Document:

2014 10-K Exhibit 10.27

EXHIBIT  10.27

REVOLVING SUBORDINATED
LOAN AGREEMENT
BETWEEN
MERCHANTS BANCORP,
an Indiana corporation
AND
STONEGATE MORTGAGE CORPORATION,
an Ohio corporation
April 15, 2014
2
REVOLVING SUBORDINATED LOAN AGREEMENT
This Revolving Subordinated Loan Agreement (“Agreement”) is entered into at Indianapolis, Indiana, effective the 15th day of April, 2014 by and between Stonegate Mortgage Corporation, an Ohio corporation (“Lender”), with a mailing address of 9190 Priority Way West Drive, Suite 300, Indianapolis, Indiana 46240, and Merchants Bancorp, an Indiana corporation (“Borrower”), with a principal mailing address of 11555 North Meridian Street, Suite 400, Carmel, Indiana 46032.
NOW, THEREFORE, in order to induce Lender to make the loan hereunder, as well as for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Lender and Borrower hereby agree to the following.
Section 1.AMOUNT OF LOAN.  
1.Principal Amount
.  Borrower hereby promises to pay when due to the order of Lender, in lawful money of the United States of America, the aggregate unpaid principal amount of all advances of funds, up to Twenty-Five Million Dollars ($25,000,000) (the “Maximum Amount”), made by Lender to Borrower hereunder. Borrower shall also pay interest on the unpaid principal amount outstanding at rates in accordance with the terms hereof.  Funds may be disbursed by Lender in multiple Advances and repaid by Borrower as follows:
(a)Lender shall advance funds to Borrower, subject to the Maximum Amount, as requested in writing by Borrower (a “Draw Notice”) at least 30 days in advance of the proposed date of disbursement, provided, however, that Lender will be obligated to advance funds to Borrower only to the extent that the unpaid principal balance of the Note (as defined below), after taking into account the advance requested in the Draw Notice, does not exceed an amount equal to the sum of (i) ten percent (10%) of the aggregate funded balances of the outstanding warehouse loans extended to 

borrowers by NattyMac Funding, Inc., an Indiana corporation (“Funding”), (ii) the aggregate equitable interests of Funding in warehouse loans originated by NattyMac, LLC, an Indiana limited liability company (“NattyMac”), in which Funding owns a participation interest (the “Aggregate Warehouse Participation Amount”), and (iii) the aggregate equitable interests of Funding in residential mortgage loans originated by Lender in which Funding owns a participation interest pursuant to the Participation Agreement between Lender and Funding of even date (the “Aggregate Mortgage Loan Participation Amount”).
(b)Borrower shall repay Lender an amount set forth in a written notice (a “Repayment Notice”) from Lender, to the extent the unpaid principal amount of the Note exceeds the sum of (i) ten percent (10%) of the aggregate outstanding warehouse loan commitments extended to borrowers by Funding, including amounts advanced thereunder, (ii) the Aggregate Warehouse Participation Amount, and (iii) the Aggregate Mortgage Loan Participation Amount.  Borrower may limit or restrict payment if the aforementioned criterion is not met.  Repayment shall occur at least 30 days from the repayment date (the “Repayment Date”) set forth in such Repayment Notice. 
(c)The principal balance of the Note shall automatically be reduced on a dollar for dollar basis in the amount of any loss recognized by Funding in the ordinary course of conducting its business as a warehouse lender to mortgage loan originators. 
(d)Borrower may prepay amounts owed on the Note in full or in part at any time without penalty. 
2.Use of Proceeds
.  Borrower shall invest the funds advanced by Lender hereunder in its wholly-owned subsidiary, Merchants Bank of Indiana (“Merchants”), and shall cause Merchants to invest such funds in ownership units of its wholly-owned subsidiary, Funding.  
Section 2.INTEREST.
1.Interest
.  
(a)Interest will accrue under the Subordinated Promissory Note of even date herewith executed by and between Borrower and Lender (the “Note”) as described in the Note.
(b)Basic Interest (as defined in the Note) shall be payable by Borrower in arrears on the fifteenth (15th) day of each calendar quarter, and at the maturity of the Note, whether by acceleration or otherwise.
(c)Additional Interest (as defined in the Note) shall be payable by Borrower to Lender within 30 days of the end of each calendar quarter based upon the net income or loss of Funding during the quarter then ended, and, to the extent applicable, upon the Maturity Date based upon the net income or loss of Funding during the period beginning upon the end of the preceding calendar quarter through the Maturity Date.
2.Usury Laws
1.. It is the intention of the parties hereto to comply strictly with all applicable usury laws.  All agreements between Borrower and Lender, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity hereof, or otherwise, shall the amount paid, or agreed to be paid to Lender for the use, forbearance, or detention of the money to be loaned hereunder or otherwise or for the payment or performance of any covenant or obligation contained herein or in any other document evidencing, securing, or pertaining to the indebtedness evidenced hereby, exceed the maximum amount permissible under applicable law.  If from any circumstance whatsoever fulfillment of any provision hereof or of such other documents, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then ipso 

facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance Lender shall ever receive as interest or otherwise an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal indebtedness of Borrower to Lender, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof, such excess shall be refunded to Borrower.  All sums paid or agreed to be paid by Borrower for the use, forbearance or detention of the indebtedness of Borrower to Lender hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full in such manner that there will be no violation of applicable laws pertaining to the maximum rate or amount of interest which may be contracted for, charged or received with respect to such indebtedness.  Borrower shall not institute any action or file any defense based upon the charging or collecting of usurious interest hereunder unless (i) Borrower shall give Lender written notice of an intent to do so and (ii) Lender shall fail to comply with the terms hereof by making necessary adjustments as required by this Section, and notify Borrower of such compliance within fifteen (15) days after receipt by Lender of such written notice from Borrower.  The provisions of this Section shall be given precedence over any other provision contained herein or in any other agreement between the parties hereto that is in conflict with the provisions of this Section.
Section 3.Maturity
.  If not sooner paid by Borrower or accelerated by Lender upon the occurrence of an Event of Default hereunder, the principal amount and accrued and unpaid interest thereon, together with all other costs and expenses for which Borrower is responsible under the Note (collectively, the “Indebtedness”) shall be due on the Maturity Date, as defined in the Note.
Section 4.collateral
.  As collateral and security for the obligations of Borrower hereunder, Borrower shall cause Merchants to grant to Lender a pledge and first-lien security interest in and to all of the issued and outstanding stock of Funding.  The pledge and security interest granted hereunder shall be evidenced by, and Borrower shall cause Merchants to execute and deliver, a Stock Pledge Agreement (the “Pledge Agreement”) in the form of Exhibit A attached hereto.  Borrower will deliver to Lender prior to the initial advance of funds hereunder the unanimous consent of Merchants’ board of directors in a form satisfactory to Lender authorizing and approving the execution of the Pledge Agreement by Merchants and the consummation of the transactions contemplated thereby.
Section 5.SUBORDINATION
.  This Agreement and the Note shall be subject to the terms of a Subordination Agreement of even date executed among Borrower, Lender and The Huntington National Bank (the “Subordination Agreement”).
Section 6.WARRANTIES AND REPRESENTATIONS
.  Borrower represents and warrants to Lender as of the date hereof and as of each date on which Lender advances to Borrower hereunder that, as of such date:
1.Corporate Organization and Authority
.  Borrower:
(a)is a corporation duly organized and validly existing under the laws of the State of Indiana;
(b)has and possesses all requisite corporate right, power and authority and all necessary licenses and permits to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, and to enter into the Loan Documents and to perform its obligations thereunder;

