10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-40291

COMPASS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	30-0751604
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
90 Fifth Avenue, 3rd Floor New York, New York	10011
(Address of Principal Executive Offices)	(Zip Code)

(212) 913-9058

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class A Common Stock, $0.00001 par value per share	COMP	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of August 5, 2021, there were 394,518,773 shares of the registrant’s common stock outstanding.

Compass, Inc.

Index to Condensed Consolidated Financial Statements

		Page
Special Note Regarding Forward-Looking Statements			3
PART I.	FINANCIAL INFORMATION		5
Item 1.	Financial Statements (unaudited)		5
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020		5
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020		6
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2021 and 2020		7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020		9
	Notes to Condensed Consolidated Financial Statements		10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		39
Item 4.	Controls and Procedures		40
PART II.	OTHER INFORMATION		41
Item 1.	Legal Proceedings		41
Item 1A.	Risk Factors		41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		68
Item 6.	Exhibits		69
	Signatures

Unless otherwise expressly stated or the context otherwise requires, references in this Quarterly Report on Form 10-Q, which we refer to as this Quarterly Report, to “Compass,” “Company,” “our,” “us,” and “we” and similar references refer to Compass, Inc. and its wholly-owned subsidiaries.

WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we may announce material business and financial information to our investors using our investor relations page on our website (www.compass.com), filings we make with the Securities and Exchange Commission, or the SEC, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

From time to time, we intend to announce material information to the public through filings with the SEC, the investor relations page on our website (www.compass.com), press releases, public conference calls, public webcasts, and our Twitter feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s Twitter feed (@RobReffkin) and Robert Reffkin’s Instagram account (@robreffkin).

Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

The information contained on, or that can be accessed through, the website referenced in this Quarterly Report is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, and potential impacts of the COVID-19 pandemic, or expectations regarding actions we may take in response to the pandemic, are forward-looking statements. Words such as “believes,” “may,” “will,” “estimates,” “potential,” “continues,” “anticipates,” “intends,” “expects,” “could,” “would,” “projects,” “plans,” “targets,” and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

• our future financial performance, including our expectations regarding our revenue, rate of growth, operating expenses including changes in sales and marketing, research and development, and general and administrative expenses (including any components of the foregoing), and our ability to achieve and sustain future profitability;

• any changes in macroeconomic conditions and in U.S. residential real estate market conditions, including changes in prevailing interest rates or monetary policies;

• the effects of the ongoing COVID-19 coronavirus pandemic in the markets in which we operate;

• our business plan and our ability to effectively manage our expenses or grow our revenue;

• anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

• our ability to drive ongoing usage of our platform by agents;

• our market opportunity;

• our ability to expand into new domestic and international markets;

• our ability to successfully develop and market our adjacent services, including with respect to any joint ventures;

• our expectations regarding anticipated benefits from our mortgage business and new mortgage joint venture with Guaranteed Rate;

• our ability to attract and retain agents and expand their businesses;

• beliefs and objectives for future operations;

• the timing and market acceptance of our products and services for our agents and their clients;

• the effects of seasonal and cyclical trends on our results of operations;

• our expectations concerning relationships with third parties;

• our ability to maintain, protect, and enhance our intellectual property;

• the effects of increased competition in our markets and our ability to compete effectively;

• our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and, if and as applicable, internationally; and

• economic and industry trends, growth forecasts, or trend analysis.

We have based these forward-looking statements largely on our current expectations and projections as of the date of this filing about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors” in this Quarterly Report and the impact of the COVID-19 pandemic. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking

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statements are reasonable, we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Quarterly Report are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason after the date of this Quarterly Report or to conform statements to actual results or revised expectations, except as required by law.

You should read this Quarterly Report and the documents that we reference herein and have filed with the SEC as exhibits to this Quarterly Report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Compass, Inc.

Condensed Consolidated Balance Sheets

(In millions, except share and per share data, unaudited)

	June 30, 2021			December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	810.7		$	440.1
Accounts receivable, net of allowance of $8.6 and $8.1, respectively		66.6			54.8
Compass Concierge receivables, net of allowance of $19.3 and $17.2, respectively		48.1			49.5
Other current assets		73.2			54.9
Total current assets		998.6			599.3
Property and equipment, net		146.4			141.7
Operating lease right-of-use assets		438.3			426.6
Intangible assets, net		107.4			45.6
Goodwill		177.4			119.8
Other non-current assets		43.5			32.1
Total assets	$	1,911.6		$	1,365.1
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable	$	31.8		$	36.6
Commissions payable		91.7			62.0
Accrued expenses and other current liabilities		140.2			106.8
Current lease liabilities		76.6			68.1
Concierge credit facility		11.1			8.4
Total current liabilities		351.4			281.9
Non-current lease liabilities		441.0			435.9
Other non-current liabilities		43.7			23.5
Total liabilities		836.1			741.3
Commitments and contingencies (Note 6)
Convertible preferred stock, $0.00001 par value, 0 and 246,430,170 shares authorized at June 30, 2021 and December 31, 2020, respectively; 0 and 237,047,550 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		—			1,486.7
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value, 13,850,000,000 and 700,754,910 shares authorized at June 30, 2021 and December 31, 2020, respectively; 396,669,967 and 125,221,900 shares issued at June 30, 2021 and December 31, 2020, respectively; 394,419,967 and 122,971,900 shares outstanding at June 30, 2021 and December 31, 2020, respectively		—			—
Additional paid-in capital		2,395.9			238.0
Accumulated deficit		(1,320.4	)		(1,100.9	)
Total stockholders’ equity (deficit)		1,075.5			(862.9	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	1,911.6		$	1,365.1

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

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Compass, Inc.

Condensed Consolidated Statements of Operations

(In millions, except share and per share data, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue	$	1,951.4		$	682.1		$	3,065.3		$	1,302.0
Operating expenses:
Commissions and other related expense		1,590.4			559.0			2,532.6			1,067.8
Sales and marketing		124.3			90.8			235.6			197.3
Operations and support		96.7			44.5			166.7			105.6
Research and development		73.5			34.2			170.1			73.0
General and administrative		59.4			26.5			152.3			53.0
Depreciation and amortization		14.9			12.7			28.4			25.1
Total operating expenses		1,959.2			767.7			3,285.7			1,521.8
Loss from operations		(7.8	)		(85.6	)		(220.4	)		(219.8	)
Investment income, net		—			0.5			—			2.0
Interest expense		(0.6	)		—			(1.1	)		—
Loss before income taxes		(8.4	)		(85.1	)		(221.5	)		(217.8	)
Benefit from income taxes		1.3			0.9			2.0			0.9
Net loss	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.02	)	$	(0.77	)	$	(0.87	)	$	(1.99	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		377,615,338			109,120,449			252,958,956			108,942,655

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

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Compass, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In millions, except share amounts, unaudited)

	Convertible Preferred Stock						Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares		Amount
For the three months ended June 30, 2021:
Balances at March 31, 2021		221,127,100		$	1,419.1			143,852,070	$	—	$	486.0	$	—		$	(1,313.3	)	$	(827.3	)
Net loss		—			—			—		—		—		—			(7.1	)		(7.1	)
Issuance of shares in connection with acquisitions		—			—			606,510		—		5.8		—			—			5.8
Conversion of convertible preferred stock to common stock in connection with the initial public offering		(221,127,100	)		(1,419.1	)		223,033,725		—		1,419.1		—			—			1,419.1
Issuance of common stock in connection with the initial public offering, net of offering costs		—			—			26,296,438		—		438.7		—			—			438.7
Exercise of stock options		—			—			550,194		—		1.3		—			—			1.3
Early exercise of stock options		—			—			81,030		—		—		—			—			—
Vesting of early exercised stock options		—			—			—		—		1.3		—			—			1.3
Stock-based compensation		—			—			—		—		43.7		—			—			43.7
Balances at June 30, 2021		—		$	—			394,419,967	$	—	$	2,395.9	$	—		$	(1,320.4	)	$	1,075.5
For the three months ended June 30, 2020:
Balances at March 31, 2020		246,430,170		$	1,526.7			109,717,910	$	—	$	154.7	$	0.1		$	(963.4	)	$	(808.6	)
Net loss		—			—			—		—		—		—			(84.2	)		(84.2	)
Unrealized loss on investments		—			—			—		—		—		(0.1	)		—			(0.1	)
Issuance of shares in connection with acquisitions		—			—			179,920		—		1.2		—			—			1.2
Exercise of stock options		—			—			747,660		—		3.2		—			—			3.2
Stock-based compensation		—			—			—		—		13.0		—			—			13.0
Balances at June 30, 2020		246,430,170		$	1,526.7			110,645,490	$	—	$	172.1	$	—		$	(1,047.6	)	$	(875.5	)

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

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Compass, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In millions, except share amounts, unaudited)

	Convertible Preferred Stock							Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
		Shares			Amount			Shares		Amount
For the six months ended June 30, 2021:
Balances at December 31, 2020			237,047,550		$	1,486.7			122,971,900	$	—	$	238.0	$	—		$	(1,100.9	)	$	(862.9	)
Net loss			—			—			—		—		—		—			(219.5	)		(219.5	)
Issuance of shares in connection with acquisitions			—			—			855,740		—		10.1		—			—			10.1
Conversion of Series D convertible preferred stock			(15,920,450	)		(67.6	)		15,920,450		—		67.6		—			—			67.6
Conversion of convertible preferred stock to common stock in connection with the initial public offering			(221,127,100	)		(1,419.1	)		223,033,725		—		1,419.1		—			—			1,419.1
Issuance of common stock in connection with the initial public offering, net of offering costs			—			—			26,296,438		—		438.7		—			—			438.7
Exercise of stock options			—			—			4,523,124		—		11.2		—			—			11.2
Early exercise of stock options			—			—			818,590		—		—		—			—			—
Vesting of early exercised stock options			—			—			—		—		2.5		—			—			2.5
Stock-based compensation			—			—			—		—		208.7		—			—			208.7
Balances at June 30, 2021			—		$	—			394,419,967	$	—	$	2,395.9	$	—		$	(1,320.4	)	$	1,075.5
For the six months ended June 30, 2020:
Balances at December 31, 2019			246,365,350		$	1,525.7			109,294,060	$	—	$	143.4	$	0.1		$	(825.1	)	$	(681.6	)
Cumulative change in accounting principle (ASU 2016-13)			—			—			—		—		—		—			(5.6	)		(5.6	)
Net loss			—			—			—		—		—		—			(216.9	)		(216.9	)
Unrealized loss on investments			—			—			—		—		—		(0.1	)		—			(0.1	)
Issuance of shares in connection with acquisitions			—			—			401,310		—		1.2		—			—			1.2
Issuance of Series G convertible preferred stock, net of issuance costs			64,820			1.0			—		—		—		—			—			—
Exercise of stock options			—			—			950,120		—		3.4		—			—			3.4
Stock-based compensation			—			—			—		—		24.1		—			—			24.1
Balances at June 30, 2020			246,430,170		$	1,526.7			110,645,490	$	—	$	172.1	$	—		$	(1,047.6	)	$	(875.5	)

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

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Compass, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions, unaudited)

	Six Months Ended June 30,
	2021			2020
Operating Activities
Net loss	$	(219.5	)	$	(216.9	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		28.4			25.1
Stock-based compensation		221.8			24.1
Change in acquisition related contingent consideration		(0.5	)		1.9
Bad debt expense		6.2			9.6
Amortization of debt issuance costs		0.6			—
Changes in operating assets and liabilities:
Accounts receivable		(10.4	)		(30.9	)
Compass Concierge receivables		(3.3	)		(28.0	)
Other current assets		(18.2	)		6.2
Other non-current assets		(10.8	)		(3.1	)
Operating lease right-of-use assets and operating lease liabilities		2.0			23.1
Accounts payable		(5.6	)		(11.8	)
Commissions payable		27.8			31.1
Accrued expenses and other liabilities		25.6			9.7
Net cash provided by (used in) operating activities		44.1			(159.9	)
Investing Activities
Proceeds from sales and maturities of marketable securities		—			44.4
Capital expenditures		(20.1	)		(19.2	)
Payments for acquisitions, net of cash acquired		(103.8	)		(0.8	)
Net cash (used in) provided by investing activities		(123.9	)		24.4
Financing Activities
Proceeds from issuance of convertible preferred stock, net of issuance costs		—			1.0
Proceeds from exercise and early exercise of stock options		16.2			3.4
Proceeds from drawdowns on Concierge credit facility		15.5			—
Repayments of drawdowns on Concierge credit facility		(12.8	)		—
Payments of contingent consideration related to acquisitions		(6.7	)		(1.4	)
Payments of debt issuance costs for the Revolving Credit and Guaranty Agreement		(1.4	)		—
Proceeds from issuance of common stock upon initial public offering, net of offering costs		439.6			—
Net cash provided by financing activities		450.4			3.0
Net increase (decrease) in cash and cash equivalents		370.6			(132.5	)
Cash and cash equivalents at beginning of period		440.1			491.7
Cash and cash equivalents at end of period	$	810.7		$	359.2
Supplemental disclosures of cash flow information:
Cash paid for interest	$	0.5		$	—
Supplemental non-cash information:
Issuance of common stock for acquisitions	$	10.1		$	1.2
Conversion of convertible preferred stock in connection with initial public offering	$	1,419.1		$	—
Conversion of Series D convertible preferred stock	$	67.6		$	—

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

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Compass, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Business and Basis of Presentation

Description of the Business

Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors of the Company approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc.

The Company provides an end-to-end platform that empowers its residential real estate agents to deliver exceptional service to seller and buyer clients. The Company’s platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service and other critical functionality, all custom-built for the real estate industry which enables the Company’s core brokerage services. The platform also uses proprietary data, analytics, artificial intelligence, and machine learning to deliver high value recommendations and outcomes for Compass agents and their clients.

The Company’s agents are independent contractors who affiliate their real estate licenses with the Company, operating their businesses on the Company’s platform and under the Compass brand. The Company generates revenue from clients through its agents by assisting home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, like title and escrow services, which comprise a smaller portion of the Company’s revenue to date. The Company currently generates substantially all of its revenue from commissions paid by clients at the time that a home is transacted.

Stock Split

In March 2021, the Company’s board of directors and the stockholders of the Company approved a ten-for-one forward stock split of the Company’s common stock and convertible preferred stock (collectively, the “Capital Stock”), which became effective on March 19, 2021. The authorized number of each class and series of Capital Stock was proportionally increased in accordance with the ten-for-one stock split and the par value of each class of Capital Stock was adjusted from $0.0001 to $0.00001 as a result of this forward stock split. All common stock, convertible preferred stock, stock options, restricted stock units (“RSUs”) and per share information presented within these condensed consolidated financial statements have been adjusted to reflect this forward stock split on a retroactive basis for all periods presented, except where otherwise noted.

Initial Public Offering

On April 6, 2021, the Company completed its initial public offering (“IPO”) and the Company’s Class A common stock began trading on the New York Stock Exchange on April 1, 2021 under the symbol “COMP”. In connection with the IPO, the Company issued and sold 26,296,438 shares of its common stock at a public offering price of $18.00 per share. The Company received aggregate proceeds of $438.7 million from the IPO, net of the underwriting discount and offering costs of approximately $11.0 million (of which $0.9 million were paid in 2020). Offering costs, including the legal, accounting, printing and other IPO-related costs have been recorded in Additional paid-in capital against the proceeds from the offering. During April 2021, also in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of common stock and the Company reclassified $1.4 billion of convertible preferred stock to Additional paid-in-capital.

On March 31, 2021, in connection with the effectiveness of the Company’s IPO registration statement, the Company recognized $148.5 million in stock-based compensation expense for (i) certain RSUs that contained both service-based and liquidity event-based vesting conditions as the liquidity event-based vesting condition was satisfied upon effectiveness of the registration statement and (ii) certain stock options and RSU awards with service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange.

In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12,500,000,000 shares of Class A common stock, 1,250,000,000 shares of Class B common stock, 100,000,000 shares of Class C common stock and 25,000,000 shares of undesignated preferred stock. On March 31, 2021, in connection with the effectiveness of the Company’s IPO registration statement, 15,244,490 shares of Class A common stock held by the Company’s founder and Chief Executive Officer were exchanged for an equivalent number of shares of Class C common stock. In addition, any Class A common stock issued to the Company’s Chief Executive Officer from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock once the RSUs have been settled for the underlying Class A common stock. 

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Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all controlled subsidiaries. The condensed consolidated statements of operations include the results of entities acquired from the date of the acquisition.

The unaudited interim condensed consolidated financial statements and related disclosures have been prepared by management on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair statement of the interim periods presented. 

The results of the interim periods presented are not necessarily indicative of the results expected for the full year. Certain information and notes normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations. Accordingly, the unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2020, included in the final prospectus that forms a part of the Company’s IPO registration statement, dated as of March 31, 2021 and filed with the Securities and Exchange Commission on April 1, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) valuation of the Company’s common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) contingent considerations in connection with business combinations, (iv) incremental borrowing rate used for the Company’s operating leases, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. The Company determines its estimates and judgments based on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.

There are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact the Company’s operations and its customers for an indefinite period of time. The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and the Company’s financial condition, results of operations, or cash flows remain uncertain and depend on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on the Company’s business in particular. The Company will continue to assess the impacts of the COVID-19 pandemic and will adjust its operations as necessary.

Business Combinations

Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred.

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Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. The Company recognizes forfeitures as they occur.

For stock options, which the Company issues to employees and affiliated agents, the Company generally estimates the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends.

The Company also issues RSUs to employees and affiliated agents. In addition to the issuance of RSUs to agents as equity compensation for the provision of services, the Company offers RSUs to affiliated agents through its Agent Equity Program. The Agent Equity Program offers affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs. RSUs issued in connection with the Agent Equity Program are granted at the beginning of the year following the calendar year in which the commissions were earned and are subject to the terms and conditions of the 2012 Stock Incentive Plan and the 2021 Equity Incentive Plan, as applicable.

The Company’s RSUs granted prior to December 2020 generally vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years, except for the RSUs associated with the 2020 Agent Equity Program which vested immediately on the date of issuance. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, generally defined as a change in control or the effective date of the registration statement for the Company’s IPO. Upon the satisfaction of both vesting conditions and any delayed settlement period, the Company will issue shares to the award holders from the pool of authorized but unissued common stock. The Company intends to settle RSUs for which all vesting conditions have been satisfied on September 28, 2021 (for affiliated agents) and October 28, 2021 (for employees). The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will begin to be recognized as expense when both the required service-based vesting condition and the liquidity event-based vesting condition has been achieved using the accelerated attribution method. The liquidity event-based vesting requirement was met on March 31, 2021, the effective date of the Company’s registration statement, see Note 1—“Business and Basis of Presentation—Initial Public Offering.”

Beginning in December 2020, the Company began issuing RSUs that vest upon the satisfaction of only a service-based vesting condition that is generally ranging from four to five years. The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense on a straight-line basis as the required service-based vesting condition is satisfied. Any vested RSUs that require only a service-based vesting condition will convert to common stock following vesting and their prescribed delayed settlement periods.

For RSUs to be granted in connection with the 2021 Agent Equity Program, the Company determines the value of the stock-based compensation expense at the time the underlying commission is earned and begins to recognize the associated expense on a straight-line basis over the requisite service periods beginning on the closing date of the underlying real estate commission transactions. The stock-based compensation expense is recorded as a liability and will be reclassified to additional paid-in capital at the end of the vesting period when the underlying RSUs are issued. For the six months ended June 30, 2021, the Company recognized stock-based compensation expense and an associated liability of $13.7 million in connection with RSUs earned as a part of the 2021 Agent Equity Program. The associated liability is recorded within Accrued expenses and other current liabilities in the condensed consolidated balance sheet.

On a limited basis, the Company has issued stock options and RSUs that contain service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange. Such awards are valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the IPO, are capitalized and recorded on the condensed consolidated balance sheets. As of December 31, 2020, $1.8 million of deferred offering costs were capitalized in Other non-current assets on the condensed consolidated balance sheet. During the three months ended June 30, 2021, $11.0 million of deferred offering costs were recorded against the proceeds from the initial public offering in Additional paid-in capital on the condensed consolidated balance sheet and as of June 30, 2021 there were no remaining deferred offering costs included on the condensed consolidated balance sheet.

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New Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU is part of the FASB’s simplification initiative, and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The new standard became effective for public companies with fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisitions

During the six months ended June 30, 2021, the Company completed several business acquisitions including the acquisition of 100% of the ownership interests in KVS Title, LLC, a title insurance and escrow settlement services company, Glide Labs, Inc., a real estate technology company and four small real estate brokerages. The purpose of these acquisitions was to expand the Company’s title and escrow offerings, to grow the Company’s transaction management tools included in its end to end real estate platform, and to expand its existing brokerage business in key domestic markets. The Company has accounted for two of the real estate brokerages as asset acquisitions and the remaining acquisitions were accounted for as business combinations.

Total Consideration

The total consideration for acquisitions completed during the six months ended June 30, 2021 comprised $117.0 million of cash, net of cash acquired, $5.8 million in Class A Common Stock of the Company and up to $4.7 million of additional cash that may be paid contingent on certain earnings-based targets being met through 2023. During the six months ended June 30, 2021, $103.8 million in cash was paid in connection with these acquisitions, net of cash acquired, and up to an aggregate of $13.2 million will be paid once certain indemnification matters and pre-acquisition contingencies are resolved. Future cash payments were recorded as Accrued expenses and other current liabilities in the condensed consolidated balance sheet. 

The fair value of the assets acquired and the liabilities assumed primarily resulted in the recognition of: broker relationships of $55.9 million; trademark intangible assets of $10.8 million; acquired technology of $5.5 million; operating lease right-of-use assets of $6.2 million; $6.0 million of other current and non-current assets; lease liabilities of $6.2 million; and $8.3 million of other current and non-current liabilities. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill of $57.6 million. Acquired intangible assets are being amortized over their estimated useful lives of approximately 4 to 9 years.

Approximately $23.8 million of the goodwill recorded during the six months ended June 30, 2021 is deductible for tax purposes. The amount of tax-deductible goodwill may increase in the future to approximately $45.7 million dependent on the payment of certain holdbacks and acquisition related compensation arrangements. These amounts are not expected to have an impact on the income tax provision while the Company maintains a full valuation allowance on its U.S. deferred tax assets.

The Company has recorded the preliminary purchase price allocation as of the acquisition dates and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the respective transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the consolidated statements of operations.

Pro forma revenue and earnings for 2021 acquisitions have not been presented because they are not material to the Company’s consolidated revenue and results of operations, either individually or in the aggregate.

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Contingent Consideration

Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired businesses in the event that certain targets and milestones are met. As of June 30, 2021, the undiscounted maximum payment under these arrangements was $87.4 million. Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Opening balance	$	28.0		$	17.1		$	39.8		$	16.4
Acquisitions		2.7			—			4.7			—
Payments and issuances		(0.4	)		(3.0	)		(11.0	)		(3.0	)
Fair value losses (gains) included in net loss		2.7			1.2			(0.5	)		1.9
Closing Balance	$	33.0		$	15.3		$	33.0		$	15.3

Other Acquisition Related Compensation

In connection with the Company’s acquisitions, certain amounts paid or to be paid to selling shareholders are subject to clawback and forfeiture dependent on certain employees and agents providing continued service to the Company. These retention-based payments are accounted for as compensation for future services and the Company recognizes the expenses over the service period. As of June 30, 2021, the Company expects to pay up to an additional $44.9 million in future compensation to such selling shareholders in connection with these arrangements. For the three months ended June 30, 2021 and 2020, the Company recognized $7.2 million and $(0.1) million, respectively, and for the six months ended June 30, 2021 and 2020, the Company recognized $11.4 million and $1.2 million, respectively, in compensation expense (income) within Operations and support in the accompanying condensed consolidated statements of operations related to these arrangements.

During the six months ended June 30, 2021, the Company granted 277,776 shares of common stock to sellers in accordance with arrangements where vesting of the shares is contingent on such sellers providing continued service to the Company. Accordingly, these share-based payments will be accounted for as stock-based compensation expense over the underlying retention periods. There was no stock-based compensation expense related to these compensation arrangements recognized during the six months ended June 30, 2021.

4. Fair Value of Financial Assets and Liabilities

The Company’s cash and cash equivalents of $810.7 million and $440.1 million as of June 30, 2021 and December 31, 2020, respectively, are held in cash and money market funds which are classified as Level 1 within the fair value hierarchy because they are valued using quoted prices in active markets. These are the Company’s only Level 1 financial instruments. The Company does not hold any Level 2 financial instruments. The Company’s contingent consideration liabilities of $33.0 million and $39.8 million as of June 30, 2021 and December 31, 2020, respectively, are the Company’s only Level 3 financial instruments.

See Note 3 – “Acquisitions” for changes in contingent consideration for the three and six months ended June 30, 2021 and 2020. The following table presents the balances of contingent consideration (in millions):

	June 30, 2021		December 31, 2020
Accrued expenses and other current liabilities	$	10.3	$	19.1
Other non-current liabilities		22.7		20.7
Total contingent consideration	$	33.0	$	39.8

There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

Level 3 Financial Liabilities

The Company’s Level 3 financial liabilities relate to acquisition-related contingent consideration arrangements. Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired entities in the event that certain targets and milestones are met. The Company estimated the fair value of the contingent consideration using a Monte Carlo simulation, which is based on significant inputs, primarily forecasted future results of the acquired businesses, not observable in the market, discount rates and earnings volatility measures. The changes in the fair value of Level 3 financial liabilities are included within Operations and support in the accompanying condensed consolidated statements of operations (see Note 3 – “Acquisitions”). 

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The following tables present quantitative information regarding the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 liabilities, consisting of different contingent consideration agreements, measured at fair value on a recurring basis:

	June 30, 2021	December 31, 2020
Discount rate	0.0% - 2.0%	0.0% - 2.0%
Weighted average discount rate	1.6%	1.3%
Earnings volatility	0% - 18%	0% - 18%
Weighted average earnings volatility	8.7%	6.9%

5. Debt

Concierge Credit Facility

In July 2020, the Company entered into a Revolving Credit and Security Agreement (the “Concierge Facility”) with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance, in part, the Company’s Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. Prior to July 29, 2021 borrowings under the Concierge Facility accrued interest at rates equal to the adjusted London interbank offered rate (“LIBOR”) plus a margin of 3.00 as adjusted, or an alternate rate of interest upon the occurrence of certain changes in LIBOR. Additionally, prior to July 29, 2021, the Company was required to pay an annual commitment fee of 0.50% on a quarterly basis based on the unused portion of the Concierge Facility irrespective of the Company’s utilization rate. On July 29, 2021, the Company amended and restated the Concierge Facility (the “A&R Concierge Facility”), extending the revolving period for another twelve months, lowering the interest rate to LIBOR plus a margin of 1.85%, which may be adjusted, and lowering the annual commitment fee to 0.35% if the Concierge Facility is utilized greater than 50% (the annual commitment fee remained the same, at 0.50%, if the Concierge Facility is utilized less than 50%). Pursuant to the A&R Concierge Facility, the principal amount, if any, is payable in full in January 2023, unless earlier terminated or extended. The interest rate on the Concierge Facility was 3.16% as of June 30, 2021. As of June 30, 2021 and December 31, 2020, there were $11.1 million and $8.4 million, respectively, in borrowings outstanding under the Concierge Facility.

The Company has the option to repay the borrowings under the Concierge Facility without premium or penalty prior to maturity. The Concierge Facility contains customary affirmative covenants, such as financial statement reporting requirements, as well as covenants that restrict its ability to, among other things, incur additional indebtedness, sell certain receivables, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. Additionally, in the event that the Company fails to comply with certain financial covenants that require the Company to meet certain liquidity-based measures, the commitments under the Concierge Facility will automatically be reduced to zero and the Company will be required to repay any outstanding loans under the Concierge Facility. As of June 30, 2021, the Company was in compliance with the covenants under the Concierge Facility.

Revolving Credit Facility

In March 2021, the Company entered into a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”) with several lenders and issuing banks and Barclays Bank PLC, as administrative agent and as collateral agent. The Revolving Credit Facility provides for a $350.0 million revolving credit facility, which may be increased by the greater of $250.0 million and 18.5% of the Company’s consolidated total assets, plus such additional amount so long as the Company’s total net leverage ratio does not exceed 4.50:1.00 on a pro forma basis as of the most recent test period, subject to the terms of the Revolving Credit Facility. The Revolving Credit Facility also includes a letter of credit sublimit which is the lesser of (i) $125.0 million and (ii) the aggregate unused amount of the revolving commitments then in effect under the Revolving Credit Facility. The Company’s obligations under the Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured by a first priority security interest in substantially all of the Company’s assets and the Company’s subsidiary guarantors.

Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the base rate plus a margin of 0.50% or (ii) a floating rate per annum equal to the rate at which dollar deposits are offered in the London interbank market plus a margin of 1.50%. In the Revolving Credit Facility, the base rate is defined as the highest of (a) the prime rate as quoted by The Wall Street Journal, (b) the federal funds effective rate plus 0.50%, (c) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period plus 1.00% and (d) 1.00%. During an event of default under the Revolving Credit Facility, the applicable interest rates are increased by 2.0% per annum.

The Company is also obligated to pay other customary fees for a credit facility of this size and type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175% per annum and fees associated with letters of credit. The principal amount, if any, is payable in full in March 2026, unless earlier terminated or extended.

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The Company has the option to repay the Company’s borrowings, and to permanently reduce the loan commitments whole or in part, under the Revolving Credit Facility without premium or penalty prior to maturity. As of June 30, 2021, there were no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $15.3 million.

The Revolving Credit Facility contains customary representations, warranties, financial covenants applicable to the Company and to the Company’s restricted subsidiaries, affirmative covenants, such as financial statement reporting requirements, and negative covenant which restrict its ability, among other things, to incur liens and indebtedness, make certain investments, declare dividends, dispose of, transfer or sell assets, make stock repurchases and consummate certain other matters, all subject to certain exceptions. The financial covenants require that the Company maintain certain liquidity-based measures and total revenue requirements. As of June 30, 2021, the Company was in compliance with the covenants under the Revolving Credit Facility.

The Revolving Credit Facility includes customary events of default that include, among other things, nonpayment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility.

The Company incurred debt issuance costs of $1.4 million in connection with the Revolving Credit Facility, which are included in Other current assets and Other non-current assets in the condensed consolidated balance sheet. The unamortized debt issuance costs will be amortized within Interest expense in the consolidated statements of operations over the remaining term on a straight-line basis.

6. Commitments and Contingencies

Legal Proceedings

From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the Company’s business taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Legal costs related to the defense of loss contingencies are expensed as incurred.

Claims or regulatory actions against the Company, whether meritorious or not, could have an adverse impact on the Company due to legal costs, diversion of management resources and other elements. Except as identified with respect to the matters below, the Company does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.

Avi Dorfman v. Robert Reffkin and Urban Compass, Inc.

In July 2014, Avi Dorfman (“Dorfman”) and RentJolt, Inc. (“RentJolt”) (collectively, “Plaintiffs”) filed suit against the Company and Robert Reffkin (“Defendants”), seeking compensation for certain services, trade secrets and other contributions allegedly provided in the formation of the Company. After miscellaneous motion practice, in June 2018, Defendants moved for summary judgment, the court held oral argument in October 2018 and ultimately denied the Defendants’ motion for summary judgment in October 2019. In November 2019, Defendants appealed portions of the court’s summary judgment ruling. In February 2020, the appellate court granted in part and denied in part Defendants’ appeal resulting in one plaintiff (RentJolt) voluntarily discontinuing its only remaining claim and leaving the case. Defendants have one motion in limine pending. A trial date was previously set for September 2021; in August 2021, the trial date was rescheduled to January 2022.

Realogy Holdings Corp., et al v. Urban Compass, Inc. and Compass Inc.

In July 2019, Realogy Holdings Corp., NRT New York LLC (“Corcoran”) and many of its related entities (collectively, “Plaintiffs”) filed a complaint against the Company in the New York Supreme Court. The complaint alleges various violations of New York and California state law related to claims of unfair competition and seeks unspecified damages. The Company filed a Motion to Dismiss in September 2019. In September 2019, Plaintiffs filed an amended complaint, removing one claim and adding a claim for defamation. In November 2019, the Company moved to compel arbitration related to claims asserted by Corcoran and moved to

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dismiss all of the counts. In June 2020, the Court denied the motion to dismiss and denied the motion to compel arbitration as moot, granting Plaintiffs leave to amend the complaint as to claims asserted by Corcoran without prejudice to Defendants’ ability to move to compel or dismiss the Second Amended Complaint.

On July 3, 2020, Plaintiffs filed their Second Amended Complaint. On December 18, 2020, the Court denied the Company’s motion to compel arbitration on Plaintiffs’ second amended complaint without prejudice. Defendants’ Answer to the Second Amended Complaint and Counterclaims were filed on January 28, 2021. Additionally, the Company filed its appeal of the lower Court’s denial of the Company’s motion to dismiss and motion to compel arbitration on February 1, 2021. On June 1, 2021, the First Department affirmed the lower Court’s denial of the Company’s motion to compel arbitration. Discovery is proceeding, with an end date set for June 30, 2022. The Company is unable to predict the outcome of this action or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein.

Letter of Credit Agreements

The Company has irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities. As of June 30, 2021 and December 31, 2020, the Company was contingently liable for $57.3 million and $50.7 million, respectively, under these letters of credit. As of June 30, 2021, $15.3 million and $42.0 million of these letters of credit were collateralized by the Company’s Revolving Credit Facility and cash and cash equivalents, respectively. As of December 31, 2020, all letters of credit were collateralized by the Company’s cash and cash equivalents.

Escrow and Trust Deposits

As a service to its home buyers and home sellers, the Company administers escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. The escrow and trust deposits totaled $282.5 million and $46.1 million, respectively as of June 30, 2021 and December 31, 2020. These deposits are not assets of the Company and therefore are excluded from the accompanying condensed consolidated balance sheets. However, the Company remains contingently liable for the disposition of these deposits.

7. Preferred Stock and Common Stock

Convertible Preferred Stock

In March 2020, the Company issued an additional 64,820 shares of its Series G convertible preferred stock for proceeds of $1.0 million.

In March 2021, the holders of 15,920,450 shares of the Company’s Series D convertible preferred stock elected to convert such shares into an equal number of shares of Class A common stock.

During April 2021, in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of Class A common stock and the Company reclassified $1.4 billion of Convertible preferred stock to Additional paid-in-capital.

Undesignated Preferred Stock

In April 2021, the Company adopted a restated certificate of incorporation which provides for authorized undesignated preferred stock to 25,000,000. As of June 30, 2021, there are no shares of the Company’s preferred stock issued and outstanding.

Common Stock

In February 2021, the Company approved the establishment of Class C common stock and an agreement with the Company’s CEO to exchange his Class A common stock for Class C common stock. On March 31, 2021, in connection with the effectiveness of the registration statement for the Company’s IPO, 15,244,490 shares of Class A common stock held by the Company’s founder and CEO were automatically exchanged for an equivalent number of shares of Class C common stock. In addition, any Class A common stock issued to the Company’s Chief Executive Officer from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock. Each share of Class C common stock is entitled to twenty votes per share and will be convertible at any time into one share of Class A common stock and will automatically convert into Class A common stock under certain “sunset” provisions. Other than certain permitted transfers for estate planning purposes, upon a transfer of Class C common stock, the Class C common stock will convert into Class A common stock.

In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12,500,000,000 shares of Class A common stock, 1,250,000,000 shares of Class B common stock and 100,000,000 shares of Class C common stock. As of June 30, 2021, the Company had three classes of common stock: Class A common stock, Class B common stock and Class C common stock. Each class has par value of $0.00001.

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	June 30, 2021
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		12,500,000,000		376,863,317		374,613,317
Class B common stock		1,250,000,000		4,562,160		4,562,160
Class C common stock		100,000,000		15,244,490		15,244,490
Total		13,850,000,000		396,669,967		394,419,967

As of December 31, 2020, the Company had two classes of common stock: Class A common stock and Class B common stock. Each class has a par value of $0.00001.

	December 31, 2020
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		530,136,050		118,549,390		116,299,390
Class B common stock		170,618,860		6,672,510		6,672,510
Total		700,754,910		125,221,900		122,971,900

Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are not entitled to vote. Holders of Class C common stock are entitled to twenty votes per share.

Each share of Class C common stock is convertible at any time of the option of the holder into one share of Class A common stock. Each share of Class C common stock will automatically convert into a share of Class A common stock upon sale or transfer, except for certain permitted transfers.

On July 1, 2021, the board of directors of the Company approved the conversion of all outstanding shares of the Company’s Class B common stock into the same number of shares of the Company’s Class A common stock effective on that date. A description of all other rights, preferences and privileges of the holders of the Company’s common stock are included in the Company’s IPO prospectus on Form S-1 filed with the Securities and Exchange Commission.

As of June 30, 2021 and December 31, 2020, the Company had shares of common stock reserved for issuance as follows:

	June 30, 2021		December 31, 2020
Convertible preferred stock outstanding		—		238,954,050
Options issued and outstanding		59,767,636		62,827,150
Restricted stock units issued and outstanding		55,268,499		32,556,160
Shares available for future stock-based incentive award issuances		35,035,925		11,679,150
Total		150,072,060		346,016,510

As of June 30, 2021 and December 31, 2020, the Company had 2,250,000 shares of Class A common stock issued and held as treasury stock which were subsequently retired on July 1, 2021.

8. Stock-Based Compensation

2012 Stock Incentive Plan

In October 2012, the Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”). Under the 2012 Plan, employees and non-employees could be granted options on common stock, RSUs and other stock-based awards, including awards earned in connection with the Agent Equity Program. Generally, these awards were based on stock agreements with ten-year contractional terms for stock options, and seven-year contractual terms for RSUs, subject to board approval.

2021 Equity Incentive Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Equity Incentive Plan (the “2021 Plan”), with an initial pool of 29,666,480 shares of common stock available for granting stock-based awards plus any reserved shares of common stock not issued or subject to outstanding awards granted under the Company’s 2012 Plan. In addition, on

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January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the 2021 Plan shall be increased automatically by the number of shares equal to five percent (5%) of the total number of outstanding shares of common stock and shares of preferred stock of the Company outstanding (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of such increase in any particular year. The 2021 Plan became effective on March 30, 2021 and as of that date, the Company ceased granting new awards under the 2012 Plan and all remaining shares available under the 2012 Plan were transferred to the 2021 Plan. As of June 30, 2021, there were 35,035,925 shares available for future grants under the 2021 Plan, inclusive of those shares transferred from the 2012 Plan.

2021 Employee Stock Purchase Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP authorizes the issuance of 7,416,620 shares of common stock to purchase rights granted to the Company’s employees or to employees of its designated affiliates. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the ESPP shall be increased automatically by the number of shares equal to one percent (1%) of the total number of outstanding shares of common stock and shares of preferred stock of the Company outstanding (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of the increase in any particular year. No more than 150,000,000 shares of common stock may be issued over the term of the ESPP, subject to certain exceptions set forth in the ESPP. As of the date of this filing, no shares have been granted under the ESPP.

Stock Options

A summary of stock option activity under the 2012 Plan and the 2021 Plan, including 1,061,250 stock options that were granted outside of the 2012 Plan in 2019, is presented below (in millions, except share and per share amounts):

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)		Aggregate Intrinsic Value
Balances as of December 31, 2020		62,827,150		$	4.55		7.8	$	1,208.0
Granted		3,119,998			13.88
Exercised		(5,341,714	)		3.03
Forfeited		(837,798	)		6.42
Balances as of June 30, 2021		59,767,636		$	5.14		7.5	$	483.9
Exercisable and vested at June 30, 2021		34,154,376		$	3.61		6.5	$	325.5

During the six months ended June 30, 2021 and 2020, the intrinsic value of options exercised was $88.5 million and $2.7 million, respectively.

Restricted Stock Units

A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:

	Number of Shares		Weighted Average Grant Date Fair Value
Balances as of December 31, 2020	32,556,160		$	6.75
Granted	23,376,819			14.14
Vested and converted to common stock	—			—
Forfeited	(664,480	)		12.26
Balances as of June 30, 2021	55,268,499		$	9.81

Included in the table above are 8,611,810 RSUs granted to an executive employee during the three months ended March 31, 2021. These RSUs have service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange.

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Stock-Based Compensation Expense

Total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30, 2021
	2021		2020		2021		2020
Commissions and other related expense	$	11.7	$	0.5	$	56.3	$	4.6
Sales and marketing		8.6		2.5		17.6		5.4
Operations and support		2.8		0.7		7.8		1.5
Research and development		13.5		0.3		63.0		0.8
General and administrative		17.7		9.0		77.1		11.8
Total stock-based compensation expense	$	54.3	$	13.0	$	221.8	$	24.1

As more fully described in Note 1 – “Business and Basis of Presentation”, the Company recognized $148.5 million in stock-based compensation expense in connection with the effectiveness of the Company’s IPO registration statement on March 31, 2021. Stock-based compensation expense for the six months ended June 30, 2021 includes the following amounts related to a one-time acceleration of stock-based compensation expense in connection with the IPO (in millions):

	IPO Related Expense
Commissions and other related expense	$	41.7
Sales and marketing		1.8
Operations and support		3.1
Research and development		46.9
General and administrative		55.0
Total stock-based compensation expense	$	148.5

As of June 30, 2021, unrecognized stock-based compensation expense totaled $523.4 million and is expected to be recognized over a weighted-average period of 3.3 years.

The Company has not recognized any tax benefits from stock-based compensation as a result of the full valuation allowance maintained on its deferred tax assets.

Early Exercise of Stock Options

A majority of the stock options granted under the 2012 Plan provide option holders the right to elect to exercise unvested options in exchange for restricted common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service until the stock options are fully vested at the lesser of the original issuance price or the fair value the Company’s common stock.

During the six months ended June 30, 2021, 818,590 stock options were early exercised for total proceeds of $5.0 million. As of June 30, 2021, 1,431,410 shares of common stock received by holders from an early exercise were subject to repurchase. The cash proceeds received for unvested shares of common stock recorded within Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheet was $8.1 million as of June 30, 2021. Amounts recorded are transferred into Common stock and Additional paid-in capital within the condensed consolidated balance sheets as the shares vest.

9. Income Taxes

The Company recognized a benefit from income taxes of $1.3 million and $2.0 million for the three and six months ended June 30, 2021, respectively. This benefit resulted from a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions. Additionally, the Company incurred current tax expense from its operations in India, which was fully offset by a deferred tax benefit for future AMT tax credits. The Company recognized a benefit from income taxes of $0.9 million for the three and six months ended June 30, 2020.

The Company continues to maintain a full valuation allowance on all domestic net deferred tax assets based on numerous factors including estimated future taxable income and historic profitability.

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The Company does not have any amount recorded related to uncertain tax positions as of the period ended June 30, 2021 nor does it expect a substantial increase in the next 12 months. If applicable, the Company recognizes interest and penalties related to uncertain tax positions in the income tax provision.

The United States is the Company’s only material tax jurisdiction and as a result of net operating loss carryforwards, the Company is subject to audit for all years for US federal income tax purposes.

10. Net Loss Per Share Attributable to Common Stockholders

The Company computes net loss per share under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock, Class B common stock and Class C common stock are substantially identical, other than voting rights. Accordingly, the net loss per share attributable to common stockholders will be the same for Class A common stock, Class B common stock and Class C common stock on an individual or combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in millions, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Numerator:
Net loss attributable to common stockholders	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Denominator:
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		377,615,338			109,120,449			252,958,956			108,942,655
Net loss per share attributable to common stockholders, basic and diluted	$	(0.02	)	$	(0.77	)	$	(0.87	)	$	(1.99	)

The following participating securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Convertible preferred stock		—		248,336,668		—		248,336,668
Outstanding stock options		59,767,636		55,434,110		59,767,636		55,434,110
Outstanding RSUs		55,268,499		28,333,160		55,268,499		28,333,160
Unvested early exercised options		1,431,410		—		1,431,410		—
Unvested common stock		689,316		869,100		689,316		869,100
Total		117,156,861		332,973,038		117,156,861		332,973,038

11. Compass Concierge Receivables and Allowance for Credit Losses

In 2018, the Company launched the Compass Concierge Program for home sellers who have engaged Compass as their exclusive listing agent. The program, initially launched by the Company, is based on a services model (“Concierge Classic”) provided by Compass Concierge, LLC (“Compass Concierge”), which includes items such as consultation on suggested cosmetic updates or modifications to a specific property or guidance on securing licensed contractors or vendors to perform non-structural property improvements. The Concierge Classic program provides for the payment of the up-front costs of specified home improvement services provided by unrelated vendors.

In 2019, the Compass Concierge Program was expanded to include a loan program underwritten by an independent third-party lender (the “Lender”) through a commercial arrangement with Compass Concierge (“Concierge Capital”). Under the Concierge Capital program, the Lender originates and services unsecured consumer loans to home sellers following its independent underwriting process pursuant to program-level criteria provided by the Company. Pursuant to the Company’s agreement with the Lender, the consumer

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loans are unsecured, interest-free and have no associated fees except for late fees that the Lender may charge in its sole discretion. The Company has no right or obligation with respect to any individual consumer loan originated by the Lender. Under the agreement with the Lender, the Company has repayment rights against the Lender in connection with a corporate loan.

Payment to the Company for these services under the Concierge Classic model or repayment of the loan funds under the Concierge Capital model is due upon the earlier of a successful home sale, the termination of the listing agreement, or one year from the date in which costs were originally funded. Compass Concierge receivables (“Concierge Receivables”) are stated at the amount advanced to the home sellers, net of an estimated allowance for credit losses (“ACL”). The Company does not recognize any revenue or earn any fees from the Compass Concierge Program. The Company incurs service fees payable to the Lender and incurs bad debt expense in connection with the Compass Concierge Program.

The Company manages its credit risk by establishing a comprehensive credit policy for the approval of projects under the Concierge Classic program and new loans under the Concierge Capital program, while monitoring and reviewing the performance of its existing Concierge Receivables. Factors considered include but not limited to:

• No negative liens or judgements on the property;

• Seller’s available equity on the property;

• Loan to listing price ratio;

• FICO score (only for Concierge Capital program); and

• Macroeconomic conditions.

Credit Quality

The Company monitors credit quality by evaluating various attributes and utilizes such information in its evaluation of the appropriateness of the ACL. Based on the Company’s experience, the key credit quality indicator is whether the underlying properties associated with the Concierge Receivables will be sold or not. Concierge Receivables associated with properties that are eventually sold have a lower credit risk than those that are associated with properties that are not sold. For Concierge Receivables where repayments have not been triggered (i.e., earlier of (i) sale of the property, (ii) termination of a listing agreement or (iii) 12 months from the date costs were originally funded), the Company establishes an estimate as to the percentage of underlying properties that will be sold based on historical data. This estimate is updated quarterly and on an annual basis. As of June 30, 2021 and December 31, 2020, the amount of outstanding Concierge Receivables related to unsold properties was approximately 95% and 93%, respectively.

Allowance for credit losses

The Company maintains an ACL for the expected credit losses over the contractual life of the Concierge Receivables. The amount of ACL is based on ongoing, quarterly assessments by management. Historical loss experience is generally the starting point when the Company estimates the expected credit losses. The Company then considers whether (i) current conditions, such as the impact of COVID-19 and related economic uncertainty surrounding the pandemic, (ii) future economic conditions and (iii) any potential changes in the Compass Concierge Program that are reasonable and supportable would impact on its ACL. The following table summarizes the activity of the ACL for Concierge Receivables for the three and six months ended June 30, 2021 (in millions):

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Beginning of period	$	16.9		$	17.2
Allowances		2.8			4.7
Net write-offs and other		(0.4	)		(2.6	)
End of period	$	19.3		$	19.3

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Aging Status

The Company generally considers Concierge Receivables to be past due after being outstanding for over 30 days after initial billing. Changes in the Company’s estimate to the ACL is recorded through bad debt expense as Sales and marketing expense in the condensed consolidated statements of operations and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. The following tables present the aging analysis of Concierge Receivables as of June 30, 2021 (in millions):

	31-90 days		Over 90 days		Total Past Due		Current		Total
June 30, 2021	$	3.6	$	15.0	$	18.6	$	48.8	$	67.4

12. Restructuring Activities and COVID-19 Update

Beginning in March 2020, the onset of the COVID-19 pandemic resulted in a negative impact on the Company’s business in the second quarter of 2020 due to shelter-in-place and stay-at-home restrictions (in certain of the Company’s markets) which prohibited or reduced in-person residential real estate showings and the related impact on customer demand and housing inventory, as well as deteriorating economic conditions, such as increased unemployment rates. In light of the uncertain and rapidly evolving situation relating to COVID-19, the Company took a range of measures to address the uncertainties related to the COVID-19 pandemic including, but not limited to, reducing the size of its workforce, terminating certain lease obligations and reducing certain discretionary expenses during the first half of 2020. As a result of these cost-saving measures, the Company reduced its workforce by approximately 15%. Although the demand in the Company’s services had recovered starting in the second half of 2020, the duration of the pandemic and any impacts on consumer behavior are unknown, and the amount of that demand which will persist after the reversal of the stay-at-home orders is unknown. Additionally, the pandemic’s impacts on the overall economy and credit markets could significantly impact the Company’s estimates of fair value, which could affect the carrying amount of certain assets and liabilities. As of June 30, 2021, the impacts of the pandemic have not significantly impacted the carrying amount of the Company’s assets and liabilities.

The expenses resulting from these cost-saving measures were included in the consolidated statement of operations for the three and six months ended June 30, 2020, as follows (in millions):

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Severance		Lease Terminaion		Total		Severance		Lease Terminaion		Total
Sales and marketing	$	—	$	1.8	$	1.8	$	1.5	$	3.0	$	4.5
Operations and support		0.1		—		0.1		2.9		—		2.9
Research and development		—		—		—		0.7		—		0.7
General and administrative		0.5		—		0.5		0.9		—		0.9
Total	$	0.6	$	1.8	$	2.4	$	6.0	$	3.0	$	9.0

The Company did not recognize any restructuring expenses during the six months ended June 30, 2021. As of June 30, 2021 and December 31, 2020, the Company did not have any material remaining liabilities related to restructuring costs.

