Common use of Material Decisions Clause in Contracts

Material Decisions. Notwithstanding anything to the contrary contained this Agreement, any Basic Document, or any other agreement to which the Company or any of its Subsidiaries is a party, but subject to Section 4.2, Administrative Member shall not cause the Company or any Subsidiary to take any of the following actions, or enter into any agreement to take any of the following actions (“Material Decisions”), without the prior approval of the Board acting in accordance with Section 8.1: (i) (x) form any new Subsidiary or acquiring any direct or indirect equity interest in any Person and (y) causing any Subsidiary to be classified as a REIT and transferring any Company Assets to such Subsidiary; provided, that if the Board or the Members (if a Fundamental Decision), as applicable, is/are unable to agree upon a matter set forth in this clause (i) after Reasonable Efforts to Resolve and such matter relates to the formation of a Subsidiary that is intended to be classified as a REIT or causing any Subsidiary to be classified as a REIT, Investor shall have the right to purchase all, but not less than all, of Figure’s Membership Interests pursuant to the procedures for a Bad Act Termination Event Membership Interest Buyout pursuant to Section 4.2(b) (but for the avoidance of doubt, a Bad Act Termination Event shall not be deemed to have occurred with respect to Figure as a result of the failure of the Board to agree upon a matter set forth in clause (i)); provided, further, that if a decision is made in accordance with this clause (i) to form a new Subsidiary to be classified as a REIT or cause an existing Subsidiary to be treated as a REIT, the Members shall use commercially reasonable efforts to cause the Company to engage a third-party advisor or consultant to provide REIT compliance advice and/or reporting services; [Fundamental Decision to the extent relating to forming a new Subsidiary to be classified as a REIT or causing an existing Subsidiary to be treated as a REIT] (ii) amending the [***] from Figure Standard Production; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (ii) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers [***];** (iii) adjusting the Preferred Hurdle Rate [Fundamental Decision]; (iv) (x) determining inputs for the [***], including the [***], for any TBA/Committed ABS; and (y) committing the Company to a TBA/Committed ABS and agreement on any Forward Sale documentation; provided, that (A) in no event shall the Company or any Subsidiary commit to a TBA/Committed ABS or enter into an agreement therefor before the Board has agreed on the matters set forth in clause (iv)(x) above and (B) once the Company or any Subsidiary has committed to a to a TBA/Committed ABS or entered into an agreement therefor, the matters set forth in clause (iv)(x) based on which such commitment was made may not thereafter be modified; (v) entering into any agreement for interest rate risk management; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (v) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers;** (vi) exercising any Call Options; provided, that if after Reasonable Efforts to Resolve, the Board or the Members (if a Fundamental Decision), as applicable, is/are unable to agree upon the exercise of any Call Option and either the SSP Managers or the Figure Managers have approved the exercise of such Call Option, the Member appointing the Managers in favor of exercising such Call Option shall have the right to cause the Company to assign such Call Option at its fair market value to such Member or its Affiliate; [Fundamental Decision to the extent that Additional Capital Contributions in excess of the Members’ respective Capital Contribution Caps would be required to exercise the Call Option and fund the related Call Option Payments] (vii) except as required in connection with the securitization of Company Assets in the ordinary course of business, borrowing money or issuing notes, bonds or other securities to finance the operation of the business of the Company and its Subsidiaries; (viii) (A) establishing new warehouses, financing facilities or securitization vehicles, or initiating any initial public offering or listing of the equity interests of the Company or any Subsidiary on any capital markets exchange; provided, that the pledge of all or a portion of all or any of the Company Assets as collateral to secure any such warehousing, financing and securitization that has been previously approved as a Material Decision, in each case, directly or indirectly through a Subsidiary, shall not require further Board approval; or (B) determining the optimal risk retention structure, which may include a horizontal risk retention slice or a vertical risk retention slice; (ix) any guaranty by the Company or any Subsidiary of any debt of any Person (including any Subsidiary); [Fundamental Decision]; (x) approval of any Company Budget and any amendments, supplements or modifications thereto, other than those permitted under this Agreement; provided, that the Board has approved the Initial Company Budget; (xi) acquiring any Assets pursuant to the Basic Documents other than acquisition of any Assets necessary to satisfy Pre-Existing Obligations of the Company or any Subsidiary; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xi) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers**; (xii) acquiring any Assets other than HELOCs and rights incidental thereto pursuant to the Basic Documents to the extent such Asset type has not previously been acquired by the Company or any of its Subsidiaries pursuant to the Basic Documents [Fundamental Decision]; (xiii) subject to the terms of this Agreement, selling any Company Assets (x) other than in the ordinary course of business involving securitizing such Asset and (y) except for sales undertaken in accordance with Section 4.3 or Section 4.2(e)); provided, that, if, prior to the Run-Off Commencement Date, the Board is unable to agree upon a Material Decision set forth in this clause (xiii) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers** (xiv) [intentionally omitted]; (xv) making or changing such elections under the Code and other relevant tax laws as to the treatment of items of income, gain, loss, deduction and credit of the Company or any of its Subsidiaries, including elections referred to in section 754 of the Code to adjust the tax basis of Company property for federal income tax purposes in the manner prescribed in section 734 or 743 of the Code (and excluding, for the avoidance of doubt, any matters or actions described in clause (i) above or Section 11.2 below); provided, that if the Board or the Members (if a Fundamental Decision), as applicable, is/are unable to agree upon a matter set forth in this clause (xv) after Reasonable Efforts to Resolve, such matter shall be determined by the SSP Managers** and if any determination by the SSP Managers pursuant to this proviso would result in an adverse and disproportionate effect on Figure, then such determination shall require