(c)has taken the necessary action to authorize the execution and delivery of the Loan Documents and the borrowings thereunder;
(d)The Board of Directors of Borrower has duly authorized the execution and delivery of this Agreement, the Note, the Subordination Agreement and documents contemplated herein and executed in connection with this Agreement will constitute legal, valid and binding obligations of Borrower enforceable in accordance with their terms, except as enforcement is subject to equitable and other limitations applied by courts, and debtor’s rights generally.
(e)The execution, delivery and performance of this Agreement, the Note and the Subordination Agreement and the compliance by Borrower with all the provisions of this Agreement, the Note and the Subordination Agreement applicable to Borrower:
(i)are within the corporate powers of Borrower;
(ii)are legal and will not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any lien or encumbrance other than as created by this Agreement and any other documents executed in connection with the Loan upon any property of Borrower under the provisions of, any agreement, charter instrument, articles of incorporation, bylaw or other instrument to which Borrower or Merchants is a party or by which Borrower or Merchants may be bound; and
(iii)do not violate, contravene, or cause a breach or a default under any applicable laws, rules or regulations, or any agreement, contract or instrument to which Borrower or Merchants is a party.
(f)There are no limitations in any indenture, mortgage, deed of trust or other agreement or instrument to which Borrower is now a party or by which Borrower may be bound with respect to the payment of principal or interest on any indebtedness of Borrower, including the Note to be executed in connection with this Agreement.
Section 7.covenants.
1.Covenants of Borrower
.  Borrower hereby covenants and agrees with Lender as of the date hereof and for so long as any amounts remain payable by Borrower hereunder:
(a)Borrower shall maintain its corporate existence and good standing in the jurisdiction of its organization.  
(b)Borrower shall keep or cause to be kept in reasonable detail books and records setting forth an account of the assets and business of Borrower and Funding and, as applicable, shall clearly reflect therein the warehouse loans extended to borrowers by Funding, the repayment of such warehouse loans, and the disposition of the mortgage loans and related collateral securing such loans.
(c)Borrower shall deliver to Lender:
(i)Within 30 days of the end of each month, unaudited financial statements of Funding for the month and year-to-date periods then ended; 
(ii)Within 30 days of the end of each calendar quarter, unaudited financial statements of Borrower for the quarter and year-to-date periods then ended;
(iii)Within 90 days of the end of each fiscal year, audited financial statements of Borrower; and
(iv)Promptly upon becoming aware thereof, notice of any potential or existing Event of Default or material event, including the commencement of, or any determination in, any legal, judicial or regulatory proceedings which, if adversely determined, would be reasonably likely to result in a material adverse effect to the business of Borrower or Funding.
Section 8.Advances of Funds to borrower.  
1.Obligation to make Advances
.  The obligation of Lender to make any advance of funds to Borrower hereunder shall be subject to 

the following conditions precedent:
(a)Borrower shall provide Lender on the date of any such advance of funds a certificate, signed by an officer of Borrower with knowledge of the matters set forth therein, certifying that, as of such date, (i) all of the representations and warranties of Borrower contained in Section 6 hereof are true and correct, except to the extent that such representations and warranties expressly relate to an earlier date, in which event, such representations and warranties remain true and correct as of such earlier date, and (ii) Borrower has performed and complied with all agreements, covenants and conditions contained herein and contemplated hereby which are required to be performed or complied with by Borrower.
(b)Prior to the initial advance of funds hereunder, Borrower shall have delivered to Lender:  (i) a resolution of Borrower authorizing the execution and delivery of this Agreement, the Note, the Subordination Agreement and any other instrument or document executed and delivered by Borrower to Lender in connection with the Loan and all acts required to be performed by Borrower hereunder and thereunder; and (ii) a certificate of existence for Borrower issued by the Secretary of State of the state of its formation dated not more than thirty (30) days prior to the date of such initial advance.
Section 9.EVENTS OF DEFAULT.
1.Nature of Events
.  An “Event of Default” shall exist if any of the following occurs and is continuing:
(a)Borrower fails to make any payment of interest or principal on the Note within thirty (30) days after the date when due pursuant to the terms of the Note and the continuation of such failure for a period of ten (10) days after written notice of such failure has been sent to Borrower;
(b)Borrower, Merchants or Lender, as applicable, fails or neglects to perform, keep, or observe, or is otherwise in breach of, any other material term, provision, condition, covenant, representation, warranty, or agreement contained in this Agreement, the Note, the Subordination Agreement or Pledge Agreement (each, a “Loan Document” and collectively, the “Loan Documents”), or in any other present or future agreement between, on the first part, Borrower, Merchants or Funding, and, on the second part, Lender or NattyMac, and as to any default or breach under such other term, provision, condition, covenant, representation, warranty, or agreement that can be cured, has failed to cure such default or breach within ten (10) days after delivery by the non-defaulting party of written notice thereof, provided, however, that Lender will not be obligated to advance any funds to Borrower hereunder during a cure period following a default by Borrower. 
(c)An event of default has occurred under the Services Agreement of even date herewith between Funding and NattyMac as the result of a material breach thereof which breach has not been cured or remedied within the 30-day period following receipt of notice of such breach.
(d)Any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate or writing delivered to a party hereto by the other party hereto or any person acting on behalf of a party hereto pursuant to this Agreement or to induce a party hereto to enter into this Agreement or any other Loan Document. 
(e)Borrower or Lender becomes insolvent or bankrupt, or makes an assignment for the benefit of creditors, or consents to the appointment of a trustee, receiver or liquidator; and
(f)Bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings are instituted by or against Borrower or Lender and are not dismissed or discharged within sixty (60) days of the filing thereof.
Section 10.lender’s rights and remedies.
1.Default Remedies
.  Upon the occurrence and during the continuance of an Event of Default by Borrower, Lender may, 