13. Subsequent Events

On July 13, 2021, the Company and Guaranteed Rate, Inc. (“Guaranteed Rate”) announced the entry into a definitive agreement by their respective subsidiaries to form OriginPoint, a new mortgage origination company. OriginPoint will originate mortgages for the Company’s real estate brokerage clients, as well as the clients of any other brokerage, in order to make loans available to a broad consumer audience.

On July 19, 2021, the Randall Family of Companies, a group of Southern Coastal New England residential real-estate brokerage entities, joined the Company through a stock purchase agreement. 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2020 included in our final prospectus, or our Final IPO Prospectus, that forms a part of the Registration Statement on Form S-1 (File No. 333- 253744), or the IPO Registration Statement, for our initial public offering, or our IPO, dated as of March 31, 2021 and filed with the SEC on April 1, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended, or the Securities Act. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section entitled “Special Note Regarding Forward Looking Statements”. You should review the disclosure under the section entitled “Risk Factors” in this Quarterly Report for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

OVERVIEW

Management’s discussion and analysis of financial condition and results of operations, or MD&A, is provided as a supplement to the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report and is intended to provide an understanding of our results of operations, financial condition and changes in our results of operations and financial condition. Our MD&A is organized as follows:

• Introduction. This section provides a general description of our company and its business, recent developments affecting our company and discussions of how seasonal factors may impact our results.

• Results of Operations. This section provides our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis.

• Key Business Metrics and Non-GAAP Financial Measures. This section provides a discussion of key business metrics and Non-GAAP financial measures we use to evaluate our business and measure our performance, in addition to the measures presented in our condensed consolidated financial statements.

• Liquidity and Capital Resources. This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of June 30, 2021.

• Critical Accounting Estimates and Policies. This section discusses those accounting policies that are considered important to the evaluation and reporting of our financial condition and results of operations, and whose application requires us to exercise subjective and often complex judgments in making estimates and assumptions.

• Recent Accounting Pronouncements. This section provides a summary of the most recent authoritative accounting standards and guidance that have either been recently adopted by our company or may be adopted in the future.

INTRODUCTION

Our Company

Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors of the Company approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc.

Our Business and Business Model

We provide an end-to-end platform that empowers our residential real estate agents to deliver exceptional service to seller and buyer clients. Our platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service and other critical functionality, all custom-built for the real estate industry and enabling our core brokerage services. The platform also uses proprietary data, analytics, artificial intelligence, and machine learning to deliver high value recommendations and outcomes for Compass agents and their clients.

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Our business model is directly aligned with the success of our agents. We attract agents to our brokerage and partner with them as independent contractors who affiliate their real estate licenses with us, operating their businesses on our platform and under our brand. We generate revenue from clients through our agents by assisting home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, like title and escrow services. We currently generate substantially all of our revenue from commissions paid to us by clients at the time that a home is transacted on our platform. While adjacent services comprise a smaller portion of our revenue to date, we are well-positioned to capture meaningful revenue from adjacent services as we continue to expand and diversify our offerings within the real estate ecosystem.

Initial Public Offering

On April 6, 2021, we completed our IPO and our Class A common stock began trading on the New York Stock Exchange on April 1, 2021 under the symbol “COMP”. In connection with the IPO, we issued and sold 26,296,438 shares of our Class A common stock at a public offering price of $18.00 per share. We received aggregate proceeds of $438.7 million from the IPO, net of the underwriting discount and offering costs of approximately $11.0 million.

On March 31, 2021, in connection with the effectiveness of the IPO Registration Statement, we recognized $148.5 million in stock-based compensation expense for (i) certain restricted stock units RSUs that contained both service-based and liquidity event-based vesting conditions as the liquidity event-based vesting condition was satisfied upon effectiveness of the IPO Registration Statement and (ii) certain stock options and RSU awards with service, performance and market-based vesting conditions that include stock price targets to be met after the listing of our stock on a public exchange.

Recent Developments

On July 13, 2021, we and Guaranteed Rate announced the entry into a definitive agreement by our respective subsidiaries to form OriginPoint, a new mortgage origination company. OriginPoint will originate mortgages for our real estate brokerage clients, as well as the clients of any other brokerage, in order to make loans available to a broad consumer audience.

Operational Highlights for the three months ended June 30, 2021

We look to continue to attract the most talented agents to our platform, which is critical to our long-term success. We grow our revenue by increasing the productivity of our agents and by selectively attracting high-performing agents looking to grow their business. We also continue to significantly invest in our proprietary, integrated platform, designed for real estate agents, to enable them to grow their business and save them time and money. This value proposition allows us to recruit more agents, help them grow their business and retain them on our platform at industry leading retention rates.

We had nearly 23,000 agents on our platform as of June 30, 2021. A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform.

For the three months ended June 30, 2021, the Average Number of Principal Agents(1) was 10,629, an increase of 2,095, or 25%, from the three months ended June 30, 2020. The principal agent additions came in both new and existing markets.

During the three months ended June 30, 2021, our agents closed 65,743 Total Transactions(1), an increase of 140.3% when compared to the three months ended June 30, 2020. Our growth in Total Transactions was due to a combination of new agents joining the platform, enhanced productivity for existing agents already on the platform and a robust housing market.

Our Gross Transaction Value(1) for the three months ended June 30, 2021 was $77.0 billion, an increase of 186.2% when compared to the three months ended June 30, 2020. This growth reflects strong transaction volume, higher productivity per principal agent and higher Average Transaction Values. Average Transaction Value is calculated by dividing Gross Transaction Value by Total Transactions.

(1)  For the definitions of Average Number of Principal Agents, Total Transactions and Gross Transaction Value please refer to the section entitled “Key Business Metrics” included elsewhere in this Quarterly Report.

We believe there remains a meaningful opportunity to grow our business by continuing to expand our geographic coverage. During the three months ended June 30, 2021, we launched 15 new markets, bringing total markets served to 62 at the end of the quarter. We now operate real estate brokerage services in 27 states. For the three months ended June 30, 2021, our Gross Transaction Value represented 6.2% of residential real estate transacted in the United States, compared to 3.3% for the three months ended June 30, 2020. We calculate our market share by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S. existing home sales as reported by the National Association of Realtors. Faster data integration and ingestion, more efficient

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agent onboarding, and the ability to customize our solutions to local market requirements will allow us to enter new markets more quickly and effectively over time. We have a dedicated expansion team responsible for launching new markets that partners closely with our enterprise sales team to rapidly identify talented agents in each new market. As we move forward, the priority with which we enter new markets will be based on the addressable size of each market, agent feedback and local market dynamics. Expansion within existing markets is particularly cost efficient as we are able to leverage existing infrastructure, personnel and our agent network. We also use alternative models like Compass Anywhere to provide a more tailored offering for key customer segments in order to accelerate expansion in a cost efficient manner.

Platform Highlights for the three months ended June 30, 2021

Our proprietary technology platform enables our agents to deliver an exceptional experience to their buyer and seller clients. It makes our agents more productive, allowing them to drive increased transaction volume by using technology to accelerate, automate and simplify many of the routine tasks an agent performs on a daily basis. It also uses artificial intelligence and machine learning to better analyze the data sets, yielding better outcomes for our agents and their clients.

We continue to invest in the platform, adding new engineers to build out the depth and breadth of the platform for our agents. As of June 30, 2021, we employed approximately 950 engineers and product specialists in New York, Washington DC, Seattle, and Hyderabad.

Usage on our platform continues to increase. For the three months ended June 30, 2021, total sessions on the platform grew by 104% as compared to the three months ended June 30, 2020 as both our agents and buyer and seller clients saw the advantages of discovering, collaborating, and transacting for home purchases and sales in a digital setting. Additionally, during the three months ended June 30, 2021, 85% of our agent teams used our proprietary technology platform weekly. This usage represents a 4%(1) increase when compared to the three months ended June 30, 2020. The ratio of daily active users to weekly active users (DAU/WAU) was 74%(1) during the three months ended June 30, 2021, an increase of 5 percentage points from the prior year period.

We are investing aggressively in technologies and services that empower our agents. To that end, we recently completed the acquisition of Glide Labs, Inc., a real estate technology company. The addition of Glide to our suite of services accelerates our ability to offer critical transaction management tools to our customers and provides us with a fast-growing software services business.

Our ability to grow our agents, retain our agents and increase agent success on our platform, depends in part, on our ability to continue innovating in the industry and our ability to successfully launch new products for agents and clients. As such, we plan to continue making significant investments in research and development.

Seasonality and Cyclicality

The residential real estate market is seasonal, which directly impacts our agents’ businesses. While individual markets may vary, transaction volume is typically highest in spring and summer, and then declines gradually in late fall and winter. We experience the most significant financial effect from this seasonality in the first and fourth quarters of each year, when our revenue is typically lower relative to the second and third quarters. We believe that this seasonality has affected and will continue to affect our quarterly results; however, to date its effect may have been masked by our rapid growth. Additionally, volatility due to the COVID-19 pandemic caused some disruption to the typical seasonality patterns of the residential real estate market and our quarterly results. The COVID-19 pandemic is ongoing and it might result in further volatility causing future disruptions to the typical seasonality patterns, which would continue to affect our quarterly results. See “Impact of COVID-19 Pandemic on our Business” elsewhere in this section for more information.

The residential real estate industry is also highly cyclical, and individual markets can have their own cyclical dynamics that diverge from broad market conditions. Generally, when economic conditions are favorable, the real estate industry tends to perform well. When the economy is weak, if interest rates dramatically increase, if mortgage lending standards tighten, or if there are economic or political disturbances, the residential real estate industry tends to perform poorly. Our revenue growth rate tends to increase as the real estate industry performs well and to decrease when the real estate industry performs poorly.

(1)  We have refined the methodology that we used to calculate WAU and DAU/WAU; using this revised methodology WAU for the three months ended March 31, 2021 was 85% and DAU/WAU for the three months ended March 31, 2021 was 74%, up 7 percentage points from the prior year period.

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Impact of the COVID-19 Pandemic on Our Business

In March 2020, the World Health Organization declared the outbreak of the COVID-19 a global pandemic, which continues to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including quarantines, shelter-in-place orders, and business limitations and shutdowns.

In the first half of 2020, the COVID-19 pandemic significantly affected the U.S. residential real estate market. As a result of health concerns, stay-at-home orders and economic uncertainty, many metro areas saw a significant decline in home sales. In April and May 2020, nationwide home sales dropped to their lowest levels since the 2007-2008 housing and financial crisis, with a significant increase in the number of delisted homes. During that time, new listings and home buying activity were down significantly year over year due to limitations on in-person activities related to the sale of residential real estate, such as prohibitions or restrictions on in home showings, inspections and appraisals, and availability or hours of local real property documentation searches and new recordings. However, the combination of low supply and historically low interest rates allowed prices to remain steady. In response to the COVID-19 pandemic, we also took a number of measures, including, but not limited to, adoption of remote working for our employees and a virtual model for our agents, various platform enhancements and certain cost-saving measures such as temporary reduction of our workforce by 15%, temporary salary reduction, termination of certain lease obligations and reduction of certain discretionary expenses.

Towards the end of the second quarter of 2020, the U.S. residential real estate market started to recover. Potential buyers started to increase their housing search and purchase activity by the end of May 2020. Home showings per listing rose from their lows in March and April, and were well above pre-pandemic levels by May, aided by the increase in online and socially distant viewings. Housing supply did not recover at the same pace, with housing inventory down over significantly year-over-year in the second half of 2020.

Starting in June 2020, we saw a dramatic increase in year-over-year revenue growth. This momentum continued through the second half of 2020 and into 2021 across most of our markets. During the first half of 2021, the new listings and home buying activity returned to pre-pandemic levels and most metro areas saw year-over-year price increases. More broadly, we believe COVID-19 has accelerated the adoption of our technology platform, allowing our agents to not only continue to operate their business during the slowdown, but also to take advantage of the current market momentum. In addition, we have seen strong interest in our Compass Anywhere mobile agent offering, which provides location flexibility and a fully virtual support model well-suited to the COVID-19 working environment. While our performance in the face of COVID-19 does not necessarily reflect our future performance in every industry downturn, our adaptable team, backed by our strong digital platform, proved its ability to respond quickly in times of significant market dislocation.

The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and our financial condition, results of operations, or cash flows remain uncertain and depend on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on our business in particular. See the section entitled “Risk Factors – Risks Related to Our Business and Operations – The outbreak of the COVID-19 pandemic has had a material effect on our business and could continue to do so.”

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RESULTS OF OPERATIONS

The following table sets forth our consolidated statements of operations data for the period indicated:

	Three Months Ended June 30,										Six Months Ended June 30,
	2021					2020					2021					2020
	(in millions, except percentages)
Revenue.	$	1,951.4		100.0%		$	682.1		100.0%		$	3,065.3		100.0%		$	1,302.0		100.0%
Operating expenses:
Commissions and other related expense (1)		1,590.4		81.5			559.0		82.0			2,532.6		82.6			1,067.8		82.0
Sales and marketing (1)		124.3		6.4			90.8		13.3			235.6		7.7			197.3		15.2
Operations and support (1)		96.7		5.0			44.5		6.5			166.7		5.4			105.6		8.1
Research and development (1)		73.5		3.8			34.2		5.0			170.1		5.5			73.0		5.6
General and administrative (1)		59.4		3.0			26.5		3.9			152.3		5.0			53.0		4.1
Depreciation and amortization		14.9		0.8			12.7		1.9			28.4		0.9			25.1		1.9
Total operating expenses		1,959.2		100.4			767.7		112.5			3,285.7		107.2			1,521.8		116.9
Loss from operations		(7.8	)	(0.4	)		(85.6	)	(12.5	)		(220.4	)	(7.2	)		(219.8	)	(16.9	)
Investment income, net		—		—			0.5		0.1			—		—			2.0		0.2
Interest expense		(0.6	)	—			—		—			(1.1	)	—			—		—
Loss before income taxes		(8.4	)	(0.4	)		(85.1	)	(12.5	)		(221.5	)	(7.2	)		(217.8	)	(16.7	)
Benefit from income taxes		1.3		0.1			0.9		0.1			2.0		0.1			0.9		0.1
Net loss	$	(7.1	)	-0.4%		$	(84.2	)	-12.3%		$	(219.5	)	-7.2%		$	(216.9	)	-16.7%

(1) Includes stock-based compensation expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30, 2021
	2021		2020		2021		2020
Commissions and other related expense	$	11.7	$	0.5	$	56.3	$	4.6
Sales and marketing		8.6		2.5		17.6		5.4
Operations and support		2.8		0.7		7.8		1.5
Research and development		13.5		0.3		63.0		0.8
General and administrative		17.7		9.0		77.1		11.8
Total stock-based compensation expense	$	54.3	$	13.0	$	221.8	$	24.1

Stock-based compensation for the six months ended June 30, 2021 includes the following amounts related to a one-time acceleration of stock-based compensation expense in connection with the IPO:

	IPO Related Expense
Commissions and other related expense	$	41.7
Sales and marketing		1.8
Operations and support		3.1
Research and development		46.9
General and administrative		55.0
Total stock-based compensation expense	$	148.5

Comparison of the Three and Six Months Ended June 30, 2021 and 2020

Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Revenue	$	1,951.4	$	682.1	$	1,269.3		186.1%	$	3,065.3	$	1,302.0	$	1,763.3		135.4%

Revenue was $1,951.4 million and $3,065.3 million during the three and six months ended June 30, 2021, increases of $1,269.3 million, or 186.1%, and $1,763.3 million, or 135.4%, compared to the year ago periods, respectively. These increases were primarily driven by an increase in the number of

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agents that joined our platform during 2020 and 2021, a higher volume of transactions from both new and existing agents, continued geographic expansion both within our existing and new markets, as well as from a modest increase in Average Transaction Value. The Average Number of Principal Agents for the three and six months ended June 30, 2021 grew to 10,629 and 10,221, increases of 24.5% and 22.5%, from the year ago periods, respectively. Total Transactions for the three and six months ended June 30, 2021 grew to 65,743 and 106,011, increases of 140.3% and 106.0% from the year ago periods, respectively.

Operating Expenses

Commissions and other related expense

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Commissions and other related expense	$	1,590.4	$	559.0	$	1,031.4		184.5%	$	2,532.6	$	1,067.8	$	1,464.8		137.2%
Percentage of revenue		81.5%		82.0%						82.6%		82.0%

Commissions and other related expense was $1,590.4 million and $2,532.6 million during the three and six months ended June 30, 2021, increases of $1,031.4 million, or 184.5%, and $1,464.8 million, or 137.2% compared to the year ago periods, respectively. Included in commissions and other related expense were non-cash expenses related to stock-based compensation of $11.7 million and $56.3 million for the three and six months ended June 30, 2021 and $0.5 million and $4.6 million for the three and six months ended June 30, 2020, respectively. The increases in stock-based compensation expense for the three and six months ended June 30, 2021 as compared to the year ago periods were primarily related to a one-time acceleration of stock-based compensation expense of $41.7 million in connection with our IPO, and stock-based compensation expense related to certain RSUs, for which the liquidity-based condition was satisfied in connection with the IPO. Commissions and other related expense excluding such non-cash stock-based compensation expense was $1,578.7 million and $2,476.3 million, or 80.9% and 80.8% of revenue for the three and six months ended June 30, 2021 and $558.5 million and $1,063.2 million, or 81.9% and 81.7% for the three and six months ended June 30, 2020, respectively. The increase in absolute dollars of commissions and other related expense, excluding the non-cash stock-based compensation, was primarily driven by our higher revenue. The favorable 100 and 90 basis points decreases in commissions and other related expense, excluding the non-cash stock-based compensation expense, expressed as a percentage of revenue in the three and six months ended June 30, 2021, respectively, as compared to the three and six months ended June 30, 2020, respectively, was primarily due to the change in mix of the commission arrangements we have with our agents and changes in geographic mix.

Sales and marketing

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Sales and marketing	$	124.3	$	90.8	$	33.5		36.9%	$	235.6	$	197.3	$	38.3		19.4%
Percentage of revenue		6.4%		13.3%						7.7%		15.2%

Sales and marketing expense was $124.3 million and $235.6 million during the three and six months ended June 30, 2021, increases of $33.5 million, or 36.9%, and $38.3 million, or 19.4% compared to the year ago periods, respectively. Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $8.6 million and $17.6 million for the three and six months ended June 30, 2021 and $2.5 million and $5.4 million for the three and six months ended June 30, 2020, respectively. The increases in stock-based compensation expense for the three and six months ended June 30, 2021 as compared to the year ago periods were partially due to a one-time acceleration of stock-based compensation expense of $1.8 million in connection with our IPO, and stock-based compensation expense related to certain RSUs, for which the liquidity-based condition was satisfied in connection with the IPO. Sales and marketing expense excluding such non-cash stock-based compensation expense was $115.7 million and $218.0 million, or 5.9% and 7.1% of revenue for the three and six months ended June 30, 2021 and $88.3 million and $191.9 million, or 12.9% and 14.7% for the three and six months ended June 30, 2020, respectively. The increase in sales and marketing expense, excluding the non-cash stock-based compensation expense was partially due to an increase in headcount and increased agent marketing and advertising. The decrease in sales and marketing expense excluding the non-cash stock-based compensation expense, expressed as a percentage of revenue during the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020, respectively, was primarily due to the economies of scale as we were able to grow revenue more quickly than the costs of our sales and marketing efforts.

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Operations and support

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Operations and support	$	96.7	$	44.5	$	52.2		117.3%	$	166.7	$	105.6	$	61.1		57.9%
Percentage of revenue		5.0%		6.5%						5.4%		8.1%

Operations and support expense was $96.7 million and $166.7 million during the three and six months ended June 30, 2021, increases of $52.2 million, or 117.3%, and $61.1 million, or 57.9% compared to the year ago periods, respectively. Included in Operations and support expense were non-cash expenses related to stock-based compensation of $2.8 million and $7.8 million for the three and six months ended June 30, 2021 and $0.7 million and $1.5 million for the three and six months ended June 30, 2020, respectively. The increase in stock-based compensation expense for the three and six months ended June 30, 2021 as compared to June 30, 2020 was primarily due to a one-time acceleration of stock-based compensation expense of $3.1 million in connection with our IPO, and stock-based compensation expense related to certain RSUs, for which the liquidity-based condition was satisfied in connection with the IPO. Operations and support expense excluding such non-cash stock-based compensation expense was $93.9 million and $158.9 million, or 4.8% and 5.2% of revenue for the three and six months ended June 30, 2021 and $43.8 million and $104.1 million, or 6.4% and 8.0% for the three and six months ended June 30, 2020, respectively. The increase in absolute dollars, excluding such non-cash stock based-compensation expense, was primarily driven by an increase in compensation and other personnel-related costs due to increased headcount and costs associated with the various acquisitions completed during 2020 and 2021. The decrease in operations and support expense excluding the non-cash stock-based compensation expense, expressed as a percentage of revenue during the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020, respectively, was primarily due to the economies of scale as we were able to grow revenue more quickly than the costs to support our agents on our platform.

Research and development

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Research and development	$	73.5	$	34.2	$	39.3		114.9%	$	170.1	$	73.0	$	97.1		133.0%
Percentage of revenue		3.8%		5.0%						5.5%		5.6%

Research and development expense was $73.5 million and $170.1 million during the three and six months ended June 30, 2021, increases of $39.3 million, or 114.9%, and $97.1 million, or 133.0% compared to the year ago periods, respectively. Included in research and development expense were non-cash expenses related to stock-based compensation of $13.5 million and $63.0 million for the three and six months ended June 30, 2021 and $0.3 million and $0.8 million for the three and six months ended June 30, 2020, respectively. The increase in stock-based compensation expense for the three and six months ended June 30, 2021 as compared to June 30, 2020 was primarily due to a one-time acceleration of stock-based compensation expense of $46.9 million in connection with our IPO, and stock-based compensation expense related to certain RSUs, for which the liquidity-based condition was satisfied in connection with the IPO. Research and development expense excluding such non-cash stock-based compensation expense was $60.0 million and $107.1 million, or 3.1% and 3.5% of revenue for the three and six months ended June 30, 2021 and $33.9 million and $72.2 million, or 5.0% and 5.5% for the three and six months ended June 30, 2020, respectively. The increase in absolute dollars, excluding such non-cash stock based-compensation expense was primarily driven by an increase in compensation and other personnel-related costs due to increased headcount. The decrease in research and development expense, excluding the non-cash stock-based compensation expense, expressed as a percentage of revenue during the three and six months ended June 30, 2021 as compared to the three months ended June 30, 2020, respectively, was primarily due to the economies of scale as we were able to grow revenue more quickly than the costs to invest in our technology infrastructure and platform.

General and administrative

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
General and administrative	$	59.4	$	26.5	$	32.9		124.2%	$	152.3	$	53.0	$	99.3		187.4%
Percentage of revenue		3.0%		3.9%						5.0%		4.1%

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General and administrative expense was $59.4 million and $152.3 million for the three and six months ended June 30, 2021, increases of $32.9 million, or 124.2%, and $99.3 million, or 187.4% compared to the year ago periods, respectively. Included in general and administrative expense were non-cash expenses related to stock-based compensation of $17.7 million and $77.1 million for the three and six months ended June 30, 2021 and $9.0 million and $11.8 million for the three and six months ended June 30, 2020, respectively. The increases in stock-based compensation expense for the three and six months ended June 30, 2021 compared to the year ago periods were primarily due to a one-time acceleration of stock-based compensation expense of $55.0 million in connection with our IPO, and stock-based compensation expense related to certain RSUs, for which the liquidity-based condition was satisfied in connection with the IPO. General and administrative expense excluding such non-cash stock-based compensation expense was $41.7 million and $75.2 million, or 2.1% and 2.5% of revenue for the three and six months ended June 30, 2021 and $17.5 million and $41.2 million, or 2.6% and 3.2% for the three and six months ended June 30, 2020, respectively. The increase in absolute dollars, excluding such non-cash stock based-compensation expense was primarily driven by an increase in compensation and other personnel-related costs due to increased headcount. Our general and administrative expense, excluding the non-cash stock-based compensation expense, expressed as a percentage of revenue decreased during the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020, respectively, as we were able to grow our revenues more quickly than the general and administrative expenses of our business.

Depreciation and amortization

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Depreciation and amortization	$	14.9	$	12.7	$	2.2		17.3%	$	28.4	$	25.1	$	3.3		13.1%
Percentage of revenue		0.8%		1.9%						0.9%		1.9%

Depreciation and amortization expense increased by $2.2 million, or 17.3%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. For the six months ended June 30, 2021, depreciation and amortization expense increased by $3.3 million, or 13.1% when compared to the six months ended June 30, 2020. The increase was primarily driven by an increase in the amortization of intangible assets related to the impact of acquisitions completed during the year ended December 31, 2020 and the six months ended June 30, 2021. Depreciation and amortization expense as a percentage of revenue decreased in the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020, respectively, primarily due to capital expenditures growing at a slower rate relative to our revenue growth.

Investment income, net

	Three Months Ended June 30,									Six Months Ended June 30,
	2021		2020		$ Change			% Change		2021		2020		$ Change			% Change
	(in millions, except percentages)
Investment income, net	$	—	$	0.5	$	(0.5	)		-100.0%	$	—	$	2.0	$	(2.0	)		-100.0%

Investment income, net was not meaningful during the three and six months ended June 30, 2021 as a result of lower average interest rates on our short-term interest-bearing investments. During the three and six months ended June 30, 2020, interest income was $0.5 million and $2.0 million, respectively.

Interest expense

	Three Months Ended June 30,										Six Months Ended June 30,
	2021			2020		$ Change			% Change		2021			2020		$ Change			% Change
	(in millions, except percentages)
Interest expense	$	(0.6	)	$	—	$	(0.6	)		100.0%	$	(1.1	)	$	—	$	(1.1	)		100.0%

Interest expense was $0.6 million and $1.1 million for the three and six months ended June 30, 2021. These amounts were driven by the interest expense incurred on both our Concierge Facility and Revolving Credit Facility, including the commitment fees related to the available borrowing capacities on such facilities. These facilities did not exist in the year ago periods.

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Benefit from income taxes

	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(in millions, except percentages)
Benefit from income taxes	$	1.3	$	0.9	$	0.4		44.4%	$	2.0	$	0.9	$	1.1		122.2%

Benefit from income taxes increased by $0.4 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. For the six months ended June 30, 2021, benefit from income taxes increased by $1.1 million when compared to the six months ended June 30, 2020. The increase resulted from a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions.

KEY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics and non-GAAP financial measures to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Total Transactions		65,743			27,357			106,011			51,468
Gross Transaction Value (in billions)	$	77.0		$	26.9		$	120.8		$	52.0
Average Number of Principal Agents		10,629			8,534			10,221			8,343
Net Loss (in millions)	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Net Loss Margin		-0.4%			-12.3%			-7.2%			-16.7%
Adjusted EBITDA(1) (in millions)	$	71.3		$	(56.4	)	$	40.7		$	(158.5	)
Adjusted EBITDA Margin(1)		3.7%			-8.3%			1.3%			-12.2%

(1) Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of Net Loss to Adjusted EBITDA, see the section titled “—Non-GAAP Financial Measures” below.

Key Business Metrics

Total Transactions

Total Transactions is a key measure of the scale of our platform, which drives our financial performance. We define Total Transactions as the sum of all transactions closed on our platform in which our agent represented the buyer or seller in the purchase or sale of a home. We include a single transaction twice when one or more of our agents represent both the buyer and seller in any given transaction. We exclude transactions related to rentals in this metric.

Total Transactions have increased over time as we recruited new agents in existing markets, expanded into new markets, retained top-performing agents, and as existing agents increased their productivity on our platform.

Our Total Transactions for the three and six months ended June 30, 2021 and 2020 were 65,743 and 106,011, increase of 140.3% and 106.0% from the year ago periods, respectively. This increases were due to a combination of agent additions, enhanced productivity from the platform, and a robust housing market. Robust housing demand was driven by a number of factors including: (i) favorable economic conditions supported by historically low mortgage rates, (ii) higher mobility rates as consumers reassess the requirements of their homes, have more flexibility on location, and accelerate the purchase of second homes and (iii) positive demographic trends as millennials are entering the housing market in larger numbers and household formations increase.

Gross Transaction Value

Gross Transaction Value is a key measure of the scale of our platform and success of our agents, which ultimately impacts revenue. Gross Transaction Value is the sum of all closing sale prices for homes transacted by agents on our platform. We include the value of a single transaction twice when our agents serve both the home buyer and home seller in the transaction. This metric excludes rental transactions.

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Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as seasonality and macroeconomic factors.

Our Gross Transaction Value for the three and six months ended June 30, 2021 were $77.0 billion and $120.8 billion, increases of 186.2% and 132.3% from the year ago periods, respectively. We have experienced consistent and significant growth in the number of agents on our platform and the markets we serve, resulting in strong period-over-period growth rates in both Total Transactions and associated Gross Transaction Value.

Average Number of Principal Agents

The Average Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform during a given period. The Average Number of Principal Agents is an indicator of the potential future growth of our business, as well as the size and strength of our platform. This figure is calculated by taking the average of the number of principal agents at the end of each month included in the period. We use the Average Number of Principal Agents, in combination with our other key metrics such as Total Transactions and Gross Transaction Value, as a measure of agent productivity.

Our Average Number of Principal Agents for the three and six months ended June 30, 2021 were 10,629 and 10,221, respectively, representing increases of 24.5% and 22.5% from the year ago periods, respectively. For the three and six months ended June 30, 2021, our Average Number of Principal Agents was 47% and 45%, respectively, of our average number of total agents. Our principal agents generate revenue across a diverse set of real estate markets in the United States.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is a non-GAAP financial measure that represents our net loss adjusted for depreciation and amortization, investment income, net, interest expense, stock-based compensation expense, benefit from income taxes and other items. During the periods presented, other items included (i) restructuring charges associated with lease termination and severance costs and (ii) acquisition-related expenses related to adjustments to the fair value of contingent consideration and acquisition consideration treated as compensation expense over underlying retention periods. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue.

We use Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA and Adjusted EBITDA Margin are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, however, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, including net loss and our other GAAP results. In evaluating Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry.

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The following table provides a reconciliation of Net loss to Adjusted EBITDA (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Adjusted to exclude the following:
Depreciation and amortization		14.9			12.7			28.4			25.1
Investment income, net		—			(0.5	)		—			(2.0	)
Interest expense		0.6			—			1.1			—
Stock-based compensation		54.3			13.0			221.8			24.1
Benefit from income taxes		(1.3	)		(0.9	)		(2.0	)		(0.9	)
Restructuring charges(1)		—			2.4			—			9.0
Acquisition-related expenses(2)		9.9			1.1			10.9			3.1
Adjusted EBITDA	$	71.3		$	(56.4	)	$	40.7		$	(158.5	)
Net Loss Margin		-0.4%			-12.3%			-7.2%			-16.7%
Adjusted EBITDA Margin		3.7%			-8.3%			1.3%			-12.2%

(1)  Includes lease termination and severance costs. See Note 12 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

(2)  Includes adjustments related to the change in fair value of contingent consideration and adjustments related to acquisition consideration treated as compensation expense over the underlying retention periods. See Note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Adjusted EBITDA was income of $71.3 million compared to a loss of $56.4 million during the three months ended June 30, 2021 and 2020, respectively, and income of $40.7 million compared to a loss of $158.5 million during the six months ended June 30, 2021 and 2020, respectively. The favorable increase in Adjusted EBITDA during the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020 was primarily due to a significant increase in our revenue which was driven by our growth initiatives resulting in an increase in the number of agents that joined our platform during 2020 and 2021, including continued geographic expansion into new markets and a higher volume of transactions from both new and existing agents. Additionally, while expenses increased as compared to the three and six months ended June 30, 2020, the rate of increase was less than the increase in our revenue which contributed to the favorable increases in Adjusted EBITDA.

The following tables provide supplemental information to the Reconciliation of Net loss to Adjusted EBITDA presented above. These tables identify how each of the Operating expenses related financial statement line items contained within the accompanying condensed consolidated statements of operations elsewhere in this Quarterly Report are impacted by the items excluded from Adjusted EBITDA (in millions):

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	Three Months Ended June 30, 2021
	Commissions and other related expense			Sales and marketing			Operations and support			Research and development			General and administrative
GAAP Basis	$	1,590.4		$	124.3		$	96.7		$	73.5		$	59.4
Adjusted to exclude the following:
Stock-based compensation		(11.7	)		(8.6	)		(2.8	)		(13.5	)		(17.7	)
Acquisition-related expenses		—			—			(9.9	)		—			—
Non-GAAP Basis	$	1,578.7		$	115.7		$	84.0		$	60.0		$	41.7
	Three Months Ended June 30, 2020
	Commissions and other related expense			Sales and marketing			Operations and support			Research and development			General and administrative
GAAP Basis	$	559.0		$	90.8		$	44.5		$	34.2		$	26.5
Adjusted to exclude the following:
Stock-based compensation		(0.5	)		(2.5	)		(0.7	)		(0.3	)		(9.0	)
Restructuirng charges		—			(1.8	)		(0.1	)		—			(0.5	)
Acquisition-related expenses		—			—			(1.1	)		—			—
Non-GAAP Basis	$	558.5		$	86.5		$	42.6		$	33.9		$	17.0
	Six Months Ended June 30, 2021
	Commissions and other related expense			Sales and marketing			Operations and support			Research and development			General and administrative
GAAP Basis	$	2,532.6		$	235.6		$	166.7		$	170.1		$	152.3
Adjusted to exclude the following:
Stock-based compensation		(56.3	)		(17.6	)		(7.8	)		(63.0	)		(77.1	)
Acquisition-related expenses		—			—			(10.9	)		—			—
Non-GAAP Basis	$	2,476.3		$	218.0		$	148.0		$	107.1		$	75.2
	Six Months Ended June 30, 2020
	Commissions and other related expense			Sales and marketing			Operations and support			Research and development			General and administrative
GAAP Basis	$	1,067.8		$	197.3		$	105.6		$	73.0		$	53.0
Adjusted to exclude the following:
Stock-based compensation		(4.6	)		(5.4	)		(1.5	)		(0.8	)		(11.8	)
Restructuirng charges		—			(4.5	)		(2.9	)		(0.7	)		(0.9	)
Acquisition-related expenses		—			—			(3.1	)		—			—
Non-GAAP Basis	$	1,063.2		$	187.4		$	98.1		$	71.5		$	40.3

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LIQUIDITY AND CAPITAL RESOURCES

Since inception, except for the six months ended June 30, 2021, we have generated negative cash flows from operations and have primarily financed our operations from net proceeds from the sale of convertible preferred stock and common stock. As of June 30, 2021, we had cash and cash equivalents of $810.7 million and an accumulated deficit of $1.3 billion.

During the three months ended June 30, 2021, we received aggregate proceeds of $438.7 million from our IPO, net of offering costs of approximately $11.0 million.

We expect that operating losses and negative cash flows from operations may continue in certain periods in the foreseeable future as we continue to invest in the expansion of our business, research and development and sales and marketing activities. We believe our existing cash and cash equivalents, the Concierge Facility (which, as defined below, may be used to support our Compass Concierge Program) and the Revolving Credit Facility will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.

Our future capital requirements will depend on many factors, including, but not limited to, growth in the number of our agents and the associated costs to attract, support and retain them, our expansion into new geographic markets, future acquisitions, and the timing of investments in technology and personnel to support the overall growth in our business. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. In the event that additional financing is required from outside sources, we may not be able to negotiate terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected. As of June 30, 2021, there have been no material changes from the contractual obligations and commitments previously disclosed in our IPO prospectus.

In addition to the foregoing, based on our current assessment, we do not currently anticipate any material impact on our long-term liquidity due to the COVID-19 pandemic. However, we will continue to assess the effect of the pandemic on our operations. The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and our financial condition, results of operations, or cash flows remain uncertain and dependent on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on our business in particular. While the potential economic impact brought by the COVID-19 pandemic may be difficult to assess or predict, the ultimate impact of the pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in the future. In addition, a recession or long-term market correction resulting from the COVID-19 pandemic could materially affect our business, financial condition and results of operations.

Concierge Facility

In July 2020, our subsidiary, Compass Concierge SPV I, LLC, or Concierge SPV, entered into a Revolving Credit and Security Agreement, or the Concierge Facility, with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance, in part, our Compass Concierge Program. The Concierge Facility is secured by the assets of the Concierge SPV, which primarily consists of the purchased receivables and cash of the Compass Concierge Program. The Concierge Facility is also guaranteed by us. Prior to July 29, 2021, borrowings under the Concierge Facility accrued interest at rates equal to the adjusted London interbank offered rate, or LIBOR plus the applicable margin of 3.00%, as adjusted, or an alternate rate of interest upon the occurrence of certain changes in LIBOR. Additionally, prior to July 29, 2021, we were required to pay an annual commitment fee of 0.50% on a quarterly basis based on the unused portion of the Concierge Facility irrespective of our utilization rate. On July 29, 2021, we amended and restated the Concierge Facility (the “A&R Concierge Facility”), extending the revolving period for another twelve months, lowering the interest rate to LIBOR plus a margin of 1.85%, which may be adjusted, and lowering the annual commitment fee to 0.35% if the Concierge Facility is utilized greater than 50% (the annual commitment fee remained the same, at 0.50%, if the Concierge Facility is utilized less than 50%). Pursuant to the A&R Concierge Facility, the principal amount, if any, is payable in full in January 2023, unless earlier terminated or extended. As of June 30, 2021 and December 31, 2020, there were $11.1 million and $8.4 million, respectively, in borrowings outstanding under the Concierge Facility. The interest rate on the Concierge Facility was 3.16% as of June 30, 2021.

We have the option to repay our borrowings under the Concierge Facility without premium or penalty prior to maturity. The Concierge Facility contains customary affirmative covenants, such as financial statement reporting requirements, as well as customary covenants related to the Concierge SPV, including affirmative covenants that restrict its ability to, among other things, incur additional

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indebtedness, sell certain receivables, declare dividends or make certain distributions and undergo a merger or consolidation or certain other transactions. Additionally, in the event that we and our consolidated subsidiaries fail to comply with certain financial covenants that require us to meet certain liquidity-based measures, the commitments under the Concierge Facility will automatically be reduced to zero and we will be required to repay any outstanding loans under the Concierge Facility. As of June 30, 2021, we were in compliance with the covenants under the Concierge Facility.

Revolving Credit and Guaranty Agreement

In March 2021, we entered into a Revolving Credit and Guaranty Agreement, or the Revolving Credit Facility, with several lenders and issuing banks and Barclays Bank PLC, as administrative agent and as collateral agent. The Revolving Credit Facility provides for a $350.0 million revolving credit facility, which may be increased by the greater of $250.0 million and 18.5% of our consolidated total assets, plus such additional amount so long as our total net leverage ratio does not exceed 4.50:1.00 on a pro forma basis as of the most recent test period, subject to the terms of the Revolving Credit Facility. The Revolving Credit Facility also includes a letter of credit sublimit which is the lesser of (i) $125.0 million and (ii) the aggregate unused amount of the revolving commitments then in effect under the Revolving Credit Facility. Our obligations under the Revolving Credit Facility are guaranteed by certain of our subsidiaries and are secured by a first priority security interest in substantially all of our assets and subsidiary guarantors.

Borrowings under the Revolving Credit Facility bear interest, at our option, at either (i) a floating rate per annum equal to the base rate plus a margin of 0.50% or (ii) a floating rate per annum equal to the rate at which dollar deposits are offered in the London interbank market plus a margin of 1.50%. In the Revolving Credit Facility, the base rate is defined as the highest of (a) the prime rate as quoted by The Wall Street Journal, (b) the federal funds effective rate plus 0.50%, (c) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period plus 1.00%, and (d) 1.00%. During an event of default under the Revolving Credit Facility the applicable interest rates are increased by 2.0% per annum. We are also obligated to pay other customary fees for a credit facility of this size and type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175% per annum and fees associated with letters of credit. The principal amount, if any, is payable in full in March 2026, unless earlier terminated or extended.

We have the option to repay our borrowings, and to permanently reduce the loan commitments whole or in part, under the Revolving Credit Facility without premium or penalty prior to maturity. As of June 30, 2021, we had no outstanding borrowings under the Revolving Credit Facility and outstanding letters of credit totaled approximately $15.3 million. The Revolving Credit Facility contains customary representations, warranties, financial covenants applicable to the Company and to the Company’s restricted subsidiaries, affirmative covenants, such as financial statement reporting requirements, and negative covenant which restrict its ability, among other things, to incur liens and indebtedness, make certain investments, declare dividends, dispose of, transfer or sell assets, make stock repurchases and consummate certain other matters, all subject to certain exceptions. The financial covenants require that the Company maintain certain liquidity-based measures and total revenue requirements. As of June 30, 2021, the Company was in compliance with the covenants under the Revolving Credit Facility.

The Revolving Credit Facility includes customary events of default that include, among other things, nonpayment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility.

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Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Six Months Ended June 30,
	2021			2020
	(in millions)
Net cash provided by (used in) operating activities	$	44.1		$	(159.9	)
Net cash (used in) provided by investing activities		(123.9	)		24.4
Net cash provided by financing activities		450.4			3.0
Net increase (decrease) in cash and cash equivalents	$	370.6		$	(132.5	)

Operating Activities

For the six months ended June 30, 2021, net cash provided by operating activities was $44.1 million. The inflow was primarily due to a $219.5 million net loss adjusted for $256.5 million of non-cash charges and cash inflow due to changes in assets and liabilities of $7.1 million.

For the six months ended June 30, 2020, net cash used in operating activities was $159.9 million. The outflow was primarily due to a $216.9 million net loss adjusted for $60.7 million of non-cash charges and cash outflow due to changes in assets and liabilities of $3.7 million.

Investing Activities

During the six months ended June 30, 2021, net cash used by investing activities was $123.9 million consisting of $103.8 million in payments for acquisitions, net of cash acquired, and $20.1 million in capital expenditures.

During the six months ended June 30, 2020, net cash provided by investing activities was $24.4 million consisting of $44.4 million in proceeds from sales and maturities of marketable securities partially offset by $19.2 million in capital expenditures and $0.8 million in payments for acquisitions, net of cash acquired.

Financing Activities

During the six months ended June 30, 2021, net cash provided by financing activities was $450.4 million, primarily consisting of $439.6 million in net proceeds from the issuance of common stock upon initial public offering, $16.2 million in proceeds from the exercise and early exercise of stock options and $2.7 million in net proceeds from drawdowns on the Concierge Facility, partially offset by $6.7 million in payments of contingent consideration related to acquisitions and $1.4 million in paid deferred debt issuance costs relating to the Revolving Credit Facility.

During the six months ended June 30, 2020, net cash provided by financing activities was $3.0 million, primarily consisting of $3.4 million in proceeds from the exercise and early exercise of stock options and $1.0 million in proceeds from the issuance of convertible preferred stock partially offset by $1.4 million in payments of contingent consideration related to acquisitions.

Off-Balance Sheet Arrangements

We administer escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. We are contingently liable for these escrow and trust deposits totaled $282.5 million and $46.1 million as of June 30, 2021 and December 31, 2020, respectively. We did not have any other off-balance sheet arrangements as of or during the periods presented.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Critical Accounting Estimates

Our MD&A is based upon our condensed consolidated financial statements and related notes, which were prepared in conformity with U.S. GAAP. The preparation of the condensed consolidated financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the condensed consolidated financial statements and accompanying notes.

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These judgments, estimates and assumptions are used for, but not limited to (i) valuation of our common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) contingent considerations in connection with business combinations, (iv) incremental borrowing rate used for our operating leases, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. We determine our estimates and judgments based on historical experience and on various other assumptions that we believe they are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.

There are many uncertainties regarding the COVID-19 pandemic, and we are closely monitoring the impact of the pandemic on all aspects of our business, including how it has impacted and may continue to impact our operations and our customers for an indefinite period of time The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and our financial condition, results of operations, or cash flows remain uncertain and depend on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on our business in particular. We will continue to assess impacts of the COVID-19 pandemic and will adjust our operations as necessary.

Critical Accounting Policies

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

There have been no material changes to our critical accounting policies and estimates disclosed in our Final IPO Prospectus. For additional information about our critical accounting policies and estimates, see the disclosure included in our Final IPO Prospectus as well as Note 1 and Note 2 to our condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report.

RECENT ACCOUNTING PRONOUNCEMENTS

For a description of our recently adopted accounting pronouncements and accounting pronouncements issued but not yet adopted, see Note 2 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential changes in interest rates or inflation.

Interest Rate Risk

Our cash and cash equivalents as of June 30, 2021 consisted of $810.7 million in cash and cash equivalents. Certain of our cash and cash equivalents are interest-earning instruments that carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents.

We are also subjected to interest rate exposure on LIBOR-based interest rates on our Concierge Facility and Revolving Credit Facility. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. Our Concierge Facility bears interest equal to the adjusted LIBOR rate plus a margin of 1.85% or an alternate rate of interest upon the occurrence of certain changes in LIBOR. As of June 30, 2021, we had a total outstanding balance of $11.1 million under these debt facilities. Based on the amounts outstanding, a 100-basis point increase or decrease in market interest rates over a twelve-month period would not result in a material change to our interest expense.

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Foreign Currency Exchange Risk

As our operations in India have been limited, and we do not maintain a significant balance of foreign currency, we do not currently face significant risk with respect to foreign currency exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2021 due to the material weaknesses in our internal control over financial reporting described below. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the condensed consolidated financial statements for the periods covered by and included in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Previously Reported Material Weaknesses

As disclosed in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report, we previously identified material weaknesses in our internal control over financial reporting. These material weaknesses primarily relate to our failure to design, maintain, and document sufficient oversight of activities related to our internal control over financial reporting due to a lack of an appropriate level of experience and training in internal control over financial reporting commensurate with public company requirements; formal accounting policies procedures, and controls related to substantially all of our business processes to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries; IT general controls for information systems and applications that are relevant to the preparation of the consolidated financial statements. We have concluded that these material weaknesses arose because, as a private company, we did not have the necessary business processes, systems, personnel, and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.

Accordingly, we have determined that these control deficiencies constituted material weaknesses in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis. These deficiencies could result in additional misstatements to our consolidated financial statements that would be material and would not be prevented or detected on a timely basis.

Remediation Plans

We have commenced measures to remediate the identified material weaknesses. These measures include adding personnel as well as implementing new financial systems and processes. We intend to continue to take steps to remediate the material weaknesses described above and further evolving our accounting processes. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

While we believe that these efforts will improve our internal control over financial reporting, the implementation of our remediation is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles.

We believe we are making progress toward achieving the effectiveness of our internal controls and disclosure controls. The actions that we are taking are subject to ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting.

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Changes in Internal Control over Financial Reporting

We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information relating to legal proceedings contained in Note 6 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report is incorporated herein by this reference

ITEM 1A. RISK FACTORS

A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties described below, as well as the other information in this Quarterly Report, including our condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, financial condition, and growth prospects. In such an event, the market price of our common stock could decline and you could lose all or part of your investment.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties including those described at length below. These risks include, among others, the following, which we consider our most material risks:

• Our success depends on general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, and our business may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends;

• If we do not provide our agents with solutions that they value, we may fail to attract new agents, retain current agents or increase agents’ utilization of our platform, which may adversely affect our business, financial condition and results of operations;

• We have experienced rapid growth since inception which may not be indicative of our future growth. We expect that, in the future, even if our revenue increases, our rate of growth may decline;

• We have incurred net losses on an annual basis since we were founded, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability;

• We anticipate using a significant amount of our cash to satisfy tax withholding and remittance obligations that will arise in connection with the initial and future settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity. Additionally, if we choose to implement a “sell-to-cover” settlement method in the future, additional shares will be issued and sold in the market at settlement to cover tax withholding obligations, which would result in dilution to our stockholders.

• We may not be able to commence our new mortgage joint venture in a timely manner or at all and may not realize the expected benefits from the new venture;

• If we do not innovate and continuously improve and expand our platform to create value for Compass agents and clients, our business could be negatively impacted;

• The COVID-19 pandemic has had a material effect on our business, and could continue to do so;

• We operate in highly competitive markets and we may be unable to compete successfully against competitors;

• Monetary policies of the federal government and its agencies may have a material impact on our business, results of operations and financial condition;

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• Any decrease in our gross commission income or the percentage of commissions that we collect may harm our business, results of operations and financial condition;

• Our efforts to expand our business and offer additional adjacent services may not be successful;

• Our quarterly results and other operating metrics may fluctuate from quarter to quarter, which makes these difficult to predict;

• The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business;

• Actions by our agents or employees could adversely affect our reputation and subject us to liability;

• If we pursue acquisitions that are not successfully completed or integrated into our existing operations, our business, financial condition or results of operations may be adversely affected;

• We are periodically subject to claims, lawsuits, government investigations and other proceedings that may adversely affect our business, financial condition and results of operations;

• Our agents are independent contractors, and if federal or state law mandates that they be classified as employees, our business, financial condition, and results of operations would be adversely impacted;

• Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand; and

• The multi-class structure of our common stock will have the effect of concentrating voting power with Robert Reffkin, our founder, Chairman and Chief Executive Officer, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions.

Risks Related to Our Business and Operations

Our success depends on general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, and our business may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends.