Figure’s prior written consent; provided, further, that if Figure does not so consent, then Investor shall have the right to purchase all, but not less than all, of Figure’s Membership Interests pursuant to the procedures for a Bad Act Termination Event Membership Interest Buyout pursuant to Section 4.2(b) (but for the avoidance of doubt, a Bad Act Termination Event shall not be deemed to have occurred with respect to Figure as a result of the failure of the Board to agree upon a matter set forth in this clause (xv)) [Fundamental Decision, to the extent such determination would result in an adverse and disproportionate effect on Figure]; (xvi) selecting and changing of the method of accounting and bookkeeping procedures to be used by the Company or its Subsidiaries; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xvi) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers but only to the extent the proposed change is related to the operation and management of the SSP Funds and would not result in an adverse and disproportionate effect on Figure ** and if any determination by the SSP Managers pursuant to this proviso would result in an adverse and disproportionate effect on Figure, then such determination shall require Figure’s prior written consent; provided, further, that if Figure does not so consent, then Investor shall have the right to purchase all, but not less than all, of Figure’s Membership Interests pursuant to the procedures for a Bad Act Termination Event Membership Interest Buyout pursuant to Section 4.2(b) (but for the avoidance of doubt, a Bad Act Termination Event shall not be deemed to have occurred with respect to Figure as a result of the failure of the Board to agree upon a matter set forth in clause (i)); (xvii) selecting and engaging legal representatives for the Company or any Subsidiaries other than with respect to day-to-day matters or implementation of business objectives; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xvii) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers to the extent such legal representative is being engaged for the defense of litigation;** (xviii) selecting and engaging service providers to provide services to the Company or any Subsidiaries other than those (i) to which neither the Company nor any Subsidiary is expected to pay more than $250,000 in any given calendar year, (ii) which are contemplated in the approved Company Budget, (iii) providing origination related or securitization services, and/or (iv) permitted to be entered into pursuant to the Basic Documents; provided, that the Members agree that a Figure Person shall act as the servicer for any securitization trusts co-sponsored by the Company or any of its Subsidiaries; (xix) enter into service agreements pursuant to which the Company or any Subsidiary is required to pay more than $250,000 in any given calendar year, other than those which (i) are contemplated in the approved Company Budget, (ii) permitted under the Basic Documents, and/or (iii) are for origination related services; (xx) selecting and engaging Company’s accountants and auditors; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xx) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers so long as such accountant or auditor is one of the “Big Four” accounting firms or ▇▇▇▇▇ ▇▇▇▇▇▇▇, BDO USA LLC, RSM USA LLC and ▇▇▇▇▇ ▇▇▇▇▇) (each, an “Approved Accountant”);** (xxi) selecting banks where operating accounts for the Company are to be maintained; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xxi) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers; provided, further, for the avoidance of doubt, that accounts into which HELOC payments are to be received shall not be a Material Decision and may be determined by the Figure Person acting as “Servicer” under the Figure Connect Documents;** (xxii) establishing Company offices; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xxii) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers;** (xxiii) making distributions other than as provided in Section 10.6(a) or Section 13.3(c); or making any in-kind distributions; [Fundamental Decision] (xxiv) communications with a Governmental Entity (specifically excluding the rating agencies) that would bind the Company or any Subsidiary, other than with respect to tax audits or tax Proceedings, which shall be governed by Section 11.2 below; [Fundamental Decision to the extent such communication would reasonably be expected to have adverse implications for the business of any Figure Person or their Affiliates]; (xxv) expending any funds on behalf of the Company or the Subsidiaries that varies from the Company Budget (provided, for the avoidance of doubt, that expenditures within the permitted variance and increases for Non-Discretionary Expenses as set forth in the definition of “Company Budget” shall not constitute a Material Decision); (xxvi) making any temporary short-term investment of the funds of the Company or any of its Subsidiaries other than as set forth in a Company Budget or short-term investments of cash and cash equivalents, entered into in the ordinary course of business; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xxvi) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers;** (xxvii) approving the initial insurance plan for the Company and any insurance plan for the Company or Subsidiaries that provides material changes to the coverages or limits as compared to the previous insurance plan for the Company and the Subsidiaries in effect; (xxviii) instituting or defending any legal action in the name of the Company or Subsidiary involving a claim in excess of $375,000, other than any tax actions described in Section 11.2 below and other than those that are covered by insurance; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xxviii) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers;** (xxix) settling or compromising Proceedings (other than any tax Proceedings described in Section 11.2 below) involving amounts in excess of $750,000 per claim or $2,000,000 in the aggregate for any calendar year; provided, that if the Board is unable to agree upon a Material Decision set forth in this clause (xxix) after Reasonable Efforts to Resolve, such Material Decision shall be determined by the SSP Managers, unless the same would result in disproportionate liability to Figure);** (xxx) establishing reserves to fund expenses of the Company and the Subsidiaries and contingent liabilities; provided, however, that all Net Cash Flow remaining after distributions are made pursuant to Section 10.6(a) shall be held as reserves for the Company for the purchase of additional Assets and other Company Expenses; [Fundamental Decision with respect to establishing reserves to fund potential securitization related liabilities of the Company and the Subsidiaries following the occurrence of a Run-Off Commencement Date] (xxxi) calling for capital, including pursuant to Section 9.3(a); [Fundamental Decision for any Member if the same would require such Member to fund more than its Capital Contribution Cap]