subject to the terms and conditions of the Subordination Agreement, at its election and without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a)At the option of Lender, declare all of the indebtedness evidenced by the Note and remaining unpaid, including without limitation the entire unpaid principal balance, and any accrued and unpaid interest, without demand or notice, to become immediately due and payable, anything contained in the Note to the contrary notwithstanding.  Notwithstanding anything herein or elsewhere to the contrary, Borrower’s liability and Lender’s recourse against Borrower pursuant to this Agreement or under the Note and any other document shall at all times be limited to  exercising its rights under the Pledge Agreement.  
(b)Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Lender.
2.Waiver and Amendment
.  Except as otherwise expressly set forth herein, to the extent permitted by law, Borrower hereby waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, or other action taken in reliance hereon and all other demands and notices of any description. With respect to any amounts payable to Lender hereunder, Borrower assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustment of any thereof, all in such manner and at such time or times as Lender may deem advisable. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to the exercise of any right on any future occasion. All rights and remedies of Lender as to any amount payable to Lender hereunder whether evidenced hereby or by any other instrument or papers shall be cumulative and may be exercised singly, successively or together. 
3.Demand; Protest
.  Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper and guarantees at any time held by Lender on which Borrower may in any way be liable.
Section 11.Borrower’s RIGHTS AND REMEDIES.
A default by Lender or any Affiliate of Lender under any agreement with Funding, Merchants, or Borrower shall excuse Borrower’s performance under this Agreement, the Note, the Pledge Agreement and the Services Agreement for as long as the default exists.  For the purpose of this Section, an “Affiliate” shall mean any entity that controls, is controlled by, or is under common control with Lender.   
Section 12.MISCELLANEOUS
1.Notices
.  All communications under this Agreement or under the Note executed pursuant hereto shall be in writing and shall be mailed by first class mail, postage prepaid to the addresses of the parties set forth on page one (1) of this Agreement or such address which the parties may give notice of in writing. 
2.Successors and Assigns
.  Except as herein provided, this Agreement shall be binding upon and inure to the benefit of Borrower and Lender and any other party thereto and Borrower’s respective successors and assigns.  Notwithstanding the foregoing, Lender, without the prior written consent of Borrower, which consent may be withheld in Borrower’s sole discretion, may not assign, transfer or set over to another party the Note or this Agreement, in whole or in part.  

3.Amendment and Waiver
.  This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of Borrower and Lender.
4.Counterparts
.  This Agreement may be executed in multiple counterparts, and delivery of an executed counterpart of a signature page of this Agreement by electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.  
5.Governing Law and Venue
.  This Loan Agreement is delivered to Lender in the State of Indiana and is executed under and shall be governed by and construed in accordance with the laws of the State of Indiana, notwithstanding that Indiana conflicts of law rules might otherwise require the substantive rules of law of another jurisdiction to apply.  Borrower and Lender each hereby submits to the exclusive jurisdiction of the state and Federal courts located in the State of Indiana.
6.Waiver of Trial by Jury
.  Any suit, action or proceeding, whether a claim or counterclaim, brought or instituted by any party on or with respect to this Loan Agreement or any other document executed in connection herewith or which in any way relates, directly or indirectly to the Loan Agreement or any event, transaction or occurrence arising out of or in any way connected with the Note or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury.  BORROWER AND LENDER EACH EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.  Borrower acknowledges that Borrower may have a right to a trial by jury in any such suit, action or proceeding and that Borrower hereby is knowingly, intentionally and voluntarily waiving any such right.  Borrower further acknowledges and agrees that this Section is material to this Loan Agreement and that adequate consideration has been given by Lender and received by Borrower in exchange for the waiver made by Borrower pursuant to this Section. 
7.Severability
.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
8.Headings
.  Any Article and Section headings in the Note are included herein and therein for convenience of reference only and shall not constitute a part of this Agreement and shall not affect the construction of, or be taken into consideration in the interpretation of this Agreement.
9.Gender
.  Whenever the context so requires, reference herein or in this Agreement to the masculine gender shall include the feminine gender or in either case the neuter and vice versa; and the singular shall include the plural and vice versa.
10.No Partnership or Joint Venture
.  Borrower and Lender expressly agree that the only relationship intended to be created between them in connection with the Loan is that of lender and borrower and that the relationship in no way is intended to create a partnership, joint venture, tenancy in common, or joint tenancy between them.    
11.Waiver of Damages