Our success is impacted, directly and indirectly, by general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, many of which are beyond our control. Our business could be harmed by a number of factors that could impact the conditions of the U.S. real estate industry, including:

• a period of slow economic growth or recessionary conditions;

• weak credit markets;

• increasing mortgage rates and down payment requirements or constraints on the availability of mortgage financing;

• a low level of consumer confidence in the economy or the residential real estate market due to macroeconomic events domestically or internationally;

• high levels of unemployment resulting from the ongoing COVID-19 pandemic and the continued slow recovery of wages;

• instability of financial institutions;

• legislative or regulatory changes (including changes in regulatory interpretations or regulatory practices) that would adversely impact the residential real estate market as well as federal and/or state income tax changes and other tax reform affecting real estate and/or real estate transactions;

• insufficient or excessive regional home inventory levels;

• high levels of foreclosure activity, including but not limited to the release of homes already held for sale by financial institutions;

• adverse changes in local, regional, or national economic conditions;

• the inability or unwillingness of consumers to enter into sale transactions due to first-time homebuyer concerns about investing in a home and move-up buyers having limited or negative equity in their existing homes;

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• a decrease in the affordability of homes including the impact of rising mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation;

• decreasing home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; and

• natural disasters, such as hurricanes, earthquakes and other events (including pandemics and epidemics) that disrupt local or regional real estate markets.

As our revenue is driven by sales commissions and transaction fees, any slowdown or decrease in the total number of residential real estate sale transactions and related transactions executed by our agents for any of the above reasons could adversely affect our business, financial condition and results of operations. In addition, the residential real estate market historically has been seasonal, with greater demand from home buyers in the spring and summer, and typically weaker demand in late fall and winter, resulting in fluctuations in the quantity, speed and price of transactions on our platform. We expect our financial results and working capital requirements to reflect these seasonal variations over time, although our growth and market expansion and the ongoing COVID-19 pandemic have obscured the impact of seasonality in our historical financials to date.

If we do not provide our agents with solutions that they value, we may fail to attract new agents, retain current agents or increase agents’ utilization of our platform, which may adversely affect our business, financial condition and results of operations.

If we do not provide our agents with solutions that they value, we may fail to attract new agents, retain current agents or increase agents’ utilization of our platform. Our continued growth depends on our ability to attract highly-qualified agents in each of the markets we serve and, once they are on our platform, to retain them and to help them expand their businesses and utilize our solutions. In addition, to retain our agents and expand their businesses, we offer a wide range of solutions and adjacent services, which we continue to expand through investments, acquisitions and joint ventures. To enhance our agent recruiting efforts in the future, we may choose to offer increased incentives, which would increase our expenses but cannot be guaranteed to lead to growth. While we believe these investments help our agents succeed, there can be no guarantee that we will retain our agents across the markets we serve, nor that our investments will lead to increased transaction volume. As a result, the success of our business is substantially dependent upon the success and growth of our agents, and their ongoing usage of our platform.

We have experienced rapid growth since inception which may not be indicative of our future growth. We expect that, in the future, even if our revenue increases, our rate of growth may decline.

We have experienced rapid growth since our founding in 2012. We expect that, in the future, even if our revenue increases, our rate of growth may decline. In any event, we may not be able to grow as fast or at all if we do not, among other things:

• attract high-performing agents in markets we currently serve;

• expand to new domestic markets;

• improve our software and develop additional functionality;

• develop a broader set of solutions;

• execute opportunistic mergers and acquisitions; and

• expand internationally.

To preserve our market position, we may expand organically or acquire brokerages in new markets more quickly than we would if we did not operate in such a highly competitive industry. Expanding into new markets can be challenging as some new markets have very distinctive characteristics, some of which may be unanticipated or unknown to us. These differences may result in greater recruitment and transaction costs that may result in those markets being less profitable for us than those that we currently operate in, and may slow the rate of our revenue growth.

We have incurred net losses on an annual basis since we were founded, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability.

We incurred net losses of $388.0 million and $270.2 million for 2019 and 2020, respectively, and had a net loss of $219.5 million for the six months ending June 30, 2021. We had an accumulated deficit of $1.3 billion as of June 30, 2021. We expect to continue to make future investments in developing and expanding our business, including investing in technology, recruitment and training, expanding our adjacent services and pursuing strategic acquisitions and joint ventures. These investments may not result in increased revenue or growth in our business and may continue to result in net losses for our business. Additionally, we may incur significant losses in the future for a number of reasons, including:

• declines in U.S. residential real estate transaction volumes;

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• our expansion into new markets, for which we typically incur more significant losses immediately following entry;

• increased competition in the U.S. residential real estate industry;

• increased costs to attract and retain agents;

• increased research and development costs to continue to advance the capabilities of our platform;

• changes in our fee structure or rates;

• our failure to realize anticipated efficiencies through our technology and business model;

• failure to execute our growth strategies;

• increased sales and marketing costs;

• hiring additional personnel to support our overall growth; and

• unforeseen expenses, difficulties, complications and delays, and other unknown factors.

Accordingly, we may not be able to achieve profitability and we may continue to incur significant losses in the future. Moreover, as we continue to invest in our business, we expect expenses to continue to increase in the near term. If we fail to manage our expenses or grow our revenue sufficiently to keep pace with our investments, our business may be harmed. In addition, as a public company, we also incur significant legal, accounting and other expenses that we did not incur as a private company, which we anticipate will increase our general and administrative expenses on an absolute dollar basis.

Because we expect to incur significant costs and expenses to grow our business, and we may incur expenses prior to generating incremental revenue with respect thereto, we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in an increase in revenue to offset these expenses, which would further increase our losses.

We anticipate using a significant amount of cash to satisfy tax withholding and remittance obligations that will arise in connection with the initial and future settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity. Additionally, if we choose to implement a “sell-to-cover” settlement method in the future, additional shares will be issued and sold in the market at settlement to cover tax withholding obligations, which would result in dilution to our stockholders. Further, we anticipate to settle a large number of RSU awards this fall, which will result in dilution to our current stockholders.

Prior to December 2020, we granted RSU awards to our employees that vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, and was satisfied upon our IPO in April of 2021. Starting in December 2020, we granted RSU awards to our employees that vest based on the satisfaction of a service-based condition, which is generally satisfied over four years. As a result, a large number of these RSU awards, which have previously satisfied the service-based vesting condition, vested in connection with or subsequent to our IPO and are required to be settled pursuant to their terms. Under U.S. tax laws, the tax withholding and remittance obligations for RSUs arise in connection with their settlement on the settlement date.

We intend to settle all RSUs granted to our employees that have vested as of October 22, 2021 (the “initial settlement”) on October 28, 2021 (the “initial settlement date”). On the initial settlement date, we plan to withhold a certain number of shares of our Class A common stock that would otherwise be issued with respect to the settling RSU awards and to remit tax withholding amounts on behalf of our employees at applicable statutory rates to the relevant tax authorities, which we refer to as a “net settlement”. The tax withholding amount due in connection with the initial settlement will be based on the then-current value of the underlying shares of our Class A common stock, and we expect to remit the tax withholding amounts in cash, which would result in a significant use of our cash. Based on the number of RSUs that are expected to vest as of October 22, 2021 and assuming (i) that the price of our Class A common stock at the time of the initial settlement date would equal to $14.50 per share, which was the price per share as of August 6, 2021, and (ii) a 40% tax withholding rate, we estimate that the tax withholding amount for the initial settlement would be approximately $66 million in the aggregate. Additionally, based on the assumptions stated above, we would expect to deliver an aggregate of approximately 6.8 million shares of our Class A common stock to our employees holding settling RSU awards after withholding an aggregate of approximately 4.5 million shares of our Class A common stock to satisfy tax withholding and remittance obligations. The amount of this obligation could be higher or lower, depending on the price of shares of our

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Class A common stock on the initial settlement date, the number of RSU awards that remain outstanding on the initial settlement date when considering forfeitures in the ordinary course, and the actual amount of the tax withholdings which will vary on an employee by employee basis. After the initial settlement, we plan to continue to net settle vested RSUs granted to our employees on a monthly basis. Accordingly, we will continue to fund the tax withholding and remittance obligations on behalf of our employees and offset such funding by withholding shares of Class A common stock, which we would otherwise be obligated to deliver to them. The initial net settlement of RSU awards and the net settlement of these awards going forward will result in a significant use of our cash and may have an adverse effect on our financial condition and liquidity.

In the future, we may also choose to implement a “sell-to-cover” settlement method to satisfy tax withholding and remittance obligations for our employees, under which shares of our Class A common stock with a market value equivalent to the tax withholdings amount would be sold on behalf of the employees holding RSU awards upon settlement to cover their tax withholding liability and the cash proceeds from such sales will be remitted by us to the relevant taxing authorities. Such sales would not result in our use of additional cash to satisfy the tax withholding obligations for RSU awards, but would result in dilution to our stockholders.

Additionally, we also granted RSU awards to certain of our agents. We intend to settle all RSUs granted to our agents that have vested as of September 20, 2021 on September 24, 2021 and expect to deliver approximately 3.8 million shares of our Class A common stock to them. Because our agents are independent contractors, we do not have tax withholding and remittance obligations, and accordingly, we will not use any of our cash to pay their tax withholding obligations. However, issuance of shares of Class A common stock at settlement would result in dilution to our stockholders.

If we do not innovate and continuously improve and expand our platform to create value for Compass agents and clients, our business could be negatively impacted.

Our success depends on our ability to continuously innovate and improve our platform to provide value to our agents, including developing our customer relationship management, marketing center, listing, search, comparative market analysis, and other products for agents. As a result, we must continually invest significant resources in research and development to improve the attractiveness and comprehensiveness of our platform. Our investments in our platform allow us to provide an expanded suite of technology offerings, such as customer relationship management and differentiated search functionality, which we believe separate us from our competitors. In addition, we have expanded the adjacent services we make available to certain of our agents, such as title and escrow services, through selective acquisitions. As a result, we believe our platform is differentiated on the basis of both its technology and the breadth of our offerings. However, if we fail to continue to innovate and expand our platform, our agents may become dissatisfied and use competitors’ offerings or leave our company, which could negatively impact our business, financial condition and results of operations.

The COVID-19 pandemic has had a material effect on our business and could continue to do so.

The extent of the impact of the COVID-19 pandemic on our business and financial results will depend largely on future developments, including the duration and extent of the spread of COVID-19 within the United States and internationally, emergence of new variants of the virus, their severity and transmission rates, the timing, availability and effectiveness of vaccines and vaccination rates, the prevalence of local, regional and national restrictions and regulatory orders that impact our business, and the impact on capital and financial markets and on the U.S. and global economies, all of which are highly uncertain and cannot be predicted. Our success depends on a high volume of residential real estate transactions throughout the markets in which we operate. This transaction volume affects all of the ways that we generate revenue, including generation of commissions from transactions executed by our agents and the number of transactions our title and escrow business closes. In the second quarter of 2020, the COVID-19 pandemic significantly and adversely affected residential real estate transaction volume. Since that time, in addition to general macroeconomic instability, many governmental authorities put in place limitations on in-person activities related to the sale of residential real estate, such as prohibitions or restrictions on in-home showings, inspections and appraisals, and availability or hours of local real property documentation searches and new recordings. Although these measures were largely lifted later in 2020, and our results of operations showed no adverse impact in the third and fourth quarters of 2020, there can be no assurance that such measures will not be implemented in the future or that the pandemic will not again adversely affect transaction volume. In addition, many of our employees continue to work remotely, which may adversely affect our efficiency and morale.

While our business has recovered since the beginning of the pandemic, as the ongoing COVID-19 pandemic continues to impact the overall U.S. economy, we believe that consumer spending on real estate transactions may be adversely affected by a number of macroeconomic factors related to the COVID-19 pandemic, including but not limited to:

• increased unemployment rates and stagnant or declining wages;

• decreased consumer confidence in the economy and recessionary conditions;

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• lower yields on individuals’ investment portfolios or volatility and declines in the stock market;

• lower rental prices in certain markets reducing demand to purchase homes; and

• more stringent mortgage financing conditions, including increased down payment requirements.

We operate in highly competitive markets and we may be unable to compete successfully against competitors.

We operate in a competitive and fragmented industry, and we expect competition to continue to increase. We believe that our ability to compete depends upon many factors both within and beyond our control, including the following:

• our ability to attract and retain agents;

• the timing and market acceptance of our products and services for Compass agents and their clients, including new products and services offered by us or our competitors;

• the attractiveness of our adjacent services for agents as well as their clients;

• our ability to attract top engineering talent to further develop and improve our technology to support our business model; and

• our brand strength relative to our competitors.

Our business model depends on our ability to continue to attract Compass agents and their clients to our platform, and to enhance their engagement in a cost-effective manner. We face competition on a national level and in each of our markets from traditional real estate brokerage firms, some of which operate nationally and others that are limited to a specific region or regions. We also face competition from technology companies, including a growing number of Internet-based brokerages and others who operate with a variety of business models.

New entrants, particularly smaller companies offering point solutions, continue to join our market categories. However, our existing and potential competitors include technology companies and real estate brokerages that operate, or could develop, national and/or local businesses offering similar services, including real estate brokerage, title insurance and escrow services, to home buyers or sellers. Several of these technology companies which may enter our market categories could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and additional access to capital, and more types of offerings than we currently do. These companies may also have higher risk tolerances or different risk assessments than we do. In addition, these competitors could devote greater financial, technical and other resources than we have available to develop, grow or improve their businesses.

Monetary policies of the federal government and its agencies may have a material impact on our business, results of operations and financial condition.

Our business is significantly affected by the monetary policies of the federal government and its agencies. We are particularly affected by the policies of the Federal Reserve Board. These policies regulate the supply of money and credit in the United States and impact the real estate market through their effect on interest rates.

Increases in mortgage rates adversely impact housing affordability and we have in the past been and could in the future be negatively impacted by a rising interest rate environment. For example, a rise in mortgage rates could result in decreased sale transaction volume if potential home sellers choose to stay with their lower mortgage rate rather than sell their existing home and pay a higher mortgage rate with the purchase of a new home or, similarly, if potential home buyers choose to rent rather than pay higher mortgage rates. Changes in the Federal Reserve Board’s policies, the interest rate environment, and the mortgage market are beyond our control, are difficult to predict, and could have an adverse impact on our business, results of operations and financial condition.

Any decrease in our gross commission income or the percentage of commissions that we collect may harm our business, results of operations and financial condition.

Our business model depends upon our agents’ success in generating gross commission income, which we collect and from which we pay them net commissions. Real estate commission rates vary somewhat by market, and although historical rates have been relatively consistent over time across markets, there can be no assurance that prevailing market practice will not change in a given market, or across the industry, in the future. Customary commission rates could change due to market forces locally or industry-wide, as well as due to regulatory or legal changes in such markets, including as a result of litigation or enforcement actions. In addition, in July of 2021, the Justice Department announced that it was withdrawing from the nation-wide antitrust settlement with the National Association of Realtors, (“NAR”) that was entered into in November 2020 to allow for a broader investigation of NAR’s rules and conduct, and there additionally have been recent statements and actions by the Federal Trade Commission (“FTC”) and the executive branch focused on increasing competition. We cannot predict the outcome of the new investigation or the executive branch focus on this issue, but it may result in industry-wide regulatory action, the result of which may cause commission rates to decrease over time. If any such decrease in commission rates were to occur, our business, financial condition, and results of operations may be adversely impacted.

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In addition, there can be no assurance that we will be able to maintain the percentage of commission income that we collect from our agents for their use of our platform. If industry conditions change such that other platforms offer similar technologies to ours at a lower price or for free, we may be forced to reduce the percentage of commissions that we collect from our agents, and our business, financial condition, and results of operations may be adversely impacted.

Our efforts to expand our business and offer additional adjacent services may not be successful.

As we have grown rapidly, we have expanded to offer additional technologies, products and services on our platform to agents. For example, in 2018 we began offering escrow services, and in 2020 we began offering title services and launched Compass Lens, our machine-learning home valuation product. In 2021, we acquired Glide Labs, Inc., a real estate transaction management platform company, and entered into an agreement with Guaranteed Rate to form a new mortgage origination company. We have invested significant resources in these and other new product and services offerings we expect to launch in the future. However, there can be no guarantee that we can continue to launch new products and services in a timely manner, or at all. Even if we do launch new products and services, if they are not utilized by our agents at the rate we expect, or at all, our business, financial condition, and results of operations may be adversely affected.

We may not be able to commence our new mortgage joint venture in a timely manner or at all and may not realize the expected benefits from the new joint venture.

We and Guaranteed Rate, which is one of the nation’s largest retail mortgage companies, by and through our respective subsidiaries, have entered into a definitive agreement to form OriginPoint, a new mortgage origination company. OriginPoint was structured as a non-exclusive joint venture, where we hold a 49.9% equity interest and certain governance rights related to the joint venture, including representation on the management committee. OriginPoint has not yet commenced operations and there can be no assurance that it will commence operations in a timely manner or at all.

In addition, we may not realize the expected benefits (including anticipated revenue) from this new joint venture. The mortgage industry is inherently cyclical in nature and volatile and, as discussed in this Quarterly Report is subject to many of the same factors that affect our real estate brokerage and title and escrow services, including regulatory changes, increases in mortgage interest rates, other changes in market conditions, consumer trends, high levels of competition and decreases in operating margins. Any one of these factors could adversely affect the mortgage industry and our new joint venture in a material way.

The benefits of OriginPoint will depend, in part, on the successful partnership between us and Guaranteed Rate. Although we have representation on the management committee and will be able to participate meaningfully in the decision-making process involving material business decisions. Rather, OriginPoint will be managed by executives at the entity who will be charged with making decisions with respect to the day-to-day operation of the business and the provision of core mortgage services. Guaranteed Rate will act in a capacity as a service provider, providing certain services to support OriginPoint’s day-to-day operations. OriginPoint’s management may make decisions which result in harm to the joint venture. Additionally, the joint venture is non-exclusive and Guaranteed Rate may decide to focus on and pursue opportunities outside of the joint venture. As a result, the services which Guaranteed Rate will be engaged to provide to OriginPoint may deteriorate necessitating OriginPoint to make alternative arrangements. In addition, OriginPoint or Guaranteed Rate could face operational or liquidity risks, such as litigation or regulatory investigations. Even though we hold a minority ownership interest in the joint venture, improper actions by OriginPoint or Guaranteed Rate may lead to direct claims against us based on theories of vicarious liability, negligence, joint operations and joint employer liability, which, if determined adversely, could increase costs, negatively impact our reputation and subject us to liability for their actions. Additionally, in the event that we have a disagreement with Guaranteed Rate with respect to a particular issue or as to the management or conduct of the business, we may not be able to resolve such disagreement in our favor. Any such disagreement could have a material adverse effect on our interest in or the business of the joint venture and may consume management time and other resources to negotiate and resolve. Any of the foregoing could have an adverse impact on OriginPoint’s results of operations and financial condition and result in us not being able to realize the expected benefits from the new joint venture.

In addition, there is no assurance that our agents, many of whom have existing relationships with other mortgage lenders, will support or work with OriginPoint. Moreover, regulatory constraints prevent us from financially incenting such agents to refer their clients to Origin Point.

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Our quarterly results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict.

Our results of operations have fluctuated in the past and are likely to fluctuate significantly from quarter-to-quarter and year-to-year in the future for a variety of reasons, many of which are outside of our control and difficult to predict. As a result, you should not rely upon our historical results of operations as indicators of future performance. Numerous factors can influence our results of operations, including:

• our ability to attract and retain agents;

• our ability to develop new solutions and offer new services on our platform;

• changes in interest rates or mortgage underwriting standards;

• the actions of our competitors;

• costs and expenses related to the strategic acquisitions, partnerships and joint ventures;

• increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive;

• changes in the legislative or regulatory environment, including with respect to real estate commission rates and disclosures;

• system failures or outages, or actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches;

• adverse judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims;

• the overall tax rate for our business and the impact of any changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period;

• the application of new or changing financial accounting standards or practices; and

• changes in regional or national business or macroeconomic conditions, including as a result of the ongoing COVID-19 pandemic, which may impact the other factors described above.

In addition, our results of operations are tied to certain key business metrics and non-GAAP financial measures that have fluctuated in the past and are likely to fluctuate in the future. As a result of such variability, our historical performance, including from recent quarters or years, may not be a meaningful indicator of future performance and period-to-period comparisons also may not be meaningful.

The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.

Our success depends upon the continued service of our senior management team, including, in particular, Robert Reffkin, our founder, Chairman and Chief Executive Officer. Our success also depends on our ability to manage effective transitions when management team members pursue other opportunities. In addition, our business depends on our ability to continue to attract, motivate and retain a large number of skilled employees across our company, including employees with public company experience. Furthermore, much of our key technology and processes are custom-made for our business by our personnel. The loss of key engineering, product development, operations, marketing, sales and support, finance and legal personnel could also adversely affect our ability to build on the efforts they have undertaken and to execute our business plan, and we may not be able to find adequate replacements. In addition, we currently do not have “key person” insurance on any of our employees.

We face intense competition for qualified individuals from numerous software and other technology companies. To attract and retain key personnel, we incur significant costs, including salaries and benefits and equity incentives. Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively.

Actions by our agents or employees could adversely affect our reputation and subject us to liability.

Our success depends on the performance of our agents and employees. Although our agents are independent contractors, if they were to provide lower quality services to their clients in a given market or overall, our image and reputation could be adversely affected. In addition, if our agents make fraudulent claims about properties they show, if their transactions lead to allegations of errors or

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omissions, if they violate certain regulations, or if they engage in self-dealing or do not disclose conflicts of interest to their clients, we could also be subject to litigation and regulatory claims which, if adversely determined, could adversely affect our business, financial condition and results of operations. For example, if an agent were to recommend that a client use an escrow service in which the agent had an ownership interest but failed to disclose that interest to the client and to us, we could see our reputation tarnished and be held liable for the agent’s failure to disclose that interest under the Real Estate Settlement Proceeding Act. Similarly, we are subject to risks of loss or reputational harm in the event that any of our employees violate applicable laws, as such laws may harm our agents’ businesses or impact clients.

If we pursue acquisitions that are not successfully completed or integrated into our existing operations, our business, financial condition or results of operations may be adversely affected.

We continue to evaluate a wide array of potential strategic opportunities, including acquisitions and “acqui-hires” of businesses in new geographies. We sometimes engage in small acquisitions of businesses or agents to provide us with greater access to a given market. For example, in July 2021, we acquired the Randall Family of Companies, a group of Southern Coastal New England residential real-estate brokerage companies. At times, we may look to larger acquisitions to provide us with additional technology or adjacent services to further enhance our platform and accelerate our ability to offer new products. For example, in 2020, we acquired Modus Technologies, Inc., a title and escrow company, that provided us with a platform to offer title services to our agents and in May 2021, we acquired Glide Labs, Inc., a real estate transaction management platform company. Such strategic transactions that we enter into could be material to our financial condition and results of operations, and there can be no guarantee that they will result in the intended benefits to our business, and we may not successfully evaluate or utilize the acquired agents, businesses, products, or technology, or accurately forecast the financial impact of a strategic transaction. In addition, integrating an acquired company, business or technology is risky and may result in unforeseen operating difficulties and expenditures, particularly in new markets.

Our failure to address risks or other problems encountered in connection with our past or future strategic transactions could cause us to fail to realize the anticipated benefits of such strategic transactions, incur unanticipated liabilities, and harm our business, financial condition and results of operations. Strategic transactions may require us to issue additional equity securities, spend a substantial portion of our available cash, or incur debt or liabilities, amortize expenses related to intangible assets, or incur write-offs of goodwill, which could adversely affect our business, financial condition and results of operations and dilute the economic and voting rights of our then-current stockholders.

A change in mortgage underwriting standards could reduce the ability of homebuyers to access the credit markets on reasonable terms, or at all.

During the past several years, many lenders have significantly tightened their underwriting standards and many alternative mortgage products have become less available in the marketplace. In addition, certain lenders added new criteria or approvals necessary to underwrite mortgages in response to the COVID-19 pandemic. Underwriting standards could be changed or tightened as a result of changes in regulations, including regulations enacted to increase guarantee fees of federally-insured mortgages. More stringent mortgage underwriting standards could adversely affect the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes in order to purchase new homes, which would adversely affect our business, financial condition and results of operations.

We may not be able to maintain or establish relationships with multiple listing services and third-party listing services, which could limit the information we are able to provide to Compass agents and clients.

Our ability to attract agents to our platform and to appeal to clients depends upon providing a robust number of listings. To provide these listings, we maintain relationships with multiple listing services and other third-party listing providers and aggregators, as well as our agents themselves to include listing data in our services. Certain of our agreements with real estate listing providers are short-term agreements that may be terminated with limited notice. The loss of some of our existing relationships with listing providers, whether due to termination of agreements or otherwise, changes to our rights to use listing data, or an inability to continue to add new listing providers, may cause our listing data to omit information important to Compass agents or clients. Any loss or changes to our rights to use listing data or add listings, or any similar loss of rights in the markets we serve, could negatively impact agent and client confidence in the listing data we provide and reduce our ability to attract and retain agents, which could harm our business, financial condition, and results of operations.

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Cybersecurity incidents could disrupt business operations and result in the loss of critical and confidential information or litigation or claims arising from such incidents, any of which may adversely impact our reputation and business, financial condition and results of operations.

We face growing risks and costs related to cybersecurity threats to our operations, our data and agent and client data, including but not limited to:

• the failure or significant disruption of our operations from various causes, including human error, computer malware, ransomware, insecure software and systems, zero-day vulnerabilities, threats to or disruption of third-party vendors who provide critical services, or other events related to our critical information technologies and systems;

• the increasing level and sophistication of cybersecurity attacks, including distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering (including phishing attempts), or other unlawful tactics aimed at compromising the systems and data of Compass agents and clients (including through systems not directly controlled by us, such as those maintained by our agents and third-party service providers); and

• the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of Compass agents and clients), the transmission of computer malware, or the diversion of sale transaction closing funds.

Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to information technology systems via viruses, ransomware and other malicious software, to phishing, or to advanced and targeted attempts to breach systems launched by individuals, organizations or sponsored nation state actors. These attacks may be directed at our business, our employees, agents, and clients and third-party service providers. An attack, threat or breach of one system can impact one or more other systems.

In the ordinary course of our business, we and our third-party service providers, our employees, agents and clients may collect, store and transmit sensitive data, including our proprietary business information and intellectual property and that of Compass agents and clients as well as personal information, sensitive financial information and other confidential information of our employees, agents and clients. Our agents’ use of our platform to access and store data presents us with uncertainties and risks, as they may accidentally or deliberately cause private information to be transmitted through unsecure channels which may lead to breaches or other leaks of such information.

Additionally, we increasingly rely on third-party data processing, storage providers, and critical infrastructure services, including cloud solution providers. The secure processing, maintenance and transmission of this information are critical to our operations and with respect to information collected and stored by our third-party service providers, we are reliant upon their security procedures, controls and adherence to our agreements. A breach or attack affecting one of our third-party service providers or partners could adversely impact our business even if we do not control the service that is attacked.

Moreover, the real estate industry is actively targeted by cybersecurity threat actors which attempt to conduct electronic fraudulent activity (such as phishing), security breaches and similar attacks directed at participants in real estate services transactions. In common with others in our industry, we manage and hold confidential personal information, including potentially sensitive personal information belonging to employees, agents or the clients or other individuals with whom they transact, in the operation of our online platform services. Accordingly, we have been and continue to be subject to a range of cyber-attacks, such as email-based phishing attacks on our agents. Historically, these attacks have not been material either individually or in the aggregate. We have enhanced our security measures in order to mitigate the risk of similar attacks in the future. However, there can be no assurance that our enhanced security measures, which are also partially dependent upon the security practices of our agents, will timely detect or prevent other cyber-attacks in the future. Cyber-attacks could give rise to the loss of significant amounts of agents’ data and other sensitive information. In addition, cyber-attacks could give rise to the disablement of our information technology systems used to service our agents. Such threats to our business may be wholly or partially beyond our control as our employees, agents and clients and other third-party service providers may use e-mail, computers, smartphones and other devices and systems that are outside of our security control environment. In addition, real estate transactions involve the transmission of funds by the buyers and sellers of real estate and consumers or other service providers selected by the consumer that may be the subject of direct cyber-attacks that result in the fraudulent diversion of funds, notwithstanding efforts we have taken to educate consumers with respect to these risks.

In addition, the increasing prevalence and sophistication of cyber-attacks as well as the evolution of cyber-attacks and other efforts to breach or disrupt our systems or those of our employees, agents, clients, and third-party service providers, has led and will likely continue to lead to increased costs to us with respect to identifying, protecting, detecting, responding, recovering, mitigating, insuring against and remediating these risks, as well as any related attempted or actual fraud.

Moreover, we are required to comply with growing regulations at the local, state and federal level in the United States, and in other countries where we have operations, that regulate cybersecurity, privacy and related matters, some of which impose steep fines and penalties for noncompliance. Any further expansion domestically or internationally will necessarily subject us to additional, and possibly more stringent, regulations and penalty structures.

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While we, our employees, our agents, and clients have experienced and expect to continue to experience these types of threats and incidents, none of them to date has been material to our business. Although we employ measures to identify, protect, detect, address and mitigate these threats (including access controls, data encryption, penetration testing, vulnerability assessments, and maintenance of backup and protective systems), and conduct diligence on the security measures employed by key third-party service providers, cybersecurity incidents, depending on their nature and scope, could potentially result in harm to confidentiality, integrity, and availability of critical systems, data and confidential or proprietary information (our own or that of third parties, including personal information and financial information) and the disruption of business operations.

The potential consequences of a material cybersecurity incident include regulatory violations of applicable U.S. and international privacy and other laws, reputational damage, loss of market value, litigation with third parties (which could result in our exposure to material civil or criminal liability), diminution in the value of the products and services we provide to our agents and their clients, and increased cybersecurity protection and remediation costs (that may include liability for stolen assets or information), any of which in turn could have a material adverse effect on our competitiveness and business, financial condition and results of operations. We cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.

We could be subject to losses if banks do not honor our escrow and trust deposits.

We act as escrow agents for certain Compass clients of our agents. As an escrow agent, we receive money from clients to hold until certain conditions are satisfied. Upon the satisfaction of those conditions (in most cases as confirmed by such clients, lenders, their respective agents or other third parties), we release the money to the appropriate party. We deposit this money with various depository banks and while these deposits are not assets of our business (and therefore excluded from our consolidated balance sheet), we remain contingently liable for the disposition of these deposits. These escrow and trust deposits totaled $24.7 million and $46.1 million as of December 31, 2019 and 2020, respectively, and $282.5 million as of June 30, 2021. A significant amount of these deposits held by depository banks may be in excess of the federal deposit insurance limit. If any of our depository banks were to become unable to honor any portion of our deposits, clients could seek to hold us responsible for such amounts and, if the clients prevailed in their claims, we could be subject to significant losses.

A significant adoption by consumers of alternatives to full-service agents could have an adverse effect on our business, financial condition and results of operations.

A significant change in consumer sales that eliminates or minimizes the role of the agent in the real estate transaction process could have an adverse effect on our business, financial condition and results of operations. These options may include direct-buyer companies (also called iBuyers) that purchase directly from the seller at below-market rates in exchange for speed and convenience and then resell them shortly thereafter at market prices, and discounters who reduce the role of the agent in order to offer sellers a low commission or a flat fee while giving rebates to buyers. Consumer preferences regarding buying or selling houses and financing their home purchase will determine if these models reduce or replace the long-standing preference for full-service agents.

We plan to expand into international markets, which will expose us to significant risks.

A component of our future growth strategy involves the further expansion of our operations and establishment of an agent base internationally. We are continuing to adapt and develop strategies to address international markets, but there is no guarantee that such efforts will have the desired effect. For example, we may need to establish relationships with new partners or acquire businesses in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute on our expansion plans. Although we maintain engineering and related operations in India, none of our agents are located outside of the United States and we currently do not engage in any non-U.S. real property transactions, except for de-minimis transactions through partnerships with local non-U.S. brokerages. We expect that our international activities will grow in the future as we pursue opportunities in international markets, which may require significant dedication of management attention and will require significant upfront investment.

Our current and future international business and operations involve a variety of risks, including the need to adapt and localize our platform for specific countries; unexpected changes in trade relations, regulations, or laws; new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information,

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particularly in Europe and Canada; difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; and regulations, adverse tax burdens, and foreign exchange controls that could make it difficult to repatriate earnings and cash.

If we invest substantial time and resources to establish international operations and are unable to do so successfully or in a timely manner, our business, financial condition, and results of operations may be adversely impacted.

Our management team will be required to evaluate the effectiveness of our internal control over financial reporting. If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy of our financial reports.

As a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm will be required to deliver an attestation report on the effectiveness of our disclosure controls and internal control over financial reporting. An adverse report may be issued in the event our independent registered public accounting firm is not satisfied with the level at which our controls are documented, designed or operating.

When evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is ineffective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we could fail to meet our reporting obligations or be required to restate our financial statements for prior periods.

In addition, our internal control over financial reporting will not prevent or detect all errors and fraud. Because of the inherent limitations in all control systems, no evaluation can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If there are material weaknesses or failures in our ability to meet any of the requirements related to the maintenance and reporting of our internal control, investors may lose confidence in the accuracy and completeness of our financial reports and that could cause the price of our Class A common stock to decline. In addition, we could become subject to investigations by the applicable stock exchange, the SEC or other regulatory authorities, which could require additional management attention and which could adversely affect our business.

We have identified material weaknesses in our internal controls over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

Recently, in connection with the preparation of our consolidated financial statements as of December 31, 2018, 2019 and 2020 and for the years then ended, we identified material weaknesses in our internal controls over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. We did not design or maintain an effective control environment as we lacked sufficient oversight of activities related to our internal control over financial reporting due to a lack of an appropriate level of experience and training commensurate with public company requirements. This material weakness resulted in our identification of the following additional material weaknesses:

• We did not maintain formal accounting policies and procedures, and did not design, document and maintain controls related to substantially all of our business processes to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries; and

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• We did not design and maintain effective controls over information technology, or IT, general controls or information systems and applications that are relevant to the preparation of the consolidated financial statements. Specifically, we did not design and maintain (i) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately that are relevant to the preparation of our financial statements, (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate personnel, (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored, and (iv) testing and approval of controls for program development to ensure that new software development is aligned with business and IT requirements.

These IT deficiencies, when aggregated, could impact effective segregation of duties as well as the effectiveness of IT-dependent controls that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, our management has determined these deficiencies in the aggregate constitute a material weakness.

None of the control deficiencies described above resulted in a material misstatement to our annual consolidated financial statements. However, each of the material weaknesses described above could result in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected, and, accordingly, we determined that these control deficiencies constitute material weaknesses.

To address our material weaknesses, we have added personnel and engaged an external advisor to assist with evaluating and documenting the design and operating effectiveness of our internal controls over financial reporting and assisting with the remediation of deficiencies, including implementing new controls and processes. We intend to continue to take steps to remediate the material weaknesses described above through hiring additional personnel with public company experience, and further evolving our accounting and business processes related to internal controls over financial reporting. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal controls over financial reporting or that they will prevent or avoid potential future material weaknesses. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal controls over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our annual or interim financial statements.

Neither our management nor our independent registered public accounting firm has performed an evaluation of our internal controls over financial reporting in accordance with the SEC rules because no such evaluation has been required. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting until the filing of our second Annual Report on Form 10-K following our IPO. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal controls over financial reporting is documented, designed, or operating. Any failure to implement and maintain effective internal controls over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal controls over financial reporting that we will eventually be required to include in our periodic reports that are filed with the SEC. Ineffective disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange.

Covenants in our debt agreements may restrict our borrowing capacity or operating activities and adversely affect our financial condition.

Our Revolving Credit and Security Agreement with Barclays Bank PLC, or the Concierge Facility, and our Revolving Credit and Guaranty Agreement with Barclays Bank PLC, or the Revolving Credit Facility, contain, and any future agreement relating to additional indebtedness which we may enter into may contain, various financial covenants. The Concierge Facility, which is secured by, and can be used to borrow against, eligible receivables and cash related to a part of our Compass Concierge program, and our Revolving Credit Facility, which is secured by substantially all the assets of us and our subsidiary guarantors, contains customary representations, warranties, affirmative covenants, such as financial statement reporting requirements, negative covenants, and financial covenants applicable to us and our restricted subsidiaries. The negative covenants include restrictions that, among other things, restrict our and our subsidiaries’ ability to incur liens and indebtedness, make certain investments, declare dividends, dispose

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of, transfer or sell assets, make stock repurchases and consummate certain other matters, all subject to certain exceptions. In certain cases, we may be required to repay all of the relevant debt immediately; the occurrence of such an event may have an adverse impact on our financial condition and results of operations.

Our ability to use our net operating losses, or NOLs, and other tax attributes may be limited.

As of December 31, 2020, we had approximately $882.5 million of federal and $870.7 million of state NOLs available to offset future taxable income. Certain of our federal NOLs and our state NOLs will begin to expire in 2032. The realization of these net operating losses depends on our future taxable income and there is a risk that these carryforwards could expire unused, which could materially affect our operating results. In addition, under Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of our IPO or future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 or 383 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. For these reasons, we may not be able to utilize a material portion of the NOLs, even if we were to achieve profitability.

We rely on assumptions, estimates, and business data to calculate our key performance indicators and other business metrics, and real or perceived inaccuracies in these metrics may harm our reputation and negatively affect our business.

Certain of our performance metrics are calculated using third party applications or internal company data that have not been independently verified. While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring such information. In addition, our measure of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results may not be comparable to our competitors.

Estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that our market opportunity estimates will reflect actual revenue that we will generate from our platform in the future. Any expansion in our markets depends on a number of factors, including the cost, performance, and perceived value associated with our platform and the products and services of our competitors. Even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all.

Changes in accounting standards, subjective assumptions and estimates used by management related to complex accounting matters could have an adverse effect on our business, financial condition and results of operations.

Generally accepted accounting principles in the United States of America, or GAAP, and related accounting pronouncements, implementation guidance and interpretations with regard to a wide range of matters, such as revenue recognition, lease accounting, stock-based compensation, asset impairments, valuation reserves, income taxes and the fair value and associated useful lives of acquired long-lived assets, intangible assets and goodwill, are highly complex and involve many subjective assumptions, estimates and judgments made by management. Changes in these rules or their interpretations or changes in underlying assumptions, estimates or judgments made by management could significantly change our reported results and adversely impact our business, financial condition and results of operations.

Our platform is highly complex and our software may contain undetected errors.

Our platform is highly complex and the software and code underlying our platform is interconnected and may contain undetected errors, bugs, or vulnerabilities, some of which may only be discovered after the code or software has been released. We release or update software code regularly and this practice may result in the more frequent introduction of errors, bugs, or vulnerabilities into the software underlying our platform, which can impact the agent and client experience on our platform. Additionally, due to the interoperative nature of the software and the systems underlying our platform, modifications to certain parts of our code, including changes to our mobile app, website, systems or third party application programming interfaces on which our platform rely, could have

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an unintended impact on other sections of our software or system, which may result in errors, bugs, or vulnerabilities to our platform. Any errors, bugs, or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of our agents or clients, loss of revenue or liability for damages, any of which could adversely affect our growth prospects and our business, financial condition and results of operations.

Furthermore, our development and testing processes may not detect errors, bugs, or vulnerabilities in our technology offerings prior to their implementation as they may not be identified or detected at the time of implementation. Any inefficiencies, errors, bugs, system misconfiguration, technical problems or vulnerabilities arising in our technology offerings after their release could reduce the quality of our products, system performance, or interfere with our agents’ access to and use of our technology and offerings.

Our management team has limited experience in operating a public company.

Our management team has limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.

Our company culture has contributed to our success, and if we cannot maintain this culture as we grow, our business could be harmed.

We believe that our company culture, which promotes innovation and entrepreneurship, has been critical to our success. We are guided by our principles including dreaming big, moving fast, learning from reality and being solutions-driven. However, as we grow, we may face challenges that may affect our ability to sustain our culture, including:

• failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission;

• the increasing size and geographic diversity of our workforce;

• shelter-in-place orders in certain jurisdictions where we operate that may result in many of our employees working remotely;

• the inability to achieve adherence to our internal policies and core values;

• the continued challenges of a rapidly-evolving industry;

• the increasing need to develop expertise in new areas of business that affect us;

• negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and

• the integration of new personnel and businesses from acquisitions.

In addition, we have at times undertaken workforce reductions to better align our operations with our strategic priorities, to manage our cost structure or in connection with acquisitions. For example, in response to the early effects of the COVID-19 pandemic on the industry, including our business, we took certain cost-saving measures, including reduction of our workforce and salary reductions. Although we have increased our workforce to above pre-pandemic levels and the salary reductions have been reversed and we have made our employees whole through additional equity awards, there can be no assurance that these actions will not adversely affect employee morale, our culture and our ability to attract and retain employees. If we are not able to maintain our culture, our business, financial condition and results of operations could be adversely affected.

Our ability to recruit agents depends on the strength of our reputation, and adverse media coverage could harm our business.

We believe that we have developed a strong reputation for helping agents succeed on the basis of our rapid growth in recent years, the technological sophistication of our platform, and our ability to offer a wide range of high-quality services. General awareness and the perceived quality and differentiation of our platform are important aspects of our efforts to attract and retain agents. In addition, our actions and growth are frequently reported on in national and regional trade publications and other media, and media coverage of our business can be critical, and may not be fair or accurate. Our reputation may be harmed due to adverse media coverage related to our actions, the actions of our agents, or other unforeseeable events, which may cause our ability to attract and retain agents to suffer. If we are unable to maintain or enhance agent awareness of our business, or if our reputation is damaged in a given market or nationally, our business, financial condition and results of operations could be harmed.

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Some of our potential losses may not be covered by insurance. We may not be able to obtain or maintain adequate insurance coverage.

We maintain insurance to cover costs and losses from certain risk exposures in the ordinary course of our operations, but our insurance does not cover all of the costs and losses from all events. We are responsible for certain retentions and deductibles that vary by policy, and we may suffer losses that exceed our insurance coverage limits by a material amount. We may also incur costs or suffer losses arising from events against which we have no insurance coverage. In addition, large-scale market trends or the occurrence of adverse events in our business may raise our cost of procuring insurance or limit the amount or type of insurance we are able to secure. We may not be able to maintain our current coverage, or obtain new coverage in the future, on commercially reasonable terms or at all. Incurring uninsured or underinsured costs or losses could harm our business.

We process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity.

We receive, store and process personal information and other employee, agent and agents’ client information. There are numerous federal and state laws, as well as regulations and industry guidelines, regarding privacy and the storing, use, processing, and disclosure and protection of personal information, which are continually evolving, subject to differing interpretations, and may be inconsistent between state and federal governments and across countries or conflict with other rules. Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, may be applicable to our business, such as the Telephone Consumer Protection Act, or the TCPA (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, and similar state consumer protection laws. We seek to comply with industry standards and are subject to the terms of our own privacy policies and privacy-related obligations to third parties. We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data security protection to the extent possible. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or regulations, making enforcement, and thus compliance requirements, ambiguous, uncertain, and potentially inconsistent. Any failure or perceived failure by us to comply with our privacy policies, privacy-related obligations to agents, clients or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized access to or unintended release of personally identifiable information or other agent or client data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others. Any of these events could cause us to incur significant costs in investigating and defending such claims and, if found liable, pay significant damages. Further, these proceedings and any subsequent adverse outcomes may cause our agents and clients to lose trust in us, which could have a materially adverse effect on our reputation and business.

Any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of personal information, or regarding the manner in which the express or implied consent of agents and clients for the use and disclosure of personal information is obtained, could require us to modify our products and features, possibly in a material manner and subject to increased compliance costs, which may limit our ability to develop new products and features that make use of the personal information that clients voluntarily share. For example, California recently enacted legislation, the California Consumer Privacy Act, or CCPA, that became operative on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020, along with related regulations which came into force on August 14, 2020. The CCPA gives California residents expanded rights related to their personal information, including the right to access and delete their personal information, and receive detailed information about how their personal information is used and shared and increases the privacy and security obligations of businesses handling personal data. The CCPA is enforceable by the California Attorney General and there is also a private right of action relating to certain data security incidents. The CCPA provides for civil penalties for violations, which could result in statutory penalties of up to $2,500 per violation, or up to $7,500 per violation if the violation is intentional. We cannot yet fully predict the impact of the CCPA or subsequent guidance on our business or operations, but it may require us to further modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Decreased availability and increased costs of information could adversely affect our ability to meet our agents’ requirements and could have an adverse effect on our business, results of operations, and financial condition.

Additionally, a recent California ballot initiative, the California Privacy Rights Act, or CPRA, imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt-outs for certain uses of sensitive data and sharing of personal data starting in January 2023. As voted into law by California residents in November 2020, the CPRA could have an adverse effect on our business, results of operations, and financial condition. The effects of the CCPA and CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation. Any of the foregoing could materially adversely affect our business, results of operations and financial condition.

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Our agents operate as independent contractors and are responsible for their own data privacy compliance. However, we provide training and our platform provides tools and security controls to assist our agents with their data privacy compliance to the extent they store relevant data on our platform. However, if an agent on our platform were to be subject to a claim for breach of data privacy laws, we could be found liable for their claims due to our relationship, which can require us to take more costly data security and compliance measures or to develop more complex systems.

Our fraud detection processes and information security systems may not successfully detect all fraudulent activity by third parties aimed at our employees or agents, which could adversely affect our reputation and business results.

Third-party cybersecurity threat actors have attempted in the past, and may attempt in the future, to conduct fraudulent activity by engaging with Compass agents or clients, including in our title insurance and escrow business. We make a large number of wire transfers in connection with loan and real estate closings and process sensitive personal data in connection with these transactions. Although we have sophisticated fraud detection processes and have taken other measures to continuously improve controls to identify fraudulent activity on our mobile app, website and internal systems, we may not be able to detect and prevent all such activity. Persistent or pervasive fraudulent activity may cause agents or clients to lose trust in us and decrease or terminate their usage of our platform, which could materially harm our operations, business, results, and financial condition.

We utilize a number of third-party service providers to deliver web and mobile content and any disruption or delays in service from these third-party providers could adversely impact the delivery of our platform.

We primarily rely on Amazon Web Services in the U.S. to host our cloud computing and storage needs. We do not own, control, or operate our cloud computing physical infrastructure or their data center providers. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, system vulnerabilities, earthquakes and similar events at the sites of such providers. The occurrence of any of the foregoing events could result in damage to systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for losses that may occur.

A failure of these systems at one or multiple sites could result in reduced capabilities or a total failure of our systems, which could cause our mobile app or website to be inaccessible, impairing our agents’ ability to use our platform. Problems faced by our third-party cloud service providers with their telecommunications network providers with which they contract or with the systems by which they allocate capacity among their customers, including us, could adversely affect the experience of our agents. Our third-party cloud service providers could decide to close their facilities without adequate notice resulting in loss of service and negative effects in our systems. Any financial difficulties, such as bankruptcy reorganization, faced by our third-party web-hosting providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict. If our third-party web-hosting providers are unable to keep up with our growing needs for capacity, Compass’ agents, clients and business could be harmed. In addition, if distribution channels for our mobile app experience disruptions, such disruptions could adversely affect the ability of agents and potential clients to access or update our mobile app, which could harm our business.

We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business, which may result from interruptions in our service as a result of system failures. Any errors, defects, disruptions or other performance problems with our services could harm our business, results of operations, and financial condition.

Third parties with whom we do business may be unable to honor their obligations to us or their actions may put us at risk.

We rely on third parties for various aspects of our business, including technology collaborations, advertising partners and development services agreements. Although we require these parties to sign our data security addendum, their actions may put our business, reputation and brand at risk. In many cases, third parties may be given access to sensitive and proprietary information or personal data in order to provide services and support to our teams or agents, and they may misappropriate and engage in unauthorized use of our information, technology or agents’ or clients’ data. In addition, the failure of these third parties to provide adequate services and technologies, or the failure of the third parties to adequately maintain or update their services and technologies, could result in a disruption to our business operations. Further, disruptions in the mobile application industry, financial markets, economic downturns, poor business decisions, or reputational harm may adversely affect our partners and may increase their propensity to engage in fraud or otherwise illegal activity which could harm our business reputation, and they may not be able to continue honoring their obligations to us, or we may cease our arrangements with them. Alternative arrangements and services may not be available to us on commercially reasonable terms or at all and we may experience business interruptions upon a transition to an alternative partner or vendor. If we lose one or more business relationships, or experience a degradation of services, our business could be harmed and our financial results could be adversely affected.

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Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks.

There is an increasing focus from certain investors, employees and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on companies have increased to meet growing investor demand for measurement of corporate responsibility performance. The criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies.

Furthermore, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead. In addition, in the event that we communicate certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. If we fail to satisfy the expectations of investors, employees and other stakeholders or our initiatives are not executed as planned, our reputation and financial results could be materially and adversely affected.

Catastrophic events may disrupt our business.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, real estate commerce, and the global economy, and thus could harm our business. For example, the COVID-19 pandemic and the reactions of governments, markets, and the general public to the COVID-19 pandemic, has resulted in and may continue to have a number of consequences for our business and results of operations, the ultimate magnitude of which is difficult to predict. Additionally, properties located in the markets in which we operate, including New York, Northern California, Southern California and South Florida, are more susceptible to certain natural hazards (such as fires, hurricanes, earthquakes, floods, or hail) than properties in other parts of the country.

In the event of a major fire, hurricane, earthquake, windstorm, tornado, flood or catastrophic event such as pandemic, flood, power loss, telecommunications failure, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure reputational harm, delays in developing our platform and solutions, breaches of data security and loss of critical data, all of which could harm our business, results of operations and financial condition. Closures of local recording offices or other governmental offices in charge of real property records, including tax or lien-related records, would adversely affect our ability to conduct operations in the affected geographies. Any of these delays will likely result in extended hold times, increased costs, and value impairment. Also, the insurance we maintain would likely not be adequate to cover our losses resulting from disasters or other business interruptions.

As we grow our business, the need for business continuity planning and disaster recovery plans will increase in significance. If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business and reputation would be harmed.

Risks Related to Our Legal and Regulatory Environment

We are periodically subject to claims, lawsuits, government investigations and other proceedings that may adversely affect our business, financial condition and results of operations.

