between Bank of America, National Association and Everett Financial,
Inc. 

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Everett Financial,
Inc.

 

4.(a) Flow Sale and Interim Servicing Agreement, dated as of May 1, 2012, as
amended, between Bank of America, National Association and Cornerstone Home
Lending, Inc. f/k/a Cornerstone Mortgage Company

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Cornerstone Home
Lending, Inc. f/k/a Cornerstone Mortgage Company

 

5.(a) Flow Sale and Interim Servicing Agreement, dated as of March 1, 2011, as
amended, between Bank of America, National Association and Guaranteed Rate, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Guaranteed Rate,
Inc.

 

6.(a) Flow Sale and Interim Servicing Agreement, dated as of March 1, 2012, as
amended, between Bank of America, National Association and Opes Advisors, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Opes Advisors, Inc.

 

7.(a) Flow Sale and Interim Servicing Agreement, dated as of March 1, 2012, as
amended, between Bank of America, National Association and Cobalt Mortgage, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Cobalt Mortgage,
Inc.

 

8.(a) Flow Sale and Interim Servicing Agreement, dated as of June 1, 2011, as
amended, between Bank of America, National Association and Amerisave Mortgage
Corporation

 

Schedule 3

 

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Amerisave Mortgage
Corporation

 

9.(a) Flow Sale and Interim Servicing Agreement, dated as of November 1, 2011,
as amended, between Bank of America, National Association and Primelending, a
Plains Capital Company

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Primelending, a
Plains Capital Company

 

10.(a) Flow Sale and Interim Servicing Agreement, dated as of May 1, 2011, as
amended, between Bank of America, National Association and First Savings
Mortgage Corporation

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and First Savings
Mortgage Corporation

 

11.(a) Flow Sale and Interim Servicing Agreement, dated as of March 1, 2012, as
amended, between Bank of America, National Association and JMAC Lending, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and JMAC Lending, Inc.

 

12.(a) Flow Sale and Interim Servicing Agreement, dated as of June 1, 2011, as
amended, between Bank of America, National Association and Guild Mortgage
Company

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Guild Mortgage
Company

 

13.(a) Flow Sale and Interim Servicing Agreement, dated as of June 1, 2012 as
amended, between Bank of America, National Association and Paramount Residential
Mortgage Group, Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Paramount
Residential Mortgage Group, Inc.

  

14.(a) Flow Sale and Interim Servicing Agreement, dated as of August 27, 2013 as
amended, between Bank of America, National Association and loanDepot.com, LLC

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and loanDepot.com, LLC

  

15.(a) Flow Sale and Interim Servicing Agreement, dated as of August 8, 2013 as
amended, between Bank of America, National Association and Caliber Home Loans,
Inc.

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Caliber Home Loans,
Inc.

  

16.(a) Flow Sale and Interim Servicing Agreement, dated as of August 22, 2013 as
amended, between Bank of America, National Association and Stonegate Mortgage
Corporation

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Stonegate Mortgage
Corporation

 

Schedule 3

 

 

17.(a) Flow Sale and Interim Servicing Agreement, dated as of March 1, 2011 as
amended, between Bank of America, National Association and NYCB Mortgage
Company, LLC

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and NYCB Mortgage
Company, LLC

  

18.(a) Flow Sale and Interim Servicing Agreement, dated as of February 1, 2013,
as amended, between Bank of America, National Association and Pinnacle Capital
Mortgage Corporation

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and Pinnacle Capital
Mortgage Corporation

 

19.(a) Flow Sale and Interim Servicing Agreement, dated as of May 1, 2013 as
amended, between Bank of America, National Association and RMR Financial, LLC

 

(b) Assignment, Assumption and Recognition Agreement, dated as of July 18, 2014,
among Bank of America, National Association, Five Oaks Acquisition Corp., New
Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing and RMR Financial, LLC

 

Schedule 3