.  To the extent permitted by applicable law, Borrower and Lender shall not assert, and each hereby waives, any claim against the other, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, including, without limitation, the Loan or the use of the proceeds thereof.
[Remainder of page intentionally blank; signatures on following page(s)]

2
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be executed and delivered as of the date first above stated.
Lender:

STONEGATE MORTGAGE CORPORATION,
  an Ohio corporation
By:    /s/ John Macke    
Name:    John Macke        
Title:    Chief Financial Officer        

Borrower:

MERCHANTS BANCORP,
  an Indiana corporation
By:    /s/ Randall D. Rogers Jr.    
Name:    Randall D. Rogers Jr.
Title:    Assistant Secretary

 
INDS01 1452024v22014 10-K Exhibit 10.28

1

10

EXHIBIT  10.28

LINE OF CREDIT PROMISSORY NOTE

$22,000,000.00                                 Indianapolis, Indiana

August 29, 2014

For value received, STONEGATE MORTGAGE CORPORATION, an Ohio corporation, having offices at 9190 Priority Way West Drive, Suite 300, Indianapolis, Indiana  46240 (hereinafter referred to as “Maker”), unconditionally promises to pay to the order of MERCHANTS BANK OF INDIANA having its principal banking office at 11555 N. Meridian Street, Suite 400, Carmel, Indiana 46032 (hereinafter referred to as “Lender”), at Lender's principal banking office or at such other place or to such other party as the holder hereof may from time to time designate, the principal sum of Twenty Two Million and 00/100 Dollars ($22,000,000.00), or so much thereof as shall from time to time be advanced by Lender to or for the benefit of Maker hereunder, with interest on the principal balance advanced from time to time remaining unpaid from the date hereof at a rate per annum (based upon a year of 360 days and actual days elapsed) equal to the rate from time to time announced by the Wall Street Journal as the “One Month LIBOR”, plus four hundred fifty (450) basis points with changes in the interest rate hereunder to take effect on the same day as each change in such One Month LIBOR takes effect.
TERMS, PROVISIONS AND CONDITIONS
1.    Advances.    Upon Maker’s submission to Lender of Maker’s quarterly financial reports, including without limitation a detailed valuation of the mortgage servicing rights of Maker (the “Pledged Mortgage Servicing Rights”) with respect to the pooled Ginnie Mae mortgage loans identified on Exhibit A hereto (the “Ginnie Mae Pooled Loans”), as such exhibit may be amended from time to time by Maker with the consent of Lender, Lender shall make an advance to Maker of funds available under this line of credit up to the lesser of (i) Twenty Two Million and 00/100 Dollars ($22,000,000.00), or (ii) fifty percent (50%) 

of the reported valuation of the Pledged Mortgage Servicing Rights as set forth in the quarterly reports of Maker issued immediately preceding the date that Lender makes any such advance of funds to Maker.
2.    Payments.     Principal and interest shall be payable as follows:
            
		
	(i)
	Commencing on the first day of the first calendar month following the calendar month in which the first advancement is made hereunder and continuing on the first day of each succeeding calendar month thereafter, accrued and unpaid interest shall be due and payable;

		
	(ii)
	On or before June 30, 2017, the entire unpaid principal balance and all accrued and unpaid interest shall be due and payable.