We may be subject to claims, lawsuits, arbitration proceedings, government investigations and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability and consumer complaints, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to the National Association of Realtors or MLS rules regarding buyer-broker commissions), securities laws and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, securities issuances or business practices.

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The results of any such claims, lawsuits, arbitration proceedings, government investigations or other legal or regulatory proceedings cannot be predicted with certainty. Any claims against us or investigations involving us, whether meritorious or not, could be time- consuming, result in significant defense and compliance costs, be harmful to our reputation, require significant management attention and divert significant resources. Determining reserves for our pending litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results of operations. These proceedings could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices. Any of these consequences could adversely affect our business, financial condition and results of operations. Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and commercial partners and current and former directors, officers and employees.

As an example of a current litigation matter, we are party to a lawsuit involving plaintiff Avi Dorfman, who seeks compensation for certain services and other contributions allegedly provided in our formation; if Mr. Dorfman prevails, we may be forced to issue equity securities to him, which could cause dilution to holders of our capital stock. See the section titled “Legal Proceedings” in Part I, Item 1 of this Quarterly Report for additional information.

In addition, since 2016 we have included mandatory arbitration provisions in our agreements with each of our agents, and since 2018 we have added mandatory arbitration provisions in our agreements with our employees. The provisions are intended to cover all disputes between us and our employees and agents, if permitted by law. These provisions are intended to streamline the litigation process for all parties involved, as arbitration can in some cases be faster and less costly than litigating disputes in state or federal court. However, arbitration may become more costly for us or the volume of arbitration may increase and become burdensome, and the use of arbitration provisions may subject us to certain risks to our reputation and brand, as these provisions have been the subject of increasing public scrutiny. In addition, these mandatory arbitration provisions are intended to cover claims related to our agent equity program, if permitted by law, though it is currently unclear whether such provisions are enforceable with respect to claims arising under the U.S. federal securities laws. In order to minimize these risks to our reputation and brand, we may limit our use of arbitration provisions or be required to do so in a legal or regulatory proceeding, either of which could increase our litigation costs and exposure.

Further, with the potential for conflicting rules regarding the scope and enforceability of arbitration on a state-by-state basis, as well as between state and federal law, there is a risk that some or all of our arbitration provisions could be subject to challenge or may need to be revised to exempt certain categories of protection. If our arbitration agreements were found to be unenforceable, in whole or in part, or specific claims are required to be exempted from arbitration, we could experience an increase in our costs to litigate disputes and the time involved in resolving such disputes, and we could face increased exposure to potentially costly lawsuits, each of which could adversely affect our business, financial condition and results of operations.

Our agents are independent contractors, and if federal or state law mandates that they be classified as employees, our business, financial condition, and results of operations would be adversely impacted.

We recruit agents as independent contractors and are subject to federal regulations and applicable state laws and guidelines regarding independent contractor classifications. These regulations, laws and guidelines are subject to judicial and agency interpretation. Moreover, such regulations, laws, guidelines and interpretations continue to evolve. California changed its classification laws effective January 1, 2020 (with a specific carveout for real estate agents) and the United States Congress and certain states have introduced proposed changes to existing classification law; additionally, the Biden administration may make additional changes to applicable laws. If our business is found to have misclassified employees as independent contractors, we could face penalties and have additional exposure under laws regarding employee classification, federal and state tax, workers’ compensation, unemployment benefits, compensation, overtime, minimum wage, and meal and rest periods. Further, if legal standards for classification of our agents as independent contractors change or appear to be changing, it may be necessary to modify the compensation structure for our agents, including by paying additional compensation or reimbursing expenses. We face claims from time to time alleging misclassification of status and it could be determined that the independent contractor classification is inapplicable to any of our agents. We could also incur substantial costs, penalties and damages due to any such future challenges by current or former professionals to our classification or compensation practices, including with respect to their status as exempt or non-exempt employees. Any of these outcomes could result in substantial costs to us, could significantly impair our financial condition and our ability to conduct our business as currently contemplated, and could damage our reputation and impair our ability to attract agents.

We are subject to a variety of federal and state laws, many of which are unsettled and still developing, and certain of our businesses are highly regulated. Any failure to comply with such regulations or any changes in such regulations could adversely affect our business.

Our real estate brokerage business, our title and escrow business and the businesses of our agents must comply with RESPA and a variety of similar state regulations. RESPA and comparable state statutes prohibit providing or receiving payments, or other things of value, for the referral of business to escrow service providers in connection with the closing of certain real estate transactions such as

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those involving federally-backed mortgages (under RESPA) or any residential sale (under certain state regulations). Such laws may to some extent impose limitations on arrangements involving our real estate brokerage, escrow services, and title agency. RESPA and related regulations do, however, contain a number of provisions that allow for payments or fee splits between providers if certain requirements are met, including fee splits between title underwriters and agents, brokers and agents, and market-based fees for the provision of goods or services and marketing arrangements. In addition, RESPA allows for referrals to affiliated entities, when specific requirements have been met. We rely on these provisions in conducting our business activities and believe our arrangements comply with RESPA. However, RESPA compliance may become a greater challenge under certain administrations for most industry participants offering escrow services, including brokerages, because of expansive interpretations of RESPA or similar state statutes by certain courts and regulators. Permissible activities under state statutes similar to RESPA may be interpreted more narrowly and enforcement proceedings of those statutes by state regulatory authorities may also be aggressively pursued. RESPA also has been invoked by plaintiffs in private litigation for various purposes and some state authorities have also asserted enforcement rights. In addition, title and escrow services are highly regulated. Our title agency services business also is subject to regulation by insurance and other regulatory authorities in each state in which we provide title insurance. For example, the State of Washington Office of Insurance Commissioner ordered our Modus Title subsidiary’s insurance producer license revoked as of April 1, 2021. Even though the order was rescinded as of June 9, 2021 and the license revocation was stayed throughout the appeal process, our title agency services business could be subject to similar types of actions in the future, which may not be resolved in our favor.

We are also, to a lesser extent, subject to various other rules and regulations such as “controlled business” statutes, which impose limitations on affiliations between providers of title and escrow services on the one hand, and real estate brokers, mortgage lenders and other real estate service providers on the other hand, or similar laws or regulations that would limit or restrict transactions among affiliates in a manner that would limit or restrict collaboration among our businesses.

For certain licenses, we are required to designate individual licensed brokers of record as qualified individuals and/or persons who control and supervise the operations of applicable licensed entities. Certain licensed entities also are subject to routine examination and monitoring by state licensing authorities. We cannot assure you that we, or our licensed personnel, are and will remain at all times, in full compliance with state and federal real estate, title insurance and escrow, and consumer protection laws and regulations, and we may be subject to litigation, government investigations and enforcement actions, fines or other penalties in the event of any non-compliance. As a result of findings from examinations, we also may be required to take a number of corrective actions, including modifying business practices and making refunds of fees or money earned. In addition, adverse findings in one state may be relied on by another state to conduct investigations and impose remedies. If we apply for new licenses, we will become subject to additional licensing requirements, which we may not be in compliance with at all times. If in the future a state agency were to determine that we are required to obtain additional licenses in that state in order to operate our business, or if we lose or do not renew an existing license or are otherwise found to be in violation of a law or regulation, we may be subject to fines or legal penalties, lawsuits, enforcement actions, void contracts or our business operations in that state may be suspended or prohibited. Our business reputation with consumers and third parties also could be damaged. Compliance with, and monitoring of, these laws and regulations is complicated and costly and may inhibit our ability to innovate or grow.

Our failure to comply with any of the foregoing laws and regulations may subject us to fines, penalties, injunctions and/or potential criminal violations. Any changes to these laws or regulations or any new laws or regulations may make it more difficult for us to operate our business and may have a material adverse effect on our operations.

We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition, and results of operations.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, U.S. domestic bribery laws, and other anti-corruption and anti-money laundering laws in the countries in which we conduct business. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. If we engage in international sales and business with partners and third-party intermediaries to market our products, we may be required to obtain additional permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. If we engage in international sales and business with the public sector, we can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, agents, representatives, contractors, and partners, even if we do not explicitly authorize such activities.

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While we have policies and procedures to address compliance with such laws, there is a risk that our employees and agents will take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. If we further expand internationally, our risks under these laws may increase. Any such noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions, and adversely affect our business, financial condition, and results of operations.

We may be subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.

If we expand our brokerage business to international markets, our platform may become subject to U.S. export controls, including the U.S. Export Administration Regulations. Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, our activities are subject to U.S. economic sanctions laws and regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control that prohibit the sale or supply of most products and services to embargoed jurisdictions or sanctioned parties. Violations of U.S. sanctions or export control regulations can result in significant fines or penalties and possible incarceration for responsible agents, employees and managers.

Also, various countries, in addition to the United States, regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to operate our platform in those countries. Changes in our platform or future changes in export and import regulations may impede the introduction of our platform in international markets, prevent our agents with international clients from using our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether, and may adversely affect our business, financial condition, and results of operations.

Internet law is evolving, and unfavorable changes to, or failure by us to comply with, these laws and regulations could adversely affect our business, financial condition and results of operations.

We are subject to regulations and laws specifically governing the Internet. The scope and interpretation of the laws that are or may be applicable to our business are often uncertain, subject to change and may be conflicting. If we incur costs or liability as a result of unfavorable changes to these regulations or laws or our failure to comply therewith, the business, financial condition and results of operations of our business could be adversely affected. Any costs incurred to prevent or mitigate this potential liability could also harm our business, financial condition and results of operations.

Adverse decisions in litigation against companies unrelated to us could impact our business practices and those of our agents in a manner that adversely impacts our financial condition and results of operations.

Litigation, claims and regulatory proceedings against other participants in the residential real estate or technology industry may impact us when the rulings in those cases cover practices common to the broader industry. Examples may include claims associated with RESPA compliance, broker fiduciary duties, and sales agent classification. Similarly, we may be impacted by litigation and other claims against companies in other industries. To the extent plaintiffs are successful in these types of litigation matters, and we or our agents cannot distinguish our or their practices (or our industry’s practices), we and our agents could face significant liability and could be required to modify certain business practices or relationships, either of which could materially and adversely impact our business, financial condition and results of operations.

Risks Related to Our Intellectual Property

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.

Our trade secrets, trademarks, copyrights and other intellectual property rights are important assets, and litigation to defend intellectual property can be expensive and lengthy. Various factors outside of our control also pose a threat to our intellectual property rights, as well as to our products, services and technologies. For example, we may fail to obtain effective intellectual property protection, or effective intellectual property protection may not be available in every country in which our products and services are available. Also, the efforts we have taken to protect our intellectual property rights may not be sufficient or effective, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Despite our efforts to protect our proprietary rights, there can be no assurance our intellectual property rights will be sufficient to protect against others offering products or services that are substantially similar to ours and compete with our business or that unauthorized parties may attempt to copy aspects of our technology and use information that we consider proprietary.

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In addition to registered intellectual property rights such as trademark registrations, we rely on non-registered proprietary information and technology, such as trade secrets, confidential information, know-how and technical information. In order to protect our proprietary information and technology, we rely in part on agreements with our employees, investors, independent contractors and other third parties that place restrictions on the use and disclosure of this intellectual property. These agreements may be breached, or this intellectual property, including trade secrets, may otherwise be disclosed or become known to our competitors, which could cause us to lose any competitive advantage resulting from this intellectual property. To the extent that our employees, independent contractors or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. The loss of trade secret protection could make it easier for third parties to compete with our products and services by copying functionality. In addition, any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection of our trade secrets or other proprietary information could harm our business, financial condition, results of operations and competitive position.

We may pursue registration of trademarks and domain names in the United States and in certain jurisdictions outside of the United States. Effective protection of trademarks and domain names is expensive and difficult to maintain, both in terms of application and registration costs as well as the costs of defending and enforcing those rights. We may be required to protect our rights in an increasing number of countries, a process that is expensive and may not be successful or which we may not pursue in every country in which our products and services are distributed or made available. Foreign countries have different laws and regulations regarding protection of intellectual property, and the protection available in other jurisdictions may not be as effective as that provided in the United States.

We may be unable to obtain trademark protection for our technologies and brands, and our existing trademark registrations and applications, and any trademarks that may be used in the future, may not provide us with competitive advantages or distinguish our products and services from those of our competitors. In addition, our trademarks may be contested, circumvented, or found to be unenforceable, weak or invalid, and we may not be able to prevent third parties from infringing or otherwise violating them. To counter infringement or unauthorized use of our trademarks, we may deem it necessary to file infringement claims, which can be expensive and time consuming. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. An adverse outcome in such litigation or proceedings may expose us to a loss of our competitive position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.

Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the United States and abroad may be necessary in the future to enforce our intellectual property rights and to determine the validity and scope of the proprietary rights of others. Efforts to enforce or protect proprietary rights may be ineffective and could result in substantial costs and diversion of resources, which could harm our business and results of operations.

Our products and services may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from providing our products and services.

We cannot guarantee that our internally developed or acquired systems, technologies and content do not and will not infringe the intellectual property rights of others. In addition, we use content, software and other intellectual property rights from third parties and may be subject to claims of infringement or misappropriation if we have failed to obtain appropriate intellectual property licenses from such parties, or such parties do not possess the necessary intellectual property rights to the products or services they license to our business. We have in the past and may in the future be subject to claims that we have infringed the copyrights, trademarks, or other intellectual property rights of a third party. Any intellectual property-related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and divert management resources and attention. Should we be found liable for infringement or misappropriation, we may be required to enter into licensing agreements, if available on acceptable terms or at all, pay substantial damages, limit or curtail our offerings and technologies or take other action, which could harm our business and results of operations. Moreover, we may need to redesign some of our systems and technologies to avoid future infringement liability. Any of the foregoing could prevent us from competing effectively and could expose our business to significant liabilities.

We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings, which could materially affect our business, financial condition and results of operations.

We rely on products, technologies and intellectual property that we license from third parties for use in our services. We cannot assure that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the products and technologies that include or incorporate the licensed intellectual property.

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We cannot be certain that our licensors are not infringing the intellectual property rights of others or that our suppliers and licensors have sufficient rights to the technology in all jurisdictions in which we may operate. Some of our license agreements may be terminated by our licensors for convenience. If we are unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against our suppliers and licensors or against us, or if we are unable to continue to obtain the technology or enter into new agreements on commercially reasonable terms, our ability to develop our services containing that technology could be severely limited and our business could be disrupted or otherwise harmed. Additionally, if we are unable to obtain necessary technology from third parties, we may be forced to acquire or develop alternate technology, which may require significant time and effort and may be of lower quality or performance standards. This would limit and delay our ability to provide new or competitive offerings and increase our costs. If alternate technology cannot be obtained or developed, we may not be able to offer certain functionality as part of our offerings, which could adversely affect our business, financial condition and results of operations.

Some of our products and services contain open source software, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative effect on our business.

We use open source software in our products and services and anticipate using open source software in the future. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms. The terms of certain open source licenses to which our business is subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, we could face claims from third parties alleging ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until it can re-engineer such source code in a manner that avoids infringement. This re-engineering process could require us to expend significant additional research and development resources, and we may not be able to complete the re-engineering process successfully. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative effect on our business, financial condition and results of operations.

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Risks Related to Ownership of Our Class A Common Stock

The multi-class structure of our common stock has the effect of concentrating voting power with Robert Reffkin, our founder, Chairman and Chief Executive Officer, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions.

Our Class A common stock has one vote per share, our Class B common stock has no voting rights, except as otherwise required by law, and our Class C common stock has 20 votes per share. Robert Reffkin, our founder, Chairman and Chief Executive Officer, holds all of the issued and outstanding shares of Class C common stock. As of June 30, 2021, our founder held approximately 45% of the voting power of our outstanding capital stock in the aggregate, which voting power may increase over time as our founder vests in equity awards, including outstanding certain performance-based equity awards, pursuant to his right to require us to exchange any shares of Class A common stock for shares of Class C common stock.

If all such equity awards held by our founder had been vested, settled and exchanged for shares of Class C common stock as of June 30, 2021, our founder would have held approximately 69% of the voting power of our outstanding capital stock. As a result, our founder will be able to determine or significantly influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction. Our founder may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and might ultimately affect the market price of our Class A common stock.

Future transfers by the holders of Class C common stock will generally result in those shares automatically converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or other transfers by our founder. In addition, each share of Class C common stock will convert automatically into one share of Class A common stock upon the earlier of (i) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the first date on which the number of shares of our Class C common stock held by our founder, his permitted entities and permitted transferees is less than 50% of the number of shares of Class C common stock held by our founder, permitted transferees and permitted entities as of the date of the effectiveness of our IPO registration statement; (ii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the first date that both (A) our founder is no longer providing services to us as an officer, employee or consultant and (B) our founder is no longer a member of our board of directors as a result of a voluntary resignation by our founder or as a result of a written request or agreement by our founder not to be renominated as a member of our board of directors at a meeting of our stockholders; (iii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date on which our founder is terminated for cause (as defined in our restated certificate of incorporation); (iv) the date that is 12 months after the death or disability (as defined in our restated certificate of incorporation) of our founder; (v) two days prior to the date specified in writing upon which our shares of capital stock will be included on the S&P 500 index following written notice and confirmation from Standard & Poor’s of such specified date and; (vi) the date specified by the affirmative vote of the holders of our Class C common stock not representing less than two-thirds (2/3) of the voting power of the outstanding shares of our Class C common stock, voting separately as a single class; or (vii) seven years from the date of the effectiveness of our IPO registration statement.

In addition, because our Class A common stock has one vote per share, if we issue Class C common stock in the future upon the vesting and settlement of equity awards held by our founder, the holders of Class C common stock may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions.

We cannot predict the effect our multi-class structure may have on the market price of our Class A common stock.

We cannot predict whether our multi-class structure will result in a lower or more volatile market price of our Class A common stock, in adverse publicity, or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multi-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it plans to require new constituents of its indices to have greater than 5% of the company’s voting rights in the hands of public stockholders, and S&P Dow Jones announced that it will no longer admit companies with multi-class share structures to certain of its indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Also in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices and in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that

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specifically includes voting rights in its eligibility criteria. However, pursuant to our restated certificate of incorporation, each share of our Class C common stock will convert into one share of our Class A common stock two days prior to the date specified in writing upon which our shares of capital stock will be included on the S&P 500 index following written notice and confirmation from Standard & Poor’s of such specified date and inclusion. Under such announced policies, the multi-class structure of our common stock would make us ineligible for inclusion in certain indices and may discourage such indices from selecting us for inclusion, notwithstanding this automatic termination provision. As a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to track those indices would not invest in our Class A common stock. It is unclear what effect, if any, these policies will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may depress valuations, as compared to similar companies that are included. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.

The trading price of the shares of our Class A common stock is likely to be volatile, and purchasers of our Class A common stock could incur substantial losses.

Technology and real estate stocks historically have experienced high levels of volatility. The trading price of our Class A common stock may fluctuate substantially. These fluctuations could cause you to incur substantial losses, including all of your investment in our Class A common stock. Factors that could cause fluctuations in the trading price of our Class A common stock include the following:

• significant volatility in the market price and trading volume of technology companies in general and of companies in the real estate technology industry in particular;

• changes in mortgage interest rates;

• variations in the housing market, including seasonal trends and fluctuations;

• announcements of new solutions, commercial relationships, acquisitions, or other events by us or our competitors;

• price and volume fluctuations in the overall stock market from time to time;

• changes in how agents perceive the benefits of our platform and future offerings;

• the public’s reaction to our press releases, other public announcements, and filings with the SEC;

• fluctuations in the trading volume of our shares or the size of our public float;

• sales of large blocks of our common stock;

• actual or anticipated changes or fluctuations in our results of operations or financial projections;

• changes in actual or future expectations of investors or securities analysts;

• litigation involving us, our industry, or both;

• governmental or regulatory actions or audits;

• regulatory developments applicable to our business, including those related to privacy in the United States or globally;

• general economic conditions and trends;

• major catastrophic events in our markets; and

• departures of key employees.

In addition, if the market for technology or real estate stocks, or the stock market, in general, experiences a loss of investor confidence, the trading price of our Class A common stock could decline for reasons unrelated to our business, financial condition or results of operations. The trading price of our Class A common stock might also decline in reaction to events that affect other companies in the real estate or technology industries even if these events do not directly affect us. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company.

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Class A common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares, change their opinion of our business prospects or publish inaccurate or unfavorable research about our business, our share price may decline. If one or more of these analysts who cover us ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

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We may need to raise additional capital to continue to grow our business and we may not be able to raise additional capital on terms acceptable to us, or at all.

Growing and operating our business, including through the development of new and enhanced products and adjacent services and expansion into new markets, may require significant cash outlays, liquidity reserves and capital expenditures. If cash on hand, cash generated from operations and cash equivalents and investment balances are not sufficient to meet our cash and liquidity needs, we may need to seek additional capital and we may not be able to raise the necessary cash on terms acceptable to us, or at all. Financing arrangements we pursue or assume may require us to grant certain rights, take certain actions, or agree to certain restrictions that could negatively impact our business. If additional capital is not available to us on terms acceptable to us or at all, we may need to modify our business plans, which would harm our ability to grow our operations.

Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.

Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of our Class A common stock to decline and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

All of the shares of Class A common stock sold in our IPO are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act (including shares purchased by our affiliates in the IPO). The remaining shares of our common stock are subject to the lock-up agreement or market stand-off agreements described below.

All shares of common stock subject to the lock-up agreement will be released upon the date that is 180 days from March 31, 2021. When the lock-up period expires, we and our securityholders subject to a lock-up agreement or market stand-off agreement will be able to sell our shares in the public market. In addition, the underwriters may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements prior to the expiration of the lock-up period. See the sections titled “Shares Eligible for Future Sale” and “Underwriting” for more information. Sales of a substantial number of such shares upon expiration of the lock-up and market stand-off agreements, or the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.

In addition, as of June 30, 2021, we had options and RSUs outstanding that, if fully exercised, would result in the issuance of 114,033,595 shares of Class A common stock and 1,002,540 shares of Class B common stock. We have filed a registration statement to register shares reserved for future issuance under our equity compensation plans. Subject to the satisfaction of applicable vesting requirements and expiration of the market standoff agreements and lock-up agreements referred to above, the shares issued upon exercise of outstanding stock options or settlement of RSUs will be available for immediate resale in the open market.

Provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may limit attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition or other change in control of our company that the stockholders may consider favorable. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, our restated certificate of incorporation and amended and restated bylaws include provisions that:

• provide that our board of directors is classified into three classes of directors with staggered three-year terms;

• permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships;

• require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;

• authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

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• provide that only our chief executive officer, chairperson of our board of directors or a majority of our board of directors are authorized to call a special meeting of stockholders;

• eliminate the ability of our stockholders to call special meetings of stockholders;

• prohibit cumulative voting;

• provide that directors may only be removed “for cause” and only with the approval of the holders of at least two-thirds of the voting power of the then outstanding capital stock;

• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

• provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; and

• establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

Moreover, Section 203 of the Delaware General Corporation Law, or DGCL, may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.

Our restated certificate of incorporation and amended and restated bylaws contain exclusive forum provisions for certain claims, which may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.

Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our restated certificate of incorporation provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and the Federal Forum Provision will apply, to the fullest extent permitted by law, to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court, to the fullest extent permitted by law.

Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or employees, which may discourage lawsuits against us and our directors, officers, and employees. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation or restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and results of operations.

Because we do not anticipate paying any cash dividends on our Class A common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains.

We have never declared or paid any dividends on our common stock. We currently intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. In addition, the terms of our future debt agreements, if any, may prevent us from paying dividends. As a result, you may only receive a return on your investment in our Class A common stock if the market price of our Class A common stock increases.

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We will incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

We will incur increased costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives. We will incur significant legal, accounting and other expenses that we did not incur as a private company. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and the New York Stock Exchange. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives and may not effectively or efficiently manage our transition into a public company. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Unregistered Sales of Equity Securities

Since April 1, 2021 through June 30, 2021 (the date of the filing of our registration statement on Form S-8), the Registrant has issued an aggregate of 328,444 shares of its Class A common stock in connection with its acquisitions of certain companies or their assets and as consideration to individuals and entities who were former service providers or stockholders of such companies. The offer, sale and issuance of the above securities was deemed to be exempt from registration under the Securities Act in reliance upon Section 4 (a)(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder) as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

On July 1, 2021, 4,562,160 share of Class B common stock, constituting all outstanding Class B common stock, were converted into the same number of shares of Class A common stock under the Registrant’s Restated Certificate of Incorporation. No additional consideration was paid in connection with the conversion. The offer, sale and issuance of the above securities was deemed exempt from registration under the Securities Act in reliance upon Section 3(a)(9) of the Securities Act as the conversion exclusively involved the Registrant’s existing security holders and no commission or other remuneration was paid or given directly or indirectly for soliciting such conversion.

(b) Use of Proceeds

During April 2021, we completed our IPO, in which we sold 26,296,438 shares of our Class A common stock at a public offering price of $18.00 per share. We raised $449.7 million from the IPO, net of the underwriting discount and before offering costs of approximately $11.0 million. We have used a portion of the net proceeds and intend to use the remainder of the net proceeds, from our IPO for working capital and other general corporate purposes, which may include research and development, sales and marketing activities, general and administrative matters, and capital expenditures. We may also use a portion of the proceeds for the acquisition of, or investment in, technologies, solutions, or businesses that complement our business.

The representatives of the underwriters of our IPO were Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC. No payments were made by us to directors, officers, or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors pursuant to our director compensation policy.

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ITEM 6. EXHIBITS.

		Incorporated by Reference				Filed or Furnished Herewith
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date
10.1	Amended and Restated Revolving Credit and Security Agreement among Compass Concierge SPV I, LLC, Barclays Bank PLC and the lenders party thereto, dated as of July 29, 2021.						X
10.2	Forms of Global Notice of Restricted Stock Unit Award and Global Restricted Stock Unit Award Agreement.						X
10.3	Forms of Global Notice of Stock Option Grant and Global Stock Option Agreement						X
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.						X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.						X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.						X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.						X
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).						X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.						X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.						X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.						X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.						X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.						X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).						X

* The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 10, 2021

COMPASS, INC.
By:	/s/ Robert Reffkin
	Robert Reffkin
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Kristen Ankerbrandt
	Kristen Ankerbrandt
	Chief Financial Officer
	(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT

among

COMPASS CONCIERGE SPV I, LLC,

as Borrower,

COMPASS CONCIERGE, LLC,

as Seller,

BARCLAYS BANK PLC,

as Administrative Agent

and

THE LENDERS FROM TIME TO TIME PARTY HERETO,

Dated as of July 29, 2021

Table of Contents
		Page
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS			1
Section 1.01	Definitions		1
Section 1.02	Rules of Construction		1
Section 1.03	Computation of Time Periods		2
Section 1.04	Collateral Value Calculation Procedures		2
ARTICLE II ADVANCES			3
Section 2.01	Revolving Credit Facility		3
Section 2.02	Making of the Advances		3
Section 2.03	Evidence of Indebtedness		5
Section 2.04	Payment of Principal and Interest		5
Section 2.05	Prepayment of Advances		6
Section 2.06	Changes of Commitments		7
Section 2.07	Maximum Lawful Rate		7
Section 2.08	Several Obligations		8
Section 2.09	Increased Costs		8
Section 2.10	Rescission or Return of Payment		10
Section 2.11	Post-Default Interest		10
Section 2.12	Payments Generally		10
Section 2.13	Extension of the Scheduled Revolving Period Termination Date		11
Section 2.14	Replacement of Lenders		11
Section 2.15	Defaulting Lenders		12
Section 2.16	Interest Rates; LIBOR Notification		14
Section 2.17	Alternate Rate of Interest		14
ARTICLE III CONDITIONS PRECEDENT			16
Section 3.01	Conditions Precedent to Initial Advance		16
Section 3.02	Conditions Precedent to Each Borrowing		17

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ARTICLE IV REPRESENTATIONS AND WARRANTIES		19
Section 4.01	Representations and Warranties	19
ARTICLE V COVENANTS		25
Section 5.01	Affirmative Covenants	25
Section 5.02	Negative Covenants	30
Section 5.03	Certain Undertakings Relating to Separateness	33
ARTICLE VI EVENTS OF DEFAULT		35
Section 6.01	Events of Default	35
Section 6.02	Remedies upon an Event of Default	37
Section 6.03	Servicer Events of Default	38
ARTICLE VII PLEDGE OF COLLATERAL; RIGHTS OF THE ADMINISTRATIVE AGENT		38
Section 7.01	Grant of Security	38
Section 7.02	Release of Security Interest	39
Section 7.03	Rights and Remedies	39
Section 7.04	Remedies Cumulative	40
Section 7.05	Related Documents	40
Section 7.06	Borrower Remains Liable	41
Section 7.07	Protection of Collateral	41
ARTICLE VIII ACCOUNTS, ACCOUNTINGS AND RELEASES		42
Section 8.01	Collection of Money	42
Section 8.02	Collection Account	42
Section 8.03	The Reserve Account; Fundings	42
Section 8.04	Accountings	43
Section 8.05	Sale and Release of Facility Receivables	44
Section 8.06	Borrower Account Details	45
ARTICLE IX APPLICATION OF MONIES		45
Section 9.01	Disbursements of Monies	45
ARTICLE X THE ADMINISTRATIVE AGENT		47
Section 10.01	Authorization and Action	47
Section 10.02	Delegation of Duties	48
Section 10.03	Agent’s Reliance, Etc	48
Section 10.04	Indemnification	49
Section 10.05	Successor Administrative Agent	50
Section 10.06	Administrative Agent’s Capacity as a Lender	50

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ARTICLE XI MISCELLANEOUS		50
Section 11.01	No Waiver; Modifications in Writing	50
Section 11.02	Notices, Etc	51
Section 11.03	Taxes	52
Section 11.04	Costs and Expenses; Indemnification	56
Section 11.05	Execution in Counterparts	59
Section 11.06	Assignability	59
Section 11.07	Governing Law	61
Section 11.08	Severability of Provisions	61
Section 11.09	Confidentiality	61
Section 11.10	Merger	62
Section 11.11	Survival	63
Section 11.12	Submission to Jurisdiction; Waivers; Etc	63
Section 11.13	Waiver of Jury Trial	63
Section 11.14	Service of Process	63
Section 11.15	Waiver of Setoff	64
Section 11.16	PATRIOT Act Notice	64
Section 11.17	[Reserved]	64
Section 11.18	Non-Petition	64
Section 11.19	Third Party Beneficiary	64
Section 11.20	No Fiduciary Duty	65
Section 11.21	Excess Funds	65
Section 11.22	Acknowledgement and Consent to Bail-In of Affected Financial Institutions	65
Section 11.23	Risk Retention	66
Section 11.24	Amendment and Restatement	67

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SCHEDULES

Schedule 1	Commitments and Percentages
Schedule 2	[Reserved]
Schedule 3	Notice Information
Schedule 4	Borrower Account Details
APPENDIX A
Appendix A	Definitions
EXHIBITS
Exhibit A	Form of Request for Advance (with attached form of Borrowing Base Certificate)
Exhibit B	Form of Notice of Prepayment
Exhibit C	Form of Assignment and Acceptance
Exhibit D	Concierge Capital Underwriting Policy
Exhibit E-1 -4	Forms of U.S. Tax Compliance Certificates
Exhibit F	Form of [Closing Date] [Amendment Effective Date] Certificate
Exhibit G	Form of Solvency Certificate

iv

AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of July 29, 2021 (the “Amendment Effective Date”), among Compass Concierge SPV I, LLC, as Borrower (the “Borrower”), Compass Concierge, LLC, as Seller (the “Seller”), Barclays Bank PLC, as Administrative Agent (in such capacity, together with its successors and assigns, the “Administrative Agent”), and each of the Lenders from time to time party hereto.

RECITALS

WHEREAS, the Borrower desires that the Lenders make advances on a revolving basis to the Borrower on the terms and subject to the conditions set forth in this Agreement (the “Facility”);

WHEREAS, each Lender is willing to make such advances to the Borrower on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the Borrower, the Seller, the Administrative Agent and Barclays Bank PLC as Lender have entered into that certain Revolving Credit and Security Agreement, dated as of July 31, 2020 (as amended by Amendment No. 1 to the Revolving Credit and Security Agreement, dated as of June 1, 2021, the “Existing Agreement”), and the parties hereto desire to amend and restate the Existing Agreement in its entirety hereby; and

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS

Section 1.01 Definitions. Capitalized terms that are not otherwise defined herein shall have the meanings assigned to them in Appendix A to this Agreement.

Section 1.02 Rules of Construction. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires (i) singular words shall connote the plural as well as the singular, and vice versa (except as indicated), as may be appropriate, (ii) the words “herein,” “hereof” and “hereunder” and other words of similar import used in this Agreement refer to this Agreement as a whole and not to any particular article, schedule, section, paragraph, clause, exhibit or other subdivision, (iii) the headings, subheadings and table of contents set forth in this Agreement are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect the meaning, construction or effect of any provision hereof, (iv) references in this Agreement to “include” or “including” shall mean include or including, as applicable, without limiting the generality of any description preceding such term, (v) each of the parties to this Agreement and its counsel have reviewed and revised, or requested revisions to, this Agreement, and the rule of construction that any ambiguities are to be resolved against the drafting party shall be inapplicable in the construction and interpretation of this Agreement, (vi) any definition of or reference to any Facility Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (vii) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions set forth herein or in any other applicable agreement), (viii) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time, (ix) (h) any use of the term “knowledge” or “actual knowledge” in this Agreement or any other Facility Document shall mean actual knowledge by a Responsible Officer of such party and (x) each reference to time without further specification shall mean New York, New York time.

Section 1.03 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” both mean “to but excluding”. Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed.

Section 1.04 Collateral Value Calculation Procedures. In connection with all calculations required to be made pursuant to this Agreement with respect to any payments on any other assets included in the Collateral, with respect to the sale of and purchase of Facility Receivables, and with respect to the income that can be earned on any other amounts that may be received for deposit in the Collection Account, the provisions set forth in this Section 1.04 shall be applied. The provisions of this Section 1.04 shall be applicable to any determination or calculation that is covered by this Section 1.04, whether or not reference is specifically made to Section 1.04, unless some other method of calculation or determination is expressly specified in the particular provision.

(a) References in the Priority of Payments to calculations made on a “pro forma basis” shall mean such calculations after giving effect to all payments, in accordance with the Priority of Payments, that precede (in priority of payment) or include the clause in which such calculation is made.

(b) References in this Agreement to the Borrower’s “purchase” or “acquisition” of a Facility Receivable include references to the Borrower’s acquisition of such Facility Receivable by way of a sale and/or contribution from the Seller.

(c) For the purposes of calculating Excess Concentration Amounts all calculations will be rounded to the nearest 0.01%.

(d) Notwithstanding any other provision of this Agreement to the contrary, all monetary calculations under this Agreement shall be in Dollars. For purposes of this Agreement, calculations with respect to all amounts received or required to be paid in a currency other than Dollars shall be valued at zero.

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ARTICLE II

ADVANCES

Section 2.01 Revolving Credit Facility. On the terms and subject to the conditions hereinafter set forth, including Article III, each Lender with a Commitment agrees to make Advances hereunder to the Borrower from time to time on any Business Day during the period from the Closing Date until the Amortization Date, on a pro rata basis, in each case in an aggregate principal amount at any one time outstanding up to but not exceeding such Lender’s Commitment and, as to all Lenders, in an aggregate principal amount up to but not exceeding an amount such that the aggregate Advances do not exceed the Borrowing Base as then in effect. Each such borrowing of an Advance on any single day is referred to herein as a “Borrowing”.

Within such limits and subject to the other terms and conditions of this Agreement, the Borrower may borrow (and re-borrow) Advances under this Section 2.01 and prepay Advances under Section 2.05. Each Lender’s obligations under this Section are several and the failure of any Lender to make available its share of any requested Advance amount on a Borrowing Date shall not relieve any other Lender of its obligations hereunder. No Lender shall be obligated to fund any portion of any Advance which would cause the aggregate principal amount of its Advances to exceed its Commitment. The Commitments of each Lender are set forth on Schedule 1. No portion of any Advance shall be funded or held with “plan assets” (within the meaning of the Department of Labor regulation located at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA).

Section 2.02 Making of the Advances.

(a) Advance Request.

(i) If the Borrower desires to make a Borrowing under this Agreement, the Borrower shall provide the Administrative Agent, not later than 12:00 p.m. (New York City time) two (2) Business Days prior to the proposed Borrowing Date, a written request for an advance substantially in the form of Exhibit A hereto (a “Request for Advance”) which Request for Advance shall be irrevocable and effective upon receipt, together with a final Borrowing Base Certificate demonstrating compliance with the Borrowing Base Test, and the related Data File with respect to the requested Borrowing. A Request for Advance received after 12:00 p.m. (New York City time) shall be deemed received on the following Business Day.

(ii) The proposed Borrowing Date specified in each Request for Advance shall be a Business Day falling prior to the Amortization Date, and the amount of the Borrowing requested in such Request for Advance (the “Requested Amount”) shall be equal to at least $500,000 (or, if less, the remaining unfunded Commitments hereunder).

(iii) Promptly following receipt of a Request for Advance in accordance with this Section, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amounts of such Lender’s Advance to be made as part of the requested Borrowing. Each Request for Advance shall be dated the date the request for the related

3

Borrowing is being made, and signed by a Responsible Officer of the Borrower. By submitting a Request for Advance, the Borrower shall be deemed to have represented and warranted to the Administrative Agent and the Lenders that, immediately after giving effect to the proposed Borrowing on the related Borrowing Date, each of the conditions precedent set forth in Section 3.02 have been satisfied.

(iv) No more than two (2) Requests for Advance may be made in any calendar week.

(b) Funding by Lenders. Each Lender, in respect of Advances, shall make its Percentage of the applicable Requested Amount available on each Borrowing Date by wire transfer of immediately available funds by 5:00 p.m. (New York City time) to the account designated by the Borrower on the related Request for Advance. Notwithstanding the foregoing, with respect to any Facility Group, each Conduit Lender without a Commitment in such Facility Group may, in its sole discretion, make available to the Borrower the Percentage of the applicable Requested Amount allocable to such Conduit Lender’s Facility Group. If a Conduit Lender (other than a Conduit Lender with a Commitment) elects not to fund its Facility Group’s Percentage of the Requested Amount, such Conduit Lender’s related Lenders with Commitments shall, upon satisfaction of the applicable conditions set forth in this Agreement, make available to the Borrower, their respective Percentages of the Requested Amount.

(c) [Reserved].

(d) Indemnification. Upon submission, each Request for Advance shall be irrevocable and binding on the Borrower, and the Borrower shall indemnify each Lender against any loss or expense incurred by such Lender, either directly or indirectly (including, in the case of a Conduit Lender, through the applicable Program Support Agreement) as a result of any failure by the Borrower to complete such Advance, including any loss or expense incurred by such Lender or such Lender’s conduit administrator, either directly or indirectly (including, in the case of a Conduit Lender, pursuant to the applicable Program Support Agreement) by reason of the liquidation or reemployment of funds acquired by such Lender (or the applicable Program Support Provider(s)) (including funds obtained by issuing CP or promissory notes or obtaining deposits or loans from third parties) in order to fund such Advance.

(e) Delayed Funding. If the Borrower delivers a request for an Advance pursuant to Section 2.02, then the Lenders may, not later than 4:00 p.m., New York City time on the date that is one (1) Business Day prior to the proposed Borrowing Date, deliver a written notice (a “Delayed Funding Notice”, and the date of such delivery, the “Delayed Funding Notice Date”) to the Borrower of its intention to fund the Advance (such amount, the “Delayed Amount”) on a date (the date of such funding, the “Delayed Funding Date”) that is on or before the thirty-fifth (35th) day following the date of such request for an Advance (or if such day is not a Business Day, then on the next succeeding Business Day) rather than on the requested Borrowing Date; provided, however, that if Borrower receives a Delayed Funding Notice, the Borrower may revoke the related request for Advance by providing written notice thereof to the Administrative Agent. A Lender that delivers a Delayed Funding Notice with respect to any Borrowing Date shall be referred to herein as a “Delaying Lender” with respect to such Borrowing Date. If the conditions to any Advance described in Section 3.02 are satisfied on the requested Borrowing Date, there shall be

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no conditions to the Lenders’ obligation to fund the requested amount on the related Delayed Funding Date. On each Delayed Funding Date, the Delaying Lender shall fund an aggregate amount equal to the Delayed Amount for such Delayed Funding Date. No Unused Fee shall accrue on the Delayed Amount of such Delaying Lender’s Commitment. Each Lender agrees that, to the extent it is a Delaying Lender, such Lender will agree not to adversely select this transaction for delayed funding with respect to an Advance as compared to other similar transactions requesting advances at such time.

Section 2.03 Evidence of Indebtedness.

(a) Maintenance of Records by Lenders. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to it and resulting from the Advances made by such Lender to the Borrower, from time to time, including the amounts of principal and interest thereon and paid to it, from time to time hereunder.

(b) Maintenance of Records by Administrative Agent. The Administrative Agent shall maintain records in which it shall record (i) the amount of each Advance made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(c) Effect of Entries. The entries made in the records maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie evidence, absent obvious error, of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Advances in accordance with the terms of this Agreement.

Section 2.04 Payment of Principal and Interest. The Borrower shall pay principal and Interest on the Advances as follows:

(a) 100% of the outstanding principal amount of each Advance, together with all accrued and unpaid Interest thereon, shall be payable on the Final Maturity Date.

(b) Interest shall accrue on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full. The interest rates applicable to the Advances shall be determined by the Administrative Agent in accordance with the applicable provisions hereof, and such determination shall be conclusive absent manifest error.

(c) Accrued Interest on each Advance shall be payable in arrears (x) on each Payment Date, and (y) in connection with any prepayment in full of the Advances pursuant to Section 2.05(a); provided that (i) with respect to any prepayment in full of the Advances outstanding, accrued Interest on such amount to but excluding the date of prepayment may be payable on such date or as otherwise agreed to between the Lenders and the Borrower and (ii) with respect to any partial prepayment of the Advances outstanding, accrued Interest on such amount to but excluding the date of prepayment shall be payable following such prepayment on the applicable Payment Date in accordance with the Priority of Payments for the Collection Period in which such prepayment occurred.

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(d) Subject in all cases to Section 2.04(e), the obligation of the Borrower to pay the Obligations, including the obligation of the Borrower to pay the Lenders the outstanding principal amount of the Advances and accrued interest thereon, shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms hereof (including Section 2.12), under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or any other Person may have or have had against any Secured Party or any other Person.

(e) No recourse shall be had against any officer, director, employee, shareholder, owner, Affiliate, member, manager, agent, partner, principal or incorporator of the Borrower or their respective successors or assigns for any amounts payable by the Borrower under this Agreement.

Section 2.05 Prepayment of Advances.

(a) Optional Prepayments. The Borrower may, from time to time on any Business Day, voluntarily prepay Advances in whole or in part, without penalty or premium but subject to payment of all amounts due pursuant to Section 2.04(c), as follows: the Borrower shall have delivered to the Administrative Agent written notice of such prepayment (such notice, a “Notice of Prepayment”) in the form of Exhibit B hereto by no later than 12:00 p.m. (New York City time) on the second Business Day immediately prior to the day of such prepayment (or such notice may be delivered at a later time or date as the Administrative Agent may agree in its sole discretion). Any Notice of Prepayment received by the Administrative Agent after 12:00 p.m. (New York City time) shall be deemed received on the next Business Day. Upon receipt of such Notice of Prepayment, the Administrative Agent shall promptly notify each Lender. Each such Notice of Prepayment shall be irrevocable and effective upon the date received and shall be dated the date such notice is given, signed by a Responsible Officer of the Borrower and otherwise appropriately completed. Each prepayment of any Advance by the Borrower pursuant to this Section 2.05(a) shall in each case be in a principal amount of at least $500,000 or, if less, the entire outstanding principal amount of the Advances of the Borrower. If a Notice of Prepayment is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. The Borrower shall make the payment amount specified in such notice by wire transfer of immediately available funds by 3:00 p.m. (New York City time) to the account of the Administrative Agent, for the account of the Lenders, as directed by the Administrative Agent.

(b) Mandatory Prepayments. The Borrower shall prepay the Advances on each Payment Date in the manner and to the extent provided in the Priority of Payments. The Borrower and the Seller shall provide, in each Monthly Report, notice of the aggregate amounts of Advances that are to be prepaid on the related Payment Date in accordance with the Priority of Payments. Additionally, if on any day during the Revolving Period the Borrowing Base Test shall not be satisfied, the Borrower shall either (i) prepay the Advances in an amount sufficient to satisfy the Borrowing Base Test by withdrawing funds on deposit in the Collection Account or (ii) identify and pledge, in accordance with the terms of Section 7.01 of this Agreement, additional Eligible Receivables with respect to which the Excess Concentration Amounts are satisfied as of such date in an amount sufficient to satisfy the Borrowing Base Test, in each case, within two (2) Business Days of either (1) a Responsible Officer of the Borrower or the Seller obtaining actual knowledge

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thereof or (2) receipt of written notice by the Borrower or the Seller (which may be by email) of such condition from the Administrative Agent; provided, however, that solely for purposes of this Section 2.05(b), for purposes of determining whether or not the Borrower is required to make a mandatory prepayment pursuant to this Section 2.05(b), the aggregate amount of cash on deposit in the Collection Account less any amounts that are estimated in good faith to be payable pursuant to Section 9.01(a)(i) through (iii) on the next Payment Date shall be deducted from the Advances in clause (a) for the calculation of the Borrowing Base Test.

(c) Additional Prepayment Provisions. Each prepayment pursuant to this Section 2.05 shall be subject to Section 2.04(c) and applied to the Advances in accordance with the Lenders’ respective Percentages.

(d) Interest on Prepaid Advances. If requested by the Administrative Agent, the Borrower shall pay all accrued and unpaid Interest on Advances prepaid on the date of such prepayment, subject to the availability of funds to the Borrower for the payment of any such amounts.

Section 2.06 Changes of Commitments.

(a) Automatic Reduction and Termination. The Commitments of all Lenders shall be automatically reduced to zero at 5:00 p.m. (New York City time) on the Amortization Date.

(b) Optional Reductions. Prior to the Amortization Date, the Borrower shall have the right to terminate or reduce the unused amount of the Commitment Amount at any time or from time to time without any fee or penalty upon not less than five (5) Business Days’ prior notice to the Lenders and the Administrative Agent of each such termination or reduction, which notice shall specify the effective date of such termination or reduction and the amount of any such reduction; provided that (i) the amount of any such reduction of the Commitment Amount shall be equal to at least $1,000,000 or an integral multiple of $250,000 in excess thereof or, if less, the remaining unused portion thereof, and (ii) no such reduction will reduce the Commitment Amount below the aggregate principal amount of Advances outstanding at such time. Such notice of termination or reduction shall be irrevocable and effective only upon receipt and shall be applied pro rata to reduce the respective Commitments of each Lender. Notwithstanding the foregoing, upon the occurrence of a Change of Control, the Borrower shall have the right to immediately terminate the unused amount of the Commitment Amount.

(c) Effect of Termination or Reduction. The Commitments of the Lenders once terminated or reduced may not be reinstated unless by mutual consent. Each reduction of the Commitment Amount pursuant to this Section 2.06 shall be applied ratably among the Lenders in accordance with their respective Commitments.

Section 2.07 Maximum Lawful Rate. It is the intention of the parties hereto that the interest on the Advances shall not exceed the maximum rate permissible under Applicable Law. Accordingly, anything herein to the contrary notwithstanding, in the event any interest is charged to, collected from or received from or on behalf of the Borrower by the Lenders pursuant hereto or thereto in excess of such maximum lawful rate, then the excess of such payment over that maximum shall be applied first to the payment of amounts then due and owing by the Borrower to the Secured Parties under this Agreement (other than in respect of principal of and interest on the Advances) and then to the reduction of the outstanding principal amount of the Advances of the Borrower.

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Section 2.08 Several Obligations. The failure of any Lender to make any Advance to be made by it on the date specified therefor shall not relieve any other Lender of its obligation to make its Advance on such date, the Administrative Agent shall not be responsible for the failure of any Lender to make any Advance, and no Lender shall be responsible for the failure of any other Lender to make an Advance to be made by such other Lender.

Section 2.09 Increased Costs.

(a) Except with respect to (i) items included in the definition of Taxes under Section 11.03, (ii) items (B) through (D) of the items expressly excluded from the definition of Taxes in Section 11.03, (iii) Other Taxes and (iv) Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise or branch profits taxes, if (i) the introduction of or any change in or in the interpretation, application or implementation of any Applicable Law or GAAP or other applicable accounting policy after the date hereof, or (ii) the compliance with any guideline or directive of general application or request from any central bank or other Governmental Authority after the date hereof (a “Regulatory Change”):

(A) shall impose, modify or deem applicable any reserve (including any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest on the Advances), special deposit or similar requirement against assets of any Affected Person, deposits or obligations with or for the account of any Affected Person or credit extended by any Affected Person;

(B) shall change the amount of capital maintained or required or requested or directed to be maintained by any Affected Person;

(C) shall impose any other condition affecting any Advance owned or funded in whole or in part by any Affected Person, or its obligations or rights, if any, to make Advances or to provide funding therefor; or

(D) shall change the rate for, or the manner in which the Federal Deposit Insurance Corporation (or a successor thereto) assesses, deposit insurance premiums or similar charges;

and the result of any of the foregoing is or would be:

(b) to increase the cost to such Affected Person funding or making or maintaining any Advance, or any purchases reinvestments or loans or other extensions of credit under any Program Support Agreement or any Facility Document; or

(c) to reduce the amount of any sum received or receivable by an Affected Person under this Agreement or under any Program Support Agreement;

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then, commencing on the first Payment Date after demand by such Affected Person (which demand shall be accompanied by a statement setting forth in reasonable detail the basis of such demand), the Borrower shall pay directly to such Affected Person such additional amount or amounts as will compensate such Affected Person for such additional or increased cost or such reduction in accordance with the Priority of Payments from funds available for such purpose; provided, that, in each case, such Affected Person has requested, or is planning to request, such payments from similar facilities. For the avoidance of doubt, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank Act”); (ii) the revised Basel Accord prepared by the Basel Committee on Banking Supervision as set out in the publication entitled “Basel II: International Convergence of Capital Measurements and Capital Standards: A Revised Framework,” as updated from time to time (“Basel II”); (iii) the publication entitled “Basel III: A global regulatory framework for more resilient banks and banking systems,” as updated from time to time (“Basel III”), including any publications addressing the liquidity coverage ratio or the supplementary leverage ratio promulgated by the Bank for International Settlements or the Basel Committee on Banking Supervision; or (iv) any implementing laws, rules, regulations or directives from any Governmental Authority relating to the Dodd Frank Act, Basel II or Basel III, and in each case all rules and regulations promulgated thereunder or issued in connection therewith shall be deemed to have been introduced after the Closing Date, thereby constituting a Regulatory Change hereunder with respect to the Affected Persons as of the Closing Date, regardless of the date enacted, adopted or issued, and such additional amounts which are sufficient to compensate such Affected Person for such increase in capital or liquidity or reduced return in accordance with the Priority of Payments.

The Borrower acknowledges that this Section 2.09 permits the Affected Person to institute measures in anticipation of a Regulatory Change (including the imposition of internal charges on the Affected Person’s interests or obligations under this Agreement), and allows the Affected Person to commence allocating charges to or seeking compensation from the Borrower under this Section 2.09 in connection with such measures (such amounts being referred to as “Early Adoption Increased Costs”), in advance of the effective date of such Regulatory Change, and the Borrower agrees to pay such Early Adoption Increased Costs to the Affected Person following demand therefor without regard to whether such effective date has occurred in accordance with the Priority of Payments from funds available for such purpose; provided, that (i) the related Lender shall provide thirty (30) days prior written notice to the Borrower of its intent to impose or incur any such charges or compensation and (ii) the related Affected Person shall not be compensated for any such amount pursuant to this paragraph relating to any period ending, and of which the related Affected Person has had knowledge, more than ninety (90) days prior to the date that the related Lender provided the Borrower the written notice contemplated by the preceding clause (i) of this paragraph.

If any Affected Person becomes entitled to claim any additional amounts pursuant to this Section 2.09, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled. A certificate setting forth in reasonable detail such amounts submitted to the Borrower by an Affected Person shall be conclusive and binding for all purposes, absent manifest error.

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(d) Upon the occurrence of any event giving rise to the Borrower’s obligation to pay additional amounts to a Lender pursuant to this Section 2.09, such Lender will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to reduce or eliminate any claim for compensation pursuant to this Section 2.09, including but not limited to designating a different lending office if such designation would reduce or obviate the obligations of the Borrower to make future payments of such additional amounts; provided that such designation is made on such terms that such Lender and its lending office suffer no unreimbursed cost or material legal or regulatory disadvantage (as reasonably determined by such Lender), with the object of avoiding future consequence of the event giving rise to the operation of any such provision.

Section 2.10 Rescission or Return of Payment. The Borrower agrees that, if at any time (including after the occurrence of the Final Maturity Date) all or any part of any payment theretofore made by it to any Secured Party or any designee of a Secured Party is or must be rescinded or returned for any reason whatsoever (including the insolvency, bankruptcy or reorganization of the Borrower or any of its Affiliates), the obligation of the Borrower to make such payment to such Secured Party shall, for the purposes of this Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence and this Agreement shall continue to be effective or be reinstated, as the case maybe, as to such obligations, all as though such payment had not been made; provided that interest shall not accrue on any such amount from and after the date of its original payment by the Borrower.

Section 2.11 Post-Default Interest. The Borrower shall pay interest on all Obligations that are not paid when due for the period from the due date thereof until the date the same is paid in full at the Post-Default Rate. Interest payable at the Post-Default Rate shall be payable on each Payment Date in accordance with the Priority of Payments. Notwithstanding anything to the contrary set forth in this Agreement, the waiver of Interest paid at the Post-Default Rate shall only require the consent of the Majority Lenders.

Section 2.12 Payments Generally.

(a) Except as otherwise provided under Section 11.04, all amounts owing and payable to any Secured Party, any Affected Person or any Indemnified Party, in respect of the Advances and other Obligations, including the principal thereof, interest, fees, indemnities, expenses or other amounts payable under this Agreement, shall be paid by the Borrower to such Person, in Dollars, in immediately available funds, in accordance with the Priority of Payments, and all without counterclaim, setoff, deduction, defense, abatement, suspension or deferment. The Administrative Agent and each Lender shall provide wire instructions to the Borrower and the Administrative Agent no later than three (3) Business Days prior to the effective date of any such change in wire instructions. Payments must be received by the applicable recipient on or prior to 2:00 p.m. (New York City time) on a Business Day; provided that, payments received after 2:00 p.m. (New York City time) on a Business Day will be deemed to have been paid on the next following Business Day.

(b) Except as otherwise expressly provided herein, all computations of interest, fees and other Obligations shall be made on the basis of a year of 360 days for the actual number of days elapsed in computing interest on any Advance, the date of the making of the Advance shall be included and the date of payment shall be excluded; provided that, if an Advance is repaid on the same day on which it is made, one day’s Interest shall be paid on such Advance. All computations made by a Lender or the Administrative Agent under this Agreement shall be conclusive absent manifest error.

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Section 2.13 Extension of the Scheduled Revolving Period Termination Date. A Responsible Officer of the Borrower may make a request to the Administrative Agent and the Lenders, upon written notice, to extend the Scheduled Revolving Period Termination Date for an additional period agreeable to the Administrative Agent and the Lenders in their sole discretion. No later than thirty (30) days from the date on which the Administrative Agent and the Lenders shall have received any such notice from a Responsible Officer of the Borrower pursuant to the preceding sentence, the Administrative Agent and the Lenders shall notify the Borrower of the initial consent or non-consent of the Administrative Agent and the Lenders to such extension request, which consent shall be given at the sole and absolute discretion of the Administrative Agent and each Lender. If the Administrative Agent and the Lenders shall have consented to such extension request, the Administrative Agent and the Lenders shall deliver to the Borrower written notice of the Administrative Agent’s and the Lenders’ election to extend the Scheduled Revolving Period Termination Date. The consent of the Administrative Agent and the Lenders shall be subject to the preparation, execution and delivery of any required legal documentation in form and substance satisfactory to the Administrative Agent and the Lenders in their sole discretion. Failure of the Administrative Agent and the Lenders to respond to a request for extension of the Scheduled Revolving Period Termination Date shall constitute denial of such extension and, as a result, the current Scheduled Revolving Period Termination Date will continue to be applicable. The Administrative Agent, the Lenders and the Borrower may also agree to extend the Scheduled Revolving Period Termination Date at any other time in their respective sole discretion. As part of any extension of the Scheduled Revolving Period Termination Date, the Final Maturity Date shall also be extended by an equal period of time unless otherwise agreed by the Administrative Agent, the Lenders and the Borrower.

Section 2.14 Replacement of Lenders.

(a) Notwithstanding anything to the contrary contained herein, in the event that (i) any Affected Person shall request reimbursement for amounts owing pursuant to Section 2.09 or 11.03, (ii) any Lender does not give or approve any consent, waiver or amendment that requires the approval of all Lenders or all affected Lenders in accordance with the terms hereof and has been approved by the Majority Lenders or (iii) a Lender is a Defaulting Lender (each such Lender, or each Lender related to such Affected Person, described in the foregoing clauses (i), (ii) and (iii), a “Potential Terminated Lender”) the Borrower, at their sole expense and effort in connection with any replacement of a Potential Terminated Lender made in reliance on clause (ii) above, shall be permitted, upon no less than ten (10) days’ written notice to the Administrative Agent and such Potential Terminated Lender, to require such Potential Terminated Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.09 or 11.03) and obligations under this Agreement and the related Facility Documents to an assignee permitted pursuant to Section 11.06 (a “Replacement Lender”) that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment); provided that:

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(A) such Potential Terminated Lender shall have received payment of the lesser of (i) an amount equal to the outstanding principal of its Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Facility Documents or (ii) such other agreed-upon amount, from the Replacement Lender (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(B) in the case of any such assignment resulting from a claim for compensation under Section 2.09 or 11.03, such assignment will result in a reduction in such compensation or payments thereafter;

(C) such assignment does not conflict with Applicable Laws; and

(D) in the case of an assignment based on clause (ii) above, the Replacement Lender shall have consented to the applicable amendment, waiver or consent.

(b) Each Potential Terminated Lender hereby agrees to take all actions reasonably necessary, at the sole expense of the Borrower, to permit a Replacement Lender to succeed to its rights and obligations hereunder. Upon the effectiveness of any such assignment to a Replacement Lender, (i) such Replacement Lender shall become a “Lender” hereunder for all purposes of this Agreement and the other Facility Documents, (ii) such Replacement Lender shall have a Commitment in the amount not less than the Potential Terminated Lender’s Commitment assumed by it and (iii) the Commitment of the Potential Terminated Lender shall be terminated in all respects.

(c) No Lender shall be required to make any assignment or delegation pursuant to Section 2.14(a) if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

Section 2.15 Defaulting Lenders.

(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 11.01(c).

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees, indemnities or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VI or otherwise) shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Unmatured Event of Default or Event of Default exists), to the

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funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Unmatured Event of Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Advances of all Lenders other than the Defaulting Lender on a pro rata basis prior to being applied to the payment of any Advances of such Defaulting Lender until such time as all Advances are held by the Lenders pro rata in accordance with their Percentages of the applicable Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post-cash collateral pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees. Notwithstanding any other provision of this Agreement or the other Facility Documents to the contrary, for so long as a Lender is a Defaulting Lender (such period of time, a “Default Period”), such Defaulting Lender shall not be entitled to receive any applicable unused commitment fees accruing to it during such Default Period under this Agreement or any other Facility Document (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender).

(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing that a Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender shall purchase such portions of the outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances to be held pro rata by the Lenders in accordance with their respective Percentages of the applicable Commitments, whereupon such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender; provided that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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(c) The Borrower may terminate the unused amount of the Commitment of any Defaulting Lender upon not less than three (3) Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof); provided that such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent or any Lender may have against such Defaulting Lender.

Section 2.16 Interest Rates; LIBOR Notification. The interest rate on Advances is determined by reference to the LIBOR Base Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, the Financial Conduct Authority (“FCA”) publicly announced that: (a) immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease; immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA’s consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored. There is no assurance that dates announced by the FCA will not change or that the administrator of the London interbank offered rate and/or regulators will not take further action that could impact the availability, composition, or characteristics of the London interbank offered rate or the currencies and/or tenors for which the London interbank offered rate is published. Each party to this agreement should consult its own advisors to stay informed of any such developments. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate is no longer available or in certain other circumstances as set forth in Section 2.17, such Section 2.17 provides a mechanism for determining the Benchmark Replacement. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.17, of any change to the reference rate upon which the interest rate an Advance using the applicable LIBOR Rate is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBOR Base Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, (i) any such alternative, successor or replacement rate implemented pursuant to Section 2.17, whether upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.17), including, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBOR Base Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

Section 2.17 Alternate Rate of Interest.

Notwithstanding anything to the contrary herein or in any other Facility Document:

(a) On March 5, 2021 the FCA, the regulatory supervisor of the LIBOR Base Rate’s administrator (“IBA”), announced in a public statement the future cessation or loss of

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representativeness of overnight/Spot Next, 1-month, 3-month, 6-month and 12-month LIBOR Base Rate tenor settings. On the earlier of (i) the date that all Available Tenors of the LIBOR Base Rate have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, if the then-current Benchmark is the LIBOR Base Rate, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Facility Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Facility Document. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.

(b) Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Facility Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders and the Borrower without any amendment to, or further action or consent of any other party to, this Agreement or any other Facility Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Advances to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Advances. During the period referenced in the foregoing sentence, the component of Base Rate based upon the Benchmark will not be used in any determination of Base Rate.

(c) In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Facility Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.

(d) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.17, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 2.17.

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(e) At any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or LIBOR Base Rate), then the Administrative Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.01 Conditions Precedent to Initial Advance. The effectiveness of this Agreement and of the obligation of each Lender hereunder to make its initial Advance hereunder shall be subject to the satisfaction or waiver by the Administrative Agent of the following conditions precedent on or prior to the Closing Date:

(a) each of the Facility Documents and the Performance Guaranty duly executed and delivered by the parties thereto, which shall each be in full force and effect;

(b) true and complete copies of the Constituent Documents of the Borrower, the Parent, the Seller and the Servicer as in effect on the Closing Date and, to the extent applicable, (x) certified within forty-five (45) days of the Closing Date by the appropriate governmental official and (y) certified by its secretary or an assistant secretary as of the Closing Date, in each case, as being in full force and effect without modification or amendment, (ii) signature and incumbency certificates of the officers of such Person executing the Facility Documents to which it is a party, (iii) resolutions of the board of directors or similar governing body of each of the Borrower, the Parent, the Seller and the Servicer approving and authorizing the execution, delivery and performance of this Agreement and the other Facility Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment and (iv) a good standing certificate from the applicable Governmental Authority of each of the Borrower’s, the Parent’s, the Seller’s and the Servicer’s jurisdiction of incorporation, organization or formation and, with respect to the Borrower, in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business except where such failure to be qualified would not reasonably be expected to have a Material Adverse Effect, each dated a recent date prior to the Closing Date;

(c) each of the Borrower, the Seller and the Servicer shall have obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary or advisable to be obtained by them, in connection with the transactions contemplated by the Facility Documents and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to the Administrative Agent other than those consents or approvals that failure of which to obtain would not reasonably be expected to have a Material Adverse Effect;

(d) the Borrower and the Seller shall have delivered to the Administrative Agent an originally executed Closing Date Certificate, in each case, dated as of the Closing Date;

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(e) the Administrative Agent shall have received a Solvency Certificate from each of the Borrower and the Seller, in each case, dated as of the Closing Date;

(f) financing statements, to be filed on the Closing Date, under the UCC in each jurisdiction necessary to perfect the security interest of the Administrative Agent in the Collateral, as contemplated by this Agreement;

(g) copies of financing statements, if any, necessary to release all security interests and other rights of any Person in the Collateral previously granted by the Borrower or any transferor;

(h) legal opinions (addressed to each of the Secured Parties) of one or more firms of counsel to the Borrower, the Parent and the Seller and an in-house legal opinion of the Servicer, in each case, covering such matters as the Administrative Agent and its counsel shall reasonably request including, but not limited to, opinions regarding substantive non-consolidation, true sale, enforceability, covered fund matters under the Volcker Rule, no conflicts and perfection;

(i) evidence reasonably satisfactory to it that all of the Borrower Accounts shall have been established;

(j) evidence that (x) all fees to be received by the Administrative Agent and each Lender on or prior to the date of the initial Advance pursuant to the Fee Letter; and (y) the accrued reasonable and documented out-of-pocket and third party fees and expenses of the Administrative Agent and the Lenders associated with the review, preparation, execution and delivery of the Facility Documents and the closing of the transactions contemplated hereby and thereby, including rating agency conduit affirmation fees to the extent attributable to this Agreement and the reasonable and documented fees and expenses of Katten Muchin Rosenman LLP, counsel to the Administrative Agent, in connection with the transactions contemplated hereby, shall have been paid by the Borrower, in each case to the extent such fees and expenses were invoiced to the Borrower at least two (2) Business Days prior to such date; and

(k) the Administrative Agent shall not have become aware, since March 31, 2020, of any new information or other matters not previously disclosed to the Administrative Agent relating to the Borrower, the Parent, the Seller or the Servicer or the transactions contemplated herein that the Administrative Agent, in its reasonable judgment, deems inconsistent in a material and adverse manner with the information or other matters previously disclosed to the Administrative Agent relating to the Borrower, the Parent, the Seller and the Servicer; and

(l) the Administrative Agent shall have received certificates from the Servicer’s insurance broker, or other evidence satisfactory to it that all insurance required to be maintained under the Servicing Agreement, is in full force and effect, and the Administrative Agent shall have completed its review of the insurance coverage for the Servicer and the results of such review shall be satisfactory to the Administrative Agent.

Section 3.02 Conditions Precedent to Each Borrowing. The obligation of each Lender to make each Advance to be made by it (including the initial Advance) on each Borrowing Date shall be subject to the satisfaction or waiver by the Administrative Agent of the following conditions precedent:

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(a) the Administrative Agent shall have received a Request for Advance with respect to such Advance (including the Borrowing Base Certificate attached thereto demonstrating compliance with the Borrowing Base Test) delivered in accordance with Sections 2.02(a)(i) and 2.02(a)(ii), respectively;

(b) immediately after the making of such Advance on the applicable Borrowing Date, the Borrowing Base Test is satisfied on a pro forma basis at such time (as demonstrated in the calculations attached to the applicable Request for Advance);

(c) each of the representations and warranties of the Borrower, the Seller, the Servicer and the Originator contained in this Agreement and the other Facility Documents shall be true and correct in all material respects (except for representations and warranties already expressly qualified by materiality or Material Adverse Effect, which shall be true and correct) as of such Borrowing Date (except to the extent such representations and warranties expressly relate to any earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date as if made on such date);

(d) no Unmatured Event of Default, Event of Default or Early Amortization Event shall have occurred and be continuing at the time of the making of such Advance or shall result upon the making of such Advance; and

(e) as of such Borrowing Date, the Administrative Agent shall have approved any changes to the Concierge Capital Underwriting Policy and the Accepted Servicing Policies in the manner prescribed in Section 5.01(h) of this Agreement.

Section 3.03 Conditions Precedent to Amendment and Restatement. The effectiveness of the amendment and restatement of this Agreement shall be subject to the satisfaction or waiver by the Administrative Agent of the following conditions precedent:

(a) each of the Facility Documents (other than the Account Control Agreement) being amended and restated duly executed and delivered by the parties thereto, which shall each be in full force and effect;

(b) true and complete copies of the Constituent Documents of the Borrower, the Seller and the Servicer as in effect on the Amendment Effective Date and, to the extent applicable, (x) certified within forty-five (45) days of the Amendment Effective Date by the appropriate governmental official and (y) certified by its secretary or an assistant secretary as of the Amendment Effective Date, in each case, as being in full force and effect without modification or amendment, (ii) signature and incumbency certificates of the officers of such Person executing the such amended and restated Facility Documents to which it is a party, (iii) resolutions of the board of directors or similar governing body of each of the Borrower, the Seller and the Servicer approving and authorizing the execution, delivery and performance of this Agreement and the other amended and restated Facility Documents to which it is a party or by which it or its assets may be bound as of the Amendment Effective Date, certified as of the Amendment Effective Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment and (iv) a good standing certificate from the applicable Governmental Authority of each of the Borrower’s, the Seller’s and the Servicer’s jurisdiction of incorporation, organization or

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formation and, with respect to the Borrower, in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business except where such failure to be qualified would not reasonably be expected to have a Material Adverse Effect, each dated a recent date prior to the Amendment Effective Date;

(c) the Borrower, the Seller and the Servicer shall have delivered to the Administrative Agent an originally executed Amendment Effective Date Certificate, in each case, dated as of the Amendment Effective Date;

(d) the Administrative Agent shall have received a Solvency Certificate from each of the Borrower, the Seller and the Servicer, in each case, dated as of the Amendment Effective Date;

(e) UCC-3 financing statement amendments, to be filed on the Amendment Effective Date, under the UCC in each jurisdiction necessary to amend the description of the Collateral to maintain the perfection of the security interest of the Administrative Agent in the Collateral, as contemplated by this Agreement; and

(f) legal opinion (addressed to each of the Secured Parties) of counsel to the Borrower and the Seller, and in-house counsel to the Servicer covering corporate and enforceability matters.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.01 Representations and Warranties. The Borrower represents and warrants to each of the Secured Parties on the Closing Date, each Monthly Reporting Date and each Borrowing Date (and, in respect of clause (l) below, each date such information is provided by or on behalf of it), as follows:

(a) Due Organization. It (i) is duly organized or formed, validly existing and in good standing under the laws of the State of its organization and (ii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Facility Documents to which it is a party, and to carry out the transactions contemplated thereby and fulfill its Obligations thereunder, including its grant of the Liens with regard to the Collateral. It does not operate or does not do business under any assumed, trade or fictitious name and has no other operations or business other than owning the Facility Receivables and activities related thereto.

(b) Due Qualification and Good Standing. It is (i) in good standing in the State of Delaware and (ii) duly qualified to do business and, to the extent applicable, in good standing in each other jurisdiction in which the nature of its business, assets and properties, including the performance of its obligations under this Agreement, the other Facility Documents to which it is a party and its Constituent Documents, requires such qualification, except in jurisdictions where the failure to be so qualified or in good standing has not had, and would not be reasonably expected to have, a Material Adverse Effect.

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(c) Due Authorization; Execution and Delivery; Legal, Valid and Binding; Enforceability. The execution and delivery by the Borrower of, and the performance of its obligations under, the Facility Documents to which it is a party and the other instruments, certificates and agreements contemplated thereby are within its powers and have been duly authorized by all requisite action by it and have been duly executed and delivered by it and constitute its legal, valid and binding obligations enforceable against it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally or general principles of equity, regardless of whether considered in a proceeding in equity or at law. The Borrower has all requisite power and authority to borrow hereunder.

(d) Non-Contravention. None of the execution and delivery by the Borrower of this Agreement or the other Facility Documents to which it is a party, the Borrowings or the pledge of the Collateral hereunder, the consummation of the transactions herein or therein contemplated, or compliance by it with the terms, conditions and provisions hereof or thereof, will (i) conflict with, or result in a breach or violation of, or constitute a default under its Constituent Documents, (ii) conflict with or contravene in any material respect (A) any Applicable Law, (B) any indenture, agreement or other contractual restriction binding on or affecting it or any of its assets, including any Related Document, or (C) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its assets or properties or (iii) result in a material breach or violation of, or constitute a default under, or permit the acceleration of any obligation or liability in, or but for any requirement of the giving of notice or the passage of time (or both) would constitute such a material conflict with, material breach or violation of, or default under, or permit any such acceleration in, any contractual obligation or any agreement or document to which it is a party or by which it or any of its assets are bound (or to which any such obligation, agreement or document relates).

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(e) Government Consents. The execution, delivery and performance by the Borrower of this Agreement and the other Facility Documents to which it is a party and the consummation of the transactions contemplated by the Facility Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority, except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Administrative Agent for filing and/or recordation, as of the Closing Date other than (a) those that have already been obtained and are in full force and effect, or (b) any registrations, notices, consents or approvals the failure of which to send or obtain would not reasonably be expected to have a Material Adverse Effect.

(f) Compliance with Agreements, Laws, Etc. The Borrower has duly observed and complied in all material respects with all Applicable Laws relating to the conduct of its business, including business related to the obligations under the Facility Documents. Each of the Borrower and the Parent has preserved and kept in full force and effect its legal existence, its rights, privileges, qualifications and franchises. Without limiting the foregoing, (x) to the extent applicable, the Borrower is in compliance in all material respects with Sanctions, (y) the Borrower, or an Affiliate acting on behalf of the Borrower, has adopted internal controls and procedures reasonably designed to promote its continued compliance in all material respects with the applicable provisions of Sanctions and to the extent applicable, will adopt procedures consistent with the PATRIOT Act and implementing regulations, and (z) no direct investor in the Borrower is a Sanctioned Person.

(g) No Material Adverse Effect. To the Borrower’s knowledge, there is no event, fact, condition or circumstance which has resulted in a Material Adverse Effect.

(h) Litigation. The Borrower (i) is not a party to any material pending action, suit, proceeding or investigation related to the business of the Borrower, (ii) is not aware of any pending material action, suit, proceeding or investigation with respect the Borrower’s business or any material portion of the Collateral which, in either such case, the Borrower reasonably expects will be adversely determined and will result in a Material Adverse Effect, (iii) is not a party or subject to any order, writ, injunction, judgment or decree of any Governmental Authority, nor is there any action, suit, proceeding, inquiry or investigation by any Governmental Authority, in either case, that would reasonably be expected to prevent or materially delay the consummation by the Borrower of the transactions contemplated herein, and (iv) has no existing material accrued and/or material unpaid penalties, fines or sanctions imposed by and owing to any Governmental Authority or any other governmental payor.

(i) Location. The Borrower’s registered office and the jurisdiction of organization of the Borrower is in the State of Delaware.

(j) Subsidiaries. The Borrower has no subsidiaries as of the Closing Date, and 100% of the outstanding Equity Interests in the Borrower are directly owned (both beneficially and of record) by the Seller.

(k) Investment Company Act; Volcker Rule. The Borrower is not required to register as an “investment company” within the meaning of the Investment Company Act. The rights and obligations of the Administrative Agent and the Lenders under this Agreement and the other Facility Documents do not constitute an “ownership interest” under the Volcker Rule or cause the Lenders or the Administrative Agent to be a “sponsor” of the Borrower for purposes of the Volcker Rule.

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(l) Information and Reports. Each Request for Advance and each Monthly Report (including the calculation of the Borrowing Base Test) and all other written information, reports, certificates and statements (other than projections and forward-looking statements), taken as a whole, furnished by or on behalf of the Borrower to any Secured Party for purposes of or in connection with this Agreement, the other Facility Documents or the transactions contemplated hereby or thereby are true, complete and correct in all material respects as of the date such information is stated or certified or updated; provided, however, that with respect to any projections or forward-looking statements furnished by or on behalf of the Borrower or the Seller, such projections and forward-looking statements were based on good faith estimates and assumptions that were believed by the Borrower or the Seller, as applicable, to be reasonable at the time delivered to the Administrative Agent; and provided, further, that such projections and forward-looking statements are not to be viewed as facts, are subject to significant uncertainties and contingencies beyond the control of the Borrower or the Seller, as applicable, no assurance can be given that any particular projection or forward-looking statements will be realized and actual results during the period or periods covered by the projections and forward-looking statements may differ from such projections and that the differences may be material.

(m) ERISA. The Borrower has no liability or obligation with respect to any Plan or Multiemployer Plan.

(n) Taxes. The Borrower has filed all income tax returns and all other tax returns which are required to be filed by it, if any, and has paid all taxes shown to be due and payable (taking into account extensions) on such returns, if any, or pursuant to any assessment by a valid taxing authority received by any such Person, except (i) for any taxes or assessments which are being contested in good faith by appropriate proceedings and with respect thereto adequate reserves have been established in accordance with GAAP and (ii) to the extent the failure to do so, individually or in the aggregate, could not reasonably be expected to give rise to a Material Adverse Effect.

(o) Tax Status. For U.S. Federal income tax purposes, assuming that the Advances constitute debt for such purposes, the Borrower (i) is disregarded as an entity separate from its owner and its owner is a United States Person as defined by Section 7701(a)(30) of the Code and (ii) has not made an election under U.S. Treasury Regulation Section 301.7701-3 and is not otherwise treated as an association taxable as a corporation.

(p) Collections. The Borrower has, or has caused the Servicer to, set up and maintain a process such that (i) all Collections on the Facility Receivables that are not Loan Proceeds Returns will transfer directly into the Collection Account within three (3) Business Days after receipt and clearance by the Servicer of such funds and (ii) all Collections on the Facility Receivables that are Loan Proceeds Returns will be transferred by the Servicer into the Collection Account at least once every two calendar weeks; provided, that if, the aggregate amount of Loan Proceeds Returns accrued since the date of the last transfer exceeds $50,000, the Servicer shall immediately transfer such aggregate amount of Loan Proceed Returns to the Collection Account. The name and address of the Account Bank, together with the account number of the Collection

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Account and the Reserve Account at the Account Bank is listed on Schedule 4 hereto. The Borrower has no other deposit or securities accounts other than the ones listed on Schedule 4 and subject to Liens in favor of the Secured Parties. No Person, other than as contemplated by and subject to this Agreement, has been granted dominion and control for purposes of the UCC of the Collection Account or the Reserve Account, or the right to take dominion and control of the Collection Account or the Reserve Account at a future time or upon the occurrence of a future event; provided, however, that nothing herein shall be deemed to preclude the Borrower from granting the Servicer access to the Collection Account for so long as the Servicer is acting in such capacity hereunder for purposes consistent with the terms of this Agreement. The Borrower has not assigned or granted an interest in any rights it may have in the Collection Account or the Reserve Account to any Person other than the Administrative Agent.

(q) Solvency. After giving effect to each Advance hereunder, and the disbursement of the proceeds of such Advance, the Borrower is and will be Solvent.

(r) Representations Relating to the Collateral. The Borrower hereby represents and warrants that:

(i) it owns and has legal and beneficial title to all Facility Receivables and other Collateral free and clear of any Lien, claim or encumbrance of any person, other than Permitted Liens;

(ii) the Borrower has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral (subject to Permitted Liens). The Borrower has not authorized the filing of and is not aware of any financing statements against the Borrower that include a description of collateral covering the Collateral other than any financing statement relating to the security interest granted to the Administrative Agent hereunder (or to the Borrower under the Purchase Agreement, which security interest has been collaterally assigned to the Administrative Agent)) or that has been terminated; and the Borrower is not aware of any judgment, PBGC liens or tax lien filings against the Borrower;

(iii) the Collateral constitutes Money, Cash, accounts (as defined in Section 9-102(a)(2) of the UCC), instruments (as defined in Section 9-102(a)(47) of the UCC), general intangibles (as defined in Section 9-102(a)(42) of the UCC), payment intangibles (as defined in Section 9-102(a)(61) of the UCC), uncertificated securities (as defined in Section 8-102(a)(18) of the UCC), certificated securities or security entitlements to financial assets resulting from the crediting of financial assets to a “securities account” (as defined in Section 8-501(a) of the UCC), or in each case, the proceeds thereof or supporting obligations related thereto;

(iv) (a) all Borrower Accounts which are not the subject of a “Cash Sweep” designation under the terms of the Account Control Agreement will constitute “deposit accounts” under Section 9-102(a)(2) of the UCC, and (b) all Borrower Accounts which are the subject of a “Cash Sweep” designation under the terms of the Accounts Control Agreement will either constitute a “deposit account” under Section 9-102(a)(2) of the UCC and/or a “securities account” under Section 8-501(a) of the UCC;

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(v) this Agreement creates a valid, continuing and, upon the filing of the financing statement referred to in clause (vi) and execution of the Account Control Agreement, perfected security interest (as defined in Section 1-201(b)(35) of the UCC) in the Collateral in favor of the Administrative Agent, for the benefit and security of the Secured Parties, which security interest is prior to all other liens (other than Permitted Liens), claims and encumbrances and is enforceable as such against creditors of and purchasers from the Borrower;

(vi) with respect to Collateral that constitutes accounts or general intangibles, the Borrower has caused or will have caused, on or prior to the Closing Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Collateral granted to the Administrative Agent, for the benefit and security of the Secured Parties, hereunder (which the Borrower hereby agrees may be an “all asset” filing);

(vii) each Facility Receivable included in the calculation of the Borrowing Base as of any date is an Eligible Receivable as of such date; and

(viii) each Facility Receivable constitutes an “eligible asset” under Rule 3a-7 promulgated under the Investment Company Act.

(s) Purchase Agreement. The Purchase Agreement is the only agreement pursuant to which the Borrower purchases the Facility Receivables and the related Collateral, unless otherwise agreed to in writing by the Administrative Agent in its sole discretion. The Borrower has furnished to the Administrative Agent a true, correct and complete copy of the Purchase Agreement. The purchase of the Facility Receivables by the Borrower under the Purchase Agreement is stated and intended to be a sale enforceable against creditors of the Seller; provided, however, that, notwithstanding the intent of such parties, if a court of competent jurisdiction holds that the transactions evidenced thereby constitute a loan and not a purchase and sale, the Purchase Agreement is deemed to be and is a security agreement under Applicable Law, and the conveyances provided for in such agreement shall be deemed to be a grant to the Borrower of a first priority security interest in and to all of the Seller’s right, title and interest, whether now existing or hereafter acquired, in, to and under the assets conveyed thereby to secure all obligations from the Seller to the Borrower. The Purchase Agreement constitutes the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with their respective terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity (whether in a proceeding at law or in equity). There is no provision in the Purchase Agreement that would restrict the ability of the Borrower to collaterally assign its rights thereunder to the Administrative Agent, for the benefit of the Lenders.

(t) Deposit Accounts and Investment Property. Schedule 4 attached hereto lists all of the Borrower’s deposit accounts and investment property as of the Closing Date.

(u) Change of Control. No Change of Control has occurred other than with the prior written consent of the Administrative Agent or in connection with a Permitted IPO.

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ARTICLE V

COVENANTS

Section 5.01 Affirmative Covenants. Each of the Borrower and the Seller, as applicable and with respect to itself, covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all Obligations have been paid in full (other than with respect to contingent indemnification obligations for which a claim has not yet been asserted)), the Borrower and the Seller, as applicable and with respect to itself, shall perform all the covenants in this Section 5.01:

(a) Compliance with Agreements, Laws, Etc. The Borrower shall (i) duly observe and comply in all material respects with all Applicable Laws relative to the conduct of its business or to its assets, including all consumer lending, servicing and debt collection laws applicable to the Facility Receivables and its activities and obligations as contemplated by the Facility Documents, (ii) preserve and keep in full force and effect its legal existence, (iii) preserve and keep in full force and effect its rights, privileges, qualifications and franchises (including all consumer lending, servicing and debt collection licenses or qualifications applicable to the Facility Receivable and its activities contemplated by the Facility Documents), except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect and (iv) comply with the terms and conditions of each Facility Document and in all material respects with its Constituent Documents to which it is a party.

(b) Financial Statements; Other Information. It shall provide to the Administrative Agent or cause to be provided to the Administrative Agent:

(i) promptly after becoming available and in any event within one hundred fifty (150) calendar days after the end of the 2020 fiscal year of the Parent and within one hundred twenty (120) calendar days after the end of fiscal year of the Parent, commencing with the 2021 fiscal year, the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Parent and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(ii) promptly after becoming available and in any event within forty-five (45) calendar days after the end of each fiscal quarter of each fiscal year of the Parent, commencing with the fiscal quarter ending June 30, 2020, the unaudited consolidated balance sheet for the Parent and its consolidated Subsidiaries and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its senior financial officers as presenting fairly in all material respects the financial condition and results of operations of the Parent and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

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(iii) quarterly, within forty-five (45) calendar days following the end of each fiscal quarter of each fiscal year of the Parent, a certificate of a Responsible Officer of the Borrower evidencing the calculation of the Tangible Net Worth, ratio of Total Liabilities to Tangible Net Worth and Liquidity, in each case, of the Parent and its consolidated Subsidiaries;

(iv) monthly, within thirty (30) days following the end of each calendar month, a certificate of a Responsible Officer of the Borrower showing estimated unaudited Liquidity of the Parent and its consolidated Subsidiaries, which calculation shall not consider certain reconciling items and therefore not be in accordance with GAAP;

(v) promptly, and in any event within five (5) Business Days after a Responsible Officer of the Borrower or the Seller obtains actual knowledge of the occurrence and continuance of any (1) Early Amortization Event, (2) Unmatured Event of Default, (3) Event of Default, (4) Unmatured Servicer Event of Default, (5) Servicer Event of Default, (6) Level I Trigger Event or (7) Level II Trigger Event, a certificate of a Responsible Officer of the Borrower or the Seller, as applicable, in each case setting forth the details thereof and the action which the Borrower and/or the Seller is taking or proposes to take with respect thereto;

(vi) from time to time, to the extent material to the Administrative Agent’s and Lenders’ interest in the Facility Receivables, such additional information regarding the Borrower’s, the Seller’s or the Parent’s financial position or business and the Collateral (including reasonably detailed calculations of the Borrowing Base Test, the Facility Delinquency Percentage, Managed Portfolio Delinquency and Extension Percentage, Monthly Payment Rate and the Excess Spread Percentage) as the Administrative Agent or any Lender may reasonably request;

(vii) (i) promptly after the occurrence of any ERISA Event that would reasonably be expected to result in a material liability to the Borrower, notice of such ERISA Event and copies of any communications with all Governmental Authorities or any Multiemployer Plan with respect to such ERISA Event, and (ii) promptly after receipt of the same, copies of any notice from (x) the IRS of a Lien pursuant to Section 6323 of the Code with regard to any assets of the Borrower or (y) the PBGC of any notice of a Lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Borrower;

(viii) within five (5) Business Days after a Responsible Officer of the Borrower or the Seller obtains actual knowledge thereof, written notice of the occurrence of the formal commencement by written notice by any Governmental Authority of any formal investigation, lawsuit or similar adversarial proceeding against the Borrower, the Seller or the Servicer challenging its authority to originate, hold, own, service, collect or enforce any Facility Receivable, or otherwise alleging any material non-compliance by the Borrower, the Seller, the Parent or the Servicer with any Applicable Laws restricting the ability of such Person to originate, hold, pledge, collect, service or enforce such Facility Receivable;

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(ix) within five (5) Business Days after a Responsible Officer of the Borrower or the Seller obtains actual knowledge thereof, written notice of the occurrence of the formal commencement by written notice by any Governmental Authority of any formal investigation, lawsuit or similar adversarial proceeding against the Borrower, the Parent, the Seller, the Servicer or any of their respective Affiliates which, if adversely determined, would have a Material Adverse Effect on the Borrower, the Seller, the Parent, the Servicer or the Facility Receivables;

(x) promptly following request of the Administrative Agent request, copies of all financial statements, settlement statements, portfolio or other material reports, notice disclosures, certificates or other written materials delivered or made available to the Borrower, the Seller or the Parent by any Person pursuant to the Facility Documents; and

(xi) such other information, documents, tapes, data, records or reports respecting the Collateral, the Borrower, the Seller, the Parent, the Servicer or the Originator which is in its possession or under its control, as the Administrative Agent may from time to time reasonably request or that any Affected Person may reasonably require in order to comply with their respective obligations under the Securitisation Regulations.

(c) Use of Proceeds. The Borrower shall use the proceeds of each Advance made hereunder solely:

(i) to fund or pay the Purchase Price of the Facility Receivables acquired by the Borrower pursuant to the Purchase Agreement and in accordance with the terms and conditions set forth herein or for general corporate purposes;

(ii) to fund the Reserve Account on or prior to the Scheduled Revolving Period Termination Date to the extent the Reserve Account is required to be funded pursuant to Section 8.03 (and the Borrower shall submit a Request for Advance requesting a Borrowing of Advances for a Borrowing Date falling no more than five and no less than one Business Day prior to the Scheduled Revolving Period Termination Date with a Requested Amount sufficient to fully fund the Reserve Account under Section 8.03);

(iii) to make distributions to the holders of the equity of the Borrower as permitted hereunder; and

(iv) for such other legal and proper purposes as are consistent with all Applicable Laws.

Without limiting the foregoing, it shall use the proceeds of each Advance in a manner that does not, directly or indirectly, violate any provision of its Constituent Documents or any Applicable Law in any material respect.

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(d) Access to Records; Audit Rights. In each case subject to Section 11.09 of this Agreement, each of the Borrower and the Seller shall permit the Administrative Agent (and its auditors) to (i) upon reasonable advance notice and during normal business hours, visit and inspect and make copies at reasonable intervals of (A) its books, records and accounts relating to its business, financial condition, operations, assets, the Collateral and its performance under the Facility Documents and to discuss the foregoing with representatives of the Borrower, and (B) any records directly related to the Facility Receivables and the ability to review and access any payment history with respect to the Facility Receivables it may have reasonable access to and (ii) conduct evaluations and appraisals of the Borrower’s computation of the Borrowing Base and the assets included in the Borrowing Base and the components of the Monthly Reports (including cash receipt and application and calculation of applicable ratios); provided, however, that, (1) prior to the occurrence and during the continuance of an Event of Default or Early Amortization Event, such rights described in the foregoing clauses (i) and (ii) may only be exercised once during each one-year period following the Closing Date or (2) following the occurrence and during the continuance of an Event of Default or Early Amortization Event, at any time at the Administrative Agent’s discretion. The Borrower shall pay the reasonable, documented fees and expenses of the Administrative Agent (and any auditors engaged by the Administrative Agent) to conduct any such evaluations or appraisals; provided that such visits, evaluations or appraisals shall not be duplicative of any visits, audits evaluations or appraisals conducted in accordance with the terms of any other Facility Document.

(e) Tax Matters. The Seller and the Borrower shall maintain the Borrower’s status as a disregarded entity for U.S. federal income tax purposes and shall not take any (or fail to take any action) that would cause the Borrower to be treated as an association taxable as a corporation.

(f) Collections. The Borrower shall, or shall cause the Servicer to, cause all Collections in respect of the Facility Receivables to promptly, and in any event within two (2) Business Days after receipt and identification in the Collection Account. The Borrower has, or has caused the Servicer to, set up and maintain an automated process such that all Collections on Facility Receivables will automatically transfer directly into the Collection Account once such funds are available for transfer pursuant to the Servicer’s procedures for processing collections. The Borrower shall ensure that no Person has been granted dominion and control of the Collection Account, or the right to take dominion and control for purposes of the UCC of the Collection Account at a future time or upon the occurrence of a future event; provided, however, that nothing herein shall be deemed to preclude the Borrower from granting the Servicer access to the Collection Account for so long as the Servicer is acting in such capacity hereunder for purposes consistent with the terms of this Agreement.

(g) Servicing; Backup Servicer.

(i) The Borrower shall promptly provide (or require the Servicer to promptly provide) the Administrative Agent with true and complete copies of all material notices, reports, statements and other documents sent or received by the Servicer. The Borrower shall require the Servicer to service all Facility Receivables in accordance with the terms hereof.

(ii) The Borrower agrees not to, and will require the Servicer not to, interfere with the Backup Servicer’s performance of its duties under the Backup Servicing Agreement or to take any action that would be in breach in any material respect in any way

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of the terms of the Backup Servicing Agreement. The Borrower covenants and agrees to, and will require the Servicer to, provide any and all information and data reasonably requested by the Administrative Agent that is available to the Borrower to be provided promptly to the Backup Servicer in order to allow the Backup Servicer to perform its obligations under the applicable Backup Servicing Agreement in the manner and form reasonably requested by the Administrative Agent. Upon the occurrence and continuance of any Servicer Event of Default, the Administrative Agent shall have the right to immediately substitute the Servicer with (1) the Backup Servicer or (2) with the consent of the Borrower (such consent not to be unreasonably conditioned or delayed) if no Event of Default has occurred and is continuing, any third-party servicer acceptable to the Administrative Agent or (3) if an Event of Default has occurred and is continuing, any third-party servicer acceptable to the Administrative Agent in its reasonable discretion, in each case, in all of the Servicer’s roles and functions as contemplated by the Facility Documents and upon and after such substitution, such Person shall be entitled to receive the applicable Servicing Fee.

(h) Changes to Concierge Capital Underwriting Policy, Accepted Collections Policies or Accepted Servicing Policies.

(i) The Borrower will not make, authorize, consent to or suffer to exist any material amendment, modification, supplement or waiver to the Concierge Capital Underwriting Policy, Accepted Collection Policies or the Accepted Servicing Policies without the prior written consent of the Administrative Agent; provided, that (1) if the Borrower has not received a written response from the Administrative Agent within five (5) Business Days following the Administrative Agent’s receipt of a notice of any such material amendment, modification, supplement or waiver, the Administrative Agent shall be deemed to have approved such material amendment, modification, supplement or waiver and (2) if the Administrative Agent determines the proposed amendment, modification, supplement or waiver is material and adverse to the interests of the Administrative Agent and the other Secured Parties, the Administrative Agent shall notify the Borrower of such determination within five (5) Business Days following the Administrative Agent’s receipt of notice of such material amendment, modification, supplement or waiver and within an additional five (5) Business Days (which time period may be extended by mutual agreement of the Borrower and the Administrative Agent via electronic means) the Administrative Agent shall either provide written consent to such amendment, modification, supplement or waiver or written notice that such amendment, modification, supplement or waiver is not permitted; provided, further, that, notwithstanding the foregoing, if the Borrower reasonable believes that such material amendment, modification, supplement or waiver will be adverse to the interests of the Administrative Agent or the other Secured Parties, the Borrower will need the explicit written consent of the Administrative Agent prior to implementing such material amendment, modification, supplement or waiver.

(ii) The Borrower shall provide written notice to the Administrative Agent of any non-material amendment, modification, supplement or waiver to the Concierge Capital Underwriting Policy or the Accepted Servicing Policies at least three (3) Business Days prior to the implementation of any such amendment, modification, supplement or waiver to, unless such amendment, modification, supplement or waiver is made solely to correct non-material ministerial or typographical errors.

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(iii) Notwithstanding the foregoing, for the avoidance of doubt, nothing in the Facility Documents or otherwise shall prohibit the Seller from making any amendments, modifications or other changes to the Concierge Capital Underwriting Policy, provided that the Borrower shall not purchase any Facility Receivables originated under such amended or modified Concierge Capital Underwriting Policy unless and until Administrative Agent has provided its written consent to such changes to the extent such consent is required pursuant to this clause (h).

(i) Account Bank.

(i) If at any time the Account Bank shall fail to have any of the applicable minimum ratings specified in the definition of “Account Bank”, it shall move the applicable accounts to an Account Bank which satisfies the ratings requirements within 30 days of knowledge or notice of such failure.

Section 5.02 Negative Covenants. The Borrower covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all Obligations have been paid in full (other than with respect to contingent indemnification obligations for which a claim has not yet been made)), the Borrower shall perform all covenants in this Section 5.02:

(a) Restrictive Agreements. It shall not enter into or suffer to exist or become effective any agreement that prohibits, limits or imposes any condition upon its ability to create, incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or revenues constituting Collateral, whether now owned or hereafter acquired, to secure its obligations under the Facility Documents other than this Agreement and the other Facility Documents.

(b) Liquidation; Merger; Sale of Collateral. It shall not consummate any plan of liquidation, dissolution, partial liquidation, merger or consolidation (or suffer any liquidation, dissolution or partial liquidation) nor sell, transfer, exchange or otherwise dispose of any of its assets, or enter into an agreement or commitment to do so or enter into or engage in any business with respect to any part of its assets, except as expressly permitted by this Agreement and the other Facility Documents (including in connection with the repayment in full of the Obligations (other than with respect to contingent indemnification obligations)).

(c) Amendments to Documents, etc. Without the written consent of the Administrative Agent, (i) it shall not materially amend or modify, or take any action inconsistent with, its Constituent Documents, and (ii) unless otherwise specified in the Facility Documents, it will not amend, modify or waive any term or provision in any Facility Document (other than in accordance with the terms thereof).

(d) ERISA. It shall not establish any Plan or Multiemployer Plan.

(e) Liens. It shall not create, assume or suffer to exist any Lien on any of its assets now owned or hereafter acquired by it at any time, except for Permitted Liens or as otherwise expressly permitted by this Agreement and the other Facility Documents.

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(f) Margin Requirements. It shall not (i) extend credit to others for the purpose of buying or carrying any Margin Stock in such a manner as to violate Regulation T or Regulation U or (ii) use all or any part of the proceeds of any Advance, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that violates the provisions of the Regulations of the Board of Governors, including, to the extent applicable, Regulation U and Regulation X.

(g) Restricted Payments. It shall not make, directly or indirectly, any Restricted Payment (whether in the form of cash or other assets) or incur any obligation (contingent or otherwise) to do so; provided, however, that the Borrower (i) shall be permitted to make Restricted Payments from funds distributed to it pursuant to the Priority of Payments and (ii) shall be permitted to make dividends-in-kind in the form of Facility Receivables in full or partial satisfaction of the purchase price thereof payable by the Seller in connection with Permitted Asset Sales.

(h) Changes to Filing Information. It shall not change its name or its jurisdiction of organization from that referred to in Section 4.01(a), unless it gives thirty (30) days’ prior written notice to the Administrative Agent and takes all actions reasonably necessary to protect and perfect the Administrative Agent’s perfected security interest in the Collateral and shall promptly file appropriate amendments to all previously filed financing statements and continuation statements that are necessary to perfect the security interests of the Administrative Agent under this Agreement under each method of perfection required herein with respect to the Collateral (and shall provide copy of such amendments to the Administrative Agent).

(i) Transactions with Affiliates. It shall not sell, lease or otherwise transfer any property or assets to (other than in accordance with the terms of the Facility Documents), or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates (including sales of Defaulted Receivables and other Facility Receivables) except as expressly contemplated by this Agreement and the other Facility Documents, unless such transaction is upon terms substantially less favorable to the Borrower than it would reasonably expected to obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.

(j) Investment Company Restriction. It shall not become required to register as an “investment company” under the Investment Company Act.

(k) Sanctions. It shall not utilize directly or, to its knowledge indirectly use the proceeds of any Advance for the benefit of any Sanctioned Person and it shall maintain internal controls and procedures reasonably designed to promote its continued compliance with the applicable provisions of Sanctions.

(l) Sale of Facility Receivables. It shall not sell any Facility Receivable unless (i) such Facility Receivable is a Repurchased Receivable required to be repurchased pursuant to the terms of the Purchase Agreement, or (ii) so long as no Early Amortization Event, Unmatured Event of Default or Event of Default exists before or after giving effect to such sale and transfer, such Facility Receivable is sold in a Permitted Asset Sale.

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(m) Indebtedness; Guarantees; Securities; Other Assets. It shall not incur or assume or guarantee any indebtedness, obligations (including contingent obligations) or other liabilities, or issue any additional securities, whether debt or equity, in each case other than (i) pursuant to or as expressly permitted by this Agreement and the other Facility Documents, (ii) obligations under its Constituent Documents, and (iii) pursuant to customary indemnification and expense reimbursement and similar provisions under the Related Documents. It shall not acquire any Facility Receivables or other property other than as expressly permitted hereunder and pursuant to the Purchase Agreement.

(n) Validity of this Agreement. It shall not (i) permit the validity or effectiveness of this Agreement or any grant of a security interest in the Collateral hereunder to be impaired, or permit the Liens granted pursuant to this Agreement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to this Agreement and (ii) except as permitted by this Agreement, take any action that would permit the Lien of this Agreement not to constitute a valid first priority security interest in the Collateral (subject to Permitted Liens).