3.    Costs of Collection and Default Rate of Interest. In addition, Maker shall pay to the holder hereof (a) reasonable attorneys' fees incurred by the holder in the protection of any security for this Note or the collection of any indebtedness evidenced hereby, (b) costs of collection and (c) during any period in which a default exists hereunder and/or any period of delinquency on any amounts not paid when due, interest at a rate per annum equal to four percent (4%) above the rate otherwise in effect.
4.    Late Charge. Maker shall pay a “late charge” for the purpose of defraying expense incident to handling any monthly installment of interest and/or principal, or portion thereof, referred to above not paid within ten (10) days after the date when first due at the rate of five cents (5¢) for each dollar ($1.00) so overdue with a minimum charge of Twenty-Five and no/100 Dollars ($25.00) and an additional “late charge” for purposes of defraying expense incident to handling on the first day of each successive calendar month thereafter at the rate of five cents (5¢) for each dollar ($1.00) so overdue with a minimum of Twenty-Five and no/100 Dollars ($25.00) per month until any such installment, or portion thereof, has been paid in full. Nothing herein contained shall be construed as a waiver by the holder of this Note of its option to declare a default if any payment of any installment of interest and/or principal, or portion thereof, is not made when due, and the assessment of a late charge shall not affect the right of the holder of this Note to increase the rate of interest as herein provided on all amounts not paid when due.
5.    Valuation and Appraisement Laws. All principal, interest and other amounts payable under or with respect to this Note shall be payable without relief from valuation and appraisement laws.

6.    Application of Payments. Each payment hereunder shall be applied to the payment of accrued and unpaid interest and to the reduction of the principal balance in such order and in such amounts as the holder of this Note shall determine, in its sole discretion. Interest shall be computed on the basis of a three hundred sixty (360)-day year applied to the actual number of days in each interest-payment period. 
7.    Security.  
(a)    This Note shall be entitled to the benefits of, and is secured by a security interest in, Maker’s rights to servicing income with respect to the Ginnie Mae Pooled Loans and the Pledged Mortgage Servicing Rights, which is hereby granted by Maker in favor of Lender and which shall be evidenced by the Uniform Commercial Code financing statement filed on November 20, 2009 by Lender with the office of the Secretary of State of Ohio as File No. OH00138577672, as amended by File No. #20123470016 filed December 11, 2012 and File No. 20141150052 filed April 24, 2014, and as hereinafter, amended or renewed, and other security agreements or documents, as from time to time amended or modified, executed in favor Lender in connection with this Note (the “Financing Statement”).  The Financing Statement shall be amended to incorporate the following language:
“Notwithstanding anything to the contrary contained herein:

		
	(1)
	The property subject to the security interest reflected in this instrument includes all of the right, title and interest of the Debtor in certain mortgages and/or participation interests related to such mortgages (“Pooled Mortgages”) and pooled under the mortgage-backed securities program of the Government National Mortgage Association (“Ginnie Mae”), pursuant to section 306(g) of the National Housing Act, 12 U.S.C. § 1721(g);

		
	(2)
	To the extent that the security interest reflected in this instrument relates in any way to the Pooled Mortgages, such security interest is subject and subordinate to all rights, powers and prerogatives of Ginnie Mae, whether now existing or hereafter arising, under and in connection with:  (i) 12 U.S.C. § 1721(g) and any implementing regulations; (ii) the terms and conditions of that certain Acknowledgment Agreement, with respect to the Security Interest, by and between Ginnie Mae, [_____] (the “Debtor”), and [_____]; (iii) applicable Guaranty Agreements and contractual agreements between Ginnie Mae and the Debtor; and (iv) the Ginnie Mae Mortgage-Backed Securities Guide, Handbook 5500.3 Rev. 1, and other applicable guides; and

		
	(3)
	Such rights, powers and prerogatives of Ginnie Mae include, but are not limited to, Ginnie Mae’s right, by issuing a letter of extinguishment to Debtor, to effect and complete the extinguishment of all redemption, equitable, legal or other right, title or interest of the Debtor 

in the Pooled Mortgages, in which event the security interest as it relates in any way to the Pooled Mortgages shall instantly and automatically be extinguished as well.”

(b)    Lender acknowledges and agrees that the foregoing pledge by Maker of its rights to servicing income with respect to the Ginnie Mae Pooled Loans and the Pledged Mortgage Servicing Rights is subject to (a) the implementing regulations governing the applicable Ginnie Mae MBS Program, (b) the applicable Guaranty Agreement between Maker and Ginnie Mae, (c) the Acknowledgment Agreement (Standard Agrmt Feb 6) among Maker, as “Issuer”, Lender, as “Secured Party” and Ginnie Mae, and (d) the Ginnie Mae Mortgage-Backed Securities Guide, Handbook 5500.3, Rev. 1, as amended (the “Ginnie Mae Agency Guide”).  Lender further acknowledges and agrees that: 
    
		
	(i)
	Maker is entitled to servicing income with respect to a given pool or loan package only so long as it maintains Issuer (as such term is defined in the Ginnie Mae Agency Guide) status;

		
	(ii)
	upon Maker’s loss of Issuer status, Lender’s rights to any servicing income related to a given Ginnie Mae pool (as defined in the Ginnie Mae Agency Guide) also terminate; and

		
	(iii)
	the foregoing pledge of rights to servicing income conveys no right (such as a right to become a substitute servicer or Issuer) that is not specifically provided for in the Ginnie Mae Agency Guide.