(o) Subsidiaries. It shall not have or permit the formation of any subsidiaries.

(p) Name. It shall not conduct business under any name other than its own.

(q) Employees. It shall not have any employees (other than officers and directors to the extent they are employees).

(r) Non-Petition. It shall not be party to any agreements (other than the Facility Documents) under which it has any material obligations or liability (direct or contingent) without using commercially reasonable efforts to include customary “non-petition” and “limited recourse” provisions therein (and shall not amend or eliminate such provisions in any agreement to which it is party).

(s) Certificated Securities. It shall not acquire or hold any certificated securities in bearer form (other than securities not required to be in registered form under Section 163(f)(2)(A) of the Code) in a manner that does not satisfy the requirements of United States Treasury Regulations section 1.165 12(c) (as determined by the Seller).

(t) Accounts. It shall not assign or grant an interest in any rights it may have in the Reserve Account or the Collection Account to any Person other than the Administrative Agent.

(u) Enforcement. It shall not take any action, and will use commercially reasonable efforts not to permit any action to be taken by others, that would release any Person from any of such Person’s covenants or obligations under any instrument included in the Collateral, except as permitted under the Servicing Agreement.

(v) No Other Business. It shall not engage (i) in any activity or take any other action that would cause it to be subject to U.S. Federal, state or local income tax on a net income basis or (ii) in any business or activity, in each case other than pursuant to the Facility Documents, originating, funding, acquiring, owning, holding, administering, selling, enforcing, lending, exchanging, redeeming, pledging, contracting for the management of and otherwise dealing with

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Facility Receivables and the other Collateral in connection therewith and entering into the Facility Documents, any applicable Related Documents and any other agreements contemplated by (or necessary to perform under) this Agreement and any activities reasonably related to the foregoing (and consistent with clause (i)).

(w) No Claims Against Advances. Subject to Applicable Law, it shall not claim any credit on, make any deduction from, or dispute the enforceability of payment of the principal or interest payable (or any other amount) in respect of the Advances or assert any claim against any present or future Lender, by reason of the payment of any taxes levied or assessed upon any part of the Collateral.

(x) Independent Director. It shall not fail at any time to have at least one Independent Director which is not and has not been for at least three (3) years, either (a) a shareholder (or other equity owner) of, or an officer, director, partner, manager, member (other than as a special member in the case of single member Delaware limited liability companies), employee, attorney or counsel of, the Borrower or any of its Affiliates, (b) a customer or creditor of, or supplier to, the Borrower or any of its Affiliates who derives any of its purchases or revenue from its activities with the Borrower or any Affiliate thereof (other than a de minimis amount), (c) a person who controls or is under common control with any such officer, director, partner, manager, member, employee, supplier, creditor or customer, or (d) a member of the immediate family of any such officer, director, partner, manager, member, employee, supplier, creditor or customer; provided, that (1) the foregoing subclause (a) shall not apply to any Person who serves, or has served, as an independent director or an independent manager for any Affiliate of the Borrower; (2) upon the death or incapacity of such Independent Director, the Borrower will have a period of ten (10) Business Days following such event to appoint a replacement Independent Director; (3) the Borrower shall use commercially reasonable efforts to cause the Independent Director not to resign until a replacement independent director has been appointed; and (4) before any Independent Director is replaced, removed, resigns or otherwise ceases to serve (for any reason other than the death or incapacity of such Independent Director), the Borrower shall provide written notice to the Administrative Agent no later than two (2) Business Days prior to such replacement, removal or effective date of cessation of service and of the identity and affiliations of the proposed replacement Independent Director.

Section 5.03 Certain Undertakings Relating to Separateness. Without limiting any, and subject to all, other covenants of the Borrower contained in this Agreement, the Borrower shall conduct its business and operations separate and apart from that of any other Person (including the Seller and any of its Affiliates, and the holders of the Equity Interests of the Seller and their respective Affiliates) and in furtherance of the foregoing:

(a) The Borrower shall maintain its accounts, financial statements, books, accounting and other records, and other Borrower documents separate from those of any other Person, provided that the Borrower may be consolidated into the Seller or other Affiliate solely for tax and accounting purposes.

(b) The Borrower shall not commingle or pool any of its funds or assets with those of any Affiliate or any other Person, and it shall hold all of its assets in its own name, in each case except as otherwise permitted, contemplated or required by the terms of the Facility Documents.

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(c) The Borrower shall conduct its own business in its own name and, for all purposes, shall not operate, or purport to operate, collectively as a single or consolidated business entity with respect to any Person.

(d) The Borrower shall pay its own debts, liabilities and expenses (including overhead expenses, if any) only out of its own assets as the same shall become due; provided, that such expenses may be settled by an intercompany administrative payment of $50,000 annually or such other amount agreed by the Borrower and the Seller; provided, further, that the Seller may pay certain start-up and related upfront expenses in connection with the establishment of the Facility Documents on behalf of the Borrower.

(e) The Borrower has observed, and shall observe (A) organizational formalities to the extent necessary or advisable to preserve its separate existence, and shall preserve its existence, and it shall not, nor shall it permit any Affiliate or any other Person to, amend, modify or otherwise change the limited liability company agreement of the Borrower in a manner that would adversely affect the existence of the Borrower as a bankruptcy remote special-purpose entity.

(f) The Borrower shall not (A) guarantee, become obligated for, or hold itself or its credit out to be responsible for or available to satisfy, the debts or obligations of any other Person or (B) control the decisions or actions respecting the daily business or affairs of any other Person except as permitted by or pursuant to the Facility Documents.

(g) The Borrower shall, at all times, hold itself out to the public as a legal entity separate and distinct from any other Person; provided that the assets of the Borrower may be consolidated into the Seller for accounting purposes and included in publicly filed financial statements of the Seller.

(h) The Borrower shall not identify itself as a division of any other Person.

(i) The Borrower shall maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person.

(j) The Borrower shall not use its separate existence to perpetrate a fraud in violation of Applicable Law.

(k) The Borrower shall not, in connection with the Facility Documents, act with an intent to hinder, delay or defraud any of its creditors in violation of Applicable Law.

(l) The Borrower shall maintain an arm’s length relationship with its Affiliates, the Seller, the Parent and the Servicer.

(m) Except as permitted by or pursuant to the Facility Documents, the Borrower shall not grant a security interest or otherwise pledge its assets for the benefit of any other Person.

(n) Except as provided in the Facility Documents, the Borrower shall not acquire any securities or debt instruments of the Seller, its Affiliates or any other Person.

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(o) The Borrower shall not make loans or advances to any Person, except as permitted by or pursuant to the Facility Documents.

(p) The Borrower shall make no transfer of its assets except as permitted by or pursuant to the Facility Documents.

(q) The Borrower shall correct any known misunderstanding regarding its separate identity.

(r) The Borrower shall maintain adequate capital in light of its contemplated business operations.

(s) The Borrower shall at all times be organized as a special-purpose entity with organizational documents substantially similar to those in effect on the Closing Date.

(t) The Borrower shall at all times conduct its business so that any assumptions made with respect to the Borrower in any “substantive non-consolidation” opinion letter delivered in connection with the Facility Documents will continue to be true and correct in all respects.

ARTICLE VI

EVENTS OF DEFAULT

Section 6.01 Events of Default. “Event of Default”, wherever used herein, means any one of the following events:

(a) (i) a default by the Borrower in the payment, when due and payable, of any interest or principal (including any mandatory prepayment under Section 2.05(b)) or (ii) the Borrower or the Seller, as applicable, shall fail to make any other payment, transfer or deposit (unless waived by the Administrative Agent) on the date first required of such party under this Agreement or the other Facility Documents or the Parent shall fail to make any payment under the Performance Guaranty and, in each case, such default or failure shall remain uncured for five (5) Business Days following receipt of written notice by the Borrower, the Seller or the Parent (which may be by email) of such default or failure from the Administrative Agent; or

(b) the failure to reduce the Advances to $0 on the Final Maturity Date; or

(c) except as otherwise provided in this Section 6.01, a default in any material respect in the performance, or breach in any material respect, of any covenant, obligation or agreement of the Borrower or the Seller under the Facility Documents and such default or breach shall remain uncured (to the extent such default or breach may be cured) for a period in excess of thirty (30) days after the earlier of (i) receipt of written notice by the Borrower, the Seller or the Parent (which may be by email) of such default from the Administrative Agent and (ii) actual knowledge of the Borrower or the Seller; or

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(d) the failure of any representation, warranty, certification or other statement made or deemed made by the Borrower or the Seller in any Facility Document to be correct in each case in all material respects when the same shall have been made and such failure shall remain uncured (to the extent such failure may be cured) for a period in excess of thirty (30) calendar days after the earlier of (i) receipt of written notice by the Borrower or the Seller (which may be by email) of such failure from the Administrative Agent and (ii) actual knowledge of the Borrower, the Seller or the Parent; provided that, for the avoidance of doubt, the repurchase of or substitution for any Repurchased Receivable by the Seller, or other cure of such Repurchased Receivable in accordance with the terms of the Purchase Agreement and this Agreement, as applicable, shall be deemed to cure the failure of any Facility Receivable to be an Eligible Receivable at the time it was acquired by the Borrower; or

(e) any failure by the Borrower and Seller to deliver a Monthly Report by the related Monthly Reporting Date and such failure is not cured within five (5) Business Days of such Monthly Reporting Date; or

(f) An Insolvency Event shall have occurred with respect to the Borrower, the Seller or the Parent; or

(g) the occurrence of a Change of Control not otherwise consented to by the Administrative Agent, other than in connection with a Permitted IPO; or

(h) any action or inaction of the Borrower or the Seller causes any Lien securing any obligation of the Borrower or the Seller under the Facility Documents to, in whole or in part, cease to be a valid and enforceable first priority perfected Lien (subject to Permitted Liens) on any material portion of the Collateral and such cessation remains unremedied for five (5) Business Days; provided, that, any affirmative action taken by the Administrative Agent to release such Lien shall not constitute an Event of Default hereunder; or

(i) the Borrowing Base Test is not satisfied and such condition is not cured within five (5) Business Days following (i) a Responsible Officer of the Borrower or the Seller obtaining actual knowledge thereof or (ii) receipt of written notice by the Borrower or the Seller (which may be by email) of such condition from the Administrative Agent; or

(j) the Borrower is required to be registered under the Investment Company Act or the Borrower becomes controlled by an entity that is required to register as an “investment company” under the Investment Company Act; or

(k) the Borrower shall have become taxable as an association or a publicly traded partnership taxable as a corporation under the Code; or

(l) (i) any material portion of any Facility Document shall terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the parties thereto (other than in accordance with its terms) or (ii) the Borrower, the Seller, the Parent or any other party thereto shall, directly or indirectly, disaffirm or contest in any manner the effectiveness, validity, binding nature or enforceability or any Lien purported to be created thereunder; or

(m) any event that constitutes a Servicer Event of Default shall have occurred and the Servicer has not been replaced by the Backup Servicer (or another third-party servicer acceptable to the Administrative Agent) within thirty (30) days of termination of the Servicer; or

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(n) a Reserve Account Deficit exists for a period of more than two (2) Business Days after giving effect to any deposits to be made into the Reserve Account from Collections received during such period pursuant to Section 9.01; or

(o) (i) one or more final non-appealable judgments shall be entered against, or settlements by, the Seller or any of its Subsidiaries (other than the Borrower) by a court of competent jurisdiction assessing monetary damages in excess of $5,000,000 in the aggregate and such amount is not discharged, paid or stayed within thirty (30) calendar days or (ii) one or more judgments for the payment of $100,000 or more shall be entered against the Borrower and such amount is not discharged, paid or stayed within thirty (30) calendar days; or

(p) the Performance Guaranty shall cease to be in full force and effect (other than in accordance with its terms) or the Performance Guarantor shall assert that it is not bound by, or otherwise seek to terminate or disaffirm its obligations under the Performance Guaranty or shall otherwise claim that the Performance Guaranty is in any way invalid or unenforceable.

Notwithstanding the foregoing, there will be no Event of Default where an Event of Default would otherwise exist under clauses (a), (b), (c) or (e) above for an additional period of days mutually agreeable to the Borrower and the Administrative Agent if the delay or failure giving rise to such Event of Default was caused by acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations imposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes, other disasters or other similar occurrence.

Section 6.02 Remedies upon an Event of Default.

(a) Upon a Responsible Officer of the Borrower obtaining actual knowledge of the occurrence of an Early Amortization Event, Unmatured Event of Default or an Event of Default, the Borrower shall notify the Servicer, the Administrative Agent within five (5) Business Days, specifying the specific Early Amortization Event(s), Unmatured Event(s) of Default or Event(s) of Default that occurred as well as all other Events of Default that are then known to be continuing.

(b) Upon the occurrence and during the continuance of any Event of Default, in addition to all rights and remedies specified in this Agreement and the other Facility Documents, including Article VII, and the rights and remedies of a secured party under Applicable Law, including the UCC, the Administrative Agent or the Majority Lenders, by notice to the Borrower, may do any one or more of the following: (1) declare the Commitments to be terminated, and/or (2) declare the principal of and the accrued interest on the Advances and all other amounts whatsoever payable by the Borrower hereunder to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby waived by the Borrower; provided that, upon the occurrence of any Event of Default described in clause (f) of Section 6.01, the Commitments shall automatically terminate and the Advances and all such other amounts shall automatically become due and payable, without any further action by any party.

(c) Upon the occurrence and during the continuance of an Event of Default, following written notice by the Administrative Agent (provided in its sole discretion or at the direction of the Majority Lenders) of the exercise of control rights with respect to the Collateral: (x) the Borrower’s unilateral power to direct the acquisition, sales and other dispositions of Facility Receivables will be immediately suspended and (y) the Borrower shall, or shall cause an Affiliate, to acquire, sell or otherwise dispose of any Facility Receivable as directed by the Administrative Agent in its sole discretion.

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Section 6.03 Servicer Events of Default.

(a) Upon a Responsible Officer of the Borrower obtaining actual knowledge of the occurrence of an Unmatured Servicer Event of Default or a Servicer Event of Default, the Borrower shall provide notice of such occurrence to the Administrative Agent promptly thereafter, specifying the specific an Unmatured Servicer Event(s) of Default or Servicer Event(s) of Default that occurred as well as all other an Unmatured Servicer Event(s) of Default or Servicer Events of Default that are then known to be continuing.

(b) In accordance with Section 4.01 of the Servicing Agreement, upon the occurrence and during the continuance of a Servicer Event of Default, the Administrative Agent, by written notice to the Servicer (with a copy to the Borrower, the Seller and the Backup Servicer) (a “Servicer Termination Notice”), may terminate all of the rights and obligations of the Servicer in accordance with the terms of the Servicing Agreement.

ARTICLE VII

PLEDGE OF COLLATERAL; RIGHTS OF THE ADMINISTRATIVE AGENT

Section 7.01 Grant of Security.

(a) The Borrower hereby grants, pledges, transfers and collaterally assigns to the Administrative Agent, for the benefit of the Secured Parties, as collateral security for all Obligations, a continuing security interest in, and a Lien upon, all of the Borrower’s right, title and interest in, to and under, the following property, in each case whether tangible or intangible, wheresoever located, and whether now owned or hereafter acquired and whether now existing or hereafter coming into existence (all of the property described in this Section 7.01(a) being collectively referred to herein as the “Collateral”):

(i) all Facility Receivables and Related Documents, both now and hereafter owned, including all Collections and other proceeds thereon or with respect thereto;

(ii) the Collection Account and all Cash and Eligible Investments on deposit therein and the Reserve Account and all Cash and Eligible Investments on deposit therein;

(iii) each Facility Document and all rights, remedies, powers, privileges and claims under or in respect thereto (whether arising pursuant to the terms thereof or otherwise available to the Borrower at law or equity), including the right to enforce each such Facility Document and to give or withhold any and all consents, requests, notices, directions, approvals, extensions or waivers under or with respect thereto, to the same extent as the Borrower could but for the assignment and security interest granted to the Administrative Agent under this Agreement;

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(iv) all accounts, chattel paper, deposit accounts, financial assets, general intangibles, instruments, investment property and letter of credit rights of the Borrower whether or not relating to the foregoing (in each case as defined in the UCC);

(v) all other property of the Borrower and all property of the Borrower which is delivered to the Administrative Agent (or any custodian on its behalf) by or on behalf of the Borrower or held by any party by or on behalf of the Borrower;

(vi) all security interests, liens, collateral, property, guaranties, supporting obligations, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of the assets, investments and properties described above; and

(vii) all Proceeds of any and all of the foregoing.

(b) All terms used in this Section 7.01 that are defined in the UCC but are not defined in Section 1.01 shall have the respective meanings assigned to such terms in the UCC.

Section 7.02 Release of Security Interest. Liens granted to the Administrative Agent for the benefit of the Secured Parties on any Collateral shall be automatically released (i) if and only if all Obligations have been paid in full and all Commitments have been terminated (other than with respect to contingent indemnification obligations for which a claim has not yet been made) or (ii) upon the sale or disposition of the applicable Collateral by the Borrower in compliance with the terms and conditions of this Agreement and, in each case, the Administrative Agent (for itself and on behalf of the other Secured Parties) shall, at the expense of the Borrower, promptly execute, deliver and file or authorize for filing such instruments as the Borrower shall reasonably request in order to reassign, release or terminate the Secured Parties’ security interest in the applicable Collateral. Any and all actions under this Article VII in respect of the Collateral shall be without any recourse to, or representation or warranty by any Secured Party and shall be at the sole cost and expense of the Borrower.

Section 7.03 Rights and Remedies. The Administrative Agent (for itself and on behalf of the other Secured Parties) shall have all of the rights and remedies of a secured party under the UCC and other Applicable Law. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may (i) instruct the Borrower to deliver any or all of the Collateral, the Related Documents and any other documents relating to the Collateral to the Administrative Agent or its designees and otherwise give all instructions for the Borrower regarding the Collateral; (ii) sell or otherwise dispose of the Collateral in a commercially reasonable manner, all without judicial process or proceedings; (iii) take control of the Proceeds of any such Collateral; (iv) subject to the provisions of the applicable Related Documents, exercise any consensual or voting rights in respect of the Collateral; (v) release, make extensions, discharges, exchanges or substitutions for, or surrender all or any part of the Collateral; (vi) enforce the Borrower’s rights and remedies with respect to the Collateral; (vii) institute and prosecute legal and equitable proceedings to enforce collection of, or realize upon, any of the Collateral; (viii) require that the Borrower immediately take all actions necessary to cause the liquidation of the Collateral in order to pay all amounts due and payable in respect of the Obligations, in accordance with the terms of the Related Documents; (ix) redeem or withdraw or cause the Borrower to redeem

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or withdraw any asset of the Borrower to pay amounts due and payable in respect of the Obligations; (x) make copies of or, if necessary, remove from the Borrower’s, the Seller’s and their respective agents’ (including custodian’s) place of business all books, records and documents relating to the Collateral; and (xi) endorse the name of the Borrower upon any items of payment relating to the Collateral or upon any proof of claim in bankruptcy against an account debtor.

The Borrower hereby agrees that, upon the occurrence and during the continuance of an Event of Default, at the request of the Administrative Agent, it shall execute all documents and agreements which are necessary or appropriate to have the Collateral to be assigned to the Administrative Agent or its designee. For purposes of taking the actions described in clauses (i) through (xi) of the first paragraph this Section 7.03 the Borrower hereby irrevocably appoints the Administrative Agent as its attorney-in-fact (which appointment being coupled with an interest and is irrevocable while any of the Obligations remain unpaid, with power of substitution), in the name of the Administrative Agent or in the name of the Borrower or otherwise, for the use and benefit of the Administrative Agent (for the benefit of the Secured Parties), but at the cost and expense of the Borrower and, except as prohibited by Applicable Law, without notice to the Borrower.

Section 7.04 Remedies Cumulative. Each right, power, and remedy of the Administrative Agent and the other Secured Parties, or any of them, as provided for in this Agreement or in the other Facility Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Facility Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Administrative Agent or any other Secured Party of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by such Persons of any or all such other rights, powers, or remedies.

Section 7.05 Related Documents.

(a) Each of the Borrower and the Seller hereby agrees that, to the extent not expressly prohibited by the terms of the Related Documents, after the occurrence and during the continuance of an Event of Default, it shall (i) upon the written request of the Administrative Agent, promptly forward to the Administrative Agent and the Backup Servicer (or other successor servicer) all material information and notices which it receives under or in connection with the Related Documents relating to the Collateral and (ii) upon the written request of the Administrative Agent, act and refrain from acting in respect of any request, act, decision or vote under or in connection with the Related Documents relating to the Collateral only in accordance with the direction of the Administrative Agent.

(b) The Borrower agrees that, to the extent the same shall be in the Borrower’s possession, it will hold all Related Documents relating to the Collateral in trust for the Administrative Agent on behalf of the Secured Parties, and, upon request of the Administrative Agent following the occurrence and during the continuance of an Event of Default or as otherwise provided herein, promptly deliver the same to the Administrative Agent or its designee (including the Backup Servicer). In addition, the Borrower shall cause the Servicer to deliver to the Backup Servicer an electronic file containing information relating to such Facility Receivables, in accordance with the applicable terms of the Backup Servicing Agreement.

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Section 7.06 Borrower Remains Liable.

(a) Notwithstanding anything herein to the contrary, (i) the Borrower shall remain liable under the contracts and agreements included in and relating to the Collateral (including the Related Documents) to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements to the same extent as if this Agreement had not been executed, and (ii) the exercise by any Secured Party of any of its rights hereunder shall not release the Borrower from any of its duties or obligations under any such contracts or agreements included in the Collateral.

(b) No obligation or liability of the Borrower is intended to be assumed by the Administrative Agent or any other Secured Party under or as a result of this Agreement or the other Facility Documents, and the transactions contemplated hereby and thereby, including under any Related Document or any other agreement or document that relates to the Collateral and, to the maximum extent permitted under provisions of law, the Administrative Agent and the other Secured Parties expressly disclaim any such assumption.

Section 7.07 Protection of Collateral. The Borrower shall from time to time execute and deliver all such supplements and amendments hereto and file or authorize the filing of all such UCC-1 financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action as may be reasonably necessary or advisable or desirable to secure the rights and remedies of the Secured Parties hereunder and to:

(a) grant security more effectively on all or any portion of the Collateral;

(b) maintain, preserve and perfect any grant of security made or to be made by this Agreement including the first priority nature of the lien or carry out more effectively the purposes hereof (subject to Permitted Liens);

(c) perfect, publish notice of or protect the validity of any grant made or to be made by this Agreement (including any and all actions necessary or desirable as a result of changes in law or regulations);

(d) enforce any of the Collateral or other instruments or property included in the Collateral;

(e) preserve title to the Collateral and defend title to the Collateral and the rights therein of the Administrative Agent and the Secured Parties in the Collateral against the claims of all third parties; and

(f) pay or cause to be paid any and all taxes levied or assessed upon all or any part of the Collateral.

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For so long as this Agreement remains in full force and effect, the Borrower hereby designates the Administrative Agent as its agent and attorney-in-fact to prepare and file any UCC-1 financing statement, continuation statement and all other instruments, and take all other actions, required pursuant to this Section 7.07. Such designation shall not impose upon the Administrative Agent, or release or diminish, the Borrower’s obligations under this Section 7.07. The Borrower further authorizes and shall cause its counsel to file, without the Borrower’s signature, UCC-1 financing statements that names the Borrower as debtor and the Administrative Agent as secured party and that describes “all assets in which the debtor now or hereafter has rights” or similar language as the Collateral in which the Administrative Agent has a grant of security hereunder and any amendments or continuation statements that may be reasonably necessary or desirable.

ARTICLE VIII

ACCOUNTS, ACCOUNTINGS AND RELEASES

Section 8.01 Collection of Money. Except as otherwise expressly provided herein, the Administrative Agent may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all Money and other property payable to or receivable by the Administrative Agent pursuant to this Agreement, including all payments due on the Collateral, in accordance with the terms and conditions of such Collateral and the related Facility Documents. The Administrative Agent shall segregate and hold all such Money and property received by it in trust for the Secured Parties and shall apply it as provided in this Agreement. Each Borrower Account shall be subject to the Account Control Agreement. Any Borrower Account may contain any number of subaccounts for the convenience of the Administrative Agent for convenience in administering the Borrower Accounts or the Collateral.

Section 8.02 Collection Account. The Borrower shall, on or prior to the Closing Date, establish at the Account Bank one or more accounts in the name “ Compass Concierge SPV I, LLC - Collection Account, subject to the lien of the Administrative Agent” or such other name as is acceptable to the Administrative Agent, which shall be designated as the “Collection Account”. The Collection Account shall be subject to the Lien of the Administrative Agent and, from and after the initial Borrowing Date, the Collection Account shall be maintained with the Account Bank and shall be subject to the Account Control Agreement. The Borrower shall deposit, or cause to be deposited, from time to time into the Collection Account, in accordance with the terms of this Agreement, all Collections received with respect to a Facility Receivable from and including the initial Cutoff Date with respect to such Facility Receivable. All Monies deposited from time to time in the Collection Account pursuant to this Agreement shall be held by the Borrower as part of the Collateral and shall be applied to the purposes herein provided. Prior to the Administrative Agent taking control of the Collection Account by delivery of a notice of exclusive control, except as provided under the Facility Documents, the Borrower shall be the only party permitted to access such account. Unless an Event of Default shall have occurred and be continuing, the Administrative Agent agrees that it shall not exercise any right under the Account Control Agreement to deliver any notice of exclusive control with respect to the Collection Account.

Section 8.03 The Reserve Account; Fundings.

(a) The Borrower shall, on or prior to the Closing Date, establish at the Account Bank one or more accounts in the name “Compass Concierge SPV I, LLC - Reserve Account, subject to

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the lien of the Administrative Agent”, or such other name as is acceptable to the Administrative Agent, which shall be designated as the “Reserve Account”. The Reserve Account shall be subject to the Lien of the Administrative Agent and, from and after the initial Borrowing Date, the Reserve Account shall be maintained with the Account Bank and shall be the subject of the Account Control Agreement. The only permitted deposits to or withdrawals from the Reserve Account shall be in accordance with the provisions of this Agreement. The Borrower shall not have any legal, equitable or beneficial interest in the Reserve Account other than in accordance with this Agreement and the Priority of Payments. Prior to the Administrative Agent taking control of the Reserve Account by delivery of a notice of exclusive control, the Borrower shall be the only party permitted to access such account. Unless an Event of Default shall have occurred and be continuing, the Administrative Agent agrees that it shall not exercise any right under the Account Control Agreement to deliver any notice of exclusive control with respect to the Reserve Account.

The Borrower shall maintain at all times when there are Obligations outstanding hereunder an amount in the Reserve Account equal to the Reserve Account Required Amount. On or prior to the Amortization Date, the Borrower shall request (and in the absence of such a request shall be deemed to have requested) a final Borrowing (subject to the conditions precedent to Borrowings set forth in Section 3.02) in an amount sufficient to fund the Reserve Account Required Amount.

To the extent that the aggregate amount of funds on deposit in the Reserve Account at any time exceeds the Reserve Account Required Amount, the Borrower may remit such excess to the Collection Account. In addition, following the occurrence and during the continuance of an Event of Default, funds in the Reserve Account may be withdrawn by the Administrative Agent and deposited into the Collection Account.

(b) In the event that there are not sufficient Collections or other available funds on any Payment Date to pay amounts which are due and owing and which are to be paid pursuant to clauses (i) through (iii) of Section 9.01(a) on such date and after giving effect to any payments made pursuant to Section 9.01, the Borrower shall withdraw from the Reserve Account the lesser of (A) the amount of such insufficiency, and (B) the Reserve Account Available Amount. The Borrower shall pay such amount (the “Reserve Account Withdrawal Amount”) from the Reserve Account to the Collection Account to satisfy such insufficiency.

(c) To the extent that the Reserve Account Available Amount together with the amount available in the Collection Account is sufficient to pay off all Obligations in full and all other amounts payable to the Administrative Agent and the Lenders under the Facility Documents in full when applied in accordance with the Priority of Payments and to cause the Final Maturity Date to occur, the Borrower may, at its option, terminate the Commitments and use the funds on deposit in the Reserve Account and the Collection Account to be applied to all outstanding amounts owing hereunder and under the other Facility Documents in accordance with the Priority of Payments with any remaining amounts distributed to the Borrower.

Section 8.04 Accountings. The Borrower and the Seller shall compile and provide (or cause to be compiled and provided) a Monthly Report (containing such information agreed upon by the Administrative Agent, the Borrower and the Seller) for the previous Collection Period no later than 2:00 p.m. (New York City time), on each Monthly Reporting Date to the Administrative Agent. The Monthly Report delivered for any Collection Period shall contain the information with

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respect to the Facility Receivables included in the Collateral set forth in Schedule 2 hereto (including a calculation of the Borrowing Base and the certifications required to be provided by the Seller on a monthly basis pursuant to Section 11.23(f) of this Agreement), and shall be determined as of the last day of the Collection Period applicable to such Monthly Report.

Section 8.05 Sale and Release of Facility Receivables.

(a) Notwithstanding anything to the contrary in this agreement, without the consent of the Administrative Agent or any Lender and subject to the satisfaction of the conditions set forth in this Section 8.05, (1) the Borrower may sell and transfer to the Originator or the Seller any Repurchased Receivable that the Seller is required to repurchase pursuant to the terms of the Purchase Agreement, and (2) the Borrower may sell and transfer any Facility Receivable in a Permitted Asset Sale. As a condition of any such sale or transfer:

(i) (x) in the case of a repurchase of a Repurchased Receivable, the Borrower shall deliver, in accordance with the terms hereof, a Borrowing Base Certificate and updated Data File demonstrating pro forma compliance with the Borrowing Base Test and (y) in the case of any other Permitted Asset Sale, the Borrower shall deliver a written notice to the Administrative Agent at least two (2) Business Day prior to the settlement date for any sale of such Facility Receivable and, as a condition to any such sale of a Facility Receivable, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower (or the Seller on its behalf) certifying that the sale of such Facility Receivable is a Permitted Asset Sale being made in accordance with the terms and conditions of this Agreement, and attaching an updated receivable schedule listing all Facility Receivables owned by the Borrower after giving effect to such Permitted Asset Sale, together with an updated Borrowing Base Certificate containing the relevant information with respect to the Collateral calculated on a pro forma basis after giving effect to such Permitted Asset Sale; and

(ii) the proceeds of any such sale and transfer of any Facility Receivable shall be deposited directly into the Collection Account; provided, that no cash purchase price or related deposit to the Collection Account shall be required in connection with the sale and transfer of any Repurchased Receivable or any Excess Concentration Receivable so long as (x) the Borrower shall be in compliance with the Borrowing Base Test both before and after giving effect to any such sale and transfer and (y) no Early Amortization Event, Servicer Event of Default, Unmatured Servicer Event of Default, Unmatured Event of Default or Event of Default exists before or after giving effect to such sale and transfer.

(b) Any Facility Receivable that is sold by the Borrower in accordance with the terms of this Agreement and (if applicable) the Purchase Agreement shall automatically be released from the Lien of this Agreement, and the Administrative Agent is hereby authorized by each Lender to, review and approve such UCC-3 financing statements and executed releases prepared by the Borrower and submitted to the Administrative Agent for authorization as are necessary or reasonably requested in writing by the Borrower to terminate and remove of record any documents constituting public notice of the security interest in such sold Facility Receivables granted hereunder being released; provided, that the Borrower shall bear reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with its review and approval of such UCC-3 financing statements and releases.

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(c) The Administrative Agent is hereby authorized by each Lender to, and shall, upon the written request of the Borrower (or the Seller on its behalf), at such time as there are no Commitments outstanding and all Obligations of the Borrower hereunder and under the other Facility Documents have been satisfied (other than contingent indemnification obligations for which a claim has not been asserted), review and approve such UCC-3 financing statements and, if necessary, executed releases prepared by the Borrower and submitted to the Administrative Agent for authorization as are necessary or reasonably requested in writing by the Borrower to terminate and remove of record any documents constituting public notice of the security interest in such Collateral granted hereunder being released; provided, that the Borrower shall bear reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with its review and approval of such UCC-3 financing statements and releases.

Section 8.06 Borrower Account Details. The account number of each Borrower Account is set forth on Schedule 4 hereto. Amounts credited to the Borrower Accounts may be invested in Eligible Investments (i) for so long as no Event of Default is then continuing, at the direction of the Borrower, and (ii) for so long as an Event of Default is continuing, at the direction of the Administrative Agent. Notwithstanding anything to the contrary contained in this Agreement or any Facility Document, neither the Borrower nor the Administrative Agent shall direct, authorize or permit the investment of any amounts credited to the Borrower Accounts unless such investment is being made in an account thereof that is the subject of a “Cash Sweep” designation under the terms of the Account Control Agreement. The Borrower and the Administrative Agent agree that any Borrower Account which is not the subject of a “Cash Sweep” designation under the terms of the Account Control Agreement will for all purposes be a deposit account within the meaning of the applicable UCC.

ARTICLE IX

APPLICATION OF MONIES

Section 9.01 Disbursements of Monies.

(a) Notwithstanding any other provision in this Agreement, but subject to the other subsections of this Section 9.01, on each Payment Date, the Borrower shall disburse Collections received during the previous Collection Period in accordance with the following priorities (the “Priority of Payments”) and the related Monthly Report:

(i) first, (1) to the Account Bank, the related Account Bank Fee, plus any such fees not paid to the Account Bank when due on any prior Payment Date, plus any expense, indemnity or other amounts owing by the Borrower to the Account Bank under the Facility Documents (including any wire transfer fees or other banking fees owing to the Account Bank), each to the extent accrued and unpaid through the last day of the related Collection Period until such accrued fees, expenses, indemnities and other amounts are paid in full; provided, however, that the aggregate amount of expenses, indemnities and other amounts (excluding the Account Bank Fee) payable under this clause (1) shall not exceed $25,000

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in any calendar year; provided, further, that after the occurrence and during the continuance of an Event of Default, such cap shall not apply and then (2) pro rata to the Servicer and the Backup Servicer, the Servicing Fee (but excluding any Successor Servicing Excess Servicing Fee or Successor Servicing Transition Fee) and Backup Servicing Fee, plus any such fees not paid to the Servicer or the Backup Servicer when due on any prior Payment Date, plus any expense, indemnity, reimbursements and other amounts owing by the Borrower to either of such parties under the Facility Documents, respectively, each to the extent accrued and unpaid through the last day of the related Collection Period until such accrued fees, expenses, indemnities, reimbursements and other amounts are paid in full; provided, however, that the aggregate amount of expenses, indemnities and other amounts (excluding the Servicing Fee and the Backup Servicing Fee) payable under this clause (2) shall not exceed $100,000 for each of the Servicer and the Backup Servicer in any calendar year;

(ii) second, to the Administrative Agent, for distribution to each Lender, (1) to pay first, any accrued and unpaid Interest payable on a prior Payment Date to the extent not paid in full on such prior Payment Date (including interest thereon at the rate used to calculate Interest for the previous Collection Period but excluding any Interest amounts attributable to the Amortization Margin, if applicable) and (2) second, Unused Fees due each such Lender, with such Interest paid first with respect to the Advances and then Unused Fees;

(iii) third, to the Administrative Agent, for distribution to each Lender, to pay, accrued and unpaid Interest on the Advances due to such Lender for the previous Collection Period;

(iv) fourth, to the Administrative Agent, for distribution to each Lender, on a pro rata basis, (1) prior to the occurrence and continuance of an Event of Default or an Early Amortization Event and prior to the end of the Revolving Period, if the Borrowing Base Test is not satisfied as of the later of (x) the most recent Determination Date and (y) the Borrowing Base Calculation Date employed in the determination of a Borrowing Base Certificate delivered to the Administrative Agent in conjunction with a Borrowing Date, to pay the principal of the Advances of each Lender (pro rata, based on each Lender’s Percentage) until the Borrowing Base Test is satisfied (on a pro forma basis as at the most recent Determination Date or such Borrowing Base Calculation Date, as applicable), and (2) at any time following the end of the Revolving Period (regardless of the cause of the end of the Revolving Period and regardless of whether an Event of Default or an Early Amortization Event has occurred and is continuing) and during the continuance of an Event of Default or an Early Amortization Event, to pay the Advances of each Lender (pro rata, based on each Lender’s Percentage) until paid in full;

(v) fifth, to the Administrative Agent, for distribution to each Lender, any Interest amounts attributable to the Amortization Margin, if any, accrued and unpaid and not otherwise paid pursuant to clause (ii) above;

(vi) sixth, for deposit into the Reserve Account until the amounts on deposit therein are equal to the Reserve Account Required Amount;

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(vii) seventh, to pay, (A) to the Administrative Agent, for distribution to each Lender, any Interest due and owing pursuant to this Agreement (including any accrued and unpaid Interest payable on a prior Payment Date (and interest thereon) to the extent not paid in full on such prior Payment Date) and any accrued and unpaid fees and expenses of the Administrative Agent in connection with this Agreement and the other Facility Documents and (B) second, on a pro rata basis, accrued and unpaid amounts owing to Affected Persons (if any) under Sections 2.09 and 11.03, and all other fees, expenses or indemnities owed to the Secured Parties or Indemnified Parties (including, following the expiration of the Revolving Period, any Interest accrued at the Amortization Margin);

(viii) eighth, on a pro rata basis, based on amounts payable to each party pursuant to this clause (viii), to the Account Bank, the Servicer and the Backup Servicer, any amounts due and payable to each such party which are in excess of any applicable cap on such amounts described in clause (i) (including, with respect to any successor Servicer, any Successor Servicing Excess Servicing Fee or Successor Servicing Transition Fee); and

(ix) ninth, (i) if no Unmatured Event of Default has occurred and is continuing, the remainder to or at the direction of the Borrower and (ii) otherwise, to the Collection Account.

(b) If on any Payment Date the amount available in the Collection Account is insufficient to pay all amounts which are due and owing and which are to be paid pursuant to clauses (i) through (iii) of Section 9.01(a), amounts on deposit in the Reserve Account may be transferred to the Collection Account to meet any shortfall and shall be disbursed in the order and according to the priority set forth under Section 9.01(a) to the extent funds are available therefor.

ARTICLE X

THE ADMINISTRATIVE AGENT

Section 10.01 Authorization and Action. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and, to the extent applicable, the other Facility Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, subject to the terms hereof. The Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Facility Documents, or any fiduciary relationship with any Secured Party, and no implied covenants, functions, responsibilities, duties or obligations or liabilities on the part of the Administrative Agent shall be read into this Agreement or any other Facility Document to which the Administrative Agent is a party (if any) as duties on its part to be performed or observed. As to any matters not expressly provided for by this Agreement or the other Facility Documents, the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Majority Lenders; provided that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent, in its judgment, to personal liability, cost or expense or which is contrary to this Agreement, the other Facility Documents or Applicable Law, or would be, in its judgment, contrary to its duties

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hereunder, under any other Facility Document or under Applicable Law. Each Lender agrees that in any instance in which the Facility Documents provide that the Administrative Agent’s consent may not be unreasonably withheld, provide for the exercise of the Administrative Agent’s reasonable discretion, or provide to a similar effect, it shall not in its instructions (or, by refusing to provide instruction) to the Administrative Agent withhold its consent or exercise its discretion in an unreasonable manner.

Section 10.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and each other Facility Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.

Section 10.03 Agent’s Reliance, Etc.

(a) Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any of the other Facility Documents, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Administrative Agent: (i) may consult with legal counsel (including counsel for the Borrower, the Parent or the Servicer or any of their Affiliates) and independent public accountants and other experts selected by it with due care and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Secured Party or any other Person and shall not be responsible to any Secured Party or any Person for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or the other Facility Documents; (iii) shall not have any duty to monitor, ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the other Facility Documents or any Related Documents on the part of the Borrower, the Parent or the Servicer or any other Person or to inspect the property (including the books and records) of the Borrower, the Parent or the Servicer; (iv) shall not be responsible to any Secured Party or any other Person for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Collateral, this Agreement, the other Facility Documents, any Related Document or any other instrument or document furnished pursuant hereto or thereto or for the validity, perfection, priority or enforceability of the Liens on the Collateral; and (v) shall incur no liability under or in respect of this Agreement or any other Facility Document by relying on, acting upon (or by refraining from action in reliance on) any notice, consent, certificate (including for the avoidance of doubt, the Monthly Report), instruction or waiver, report, statement, opinion, direction or other instrument or writing (which may be delivered by telecopier, email, cable or telex, if acceptable to it) reasonably believed by it to be genuine and believe by it to be signed or sent by the proper party or parties. The Administrative Agent shall not have any liability to the Borrower, the Parent or any Lender or any other Person for the Borrower’s, the Parent’s, the Servicer’s or any Lender’s, as the case may be, performance of, or failure to perform, any of their respective obligations and duties under this Agreement or any other Facility Document.

(b) Except as otherwise provided in this Agreement, the Administrative Agent shall not be liable for the actions or omissions of any other agent (including concerning the application of funds), or under any duty to monitor or investigate compliance on the part of any other agent with the terms or requirements of this Agreement, any Facility Documents or any Related

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Documents, or their duties thereunder. The Administrative Agent shall be entitled to assume the due authority of any signatory and genuineness of any signature appearing on any instrument or document it may receive (including each Request for Advance received hereunder). The Administrative Agent shall not be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action (including for refusing to exercise discretion or for withholding its consent in the absence of its receipt of, or resulting from a failure, delay or refusal on the part of the Majority Lenders to provide, written instruction to exercise such discretion or grant such consent from the Majority Lenders, as applicable). Nothing herein or in any Facility Documents or Related Documents shall obligate the Administrative Agent to advance, expend or risk its own funds, or to take any action which in its reasonable judgment may cause it to incur any expense or financial or other liability for which it is not adequately indemnified. The Administrative Agent shall not be liable for any indirect, special or consequential damages (included but not limited to lost profits) whatsoever, even if it has been informed of the likelihood thereof and regardless of the form of action. The Administrative Agent shall not be charged with knowledge or notice of any matter unless actually known to a Responsible Officer of the Administrative Agent, or unless and to the extent written notice of such matter is received by the Administrative Agent at its address in accordance with Section 11.02. Any permissive grant of power to the Administrative Agent hereunder shall not be construed to be a duty to act. The Administrative Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. The Administrative Agent shall not be liable for any error of judgment, or for any act done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for anything that it may do or refrain from doing in connection herewith unless it shall be proven by a court of competent jurisdiction that the Administrative Agent engaged in willful misconduct or was grossly negligent in the performance or omission of its duties.

(c) The Administrative Agent shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations imposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters.

Section 10.04 Indemnification. Each of the Lenders agrees to indemnify and hold harmless, on a pro rata basis (based on Commitments or, if Commitments have been terminated, the Facility Receivables outstanding) the Administrative Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by or on behalf of the Borrower pursuant to Section 11.04 or otherwise) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including reasonable and documented attorney’s fees and expenses) or disbursements of any kind or nature whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Administrative Agent is a party thereto) which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Facility Document or any Related Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Facility Document or any Related

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Document; provided that no Lender shall be liable to the Administrative Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent’s gross negligence or willful misconduct. The rights of the Administrative Agent and obligations of the Lenders under or pursuant to this Section 10.04 shall survive the termination of this Agreement, and the earlier removal or resignation of the Administrative Agent hereunder.

Section 10.05 Successor Administrative Agent. Subject to the terms of this Section 10.05, the Administrative Agent may, upon thirty (30) days’ notice to the Lenders and the Borrower, resign as Administrative Agent. If the Administrative Agent shall resign, then the Majority Lenders shall appoint a successor agent. If for any reason a successor agent is not so appointed and does not accept such appointment within thirty (30) days of notice of resignation, the Administrative Agent may appoint a successor agent. The appointment of any successor Administrative Agent shall be subject to the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed); provided that the consent of the Borrower to any such appointment shall not be required if (i) an Event of Default shall have occurred and is continuing or, (ii) if such successor Administrative Agent is a Lender or an Affiliate of the Administrative Agent or any Lender. Any resignation of the Administrative Agent shall be effective upon the appointment of a successor agent pursuant to this Section 10.05. After the effectiveness of the retiring Administrative Agent’s resignation hereunder as the Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Facility Documents and the provisions of this Article XI shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement and under the other Facility Documents. Any Person (i) into which the Administrative Agent may be merged or consolidated, (ii) that may result from any merger or consolidation to which the Administrative Agent shall be a party, or (iii) that may succeed to the properties and assets of the Administrative Agent substantially as a whole, shall be the successor to the Administrative Agent under this Agreement without further act of any of the parties to this Agreement.

Section 10.06 Administrative Agent’s Capacity as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

ARTICLE XI

MISCELLANEOUS

Section 11.01 No Waiver; Modifications in Writing.

(a) No failure or delay on the part of any party exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver of any provision of this Agreement, and any consent to any

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departure by any party to this Agreement from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

(b) No amendment, modification, supplement or waiver of this Agreement shall be effective unless signed by the Borrower, the Seller, the Administrative Agent and the Majority Lenders; provided that any amendment, modification, waiver or supplement of or to this Agreement that would (i) increase or extend the term of the Commitments (other than an increase in the Commitment of a particular Lender or addition of a new Lender hereunder agreed to by the relevant Lender(s) pursuant to the terms of this Agreement) or change the Final Maturity Date, (ii) extend the date fixed for the payment of principal of or interest on any Advance or any fee hereunder, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest (other than Interest paid at the Post-Default Rate) is payable thereon or any fee is payable hereunder, (v) release any material portion of the Collateral, except in connection with dispositions permitted hereunder, (vi) alter the terms of Section 9.01 or Section 11.01(b), or (vii) modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof (including the definition of “Majority Lenders”) shall require the written consent of all Lenders.

(c) Notwithstanding anything to the contrary contained in this Agreement or any other Facility Document, no Defaulting Lender shall have any right to vote, approve or disapprove of any amendment, waiver or consent under this Agreement or any other Facility Document (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected without the consent of any Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

(d) The Borrower shall deliver to the Servicer and the Backup Servicer copies of any amendment, modification, supplement or waiver of this Agreement promptly following execution and effectiveness thereof.

Section 11.02 Notices, Etc. Except where telephonic instructions are authorized herein to be given, all notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered, certified or express mail, postage prepaid, or by facsimile transmission, or by prepaid courier service, or by electronic mail (if the recipient has provided an email address in Schedule 3), and shall be deemed to be given for purposes of this Agreement on the day that such writing is received by the intended recipient thereof in accordance with the provisions of this Section 11.02. Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.02, notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective facsimile numbers or email addresses) indicated in Schedule 3, and, in the case of telephonic instructions or notices, by calling the telephone number or numbers indicated for such party in Schedule 3.

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Section 11.03 Taxes.

(a) Any and all payments by the Borrower under this Agreement shall be made, in accordance with this Agreement, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and expenses) with respect thereto, excluding, (A) taxes imposed by net income (however denominated), franchise taxes and branch profit taxes imposed (i) in the case of any Secured Party, by the jurisdiction (or any political subdivision thereof) under the laws of which such Secured Party is organized or in which its principal office is located, or in the case of any Lender, in which its applicable lending office is located, or (ii) in the case of any Secured Party, by any jurisdiction by reason of such Secured Party having any other present or former connection with such jurisdiction (other than a connection arising solely from entering into, performing its obligations under, receiving any payment under or enforcing its rights under this Agreement or any other Facility Document, engaging in any other transaction pursuant to this Agreement or any other Facility Document, or selling or assigning an interest in this Agreement or any other Facility Document) (“Other Connection Taxes”), (B) any withholding taxes or backup withholding described in Section 11.03(d)(i), (C) taxes described in Section 11.03(d)(ii) and (D) any U.S. federal withholding taxes imposed under FATCA (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrower or the Administrative Agent shall be required by law (or by the interpretation or administration thereof) to deduct or withhold any taxes from or in respect of any sum payable by it hereunder or under any other Facility Document to any Secured Party, (i) with respect to Taxes, the sum payable by the Borrower shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 11.03) such Secured Party receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the Borrower or the Administrative Agent, as applicable, shall be entitled to make such deductions or withholdings, and (iii) the Borrower or the Administrative Agent, as applicable, shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law.

(b) In addition, the Borrower agrees, to timely pay any present or future stamp, court or documentary, intangible, recording, filing or similar taxes which arise from any payment made by the Borrower hereunder or under any other Facility Document or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or under any other Facility Document, except any such taxes that are Other Connection Taxes imposed with respect to an assignment (hereinafter referred to as “Other Taxes”).

(c) Without duplication of any obligation under Section 11.03(a) or (b), the Borrower agrees to indemnify each of the Secured Parties for the full amount of Taxes or Other Taxes, including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 11.03 paid by such Person in respect of the Borrower, whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted. Payments by the Borrower or the Parent pursuant to this indemnification shall be made promptly following the date the Secured Party makes written demand therefor, which demand shall be accompanied by a certificate describing in reasonable detail the basis thereof. Such certificate shall be presumed to be correct absent manifest error.

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(d) The Borrower shall not be required to indemnify any Secured Party, or pay any additional amounts to any Secured Party, in respect of United States Federal withholding tax or United States federal backup withholding tax to the extent that (i) the obligation to withhold amounts with respect to United States Federal withholding or backup withholding tax existed on the date such Lender became a party to this Agreement or, with respect to payments to a new lending office so designated by a Lender (a “New Lending Office”), the date such Lender designated such New Lending Office with respect to an Advance; provided that this clause (i) shall not apply to the extent the indemnity payment or additional amounts any Secured Party would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or additional amounts that the transferor Lender or the Lender making the designation of such New Lending Office would have been entitled to receive in the absence of such transfer or designation, or (ii) the obligation to pay such additional amounts would not have arisen but for a failure by such Secured Party to comply with paragraphs (g) or (h) below.