8.    Financial Covenants. 

		
	(a)
	The following terms as used in this Section shall have the following definitions:

		
	(i)
	“DE Compare Ratio” has the meaning set forth in the DE Compare Report.

		
	(ii)
	“DE Compare Report” means with respect to the Seller, the top of the three rows of the report entitled “Neighborhood Watch Early Warning System - Single Lender - Originator by Institution” and found at https://entp.hud.gov/sfnw/public/. Such report shall be generated using the following criteria:  Mortgagee Selections: “Direct Endorsement Lender;” Delinquent Choices: “Seriously Delinquent;” and 2 Year Performance Period: “Data as of [END OF MOST RECENT PRIOR QUARTER].”

		
	(iii)
	“Institution Compare Ratio” has the meaning set forth in the Institution Compare Report.

		
	(iv)
	“Institution Compare Report” means with respect to the Seller, the report entitled “Neighborhood Watch Early Warning System - Single Lender - Originator by Institution” and found at https://entp.hud.gov/sfnw/public/. Such report shall be generated using the following criteria: Mortgagee Selections: “Originator by 

Institution;” Delinquent Choices: “Seriously Delinquent;” and 2 Year Performance Period: “Data as of [END OF MOST RECENT PRIOR QUARTER].”

		
	(v)
	“Servicing Portfolio Delinquency Rate” means the percentage of Mortgage Loans within the Borrower’s entire portfolio of serviced loans that have payments that are more than 180 days delinquent.

		
	(vi)
	“Tangible Net Worth” shall mean, with respect to any Person as of any date of determination, the consolidated Net Worth of such Person and its Subsidiaries, less the consolidated net book value of all assets of such Person and its subsidiaries (to the extent reflected as an asset in the balance sheet of such Person or any Subsidiary at such date) which will be treated as intangibles under GAAP, including, without limitation, such items as deferred financing expenses, deferred taxes, net leasehold improvements, good will, trademarks, trade names, service marks, copyrights, patents, licenses and unamortized debt discount and expense; provided, that residual securities issued by such Person or its Subsidiaries and such Person’s or its Subsidiaries’ servicing rights to service mortgage loans shall not be treated as intangibles for purposes of this definition; provided further that Tangible Net Worth shall not include any restricted cash of such Person which represents cash collateral in respect of letter of credit obligations of such Person, and to the extent the letter of credit obligation of such Person is only partially cash collateralized, only that portion of the letter of credit that represents cash collateral shall be excluded from the definition of Tangible Net Worth hereunder.

		
	(b)
	Maker shall, within thirty (30) days after the end of each calendar quarter, deliver to Lender a copy of its quarterly borrower certification made in accordance with the Loan and Security Agreement between Maker and Barclays Bank PLC dated May 22, 2014 (the “Barclays Loan Agreement”).

9.    Events of Default. All of the indebtedness evidenced by this Note and remaining unpaid shall, at the option of the holder and without demand or notice, become immediately due and payable upon the occurrence of any of the following (each of which shall constitute an event of default hereunder):
        
		
	(i)
	a failure by Maker to make the payments required by this Note when due;

		
	(ii)
	a default under or a failure to comply with any of the terms, provisions, conditions, agreements or covenants of this Note which remains uncured for five (5) business days after written notice from Lender to Maker; provided that there shall be no cure period for monetary defaults; 

		
	(iii)
	a default or failure to comply with any of the terms, provisions, conditions, agreements or covenants of any other agreement between Lender and Maker or by Maker in favor of Lender which remains uncured beyond any applicable notice requirements and cure periods, if any, contained in such agreement;

		
	(iv)
	Maker receives a negative designation or loss of good standing from Ginnie Mae, Fannie Mae, Freddie Mac or any other governing agency, including without limitation, anything which could result in Borrower being debarred or placed on a watch-list; or

		
	(v)
	a default by Maker under the Barclays Loan Agreement that remains unremedied or that is not waived by Barclays Bank PLC for a period of five (5) Business Days following Maker obtaining knowledge thereof.

10.    Waiver and Consent. Presentment, notice of dishonor and demand, protest and diligence in collection and bringing suit are hereby severally waived by Maker and each endorser or guarantor, each of whom consents that the time for the payment of this Note, or of any installment hereunder, may be extended from time to time without notice by the holder. 
11.    No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by the holder of this Note shall operate as a waiver of any other default or of the same default in the future or as a waiver of any right or remedy with respect to the same or any other occurrence.
12.    Prepayment. Maker may prepay all or any portion of the principal amount outstanding under this Note at any time and from time to time without penalty.
13.    Usury Laws. It is the intention of the parties hereto to comply strictly with all applicable usury laws. Accordingly, in no event and upon no contingency shall the holder be entitled to receive, collect or apply as interest any interest, fees, charges or other payments equivalent to interest in excess of the amount which may be charged from time to time under applicable law. In the event that the holder of this Note ever receives, collects or applies as interest any such excess, then immediately upon becoming aware of such receipt, collection or application, the holder shall notify Maker of the usurious overcharge and refund to Maker the amount of any overcharge taken, plus interest on the overcharge taken at the rate in effect under this Note or at the maximum lawful rate, whichever is less, at the time the usurious interest rate was taken, and make whatever adjustments in this Note as are necessary to insure that Maker will not be required to pay any further interest in excess of the amount permitted under applicable law. Maker shall not institute any action or file any defense based upon the charging or collecting of usurious interest hereunder unless (i) Maker shall give the holder written notice of an intent to do so and (ii) the holder shall fail to comply with 

the terms hereof, by notification and refund to Maker and making necessary adjustments as aforesaid, within fifteen (15) days after receipt by the holder of such written notice from Maker. The provisions of this Section shall be given precedence over any other provision contained herein or in any other agreement between the parties hereto that is in conflict with the provisions of this Section.
14.    Loan Fees. In addition to all of the terms and conditions to be performed by Maker under this Note, Maker shall reimburse Lender upon demand for all costs and expenses, including without limitation reasonable attorneys’ fees, incurred by it in connection with the loan evidenced by this Note. 
15.    Waiver of Trial by Jury. Maker hereby agrees that any suit, action or proceeding, whether a claim or counterclaim, brought or instituted by any party on or with respect to this Note or any other document executed in connection herewith or which in any way relates, directly or indirectly to any event, transaction or occurrence arising out of or in any way connected with this Note or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury. MAKER, AND LENDER BY ACCEPTANCE HEREOF, HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Maker acknowledges that Maker may have a right to a trial by jury in any such suit, action or proceeding and that Maker hereby is knowingly, intentionally and voluntarily waiving any such right. Maker further acknowledges and agrees that this Section is material to this Note and that adequate consideration has been given by Lender and received by Maker in exchange for the waiver made by Maker pursuant to this Section.
16.    Notices. Any written notice permitted or required hereunder shall be effective when received, certified or registered United States mail, postage prepaid, return receipt requested, at the applicable address specified above or at such other addresses within the United States of America, as Maker or Lender may from time to time specify for itself by notice hereunder.
17.    Legal Tender. This Note is negotiable and is payable in lawful money of the United States of America which shall be legal tender in payment of all debts and dues, public and private, at the time of payment.

18.    Successors and Assigns. The obligations of Maker hereunder shall be binding upon Maker and its successors, assigns and legal representatives and shall inure to the benefit of Lender and Lender's participants respective successors, assigns, and legal representatives.
19.    Governing Law. This Note is delivered to Lender in the State of Indiana and is executed under and shall be governed by and construed in accordance with the laws of the State of Indiana.
20.    Invalidity of any Provision. If any provision (or portion thereof) of this Note or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, then the remainder of this Note or the application of such provision (or portion thereof) to any other person or circumstance shall be valid and enforceable to the fullest extent permitted by law.
21.    Captions. The captions or headings herein have been inserted solely for the convenience of reference and in no way define, limit or describe the scope or substance of any provision of this Note.

[Remainder of page intentionally blank; signature on following page]
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly authorized officers effective as of the day and the year first above written.

                                                                            
STONEGATE MORTGAGE CORPORATION,
an Ohio corporation
                    
                        
By:    /s/ John Macke                
Name:    John Macke
Title:    EVP - Capital Markets

INDS01 1457672v3

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