(e) Promptly after the date of any payment of Taxes or Other Taxes, the Borrower will furnish to the Administrative Agent the original or a certified copy of a receipt issued by the relevant Governmental Authority evidencing payment thereof (or other evidence of payment as may be reasonably satisfactory to the Administrative Agent).

(f) If any payment is made by the Borrower (or the Seller on its behalf) to or for the account of any Secured Party after deduction for or on account of any Taxes or Other Taxes, and an indemnity payment or additional amounts are paid by the Borrower pursuant to this Section 11.03, then, if such Secured Party, in its sole discretion exercised in good faith, determines that it is entitled to a refund of such Taxes or Other Taxes, such Secured Party shall, to the extent that it can do so without prejudice to the retention of the amount of such refund, apply for such refund and reimburse to the Borrower (or the Seller, as applicable) such amount of any refund received (net of reasonable out-of-pocket expenses incurred) attributable to the relevant Taxes or Other Taxes and any interest paid by the relevant Governmental Authority with respect to such refund; provided that in the event that such Secured Party is required to repay such refund to the relevant taxing authority, the Borrower agrees to return the refund to such Secured Party. Notwithstanding anything to the contrary in this paragraph (f), in no event will a Secured Party be required to pay an amount to the Borrower pursuant to this paragraph (f) the payment of which would place the Secured Party in a less favorable net after-tax position than the Secured Party would have been in if the Tax or Other Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax or Other Tax had never been paid. This paragraph (f) shall not be construed to require any Secured Party to make available its tax returns (or any other information related to its taxes that it deems confidential) to the Borrower or any other Person.

(g) (i) Any Secured Party and each Participant that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Secured Party and each Participant, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the

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Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Secured Party or Participant, as the case may be, is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 11.03(g)(ii) below) shall not be required if in the Secured Party’s or Participant’s, as the case may be, reasonable judgment such completion, execution or submission would subject such Secured Party or Participant to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Secured Party or Participant.

(ii) Without limiting the generality of the foregoing, (i) each Secured Party and each Participant that is a U.S. person as that term is defined in Section 7701(a)(30) of the Code (a “U.S. Person”) hereby agrees that it shall, no later than the Closing Date or, in the case of a Secured Party or Participant which acquires an interest in the Advances in accordance with Section 11.06, the date upon which such Secured Party or Participant which acquires an interest in the Advances, deliver to the Borrower and the Administrative Agent an accurate, complete and signed electronic copy of IRS Form W-9 or successor form, certifying that such Secured Party or Participant is on the date of delivery thereof not subject to United States backup withholding tax and (ii) each Secured Party or Participant that is organized under the laws of a jurisdiction outside than the United States (a “Non-U.S. Lender”) shall, no later than the date upon which such Secured Party or Participant which acquires an interest in the Advances in accordance with Section 11.06, to the extent legally entitled to do so, deliver to the Borrower and the Administrative Agent: (1) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under this Agreement or any Facility Document, accurate, complete and signed electronic copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement or any Facility Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; an accurate, complete and signed electronic copy of IRS Form W-8ECI; (3) in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall provide (x) a certification substantially in the form of Exhibit E-1 to the effect that such Non-U.S. Lender (x) is not a bank for purposes of Section 881(c) of the Code, (y) is not a 10 percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and (z) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code) (a “U.S. Tax Compliance Certificate”), and such Non-U.S. Lender agrees that it shall notify the Borrower and the Administrative Agent in the event any such representation is no longer accurate and (y) a IRS Form W-8BEN or IRS Form W-8BEN-E; or (4) to the extent a Non-U.S. Lender is not the beneficial owner, an accurate, complete and signed electronic copy of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W 8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-

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U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf of each such direct and indirect partner. Such forms shall be delivered by each Non-U.S. Lender on or before the date it acquires an interest in the Advances and on or before the date, if any, such Non-U.S. Lender designates a New Lending Office. In addition, each Non-U.S. Lender shall deliver such forms as promptly as reasonable after receipt of a reasonable request therefor from the Borrower or the Administrative Agent. Notwithstanding any other provision of this Section 11.03, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 11.03(g) that such Non-U.S. Lender is not legally able to deliver. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. Notwithstanding anything in this paragraph (g) to the contrary, any documentation required to be delivered by a Participant shall be delivered to the participating Lender, and such delivery shall satisfy its documentation requirements under this paragraph (g).

(iii) If the Administrative Agent is a U.S. Person, it shall deliver to the Borrower on or prior to the date on which it becomes the Administrative Agent under this Agreement an accurate, complete and signed electronic copy of IRS Form W-9. If the Administrative Agent is not a U.S. Person, it shall provide to the Borrower on or prior to the date on which it becomes the Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower): (A) an accurate, complete and signed electronic copy of IRS Form W-8ECI with respect to any amounts payable to the Administrative Agent for its own account, and (B) an accurate, complete and signed electronic copy of IRS Form W-8IMY with respect to any amounts payable to the Administrative Agent for the account of others, certifying that it is a “U.S. branch” and that the payments it receives for the account of others are not effectively connected with the conduct of its trade or business within the United States and that it is using such form as evidence of its agreement with the Borrower to be treated as a U.S. Person with respect to such payments (and the Borrower and the Administrative Agent agree to so treat the Administrative Agent as a U.S. Person with respect to such payments as contemplated by Section 1.1441-1(b)(2)(iv) of the United States Treasury Regulations).

(h) If any Secured Party requires the Borrower to pay any additional amount to such Secured Party or any taxing Governmental Authority for the account of such Secured Party or to indemnify such Secured Party pursuant to this Section 11.03, then such Secured Party shall use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if such Lender determines, in its sole discretion exercised in good faith, that such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Section 11.03 in the future and (ii) would not subject such Secured Party to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Secured Party. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

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(i) Nothing in this Section 11.03 shall be construed to require any Secured Party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

(j) Compliance with FATCA. If a payment made to a Lender or Participant under this Agreement or any Facility Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender or Participant were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or Participant shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Administrative Agent and the Borrower to comply with their obligations under FATCA and to determine that such Lender or Participant has complied with such applicable reporting requirements or to determine the amount required to be deducted or withheld under FATCA, if any. Solely for purposes of this paragraph (j), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Notwithstanding anything in this paragraph (j) to the contrary, any documentation required to be delivered by a Participant shall be delivered to the participating Lender, and such delivery shall satisfy its documentation requirements under this paragraph (j).

(k) The Lenders shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Taxes or Other Taxes attributable to such Lender, (ii) any taxes attributable to such Lender’s failure to comply with the provisions of Section 11.06 relating to the maintenance of a Participant Register and (iii) any taxes excluded from the definition of Taxes pursuant to Section 11.03(a) attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Facility Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Facility Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (k).

(l) Each party’s obligations under this Section 11.03 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the commitments and the repayment, satisfaction or discharge of all obligations under any Facility Document.

Section 11.04 Costs and Expenses; Indemnification.

(a) The Borrower agrees to promptly pay on demand (i) all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent, the other Lenders and the Program Support Providers in connection with the preparation, review, negotiation, reproduction, execution and delivery of this Agreement and the other Facility Documents, including the reasonable and

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documented fees and disbursements of a single counsel for the Administrative Agent, the Lenders and the Program Support Providers taken as a, UCC filing fees and all other related fees and expenses in connection therewith; and in connection with any modification or amendment of this Agreement or any other Facility Document. Further, the Borrower shall promptly pay on demand (A) all reasonable out-of-pocket costs and expenses (including all reasonable and documented fees, expenses and disbursements of legal counsel (it being understood that such counsel shall be limited to one single counsel for the Administrative Agent, all Lenders and the Program Support Providers taken as a whole, plus any requisite single local counsel (in each jurisdiction in which any enforcement action is pending) for the Administrative Agent, all Lenders and the Program Support Providers taken as a whole) and any auditors and accountants engaged by the Administrative Agent) incurred by the Administrative Agent, the Lenders and the Program Support Providers in the preparation, execution, delivery, filing, recordation, administration, performance or enforcement of this Agreement or any other Facility Document or any consent, amendment, waiver or other modification relating thereto, (B) all reasonable out-of-pocket costs and expenses of creating, perfecting, releasing or enforcing the Administrative Agent’s security interests in the Collateral, including filing and recording fees, expenses, search fees, and title insurance premiums, and (C) after the occurrence of any Event of Default, all costs and expenses incurred by the Administrative Agent, the Lenders and the Program Support Providers in connection with the preservation, collection, foreclosure or enforcement of the Collateral subject to the Facility Documents or any interest, right, power or remedy of the Administrative Agent, the Lenders and the Program Support Providers or in connection with the collection or enforcement of any of the Obligations or the proof, protection, administration or resolution of any claim based upon the Obligations in any insolvency proceeding, including all reasonable and documented fees and disbursements of attorneys, accountants, auditors, consultants, appraisers and other professionals engaged by the Administrative Agent, the Lenders and the Program Support Providers. The undertaking in this Section 11.04 shall survive repayment of the Obligations, any foreclosure under, or modification, release or discharge of, any or all of the Related Documents, termination of this Agreement and the resignation or replacement of the Administrative Agent. Without prejudice to its rights hereunder, the expenses and the compensation for the services of the Administrative Agent are intended to constitute expenses of administration under any applicable bankruptcy law.

(b) The Borrower agrees to indemnify each Secured Party and each of their Affiliates and the respective officers, directors, employees, agents, managers of, and any Person controlling any of, the foregoing (each, an “Indemnified Party”) for any and all claims, damages, losses, liabilities, obligations, expenses, penalties, actions, suits, judgments and disbursements of any kind or nature whatsoever, (including the reasonable and documented fees and disbursements of counsel (but limited, in the case of legal fees and expenses of the Indemnified Parties, to one counsel to such Indemnified Parties taken as a whole and any single local counsel (in each jurisdiction in which any enforcement action is pending) for the Indemnified Parties taken as a whole)) that may be incurred by or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of the execution, delivery, enforcement, performance, administration of or otherwise arising out of or incurred in connection with this Agreement, any other Facility Document, any Related Document or any transaction contemplated hereby or thereby (collectively, the “Liabilities”), including any such Liability that is incurred or arises out of or in connection with, or by reason of any one or more of the following: (i) preparation for a defense of any investigation, litigation or proceeding arising out of, related to or in connection with this

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Agreement, any other Facility Document, any Related Document or any of the transactions contemplated hereby or thereby; (ii) any breach of any covenant or obligation by the Borrower or the Seller contained in any Facility Document; (iii) any representation or warranty made or deemed made by the Borrower or the Seller contained in any Facility Document or in any certificate, statement or report delivered in connection therewith is false or misleading; (iv) any failure by the Borrower or the Seller to comply with any Applicable Law or contractual obligation binding upon it; (v) any failure to vest, or delay in vesting, in the Administrative Agent (for the benefit of the Secured Parties) a perfected security interest in all of the Collateral free and clear of all Liens solely in the event such failure to vest or delay in vesting is a result of an act or omission of the Borrower, the Seller or the Originator; (vi) any action or omission, not expressly authorized by the Facility Documents, by the Borrower, the Seller or any Affiliate of the Borrower or the Seller which has the effect of reducing or impairing the Collateral or the rights of the Administrative Agent or the Secured Parties with respect thereto; (vii) the failure to file, or any delay in filing, by the Borrower or the Seller of financing statements, continuation statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other Applicable Law with respect to any Collateral, whether at the time of any Advance or at any subsequent time; (viii) any dispute, claim, offset or defense (other than the discharge in bankruptcy of an Obligor) of an Obligor to the payment with respect to any Collateral (including a defense based on any Facility Receivable (or the Related Documents evidencing such Facility Receivable) not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from any related property; (ix) the commingling of Collections on the Collateral at any time with other funds; (x) any failure by the Borrower to give reasonably equivalent value to the applicable seller, in consideration for the transfer by such seller to the Borrower of any item of Collateral or any attempt by any Person to void or otherwise avoid any such transfer under any statutory provision or common law or equitable action, including any provision of the Bankruptcy Code; (xi) any Unmatured Event of Default or Event of Default; (xii) the use of proceeds of any Advance; (xiii) any attempt by any person to void or otherwise avoid any transfer of Facility Receivables to the Borrower under any statutory provision or common law or equitable action, including any provision of the Bankruptcy Code; (xiv) any and all civil penalties or fines assessed by OFAC against, and all reasonable costs and expenses (including attorneys’ fees and disbursements) incurred in connection with the defense thereof by the Administrative Agent or any Lender as a result of funding all or any portion of the advances or the acceptance of payments or of Collateral due under the Facility Document and (xv) the failure by the Borrower to pay when due any taxes for which the Borrower is liable, including sales, excise or personal property taxes payable in connection with the Collateral; provided, that the Borrower shall not be liable (A) for any Liability arising due to the deterioration in the credit quality or market value of the Facility Receivables or other Collateral hereunder or (B) to the extent any such Liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Party’s fraud, gross negligence or willful misconduct; provided, further, that in no event will the Borrower or the Parent have any liability for any special, exemplary, indirect, punitive or consequential damages (including but not limited to lost profits) in connection with or as a result of such Indemnified Party’s activities related to this Agreement or any Facility Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein; provided, further, that this Section 11.04(b) shall not apply to any payment hereunder which relates to taxes, levies, imposts, deductions, charges and withholdings, and all liabilities (including penalties, interest and expenses) with respect thereto except for taxes, levies, imposts, deductions, charges and withholdings and all liabilities (including penalties, interest and expenses) that arise from a non-tax claim.

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(c) All amounts due under this Section 11.04 shall be payable not later than twenty (20) Business Days after written demand therefor accompanied by documentation reasonably evidencing the related Liabilities subject to such demand.

Section 11.05 Execution in Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, but together they shall constitute one and the same instrument. Facsimile and .pdf signatures shall be deemed valid and binding to the same extent as the original and the parties affirmatively consent to the use thereof, with no such consent having been withdrawn. Each party agrees that this Agreement and any documents to be delivered in connection with this Agreement may be executed by means of an electronic signature. Any electronic signatures appearing on this Agreement and such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any electronic signature or faxed, scanned, or photocopied manual signature of any other party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof.

Section 11.06 Assignability.

(a) Each Lender may, with the consent of the Administrative Agent and the Borrower (in each case not to be unreasonably withheld or delayed), assign to an assignee all or a portion of its rights and obligations under this Agreement (including all or a portion of its outstanding Advances or interests therein owned by it, together with ratable portions of its Commitment); provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; provided further that:

(i) the Borrower’s consent to any such assignment shall not be required if the assignee is a Permitted Assignee with respect to such assignor; and

(ii) the Borrower’s consent to any such assignment pursuant to this Section 11.06(a) shall not be required if an Event of Default shall have occurred and is continuing (and has not been waived by the Lenders in accordance with Section 11.01).

(b) The parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance and the applicable tax forms required by Section 11.03(g). For the avoidance of doubt, the parties hereto acknowledge and agree that any Conduit Lender may assign its rights and obligations hereunder and under the Advances to any Program Support Provider or Conduit Assignee (and any such Program Support Provider or Conduit Assignee may assign its rights and obligations hereunder to any Conduit Lender hereunder), in each case, without the consent of the Borrower, the Administrative Agent or any other Person. Notwithstanding any other provision of this Section 11.06, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including rights to payment of principal and interest) under this Agreement to secure obligations of such Lender, including any pledge or security interest granted

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to a Federal Reserve Bank and, in the case of a Conduit Lender, to its program collateral agent or trustee, in each case, without notice to or consent of the Borrower or the Administrative Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder or substitute any such pledgee or grantee for such Lender as a party hereto.

(c) The Borrower may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent and the Majority Lenders.

(d) (i) Any Lender may, without the consent of the Borrower, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement; provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and (D) each Participant shall have agreed to be bound by this Section 11.06(c) and Sections 11.09(b), 11.15 and 11.19. Sections 2.09 and 11.03 shall apply to each Participant as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of this Section; provided that no Participant shall be entitled to any amount under Section 2.09 or 11.03 which is greater than the amount the related Lender would have been entitled to under any such Sections or provisions if the applicable participation had not occurred, except to the extent such entitlement to receive a greater payment results from a change in Applicable Law that occurs after the Participant acquired the applicable participation.

(ii) In the event that any Lender sells participations in any portion of its rights and obligations hereunder, such Lender as non-fiduciary agent for the Borrower shall maintain a register on which it enters the name of all Participants in the Advances held by it and the principal amount (and stated interest thereon) of the portion of the Advance which is the subject of the participation (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advance or its other obligations under this Agreement) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary to establish that such Commitment, Advance or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. Unless otherwise required by the IRS, any disclosure required by the foregoing sentence shall be made by the relevant Lender directly and solely to the IRS. An Advance may be participated in whole or in part only by registration of such participation on the Participant Register. Any participation of such Advance may be effected only by the registration of such participation on the Participant Register. The entries in the Participant Register shall be conclusive absent manifest error.

(e) The Administrative Agent, on behalf of and acting solely for this purpose as the non-fiduciary agent of the Borrower, shall maintain at its address specified in Section 11.02 or such other address as the Administrative Agent shall designate in writing to the Lenders, a copy of this Agreement and each signature page hereto and each Assignment and Acceptance delivered

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to and accepted by it and a register (the “Register”) for the recordation of the names and addresses of the Lenders and the aggregate outstanding principal amount of the Advances maintained by each Lender under this Agreement (and any stated interest thereon). No assignment shall be effective unless it has been recorded in the Register as provided in this Section 11.06(e). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender (in respect of such Lender’s Advances or Commitments only) at any reasonable time and from time to time upon reasonable prior notice. An Advance may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register and in accordance with this Section 11.06. This Section shall be construed so that the Advances are at all times maintained in “registered form” within the meanings of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).

(f) Notwithstanding anything to the contrary set forth herein or in any other Facility Document, each Lender hereunder, and each Participant, must at all times be a “qualified purchaser” as defined in the Investment Company Act (a “Qualified Purchaser”) and a “qualified institutional buyer” as defined in Rule 144A under the Securities Act (a “QIB”). Each Lender represents to the Borrower (i) on the date that it becomes a party to this Agreement (whether by being a signatory hereto or by entering into an Assignment and Acceptance) and (ii) on each date on which it makes an Advance hereunder, that it is a Qualified Purchaser and a QIB. Each Lender further agrees that it shall not assign, or grant any participations in, any of its Advances or its Commitment to any Person unless such Person is a Qualified Purchaser and a QIB.

Section 11.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

Section 11.08 Severability of Provisions. 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 affecting the validity or enforceability of such provision in any other jurisdiction.

Section 11.09 Confidentiality. Each Secured Party agrees to keep confidential all non-public information provided to it by the Borrower, the Seller or the Parent with respect to the Borrower, the Seller, or the Parent or any of their respective Affiliates, the Collateral or any other information furnished to any Secured Party pursuant to this Agreement or any other Facility Document (collectively, the “Borrower Information”); provided that nothing herein shall prevent any Secured Party from disclosing any Borrower Information (a) in connection with this Agreement and the other Facility Documents and not for any other purpose, (i) to any Secured Party or any Affiliate of a Secured Party, or (ii) any of their respective Affiliates, employees, officers, directors, agents, attorneys, consultants, accountants and other professional advisors (collectively, the “Secured Party Representatives”), it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Borrower Information,

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(b) subject to (x) an agreement to comply with the provisions of this Section (or other provisions at least as restrictive as this Section) or (y) in the case of any such recipient that is subject to a legal or professional (the “Advisors”) duty of confidentiality, being informed of the confidential nature of the Borrower Information, (i) to use the Borrower Information only in connection with this Agreement and the other Facility Documents and not for any other purpose, to any actual or bona fide prospective permitted assignees and Participants in any of the Secured Parties’ interests under or in connection with this Agreement and (ii) as reasonably required by any direct or indirect contractual counterparties or professional advisors thereto, to any swap or derivative transaction relating to the Borrower and its obligations, (c) to any Governmental Authority purporting to have jurisdiction over any Secured Party or any of its Affiliates or any Secured Party Representative (provided, that such Secured Party, shall, except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority, promptly notify the Borrower to the extent practicable and permitted by law, rule, regulation, judicial process, and governmental and regulatory authority (collectively, “Law”) to do so), (d) in response to any order of any court or other Governmental Authority or as may otherwise be required or ordered to be disclosed pursuant to any Applicable Law (provided, that such Secured Party shall notify the Borrower promptly thereof, except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising routine examination or regulatory authority) to the extent practicable and permitted by Law), (e) that is a matter of general public knowledge or that has heretofore been made available to the public by any Person other than any Secured Party or any Secured Party Representative, (f) in connection with the exercise of any remedy hereunder or under any other Facility Document, (g) was already lawfully known (without restriction on disclosure) to the Secured Party prior to the information being disclosed by the Borrower, the Seller or the Parent, as applicable, (h) has been rightfully furnished to the Secured Party without restriction on disclosure by a third person lawfully in possession thereof; (i) independently developed by the Secured Party or its representatives, (j) with the Borrower’s consent, (k) on a confidential basis, to any rating agency rating the Advances, or (l) with respect to any Conduit Lender (i) to any rating agency rating the CP of any Conduit Lender or a nationally recognized statistical rating organization in connection with any party’s compliance with Rule 17g-5 promulgated by the U.S. Securities and Exchange Commission, (ii) to any administrative agent, sub-administrative agent, administrator, sub-administrator, administrative trustee, sub-administrative trustee or any entity servicing in a similar capacity for any Conduit Lender and (iii) to any Program Support Provider (including any equity provider to the applicable Conduit Lender), any potential Program Support Provider, any assignee or participant or potential assignee or participant of any Program Support Provider, any program collateral agent or trustee for any Conduit Lender, any provider of credit protection to a Lender or any provider of a hedge for the benefit of a Lender, provided that with respect to the foregoing clauses (l)(i), (ii) and (iii) such recipient from such Conduit Lender is informed of the confidentiality thereof and agree to maintain such confidentiality on the same terms as set forth in this Section 11.09 and each Person shall be responsible for any breach of these section by its Secured Party Representatives and Advisors.

Section 11.10 Merger. This Agreement and the other Facility Documents executed by the Administrative Agent or the Lenders taken as a whole incorporate the entire agreement between the parties thereto concerning the subject matter thereof and such Facility Documents supersede any prior agreements among the parties relating to the subject matter thereof.

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Section 11.11 Survival. All representations and warranties made hereunder, in the other Facility Documents and in any certificate delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery of this Agreement and the making of the Advances hereunder. The agreements in Sections 2.04(e), 2.11, 7.02, 7.06(b), 11.03, 11.04, 11.09, 11.16, 11.18, 11.19, 11.20, 11.21, 11.22 and this Section 11.11 shall survive the termination of this Agreement in whole or in part and the payment in full of the principal of and interest on the Advances.

Section 11.12 Submission to Jurisdiction; Waivers; Etc. Each party hereto hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement or the other Facility Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and the appellate courts of any of them;

(b) consents that any such action or proceeding may be brought in any court described in Section 11.12(a) and waives to the fullest extent permitted by Applicable Law any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Section 11.02 or at such other address as may be permitted thereunder;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding arising out of or relating to this Agreement or any other Facility Document any special, exemplary, indirect, punitive or consequential damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement).

Section 11.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR FOR ANY COUNTERCLAIM THEREIN OR RELATING THERETO.

Section 11.14 Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11.02 (other than by email or facsimile). Nothing in this Agreement or any other Facility Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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Section 11.15 Waiver of Setoff. Each of the Borrower and the Seller hereby waives any right of setoff it may have or to which it may be entitled under this Agreement from time to time against any Lender or its assets.

Section 11.16 PATRIOT Act Notice. Each Lender and the Administrative Agent hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107 56 (signed into law on October 26, 2001)) (the “PATRIOT Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower in accordance with the PATRIOT Act. The Borrower shall provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested in writing by any Lender in order to assist such Lender in maintaining compliance with the PATRIOT Act.

Section 11.17 [Reserved].

Section 11.18 Non-Petition.

(a) The Seller, the Parent, the Administrative Agent and each Lender hereby agrees not to institute against, or join, cooperate with or encourage any other Person in instituting against, the Borrower any bankruptcy, reorganization, receivership, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under federal or state bankruptcy or similar laws until at least one year and one day, or if longer the applicable preference period then in effect plus one day, after the payment in full of the Advances and the termination of all Commitments.

(b) Each of the parties hereto hereby covenants and agrees with respect to each Conduit Lender that, prior to the date which is one year and one day (or, if longer, any applicable preference period plus one day) after the payment in full of all outstanding indebtedness of such Conduit Lender (or its related commercial paper issuer), it will not institute against or join any other Person in instituting against such Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. The foregoing shall not limit the rights of the Borrower, the Seller, the Parent, the Administrative Agent or the Lenders to file any claim in, or otherwise take any action with respect to, any insolvency proceeding instituted against any Conduit Lender by a Person other than the Borrower, the Seller, the Parent, the Administrative Agent or the Lenders, as applicable.

(c) The provisions of this Section 11.18 shall survive the termination of this Agreement.

Section 11.19 Third Party Beneficiary. The Servicer, the Account Bank and the Backup Servicer shall be an express third-party beneficiary of this Agreement with a right to enforce the provisions of Section 9.01 that inure to its benefit. No amendment or change adverse to the Servicer in Section 9.01 or any other section of this Agreement intended for the benefit of the Servicer, or that would result in an increase of the Servicer’s obligations or diminution of its rights under the Servicing Agreement or otherwise, shall be made without the prior written consent of the Servicer.

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Section 11.20 No Fiduciary Duty. The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this Section 11.20, the “Lenders”), may have economic interests that conflict with those of the Borrower, the Seller and the Parent (collectively, solely for purposes of this Section 11.20, the “Credit Parties”), their stockholders and/or their affiliates. Each Credit Party agrees that nothing in the Facility Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Credit Party, its stockholders or its affiliates, on the other. The Credit Parties acknowledge and agree that (i) the transactions contemplated by the Facility Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Administrative Agent and the Lenders, on the one hand, and the Credit Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) neither the Administrative Agent nor Lender has assumed an advisory or fiduciary responsibility in favor of any Credit Party, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether the Administrative Agent or any Lender has advised, is currently advising or will advise any Credit Party, its stockholders or its Affiliates on other matters) or any other obligation to any Credit Party except the obligations expressly set forth in the Facility Documents and (y) the Administrative Agent and each Lender is acting solely as principal and not as the agent or fiduciary of any Credit Party, its management, stockholders, creditors or any other Person. Each Credit Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Each Credit Party agrees that it will not claim that the Administrative Agent or any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Credit Party, in connection with such transaction or the process leading thereto.

Section 11.21 Excess Funds. Notwithstanding any provision contained in this Agreement to the contrary, other than in connection with the obligation to fund Borrowings in accordance herewith if such Conduit Lender has a Commitment hereunder, no Conduit Lender shall, nor shall be obligated to, pay any amount pursuant to this Agreement unless (i) such Conduit Lender has received funds which may be used to make such payment and which funds are not required to repay its CP when due and (ii) after giving effect to such payment, either (x) such Conduit Lender could issue CP to refinance all of its outstanding CP (assuming such outstanding CP matured at such time) in accordance with the program documents governing such Conduit Lender’s commercial paper program or (y) all of such Conduit Lender’s CP are paid in full. Any amount which a Conduit Lender does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or corporate obligation of such Conduit Lender for any such insufficiency unless and until such Conduit Lender satisfies the provisions of clauses (i) and (ii) above.

Section 11.22 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Facility Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Facility Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

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(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Facility Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.

Section 11.23 Risk Retention. The Seller represents, warrants, covenants and agrees that, at all times prior to the termination of this Agreement, except as otherwise authorized by each Affected Person that is subject to the Securitisation Regulations, on an ongoing basis, that:

(a) it will retain and hold a material net economic interest in the Facility Receivables in an amount not less than 5% of the aggregate nominal value of the Facility Receivables measured as of each Borrowing Date (the “Retained Interest”) in the form of a first loss position as referred to in paragraph (d) of Article 6(3) of each of the Securitisation Regulations by owning, initially, 100% of the Equity Interests of the Borrower, and will be entitled to any Collections remaining after the payment in full of each of the foregoing items in Section 9.01(a);

(b) it will not, and will not permit any of its Affiliates to, (i) change the manner or form in which it retains the Retained Interest or (ii) subject such Equity Interests or the Retained Interest to credit risk mitigation or any other hedge, or sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from the Retained Interest, in a manner which would be contrary to the Securitisation Regulations;

(c) it (i) was not established for, and does not operate for, the sole purpose of securitizing exposures, (ii) has assets, securities and other investments excluding the Retained Interest, and (iii) has the capacity to meet its general payment obligations through resources other than the Retained Interest;

(d) it will promptly, upon written request by the Administrative Agent (which may be in electronic form) and at the written direction of and on behalf of the Lenders, provide, or cause to be provided, such information as may be reasonably required by any Affected Person to satisfy its obligations under the Securitisation Regulations, but only if such information is in its possession or that of its Affiliates and to the extent it can provide that information without breaching a legal or contractual duty of confidentiality, and in each case, subject to the provisions of Section 11.09 hereof;

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(e) it will (i) promptly, and in any event within five (5) Business Days, notify, or cause to be notified, the Administrative Agent in the event that it fails to comply with paragraphs (a) and (b) above in any material way and (ii) promptly notify, or cause to be notified, the Administrative Agent of any material breach of any of its covenants or representations contained in this Section 11.23; and

(f) it will, in each Monthly Report, confirm and represent (i) that it continues to hold the Retained Interest on an on-going basis and (ii) that it has not entered into credit risk mitigation, short positions, any other hedges or transfers with respect to the Retained Interest except as would be permitted by the Securitisation Regulations.

Section 11.24 Amendment and Restatement.

This Agreement amends and restates the Existing Agreement as of the date hereof. This Agreement shall not effect a novation of any of the obligations of the parties to the Existing Agreement, but instead shall be merely a restatement and, when applicable, an amendment of the terms governing such obligations.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

COMPASS CONCIERGE SPV I, LLC, as Borrower
By:	/s/ Kristen Ankerbrandt
Name: Kristen Ankerbrandt
Title: Chief Financial Officer
COMPASS CONCIERGE, LLC, as Seller
By:	/s/ Kristen Ankerbrandt
Name: Kristen Ankerbrandt
Title: Treasurer

[Signature Page to Amended and Restated Revolving Credit and Security Agreement (Compass)]

BARCLAYS BANK PLC, as Administrative Agent and as a Lender
By:	/s/ John McCarthy
Name: John McCarthy
Title: Director

[Signature Page to Amended and Restated Revolving Credit and Security Agreement (Compass)]

SCHEDULE 1

COMMITMENTS AND PERCENTAGES

LENDER	COMMITMENT	PERCENTAGE
Barclays Bank PLC	$75,000,000.00	100%
TOTAL COMMITMENTS	$75,000,000.00	100%

APPENDIX A

Definitions

“Acceptance List” has the meaning specified in Section 2.1 of the Transfer Agreement.

“Accepted Collections Policies” means the servicing policies of the Servicer with respect to the servicing and administration of the Notable Receivables following the related Loan’s maturity date, which is in effect as of the date hereof and a current copy of which is attached as Exhibit A to the Servicing Agreement, as such policies may be amended, modified or supplemented from time to time in accordance with the terms of the Servicing Agreement.

“Accepted Servicing Policies” means the servicing policies of the Servicer with respect to the servicing and administration of the Notable Receivables prior to the related Loan’s maturity date, which is in effect as of the date hereof and a current copy of which is attached as Exhibit B to the Servicing Agreement, as such policies may be amended, modified or supplemented from time to time in accordance with the terms of the Servicing Agreement.

“Account Bank” means (i) JPMorgan Chase Bank, N.A. or (ii) another institution acceptable to the Administrative Agent in its reasonable discretion; provided that each Account Bank shall be required to have (a) a combined capital and surplus of at least $200,000,000, (b) an office within the United States and (c) a short-term rating of at least “P-1” by Moody’s, at least “A-1” by S&P and at least “F1” by Fitch and a long-term rating of at least “Baa1” by Moody’s, at least “BBB+” by S&P and at least “BBB (high)” by Fitch.

“Account Bank Fee” means the fee payable monthly by the Borrower to the Account Bank, if any, in respect of the maintenance of the Borrower Accounts.

“Account Control Agreement” means the Blocked Account Control Agreement, dated as of the Closing Date, among the Borrower, the Account Bank and the Administrative Agent establishing “control” within the meaning of the UCC over the Collection Account and the Reserve Account.

“Administrative Agent” has the meaning assigned to such term in the preamble to the Credit Agreement.

“Advance” means the advance of a loan by the Lenders to the Borrower pursuant to Article II.

“Advance Rate” means (a) with respect to any Eligible Receivable originated less than one hundred twenty-two (122) days prior to the related Borrowing Date, 78.0% or following the occurrence and during the continuance of a Level I Trigger Event, 73.0%, (b) with respect to any Eligible Receivable originated equal to or greater than one hundred twenty-two (122) days but less than three hundred five (305) days prior to the related Borrowing Date, 68.0% or following the occurrence and during the continuance of a Level I Trigger Event, 63.0%, (c) with respect to any Eligible Receivable originated equal to or greater than three hundred five (305) days prior to the related Borrowing Date but less than three hundred ninety-five (395) days prior to the related Borrowing Date, 58.0% or following the occurrence and during the continuance of a Level I

Trigger Event, 53.0%; or (d) notwithstanding the foregoing, with respect to any Eligible Receivable that has received an Approved Extension and/or an Approved Payment Plan Adjustment, 58.0%, or following the occurrence and during the continuance of a Level I Trigger Event, 53.0%. For the avoidance of doubt, any Facility Receivable (other than a Facility Receivable that received an Approved Extension and/or an Approved Payment Plan Adjustment) originated equal to or greater than three hundred ninety-five (395) days prior to any date of determination shall have an Advance Rate equal to 0.0% and shall not constitute an Eligible Receivable.

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

“Affected Person” means (i) each Lender and (ii) each Program Support Provider.

“Affiliate” means, in respect of a referenced Person, another Person (other than any natural person) Controlling, Controlled by or under common Control with such referenced Person, provided that a Person shall not be deemed to be an “Affiliate” of another Person solely because it is under the common ownership or control of the same financial sponsor or affiliate thereof as such Person (except if any such Person provides collateral under, guarantees or otherwise supports the obligations of the other such Person).

“Aggregate Discounted Principal Balance” means, when used with respect to all or a portion of the Facility Receivables, the sum of the Discounted Principal Balances of all or of such portion of such Facility Receivables.

“Agreement” has the meaning assigned to such term in the preamble.

“Amendment Effective Date” means July 29, 2021.

“Amendment Effective Date Certificate” means an Amendment Effective Date Certificate substantially in the form of Exhibit F.

“Amortization Date” means the earlier to occur of (i) the Scheduled Revolving Period Termination Date and (ii) an Early Amortization Event.

“Amortization Margin” has the meaning assigned to such term in the Fee Letter.

“Applicable Laws” means any action, code, consent decree, constitution, decree, directive, enactment, finding, law, injunction, binding interpretation, judgment, order, ordinance, proclamation, promulgation, regulation, requirement, rule, rule of law, settlement agreement, statute, or writ, of any Governmental Authority, or any particular section, part or provision thereof, including all Federal and state banking or securities laws, to which the Person in question is subject or by which it or any of its assets or properties are bound; provided, however, that such term shall also include the rules, requirements and regulations issued by credit card associations and the National Automated Clearing House Association, as applicable.

“Applicable Margin” has the meaning assigned to such term in the Fee Letter.

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“Approved Extension” means, with respect to any Facility Receivable, an extension granted by the Servicer to the date such Facility Receivable is fully due and payable; provided, that: (a) such extension is granted pursuant to and in accordance with the Concierge Capital Extensions and Payment Arrangements Policy, (b) the duration of such extension may not exceed one hundred eighty (180) days, (c) such extension cannot be granted to a Facility Receivable where the closing of the sale of the related Property has occurred and (d) the related Facility Receivable has not previously received an Approved Extension or an Approved Payment Plan Adjustment.

“Approved Payment Plan Adjustment” means, with respect to any Facility Receivable, an alternative payment arrangement granted by the Servicer; provided, that: (a) such alternative payment arrangement is granted pursuant to and in accordance with the Concierge Capital Extensions and Payment Arrangements Policy, (b) such alternative payment arrangement does not result in an extension which duration exceeds one hundred eighty (180) days, (c) such alternative payment arrangement cannot be granted to a Facility Receivable where the closing of the sale of the related Property has occurred, (d) the related Facility Receivable has not previously received an Approved Extension, unless such Approved Extension, which taken in the aggregate with such alternative payment arrangement, does not extend the maturity of the related Facility Receivable by more than one hundred and eighty (180) days and (e) the related Facility Receivable has not previously received an Approved Payment Plan Adjustment.

“Assignment and Acceptance” means an Assignment and Acceptance in substantially the form of Exhibit C to the Credit Agreement, entered into by a Lender, an assignee, the Administrative Agent and, if applicable, the Borrower.

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Accrual Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.

“Backup Servicer” means Vervent, Inc., in its capacity as backup servicer under the Backup Servicing Agreement, or any other Person acting as a backup servicer that has been approved in writing by the Administrative Agent.

“Backup Servicing Agreement” means that certain Amended and Restated Backup Servicing Agreement, dated as of the date hereof, among the Backup Servicer, the Borrower, the Servicer and the Administrative Agent.

“Backup Servicing Fee” means the fees payable monthly by the Borrower to the Backup Servicer pursuant to the terms of the Backup Servicing Agreement.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the

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United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

“Bankruptcy Code” means the United States Bankruptcy Code, as amended.

“Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 0.50% and (c) the LIBOR Rate for a one month Interest Accrual Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided, that for the purpose of this definition, the LIBOR Rate for any day shall be based on the LIBOR Screen Rate at approximately 11:00 a.m. London time on such day. Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or the LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the LIBOR Rate, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 2.17 of the Credit Agreement (for the avoidance of doubt, only until any amendment has become effective pursuant to Section 2.17 of the Credit Agreement), then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of the Credit Agreement.

“Benchmark” means, initially, the LIBOR Base Rate; provided that if a replacement of the Benchmark has occurred pursuant to the Section titled “Alternate Rate of Interest”, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.

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“Benchmark Replacement” means, for any Available Tenor: (1) For purposes of clause (a), the first alternative set forth below that can be determined by the Administrative Agent: (a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points), or (b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of the LIBOR Base Rate with a SOFR-based rate having approximately the same length as the interest payment period specified in clause (a); and (2) For purposes of clause (b), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Administrative Agent and the Seller (on behalf of the Borrower) as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated or bilateral credit facilities at such time (as then applicable to this Facility);

provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement and the other Facility Documents.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definitions of “Base Rate,” “Business Day,” “Interest Accrual Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent, decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent, decides is reasonably necessary in connection with the administration of this Agreement and the other Facility Documents).

“Benchmark Transition Event” means, with respect to any then-current Benchmark other than the LIBOR Base Rate, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.

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“Borrower” has the meaning assigned to such term in the preamble to the Credit Agreement.

“Borrower Account” means each of the Collection Account and the Reserve Account.

“Borrowing” has the meaning assigned to such term in Section 2.01 of the Credit Agreement.

“Borrowing Base” means, as of any date of determination and, with respect to any Borrowing Date, as calculated after giving effect to any Notable Receivables to be acquired by the Seller pursuant to the terms of the Transfer Agreement and subsequently sold by the Seller to the Borrower pursuant to the terms of the Purchase Agreement on such Borrowing Date, the lesser of (a) the Commitment Amount as of such date and (b) the Net Eligible Pool Balance multiplied by the Weighted Average Advance Rate.

“Borrowing Base Calculation Date” means, with respect to the submission of any Borrowing Base Certificate, the applicable date identified on the Borrowing Base Certificate and used as the cut-off date for the calculation of the applicable Discounted Principal Balance of all Facility Receivables, which date shall be the end of business on the Business Day immediately preceding the date of such Borrowing Base Certificate.

“Borrowing Base Certificate” means a statement in substantially the form attached to the form of Request for Advance attached to the Credit Agreement as Exhibit A, as such form of Borrowing Base Certificate may be modified from time to time by mutual agreement of the Borrower and the Administrative Agent.

“Borrowing Base Test” means a test that will be satisfied at any time if the aggregate principal amount of Advances outstanding as of such date is less than or equal to the Borrowing Base at such time.

“Borrowing Date” means the date of a Borrowing.

“Business Day” means any day other than a Saturday or Sunday, provided that the following shall not constitute Business Days (i) days on which banks are authorized or required to close in the States of New York and (ii) if the applicable Business Day relates to the advance or continuation of, or conversion into, or payment of an Advance bearing interest at the LIBOR Rate or the determination of the LIBOR Rate, days on which banks are dealing in U.S. Dollar deposits in the interbank eurodollar market in London, England are authorized or required to be closed.

“Cash” means Dollars that are unrestricted on the day in question.

“Change of Control” means, at any time, (a) the Seller fails to own 100% of the Equity Interests of the Borrower at any time free and clear of any Lien (other than the “all assets” security interest granted to the Administrative Agent), (b) Compass Concierge Holdings, LLC fails to own 100% of the Equity Interests of the Seller, (c) the Parent fails to own 100% of the Equity Interests in Compass Concierge Holdings, LLC or (d) the occurrence of (i) a merger or consolidation of the Parent into another Person where the Parent is not the surviving entity, (ii) an event by which any Person succeeds to all of substantially all of the properties and assets of the Parent or (iii) the

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acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of 51% or more of the outstanding capital stock or other equity interests of the Parent on a fully diluted basis; provided, however, that a Permitted IPO shall not constitute a Change of Control.

“Charged-Off Receivable” shall mean a Facility Receivable that has been charged-off or deemed non-collectible by the Borrower or the Servicer consistent with Accepted Servicing Policies.

“Closing Date” means July 31, 2020.

“Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit F.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.

“Collateral” has the meaning assigned to such term in Section 7.01(a) of the Credit Agreement.

“Collection Account” means any account established pursuant to Section 8.02 of the Credit Agreement at the Account Bank, in the name of the Borrower, which account has been designated as the Collection Account and is subject to the Account Control Agreement.

“Collection Period” means (i) with respect to the first Payment Date occurring after the Closing Date, the period beginning on the Closing Date and ending on the last day of the calendar month immediately preceding such first Payment Date, and (ii) with respect to any other Payment Date or other date, the most recently ended calendar month.

“Collections” means all cash collections, distributions, payments and other amounts received by the Borrower from any Person in respect of any Facility Receivables from and including the initial Cutoff Date with respect to such Facility Receivable, including all principal, interest, if any, and repurchase proceeds payable to the Borrower under or in connection with any such Facility Receivables and net liquidation proceeds collected by the Servicer from any sale or disposition of any such Facility Receivables and any Loan Proceeds Returns.

“Collections Yield” means, as of any Determination Date, for the Collection Period then ended, an amount equal to (i) the sum of (a) all Collections received during such Collection Period (excluding Collections constituting Loan Proceeds Returns), minus (b) the Principal Balance of any Facility Receivables that became Defaulted Receivables during such Collection Period, minus (ii) the Principal Paydown for such Collection Period.

“Commitment” means, as to each Lender, the obligation of such Lender to make, on and subject to the terms and conditions hereof, Advances to the Borrower pursuant to Section 2.01 of the Credit Agreement in an aggregate principal amount at any one time outstanding for such Lender up to but not exceeding the amount set forth opposite the name of such Lender on Schedule 1 to the Credit Agreement or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable, as such amount may be reduced from time to time pursuant to Section 2.06 of the Credit Agreement or increased or reduced from time to time pursuant to assignments effected in accordance with Section 11.06(a) of the Credit Agreement.

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“Commitment Amount” means (a) on or prior to the Commitment Termination Date, the aggregate amount of all Commitments of all Lenders set forth on Schedule 1 to the Credit Agreement (as such amount may be reduced from time to time pursuant to Section 2.06 of the Credit Agreement) and (b) following the Commitment Termination Date, zero.

“Commitment Termination Date” means the Amortization Date; provided, that, if the Commitment Termination Date would otherwise not be a Business Day, then the Commitment Termination Date shall be the immediately preceding Business Day.

“Compass Qualified Receivable” means, as of any Determination Date, any Notable Receivable which would have met all the criteria of an Eligible Receivable set forth in clauses (a) through (bb) of the definition thereof (other than the criteria set forth in clauses (e)(ii), (e)(iii) and as otherwise set forth in Section 4.1(m)(iii)(A) of the Transfer Agreement) as of the related Receivable Origination Date. For the avoidance of doubt, a Compass Qualified Receivable need not be sold to the Seller pursuant to the terms of the Transfer Agreement and/or subsequently sold by the Seller pursuant to the terms of the Purchase Agreement; only certain Compass Qualified Receivables chosen for purchase by the Seller from the Originator meeting the definition of “Eligible Receivable” shall be sold to the Borrower by the Seller.

“Concierge Capital Extensions and Payment Arrangements Policy” means the portion of the Accepted Collections Policies relating to Loan extensions or alternative payment arrangements.

“Concierge Capital Program” means the program whereby Notable issues loans to certain sellers of residential real estate on the terms set forth in the First Amended and Restated Strategic Services Agreement, dated as of July 31, 2020, by and between the Seller and Notable, as amended, restated or otherwise modified.

“Concierge Capital Underwriting Policy” shall mean, with respect to each Notable Receivable, Notable’s minimum credit criteria and loan conditions used to originate such Loan and the related Notable Receivable through Notable’s platform, a copy or copies of which have been previously provided to the Administrative Agent and a current copy of which is attached to the Credit Agreement as Exhibit D, as such criteria may be amended, modified or supplemented from time to time in accordance with the terms of the Credit Agreement.

“Conduit Assignee” means, with respect to a Conduit Lender, any special purpose entity that finances its activities directly or indirectly through asset backed commercial paper and (x) is administered by a Lender in such Conduit Lender’s Facility Group or any Affiliate of such Lender or (y) has entered into a Program Support Agreement with a Lender which is a member of such Conduit Lender’s Facility Group or an Affiliate of such a Lender, and in either case is designated by such Conduit Lender’s conduit administrator from time to time to accept an assignment from such Conduit Lender of its interest in the outstanding Advances; provided, however, that with respect to any Conduit Lender with a Commitment under the Credit Agreement, such Conduit Assignee must be an assignee with respect to such Commitment.

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“Conduit Lender” means any commercial paper conduit administered by the Administrative Agent or an Affiliate of the Administrative Agent, and any of its successors and assigns that are special-purpose entities that become parties to the Credit Agreement and which obtain funds to purchase financial assets (directly or indirectly) from the issuance of CP.

“Constituent Documents” means, in respect of any Person, the trust agreement, the limited liability company agreement, operating agreement, partnership agreement, joint venture agreement or other applicable agreement of formation or organization (or equivalent or comparable constituent documents) and other organizational documents and by-laws and any certificate of trust, certificate of incorporation, certificate or articles of formation or organization, certificate of limited partnership and other agreement, similar instrument filed or made in connection with its formation or organization, in each case, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Control” means the direct or indirect possession of the power to direct or cause the direction of the management or policies of a Person, whether through ownership, by contract, arrangement or understanding, or otherwise. “Controlled” and “Controlling” have the meaning correlative thereto.

“CP” means the commercial paper notes issued from time to time by means of which a Conduit Lender (directly or indirectly) obtains financing.

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“CP Rate” means

(a) for any Lender in the Facility Group with Barclays Bank PLC, for any Interest Accrual Period, the per annum rate calculated to yield the “weighted average cost” (as defined below) for such Interest Accrual Period (or portion thereof) in respect of all CP issued by Sheffield Receivables Company LLC (“Sheffield”) then outstanding, as determined by its conduit administrator; provided, however, that if any component of such rate is a discount rate, in calculating the CP for such Interest Accrual Period (or portion thereof) the rate resulting from converting such discount rate to an interest-bearing equivalent rate per annum shall be used in calculating such component. As used in this definition, “weighted average cost” for any Interest Accrual Period (or portion thereof) means the sum of (i) the actual interest accrued during such Interest Accrual Period (or portion thereof) on outstanding CP issued by Sheffield, (ii) the commissions of placement agents and dealers in respect of such CP (not to exceed five basis points per annum on the amount of Advances made by such Conduit Lender that are funded by the issuance of CP) and (iii) other borrowings by Sheffield (as determined by its conduit administrator), including to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market; and

(b) for any other Conduit Lender, for the portion of the Advances funded by such Conduit Lender directly or indirectly with CP, the rate equivalent to the weighted average cost (as determined by its conduit agent and which shall include dealer fees (not to exceed five basis points per annum on the amount of Advances made by such Conduit Lender that are funded by the issuance of CP), incremental carrying costs incurred with respect to CP maturing on dates other than those on which corresponding funds are received by the Conduit Lender, other borrowings by the Conduit Lender to fund any Advances under the Credit Agreement or its related commercial paper issuer if the Conduit Lender does not itself issue commercial paper (other than under any Program Support Agreement), actual costs of swapping foreign currencies into Dollars to the extent the CP is issued in a market outside the U.S. and any other costs associated with the issuance of CP) of or related to the issuance of CP that is allocated, in whole or in part, by the Conduit Lender or its conduit agent to fund or maintain such portion of the Advances (and which may be also allocated in part to the funding of other assets of the Conduit Lender); provided, however, that if the rate (or rates) is a discount rate, then the rate (or, if more than one rate, the weighted average of the rates) shall be the rate resulting from converting such discount rate (or rates) to an interest-bearing equivalent rate per annum.

(c) For the avoidance of doubt, the CP Rate may not be less than 0.00%.

“Credit Agreement” means, the Amended and Restated Revolving Credit and Security Agreement, dated as of the date hereof, among the Borrower, the Seller, the Administrative Agent and each of the Lenders from time to time party thereto.

“Cutoff Date” has the meaning assigned to such term in the Purchase Agreement.

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for bilateral or syndicated business loans (as then applicable to this Facility); provided, that if the Administrative Agent decides in its reasonable discretion that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.

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“Data File” means the related list of Facility Receivables in an electronic file, in a *.CSV or other computer readable format reasonably acceptable to the Administrative Agent, containing the information described on Schedule 1 attached to this Appendix A to the Credit Agreement with respect to the related Facility Receivables.

“Debtor Relief Law” shall mean, collectively, the Bankruptcy Code and all other United States federal, State or foreign applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws from time to time in effect affecting the rights of creditors generally, as amended from time to time.

“Defaulted Receivable” means, as of any date of determination, a Compass Qualified Receivable or a Facility Receivable, as applicable, (a) for which the related Obligor is more than one hundred and eighty (180) calendar days past due on all or any portion of any payment required to be made, (1) for a Compass Qualified Receivable or a Facility Receivable, as applicable, that is not subject to an Approved Extension or Approved Payment Plan Adjustment, pursuant to the original terms of a Loan Agreement or (2) for a Compass Qualified Receivable or a Facility Receivable, as applicable, that is subject to an Approved Extension or Approved Payment Plan Adjustment, pursuant to the terms an Approved Extension or Approved Payment Plan Adjustment, in an amount greater than $100.00, (b) for which the related Obligor is deceased or has become the subject of a proceeding under a Debtor Relief Law and the Borrower or the Servicer has actual knowledge of such occurrence or proceeding or (c) which constitutes a Charged-Off Receivable and has an outstanding principal balance of more than $100.00; provided, that with respect to a Compass Qualified Receivable or a Facility Receivable, as applicable, which becomes fully due and payable upon the occurrence of (i) clause (z)(ii) of the Eligible Receivable definition, such one hundred eighty (180) calendar day period shall begin on the date the Servicer receives notice from the Seller, the agent or the Obligor of such expiration or cancellation and a replacement Exclusive Listing Agreement is not re-executed within the required time period or, (ii) clause (z)(iii) of the Eligible Receivable definition, such one hundred eighty (180) calendar day period shall begin one hundred twenty (120) days following the date the Servicer receives notification from the Seller, the agent or the Obligor of the cancellation of the related Exclusive Listing Agreement by an Affiliate of the Seller (iii) clause (z)(iv) of the Eligible Receivable definition, such period of one hundred eighty (180) calendar days shall exclude any Approved Extensions and/or Approved Payment Plan Adjustment.

“Defaulting Lender” means, at any time, any Lender that (a) has failed for one (1) or more Business Days after a Borrowing Date to fund its portion of an Advance required pursuant to the terms of the Credit Agreement (other than failures to fund as a result of a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Borrowing Date), (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations under the Credit Agreement, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund an Advance under the Credit Agreement and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable

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default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within five (5) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations under the Credit Agreement (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (d) has, or has a direct or indirect parent company that has voluntarily or involuntarily, (i) become the subject of a proceeding under the Bankruptcy Code or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdiction, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgment or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(b) of the Credit Agreement) upon delivery of written notice of such determination to the Borrower and each Lender.

“Delayed Amount” has the meaning assigned to that term in Section 2.02(e) of the Credit Agreement.

“Delayed Funding Date” has the meaning assigned to that term in Section 2.02(e) of the Credit Agreement.

“Delayed Funding Notice” has the meaning assigned to that term in Section 2.02(e) of the Credit Agreement.

“Delayed Funding Notice Date” has the meaning assigned to that term in Section 2.02(e) of the Credit Agreement.

“Delaying Lender” has the meaning assigned to that term in Section 2.02(e) of the Credit Agreement.

“Delinquent Receivable” means, as of any date of determination, a Compass Qualified Receivable or a Facility Receivable, as applicable (other than any Defaulted Receivable), for which the related Obligor is more than sixty (60) calendar days past due on all or any portion of any payment required to be made, (1) for a Compass Qualified Receivable or a Facility Receivable, as applicable, that is not subject to an Approved Extension or Approved Payment Plan Adjustment, pursuant to the original terms of a Loan Agreement or (2) for a Compass Qualified Receivable or a Facility Receivable, as applicable, that is subject to an Approved Extension or Approved

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Payment Plan Adjustment, in accordance with and as required by the terms of an Approved Extension or Approved Payment Plan Adjustment, in an amount greater than $100.00; provided, that with respect to a Compass Qualified Receivable or a Facility Receivable, as applicable, which becomes fully due and payable upon the occurrence of (i) clause (z)(ii) of the Eligible Receivable definition, such sixty (60) calendar day period shall begin on the date the Servicer receives notice from the Seller, the agent or the Obligor of such expiration or cancellation and a replacement Exclusive Listing Agreement is not re-executed within the required time period, (ii) clause (z)(iii) of the Eligible Receivable definition, such sixty (60) calendar day period shall begin one hundred twenty (120) days following the date the Servicer receives notification from the Seller, the agent or the Obligor of the cancellation of the related Exclusive Listing Agreement by an Affiliate of the Seller, or (iii) clause (z)(iv) of the Eligible Receivable definition, such sixty (60) calendar day period shall exclude any Approved Extensions and/or Approved Payment Plan Adjustment.

“Determination Date” means the last day of each Collection Period.

“Discount Rate” means an annual rate equal to 5.00%.

“Discounted Principal Balance” means, as of any date of determination and with respect to a Facility Receivable, the present value of the Principal Balance of such Facility Receivable, discounted using the Discount Rate and the number of months remaining until the maturity of such Facility Receivable. For the purposes of this calculation, the number of months remaining until maturity means the greater of (i) 1, and (ii) the number of days from any date of determination to the 1-year anniversary of the origination of such Facility Receivable, divided by 30, and rounded to the nearest integer.

“Dollars” and “$” mean lawful money of the United States.

“Early Amortization Event” means, as of any date of determination, the occurrence and continuance of any of the following:

(a) (i) a default by the Borrower in the payment, when due and payable, of any interest or principal (including any mandatory prepayment under Section 2.05(b) of the Credit Agreement) or (ii) the Borrower, the Seller or the Parent, as applicable, shall fail to make any other payment, transfer or deposit (unless waived by the Administrative Agent) on the date first required of such party under the Facility Documents and, in each case, such default or failure shall remain uncured for two (2) Business Days following receipt of written notice by the Borrower, the Seller or the Parent(which may be by email) of such default or failure from the Administrative Agent;

(b) the occurrence of any Level II Trigger Event shall occur;

(c) as of the end of any fiscal quarter commencing with the fiscal quarter ending September 30, 2020, the aggregate consolidated Tangible Net Worth of the Parent and all of its consolidated Subsidiaries shall be less than the sum of (i) $175,000,000 and (ii) the product of 50.0% and the aggregate proceeds from any equity issued by the Parent on or after the Closing Date, as determined by the Parent in accordance with GAAP and as reported on each Monthly Report as of the end of the applicable fiscal quarter;

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(d) as of the end of any fiscal quarter commencing with the fiscal quarter ending September 30, 2020, the Parent and its consolidated Subsidiaries shall have a ratio of Total Liabilities to Tangible Net Worth of more than 4 to 1, as determined by the Parent in accordance with GAAP and as reported on each Monthly Report as of the end of the applicable fiscal quarter;

(e) (i) as of the end of any fiscal month (other than the last month of any fiscal quarter) commencing with the fiscal month ending on September 30, 2020, the Parent and its consolidated Subsidiaries shall fail to maintain Liquidity in an amount not less than $50,000,000, which calculation shall not consider certain reconciling items and therefore not be in accordance with GAAP and as reported on each Monthly Report as of the end of the applicable calendar month and (ii) as of the end of any fiscal quarter commencing with the fiscal quarter ending on September 30, 2020, the Parent and its consolidated Subsidiaries shall fail to maintain Liquidity in an amount not less than $50,000,000, as determined by the Parent in accordance with GAAP and as reported on each Monthly Report as of the end of the applicable fiscal quarter;

(f) the occurrence of a Material Adverse Effect;

(g) the Borrowing Base Test is not satisfied and such condition is not cured in the manner specified and within the time period set forth in Section 2.05(b) of the Credit Agreement;

(h) any event that constitutes a Servicer Event of Default shall have occurred and not been waived by the Administrative Agent in accordance with the terms of the Servicing Agreement; and

(i) the occurrence of an Event of Default.

“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders.

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“Early Opt-in Election” means the occurrence of all of the following:

(a) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated bilateral or syndicated credit facilities (as then-applicable to this Facility) that at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such bilateral or syndicated credit facilities (are identified in such notice and are publicly available for review); and

(b) the joint election by the Administrative Agent and the Seller (on behalf of the Borrower) to trigger a fallback from the LIBOR Base Rate and the provision by the Administrative Agent of written notice of such election to the Lenders.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Investments” means any book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence:

(a) direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America; provided, that obligations of, or guaranteed by, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association shall be Eligible Investments only if, at the time of investment, they have a rating from each of the Rating Agencies in the highest investment category granted thereby;

(b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any State (or any domestic branch of a foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities (including depository receipts issued by any such institution or trust company as custodian with respect to any obligation referred to in clause (a) above or portion of such obligation for the benefit of the holders of such depository receipts); provided, that at the time of the investment or contractual commitment to invest therein

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(which shall be deemed to be made again each time funds are reinvested following each settlement date), the commercial paper or other short-term senior unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby;

(c) non-extendible commercial paper having, at the time of the investment, a rating from each of the Rating Agencies then rating that commercial paper in the highest investment category granted thereby;

(d) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Administrative Agent, the applicable Account Bank or any of its Affiliates is investment manager or advisor);

(e) bankers’ acceptances issued by any depository institution or trust company referred to in clause (b) above; and

(f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof, the obligations of which are backed by the full faith and credit of the United States of America, in each case entered into with a depository institution or trust company (acting as principal) described in clause (b) above.

For purposes of the definition of “Eligible Investments,” the phrase “highest investment category” means (i) in the case of Fitch, “AAA” for long-term investments (or the equivalent) and “F-1” for short-term investments (or the equivalent), (ii) in the case of Moody’s, “Aaa” for long-term investments and “Prime-1” for short-term investments and (iii) in the case of S&P, “AAA” for long-term investments and “A-1” for short-term investments. A proposed investment not rated by Fitch but rated in the highest investment category by Moody’s and S&P shall be considered to be rated by each of the Rating Agencies in the highest investment category granted thereby. In the event the rating(s) of an Eligible Investment falls below the applicable rating(s) set forth herein, the Seller shall promptly (but in no event longer than the earlier of (x) the maturity date of such Eligible Investment and (y) 60 days from the time of such downgrade) replace such investment, at no cost to the Borrower, with an Eligible Investment which has the required ratings.

“Eligible Pool Balance” means, on any date, the Aggregate Discounted Principal Balance of all of the Eligible Receivables on such date.

“Eligible Receivable” means, as of any date of determination, a Facility Receivable that meets each of the following criteria (unless otherwise indicated below):

(a) was originated in accordance with, and complies with, all material requirements of Applicable Law in effect as of the date of such origination, and has been serviced in compliance with all material requirements of Applicable Law and if serviced following the Closing Date, in compliance with the Accepted Servicing Policies and Accepted Collection Policies; it being agreed and understood that a requirement of Applicable Law will be considered to be material if the failure to comply with such requirements would have a material adverse effect upon the validity, enforceability or collectability of the obligations of the Obligor under the related Loan;

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(b) (i) such Facility Receivable is not subject to, nor has there been asserted, any litigation, any arbitration or any right of rescission, set off, counterclaim or other defense of the related Obligor and (ii) to the knowledge of the Originator as of the Receivable Origination Date, the related Obligor is not subject to any proceedings under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect;

(c) with respect to any Facility Receivable whose related Loan was originated prior to the Closing Date where the related Obligor had a FICO Score of less than 820 on the date such Facility Receivable was originated, the Servicer has independently verified that the actual Property Debt is no greater than 115% of the Property Debt stated by the related Obligor in the application for such Facility Receivable. For purposes of making such independent verification, the Servicer shall use credit reports, lien reports and/or property records, as of the Receivable Origination Date and as available;

(d) with respect to any Facility Receivable whose related Loan was originated following the Closing Date where the related Obligor had a FICO Score of less than 750 on the date such Facility Receivable was originated, either (i) the Servicer has independently verified that the Property Debt is no greater than 110% of the Property Debt stated by the related Obligor in the application for such Facility Receivable or (ii) if the Servicer has independently verified that the Property Debt is greater than 110% of the Property Debt stated by the related Obligor in the application for such Facility Receivable, the Servicer has otherwise determined that the Obligor is eligible for the Loan pursuant to the Concierge Capital Underwriting Policy. For purposes of making such independent verification, the Servicer shall use credit reports, lien reports and/or property records, as of the Receivable Origination Date and as available. In the event no lien report or property record is available, the Servicer may rely upon a written attestation from the Obligor;

(e) (i) such Facility Receivable has been originated by the Originator in accordance with the Concierge Capital Underwriting Policy if originated following the Closing Date, (ii) the sale, transfer or assignment of such Facility Receivable by the Originator to the Seller pursuant to the terms of the Transfer Agreement does not contravene or conflict in any material respect with any Applicable Law or any contractual or other restriction, limitation or encumbrance, and the sale, transfer or assignment of such Facility Receivable pursuant to the Transfer Agreement does not require the consent of the related Obligor and (iii) such Facility Receivable has been acquired by the Seller from the Originator free and clear of any lien or adverse claim (other than Permitted Liens);

(f) at the time of the sale, transfer or assignment of such Facility Receivable from the Seller to the Borrower pursuant to the terms of the Purchase Agreement, (i) the Seller was the sole owner thereof and had good and marketable title thereto, free and clear of any lien (other than Permitted Liens and liens being released simultaneously with such sale, transfer and assignment) and, immediately following the sale and transfer thereof from the Seller, the Borrower shall be the sole owner thereof and have good and marketable title thereto, free and clear of any lien (other than Permitted Liens) or adverse claim, (ii) the representations and warranties of the Seller with respect to such Facility Receivable in the Purchase Agreement were true and correct in all material respects when made thereunder and (iii) such Facility Receivable was sold, transferred or assigned to the Borrower by the Seller in accordance with the terms of the Purchase Agreement;

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(g) such Facility Receivable represents a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor, in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability;

(h) such Facility Receivable is not evidenced by any “instrument,” “security” or “chattel paper” (in each case, as defined in the UCC as then in effect in the State of Delaware and any other state where the filing of a financing statement is required to perfect the Borrower’s interest in the Facility Receivable and the proceeds thereof);

(i) with respect to which all material consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority required to be obtained, effected or given by the Originator or the Servicer in connection with the creation or the execution, delivery and performance of such Facility Receivable and servicing of such Facility Receivable, or by the Seller or the Borrower in connection with its ownership of such Facility Receivable have been duly obtained, effected or given and are in full force and effect; it being agreed and understood that (for the avoidance of doubt) any such required consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority will be considered to be material if the failure to obtain such consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority would be reasonably expected to have a material adverse effect upon the value, enforceability or collectability of the obligations of the Obligor under such Facility Receivable;

(j) constitutes a “payment intangible,” “general intangible” or “account” (in each case, as defined in the UCC as then in effect in the State of Delaware and any other state where the filing of a financing statement is required to perfect the Borrower’s interest in the Facility Receivable and the proceeds thereof);

(k) is denominated and payable in Dollars and is payable in any state or territory of the United States;

(l) is an obligation of an Obligor that, as of the Receivable Origination Date, (i) had a residential address within the United States or a U.S. territory, or a U.S. military mailing address, (ii) has a U.S. social security number and (iii) is not a Governmental Authority;

(m) such Facility Receivable is not a Delinquent Receivable;

(n) such Facility Receivable is not a Defaulted Receivable;

(o) such Facility Receivable complies with the Underwriting Criteria set forth on Schedule 2 to this Appendix A to the Credit Agreement;

(p) (i) is not contingent in any respect for any reason and there are no conditions precedent to the enforceability or validity of such Facility Receivable that have not been satisfied or waived (for the avoidance of doubt, the potential for a reduction of the Principal Balance based

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upon disbursement to the Obligor of less than the full amount of the related Loan shall not be a contingency or condition precedent) and (ii) has not been satisfied, subordinated or rescinded and no right of rescission, setoff, counterclaim or defense has been asserted by the Obligor or, to the Borrower’s actual knowledge, overtly threatened in writing with respect to such Facility Receivable;

(q) it is not a Negative Legal Development Receivable;

(r) to the Borrower’s actual knowledge, such Facility Receivable is not evidenced by a judgment and has not been reduced to judgment;

(s) to the Borrower’s actual knowledge, no fraud, with respect to such Facility Receivable (and each Related Document evidencing such Facility Receivable) has taken place on the part of any Person, including the related Obligor or any other party involved in the origination or purchase of the Facility Receivable to affect the Facility Receivable in any material respect;

(t) no instrument of release or waiver has been executed in connection with such Facility Receivable or any Related Document evidencing such Facility Receivable, and the Obligor has not been released from its obligations under such Facility Receivable in whole, or in part

(u) such Facility Receivable is not a Modified Receivable;

(v) the Related Documents evidencing such Facility Receivable are being held in accordance with the Servicing Agreement;

(w) such Facility Receivable does not constitute a renewal or extension of any Ineligible Receivable;

(x) such Facility Receivable is not a revolving line of credit or similar facility;

(y) no other Facility Receivables relating to the related Loan (i) have been sold by the Originator to a Person other than the Seller pursuant to the terms of the Transfer Agreement and (ii) have been sold by the Seller to a Person other than the Borrower pursuant to the terms of the Purchase Agreement;

(z) pursuant to the terms of the related Loan Agreement, and absent the enactment of any contravening Applicable Law, such Facility Receivable is fully due and payable on the earliest to occur of (i) the closing of the sale of the related Property, (ii) expiration or cancellation by the Obligor of his or her related Exclusive Listing Agreement and failure to re-execute another Exclusive Listing Agreement within ten (10) Business Days, (iii) the date that is one hundred twenty (120) days following the cancellation of the related Exclusive Listing Agreement by an Affiliate of Seller and (iv) the date that is no more than twelve (12) months from the initial disbursement of the Facility Receivable;

(aa) pursuant to the terms of the related Loan Agreement, the related Obligor agreed that such Obligor intends to use the proceeds of the related Loan for the purpose of making certain improvements to the related Property in order to maximize its value prior to sale; and

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(bb) no Receivable Subsequent Draw Amounts relating to such Facility Receivable (i) have been sold by the Originator to a Person other than the Seller pursuant to the terms of the Transfer Agreement and (ii) have been sold by the Seller to a Person other than the Borrower pursuant to the terms of the Purchase Agreement.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the thirty (30) day notice requirement is waived); (b) the failure with respect to any Plan to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA); (c) the filing pursuant to Section 412(c) of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Code or Section 303 of ERISA); (e) the incurrence by the Borrower or any member of its ERISA Group of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) (i) the receipt by the Borrower or any member of its ERISA Group from the PBGC of a notice of determination that the PBGC intends to seek termination of any Plan or to have a trustee appointed for any Plan, or (ii) the filing by the Borrower or any member of its ERISA Group of a notice of intent to terminate any Plan; (g) the incurrence by the Borrower or any member of its ERISA Group of any liability (i) with respect to a Plan pursuant to Sections 4063 and 4064 of ERISA, (ii) with respect to a facility closing pursuant to Section 4062(e) of ERISA, or (iii) with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by the Borrower or any member of its ERISA Group of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, in endangered status or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA or is or is expected to be insolvent or in reorganization, within the meaning of Title IV of ERISA; or (i) the failure of the Borrower or any member of its ERISA Group to make any required contribution to a Multiemployer Plan.

“ERISA Group” means each controlled group of corporations or trades or businesses (whether or not incorporated) under common control that is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code with the Borrower.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eurocurrency Liabilities” is defined in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

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“EU Securitisation Regulation” means Regulation (EU) 2017/2402 of the European Parliament and of the Council of December 12, 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation and amending certain other European Union directives and regulations, as amended and in effect from time to time, together with all relevant regulatory and/or implementing technical standards applicable in relation thereto, and, in each case, any relevant guidance and directions published in relation thereto by any relevant regulatory authority or by the European Commission.

“EUWA” means the European Union (Withdrawal) Act 2018, as amended.

“Event of Default” means the occurrence of any of the events, acts or circumstances set forth in Section 6.01 of the Credit Agreement.

“Excess Concentration Amount” means, on any date of determination, the sum (without duplication) of the following amounts:

(a) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables related to Obligors with a FICO Score of between 650 and 700 exceeds 20.00% of the Eligible Pool Balance on such date;

(b) the smallest Aggregate Discounted Principal Balance of the Eligible Receivables that would need to be excluded from the Borrowing Base in order to cause the Weighted Average FICO Score of the Obligors related to the Eligible Receivables to be greater than or equal to 735 on such date;

(c) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables with respect to which the Receivable Obligor Origination State is California exceeds 70.00% of the Eligible Pool Balance on such date;

(d) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables with respect to which the Receivable Obligor Origination State is a single state (other than California) exceeds 20.00% of the Eligible Pool Balance on such date;

(e) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables with a Receivable Original Amount of equal to or greater than $75,000 and equal to or less than $150,000 exceeds 10.00% of the Eligible Pool Balance on such date;

(f) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables originated two hundred and ten (210) days but less than or equal to three hundred and ninety-five (395) days prior to such date of determination (for the avoidance of doubt, excluding Delinquent Receivables) exceeds 35.00% of the Eligible Pool Balance on such date;

(g) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables originated three hundred (300) days but less than or equal to three hundred and ninety-five (395) days prior to such date of determination (for the avoidance of doubt, excluding Delinquent Receivables) exceeds 20.00% of the Eligible Pool Balance on such date; and

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(h) the amount by which the Aggregate Discounted Principal Balance of the Eligible Receivables that have received an Approved Extension and/or an Approved Payment Plan Adjustment exceeds 7.50% of the Eligible Pool Balance on such date.

“Excess Concentration Receivable” means, as of any date of determination, an Eligible Receivable with respect to which some or all of the related Discounted Principal Balance is included in the Excess Concentration Amount as of such date.

“Excess Spread Percentage” means, as of any Determination Date, for the Collection Period then ended, the ratio (expressed as a percentage) of:

(a) the sum of (i) the Collections Yield during such Collection Period, minus (ii) the sum of the amounts due and owing under clauses (i) and (ii) under Section 9.01 of the Credit Agreement (excluding the Unused Fees (if any)) on the Payment Date following such Collection Period; divided by

(b) the average of the beginning and ending Aggregate Discounted Principal Balance of all Facility Receivables during such Collection Period.

“Exclusive Listing Agreement” means the “Exclusive Listing Agreement” entered into between a licensed real estate brokerage entity that is an Affiliate of the Seller and the related Obligor.

“Facility” as defined in the recitals to the Credit Agreement.

“Facility Delinquency Percentage” means, for any Collection Period, (a) the Aggregate Discounted Principal Balance of all Delinquent Receivables which are Facility Receivables on the last calendar day of such Collection Period, but excluding (i) any Defaulted Receivables which are Facility Receivables (including any Delinquent Receivables repurchased as provided in the Transfer Agreement or repurchased by the Seller at the Seller’s election) and (ii) any Facility Receivables relating to Property that was not sold within three hundred and sixty-five (365) days of the related origination date as of the end of such Collection Period, divided by (b) the Aggregate Discounted Principal Balance of all Facility Receivables on the last calendar day of such Collection Period (excluding any Facility Receivables relating to Property that was not sold within three hundred and sixty-five (365) days of the related origination date).

“Facility Documents” means the Credit Agreement, the Transfer Agreement, the Purchase Agreement, the Servicing Agreement, the Backup Servicing Agreement, the Account Control Agreement, the Fee Letter and any other security agreements and other instruments entered into or delivered by or on behalf of the Borrower pursuant to Section 7.07 of the Credit Agreement to create, perfect or otherwise evidence the Administrative Agent’s security interest. For the avoidance of doubt, “Facility Documents” shall not include the Performance Guaranty.

“Facility Receivable” means a Notable Receivable sold to the Seller pursuant to the terms of the Transfer Agreement and subsequently sold by the Seller to the Borrower pursuant to the terms of the Purchase Agreement. For the avoidance of doubt, the Originator is not selling the related Loan to the Seller for subsequent sale to the Borrower.

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“Facility Group” means Barclays Bank PLC, any other Lender with a Commitment under the Credit Agreement and its related Conduit Lenders (if any) and the Program Support Providers related to any such Conduit Lenders, as applicable.

“FATCA” means the Code Sections 1471 through 1474, as of the date of the Credit Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any intergovernmental agreements entered into in connection therewith, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any current or future regulations, revenue ruling, revenue procedure, notice or similar guidance issued by the IRS thereunder or any official interpretations of the foregoing.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1.00%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent. The Federal Funds Rate may not be less than 0.00%.

“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

“Fee Letter” means that certain Amended and Restated Fee Letter, dated as of the date hereof, between the Borrower and the Administrative Agent.

“FICO Score” means, with respect to the Obligor of a Notable Receivable, the statistical credit score of such Obligor based on methodology developed by Fair Isaac Corporation, determined as of a date permitted by the Concierge Capital Underwriting Policy in connection with the origination of such Notable Receivable.

“Final Maturity Date” means the earliest of (a) the date that is one hundred and eighty (180) days following the Amortization Date, (b) the date of the termination of the Commitments and the acceleration of the Advances pursuant to Section 6.02 of the Credit Agreement, (c) the date specified by the Borrower in its sole discretion upon 30 days’ prior written notice to the Administrative Agent or (d) the date on which all Obligations shall have been paid in full and all other amounts payable to the Administrative Agent and the Lenders under the Facility Documents shall have been paid in full and the Commitments have terminated under the Credit Agreement (other than contingent indemnification obligations for which a claim has not been asserted).

“Final Payout Date” means the later of (i) the date on which all Obligations have been paid in full (other than any contingent indemnification obligations of the Borrower under the Facility Documents for which a claim has not been asserted) and (ii) the date on which the Credit Agreement is terminated.

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“Fitch” means Fitch, Inc., together with its successors.

“GAAP” means generally accepted accounting principles in effect from time to time in the United States.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, quasi-regulatory authority, administrative tribunal, central bank, public office, court or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of government, including the United States Securities and Exchange Commission, the stock exchanges, any Federal, state, territorial, county, municipal or other government or governmental agency, board, body, branch, bureau, commission, court, department, instrumentality or other political unit or subdivision or other entity of any of the foregoing, whether domestic or foreign.

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Indebtedness” means for any Person (without duplication) (a) all indebtedness created, assumed or incurred in any manner by such Person representing borrowed money (including by the issuance of debt securities), (b) all indebtedness for the deferred purchase price of property or services (other than trade payables and accrued expenses arising in the ordinary course of business), (c) all indebtedness secured by any Lien upon property of such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness; provided that, if such Person has not assumed or become liable for the payment of such indebtedness, the amount of such Indebtedness shall be limited to the lesser of (i) the principal amount of the indebtedness being secured and (ii) the fair market value (as estimated by such Person in good faith) of the encumbered property, (d) all capitalized lease obligations of such Person, (e) all obligations of such Person on or with respect to drawn letters of credit, bankers’ acceptances and other extensions of credit, (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any equity interest in such Person or any other Person or any warrant, right or option to acquire such equity interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (g) all net obligations (determined as of any time based on the termination value thereof) of such Person under any interest rate, foreign currency, and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any other similar interest rate, currency or commodity hedging arrangement, as estimated by such Person in good faith, and (h) all guarantees of such Person in respect of any of the foregoing. For the avoidance of doubt, Indebtedness shall exclude any obligations under operating leases that would be included in Indebtedness under the new accounting lease standard ASC 842.

“Indemnified Party” has the meaning assigned to such term in Section 11.04(b) of the Credit Agreement.

“Independent Director” means one or more employees of Global Securitization Services, LLC or another natural person meeting the qualifications set forth in Section 5.02(x) of the Credit Agreement.

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“Ineligible Receivable” means, as of any date of determination, a Facility Receivable that fails to satisfy one or more criterion of the definition of “Eligible Receivable” after the date of acquisition thereof by the Borrower.

“Insolvency Event” means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under the Bankruptcy Code or any other applicable insolvency law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement by such Person of a voluntary case under the Bankruptcy Code or any other applicable insolvency law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due.

“Interest” means, for each day during an Interest Accrual Period and each Advance, on such day, the sum of the products (for each day during such Interest Accrual Period) of:

IR x P x 1/D

where:

IR	=	the Interest Rate, as applicable, on such day;
P	=	the principal amount of such Advance, as applicable, on such day; and
D	=	360.

“Interest Accrual Period” means, (i) with respect to the initial Payment Date, the period beginning on, and including, August 1, 2020 and ending on, and including, August 31, 2020 and (ii) with respect to any other Payment Date, the period beginning on, and including, the first day of the most recently ended calendar month and ending on, and including, the last day of the most recently ended calendar month; provided, that the final Interest Accrual Period shall end on the Final Maturity Date.

“Interest Rate” means, for any Interest Accrual Period and for each Advance outstanding made by a Lender for each day during such Interest Accrual Period:

(a) so long as no Event of Default has occurred and is continuing (and which has not otherwise been waived by the Lenders pursuant to the terms hereof),

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(i) if a Conduit Lender funds (directly or indirectly) its portion of the Advances with CP or if such Lender is a Lender in the Barclays Bank PLC Facility Group, a rate equal to the applicable CP Rate plus the Applicable Margin; and

(ii) if a Lender (other than Barclays Bank PLC) funds its portion of the Advances other than with CP, the applicable LIBOR Rate (or, if LIBOR Rate is not available, the applicable Base Rate until a Benchmark Replacement is determined) plus the Applicable Margin; and

(b) if an Event of Default has occurred and is continuing (and which has not otherwise been waived by the Lenders pursuant to the terms hereof), a rate equal to the Post-Default Rate.

“Investment Company Act” means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

“IRS” means the U.S. Internal Revenue Service, or any successor agency.

“Lenders” means, collectively, the Persons listed on Schedule 1 and any other Person that shall have become a party hereto in accordance with the terms hereof pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance and each individually, a “Lender.”

“Level I Trigger Event” means, a breach of any of the collateral performance tests listed below. The collateral performance tests listed below will be tested as of the last Business Day of each Collection Period (unless indicated otherwise) and reported to the Administrative Agent and the Lenders on each Monthly Report.

(a) (i) with respect to the initial Collection Period, the Facility Delinquency Percentage for such Collection Period exceeds 3.0%, (ii) with respect to the second Collection Period following the Closing Date, the average Facility Delinquency Percentage for such Collection Period and the initial Collection Period exceeds 3.0% or (iii) with respect to the third Collection Period following the Closing Date and any Collection Period thereafter, the average Facility Delinquency Percentage for such Collection Period and the two Collection Periods immediately prior to such Collection Period exceeds 3.0%;

(b) (i) with respect to the initial Collection Period, the Managed Portfolio Delinquency and Extension Percentage for such Collection Period exceeds 15.0%, (ii) with respect to the second Collection Period following the Closing Date, the average Managed Portfolio Delinquency and Extension Percentage for such Collection Period and the initial Collection Period exceeds 15.0% or (iii) with respect to the third Collection Period following the Closing Date and any Collection Period thereafter, the average Managed Portfolio Delinquency and Extension Percentage for such Collection Period and the two Collection Periods immediately prior to such Collection Period exceeds 15.0%; and

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(c) (i) with respect to the fourth Collection Period following the Closing Date, the Monthly Payment Rate for such Collection Period is less than 10.0%, (ii) with respect to the fifth Collection Period following the Closing Date, the average Monthly Payment Rate for such Collection Period and the fourth Collection Period following the Closing Date is less than 10.0% or (iii) with respect to the sixth Collection Period following the Closing Date and any Collection Period thereafter, the average Monthly Payment Rate for such Collection Period and the two Collection Periods immediately prior to such Collection Period is less than 10.0%.

“Level II Trigger Event” means, a breach of any of the collateral performance tests listed below. The collateral performance tests listed below will be tested as of the last Business Day of each Collection Period (unless indicated otherwise) and reported to the Administrative Agent and the Lenders on each Monthly Report.

(a) (i) with respect to the initial Collection Period, the Facility Delinquency Percentage for such Collection Period exceeds 5.0%, (ii) with respect to the second Collection Period following the Closing Date, the average Facility Delinquency Percentage for such Collection Period and the initial Collection Period exceeds 5.0% or (iii) with respect to the third Collection Period following the Closing Date and any Collection Period thereafter, the average Facility Delinquency Percentage for such Collection Period and the two Collection Periods immediately prior to such Collection Period exceeds 5.0%;

(b) (i) with respect to the initial Collection Period, the Managed Portfolio Delinquency and Extension Percentage for such Collection Period exceeds 20.0%, (ii) with respect to the second Collection Period following the Closing Date, the average Managed Portfolio Delinquency and Extension Percentage for such Collection Period and the initial Collection Period exceeds 20.0% or (iii) with respect to the third Collection Period following the Closing Date and any Collection Period thereafter, the average Managed Portfolio Delinquency and Extension Percentage for such Collection Period and the two Collection Periods immediately prior to such Collection Period exceeds 20.0%;

(c) (i) with respect to the fourth Collection Period following the Closing Date, the Monthly Payment Rate for such Collection Period is less than 8.0%, (ii) with respect to the fifth Collection Period following the Closing Date, the average Monthly Payment Rate for such Collection Period and the fourth Collection Period following the Closing Date is less than 8.0% or (iii) with respect to the sixth Collection Period following the Closing Date and any Collection Period thereafter, the average Monthly Payment Rate for such Collection Period and the two Collection Periods immediately prior to such Collection Period is less than 8.0%;

(d) (i) with respect to the fourth Collection Period following the Closing Date, the Excess Spread Percentage for such Collection Period does not exceed 0.0%, (ii) with respect to the fifth Collection Period following the Closing Date, the average Excess Spread Percentage for such Collection Period and the fourth Collection Period following the Closing Date does not exceed 0.0% or (iii) with respect to the sixth Collection Period following the Closing Date and any Collection Period thereafter, the average Excess Spread Percentage for such Collection Period and the two Collection Periods immediately prior to such Collection Period does not exceed 0.0%.

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“LIBOR Base Rate” means, for any day during an Interest Accrual Period for any Lender, the LIBOR Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Accrual Period.

“LIBOR Rate” for any day during an Interest Accrual Period for any Lender, means, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBOR Base Rate for such Interest Accrual Period multiplied by (b) the Statutory Reserve Rate.

“LIBOR Screen Rate” means, for any day during an Interest Accrual Period for any Lender, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a three month period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBOR Screen Rate as so determined would be less than zero, such rate shall be deemed to zero for the purposes of the Credit Agreement.

“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien or security interest (statutory or other), or preference, priority or other security agreement, charge or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing authorized by the Borrower of any financing statement under the UCC or comparable law of any jurisdiction).

“Liquidity” means Unrestricted Cash.

“Loan” means an unsecured consumer loan.

“Loan Agreement” means the Notable Disclosure & Loan Agreement relating to a Notable Receivable and entered into between the Originator and the related Obligor.

“Loan Proceeds Returns” means, with respect to any Facility Receivable, returns of the proceeds of such Facility Receivable following the return of the related financed merchandise or refund and/or cancellation of related financed services.

“Majority Lenders” means, as of any date of determination, (i) if there is only one Lender or if no Lender is a Defaulting Lender, one or more Lenders having aggregate Percentages greater than 50%, or (ii) if there is more than one Lender and any such Lender is a Defaulting Lender, one or more Non-Defaulting Lenders whose aggregate Advances represent greater than 50% of the aggregate outstanding principal balance of all Advances of Non-Defaulting Lenders.

“Managed Portfolio Delinquency and Extension Percentage” means, with respect to any Collection Period, the ratio (expressed as a percentage) of (i) the aggregate principal balance of all Compass Qualified Receivables that are Delinquent Receivables (for the avoidance of doubt, excluding any Defaulted Receivables) as of the last day of such Collection Period, divided by (ii) the aggregate principal balance of all Compass Qualified Receivables as of the last day of such Collection Period.

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“Margin Stock” has the meaning assigned to such term in Regulation U.

“Material Adverse Effect” means (i) with respect to all Facility Documents (other than the Servicing Agreement), a material adverse effect on (a) the business, assets, condition (financial or otherwise), operations, performance or properties of the Borrower, the Seller or the Servicer, each individually or taken as a whole, (b) the validity or enforceability of the Credit Agreement or any other Facility Document, (c) the validity, enforceability or collectability of any material portion of the Facility Receivables, (d) the rights and remedies of the Administrative Agent, the Lenders and the Secured Parties with respect to matters arising under the Credit Agreement or any other Facility Document, (e) the ability of any of the Borrower, the Seller or the Servicer to perform its obligations under any Facility Document to which it is a party, or (f) the existence, perfection, priority or enforceability of the Administrative Agent’s Lien on the Collateral, (ii) with respect to the Servicing Agreement, a material adverse effect on (a) the collectability or value of the Facility Receivables being serviced thereunder or (b) the ability of the Servicer to perform its obligations under the Servicing Agreement and (iii) with respect to the Performance Guaranty, a material adverse effect on the ability of the Parent to perform its obligations under the Performance Guaranty.

“Maximum Remaining Term” means, as of any date of determination and with respect to any Notable Receivable, the maximum number of months remaining (rounded to the nearest whole month) until the principal amount of such Notable Receivable is due and payable in full.

“Modified Receivable” means a Notable Receivable which, at any time, (i) was past due or in default and which such delinquency or default was cured by waiving, extending, adjusting or amending the contract terms or accepting a reduced payment or (ii) has had its contract terms waived, extended, adjusted or amended with the intent of avoiding a delinquency or default. For the avoidance of doubt, (a) a Facility Receivable that has received (x) a single Approved Extension or, (y) a single Approved Payment Plan Adjustment or (z) a single Approved Extension and a single Approved Payment Plan Adjustment (in that order) and the duration of the aggregate extensions shall not extend such Facility Receivable by more than one hundred eighty (180) days, in each case, shall not constitute a “Modified Receivable” and (b) a Facility Receivable that has received (x) more than one Approved Extension, (y) more than one Approved Payment Plan Adjustment or (z) both an Approved Extension and an Approved Payment Plan Adjustment and the duration of the aggregate extensions exceed one hundred and eighty (180) days, in each case, shall constitute a “Modified Receivable.”

“Money” has the meaning specified in Section 1-201(b)(24) of the UCC.

“Monthly Payment Rate” means, for any Collection Period, the ratio of (a) all Collections received by the Servicer in respect of the Principal Balance of each Facility Receivable during such Collection Period to (b) the average of the beginning and ending aggregate Principal Balance of all Facility Receivables during such Collection Period; provided, that such calculations shall exclude Collections constituting Loan Proceeds Returns.

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“Monthly Report” means the monthly report and an updated Data File including the required information with respect to each Compass Qualified Receivable owned by the Borrower as of the prior month Determination Date, each in a form reasonably acceptable to the Administrative Agent and provided prior to the last day of the initial Collection Period.

“Monthly Reporting Date” means, with respect to any Payment Date, the twelfth (12^th) calendar day following the end of each calendar month, or if such day is not a Business Day, the immediately following Business Day.

“Moody’s” means Moody’s Investors Service, Inc., together with its successors.

“Multiemployer Plan” means an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA that is sponsored by the Borrower or a member of its ERISA Group or to which the Borrower or a member of its ERISA Group is obligated to make contributions or has any liability.

“Negative Legal Development Receivable” means, as of any date of determination, a Notable Receivable that is subject to a Regulatory Event as of such date.

“Net Eligible Pool Balance” means, as of any date of determination, an amount equal to the excess of (i) the Eligible Pool Balance, over (ii) the Excess Concentration Amounts, if any, in each case as of such date.

“Net Home Equity” means, with respect to any Notable Receivable, an amount equal to the sum of (i) 85.00% of the listing price as of the Receivable Origination Date of the Property relating to such Notable Receivable, minus (ii) any existing debt relating to such Property.

“New Lending Office” has the meaning given in Section 11.03(d) of the Credit Agreement.

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender.

“Notable” means Notable Finance, LLC.

“Notable Receivable” means the obligation of an Obligor under a Loan Agreement to make payments on the related Loan which was originated by Notable in connection with the Concierge Capital Program.

“Notice of Prepayment” has the meaning assigned to such term in Section 2.05 of the Credit Agreement.

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of

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the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of the Credit Agreement.

“Obligations” means all indebtedness, whether absolute, fixed or contingent, at any time or from time to time owing by the Borrower to any Secured Party or any Affected Person under or in connection with the Credit Agreement or any other Facility Document, including all amounts payable by the Borrower in respect of the Advances, with interest thereon, and all fees, expenses and other amounts payable under the Credit Agreement or under any other Facility Document.

“Obligor” means, in respect of any Loan and the related Notable Receivable, the individual natural Person primarily obligated to make payments in respect of the principal, interest, if any, and any fees due under such Loan and the related Notable Receivable.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Originator” means Notable, in its capacity as “Originator” under the Transfer Agreement, or any other Person acting as seller under the Transfer Agreement and that has been approved in writing by the Administrative Agent in its sole discretion.

“Other Connection Taxes” has the meaning given in Section 11.03(a) of the Credit Agreement.

“Other Taxes” has the meaning given in Section 11.03(b) of the Credit Agreement.

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight LIBOR borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

“Parent” means Compass, Inc. f/k/a Urban Compass, Inc.

“Participant” means any Person to whom a participation is sold as permitted by Section 11.06(d) of the Credit Agreement.

“PATRIOT Act” has the meaning assigned to such term in Section 11.16 of the Credit Agreement.

“Payment Date” means (a) the twenty-second (22nd) calendar day following the end of each calendar month, or if such day is not a Business Day, the immediately following Business Day, beginning in the month of September 2020 and (b) the Final Maturity Date.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor agency or entity performing substantially the same functions.

“Percentage” of any Lender means, (a) with respect to any Lender party hereto on the date hereof, the percentage set forth opposite such Lender’s name on Schedule 1 to the Credit Agreement, as such amount is reduced by any Assignment and Acceptance entered into by such

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Lender with an assignee or increased by any Assignment and Acceptance entered into by such Lender with an assignor, or (b) with respect to a Lender that has become a party hereto pursuant to an Assignment and Acceptance, the percentage set forth therein as such Lender’s Percentage, as such amount is reduced by an Assignment and Acceptance entered into between such Lender and an assignee or increased by any Assignment and Acceptance entered into by such Lender with an assignor.

“Performance Guarantor” means, the Parent.

“Performance Guaranty” means that certain Performance Guaranty, dated as of the Closing Date, by the Performance Guarantor in favor of the Secured Parties.

“Permitted Asset Sale” means each of the following:

(a) the sale and transfer by the Borrower to the Seller of any Excess Concentration Receivable;

(b) the sale and transfer by the Borrower to the Seller or any other Person of any Charged-Off Receivables; and

(c) in connection with any optional prepayment of the Advances pursuant to Section 2.05(a) of the Credit Agreement, the sale and transfer to the Seller of any Facility Receivables identified for release by the Borrower so long as (i) such Facility Receivables are substantially and contemporaneously sold by the Seller (or an Affiliate thereof), without recourse, to a special-purpose third party purchaser in connection with the closing of a securitization transaction and (ii) the Borrower certifies that such Facility Receivables were not selected pursuant to procedures designed to be adverse to the Administrative Agent or the Lenders.

“Permitted Assignee” means (i) a Lender (other than any Defaulting Lender) or any of its Affiliates, (ii) any commercial paper conduit administered by the Administrative Agent or an Affiliate of the Administrative Agent and (iii) any Conduit Lender and any of its Program Support Providers or Conduit Assignees.

“Permitted IPO” means any transactions or actions taken in connection with and reasonably related to an equity issuance by the Parent or an Affiliate consisting of a primary public offering of its common stock pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act of 1933 as amended (whether alone or in connection with a secondary public offering), including any direct listing.

“Permitted Liens” means the following: (a) Liens in favor of the Administrative Agent granted pursuant to the Credit Agreement or any other Facility Document; (b) Liens for taxes, assessments and governmental charges not yet due or the payment of which is being contested in good faith and by appropriate proceedings and for which adequate reserves are maintained in accordance with GAAP; (c) Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmens’ and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) that are not overdue by more than 45 days or are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted, and for which reserves are maintained in accordance with GAAP; (d)

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deposits and pledges of cash securing (i) obligations incurred in respect of workers’ compensation, unemployment insurance or other forms of governmental insurance benefits, (ii) the performance of bids, tenders, leases, contracts (other than for the payment of money) and statutory obligations or (iii) obligations on surety or appeal bonds, but only to the extent such deposits or pledges are made or otherwise arise in the ordinary course of business and secure obligations that are not past due and do not exceed $250,000 in the aggregate; (e) judgment Liens not resulting in an Event of Default under Section 6.01(h) of the Credit Agreement; and (f) (i) Liens in favor of collecting banks arising under Section 4-210 of the UCC or any similar law, and (ii) Liens arising solely by virtue of any contractual, statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained in the ordinary course of business with such creditor depository institution, provided that no such deposit account is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by bank regulators and no such deposit account serves as collateral to any Person other than the Administrative Agent.

“Person” means an individual or a corporation (including a business trust), partnership, trust, incorporated or unincorporated association, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind.

“Plan” means an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that is sponsored by the Borrower or a member of its ERISA Group or to which the Borrower or a member of its ERISA Group is obligated to make contributions or has any liability.

“Post-Default Rate” means a rate per annum equal to (i) the Base Rate plus (ii) 6.50% per annum.

“Potential Terminated Lender” has the meaning specified in Section 2.14 of the Credit Agreement.

“Prime Rate” means the rate announced by the Administrative Agent from time to time as its prime rate in the United States, such rate to change as and when such designated rate changes. The Prime Rate is not intended to be the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit to debtors. The Administrative Agent may make commercial loans or other loans at rates of interest at, above, or below the Prime Rate. The Prime Rate may not be less than 0.00%.

“Principal Balance” means, as of any date of determination and with respect to a Facility Receivable, an amount equal to (i) the related Receivable Initial Amount, plus (ii) any related Receivable Subsequent Draw Amounts, minus (iii) the amount of any Collections received from or on behalf of the related Obligor with respect to such Facility Receivable and the related Loan.

“Principal Paydown” means, as of any Determination Date, for the Collection Period then ended, the difference between (i) the sum of the Discounted Principal Balance for each Facility Receivable as of the beginning of such Collection Period, in each case, multiplied by the applicable Advance Rate for each such Facility Receivable as of the beginning of such Collection Period, minus (ii) for each Facility Receivable included in the calculation set forth in clause (i) above, the sum of the Discounted Principal Balance for each such Facility Receivable as of the beginning of such Collection Period, in each case, multiplied by the applicable Advance Rate for each such Facility Receivable as of the end of such Collection Period.

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“Priority of Payments” has the meaning specified in Section 9.01 of the Credit Agreement.

“Proceeds” has, with reference to any asset or property, the meaning assigned to it under the UCC and, in any event, shall include, but not be limited to, any and all amounts from time to time paid or payable under or in connection with such asset or property.

“Program Support Agreement” means, with respect to any Conduit Lender, any liquidity agreement or any other agreement entered into by any Program Support Provider providing for the issuance of one or more letters of credit for the account of such Conduit Lender (or any related commercial paper issuer that finances such Conduit Lender), the issuance of one or more surety bonds for which such Conduit Lender or such related issuer is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, the sale by the Conduit Lender or such related issuer to any Program Support Provider of any interest in an Advance (or portions thereof or participations therein) and/or the making of loans and/or other extensions of liquidity or credit to the Conduit Lender or such related issuer in connection with its commercial paper program, together with any letter of credit, surety bond or other instrument issued thereunder.

“Program Support Provider” means and includes any bank, insurance company or other financial institution now or hereafter extending liquidity or credit or having a commitment to extend liquidity or credit to or for the account of, or to make purchases from, a Conduit Lender (or any related commercial paper issuer that finances such Conduit Lender) in support of commercial paper issued, directly or indirectly, by such Conduit Lender in order to fund Advances made by such Conduit Lender under the Credit Agreement or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with such Conduit Lender’s or such related issuer’s commercial paper program, but only to the extent that such letter of credit, surety bond, or other instrument supported either CP issued to make Advances and purchase the Advances under the Credit Agreement or was dedicated to that Program Support Provider’s support of the Conduit Lender as a whole rather than one particular issuer (other than the Borrower) within such Conduit Lender’s commercial paper program.

“Property” means, with respect to any Notable Receivable, the residential real estate property listed in the related Loan Agreement and in connection with which the related Obligor applied for the related Loan.

“Property Debt” means all debt secured by the related Property.

“Purchasable Receivable” means a Notable Receivable that meets the criteria of a Compass Qualified Receivable as of the Cutoff Date of the applicable Offer List.

“Purchase Agreement” means that certain Amended and Restated Receivables Purchase Agreement, dated as of the date hereof, between the Seller, as “seller,” and the Borrower, as “buyer.”

“Purchase Price” has the meaning specified in Section 3.1 of the Purchase Agreement.

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“QIB” has the meaning specified in Section 11.06(f) of the Credit Agreement.

“Qualified Purchaser” has the meaning specified in Section 11.06(f) of the Credit Agreement.

“Rating Agencies” means Moody’s, S&P and, if applicable, Fitch.

“Receivable Initial Amount” means, with respect to any Notable Receivable, the aggregate principal amount dispersed to the related Obligor in accordance with the terms of the related Loan Agreement from and including the related Receivable Origination Date to and including the initial Cutoff Date with respect to such Notable Receivable.

“Receivable Obligor Origination State” means, with respect to any Notable Receivable, the State or U.S. territory in which the related Obligor resided on the related Receivable Origination Date.

“Receivable Original Amount” means, with respect to any Notable Receivable, the full principal amount approved as shown in either (a) the related Loan Agreement and related documents or (b) the final payment schedule, as applicable.

“Receivable Origination Date” means, with respect to any Notable Receivable, the calendar date on which the related Loan was originated by the Originator, as indicated in the Originator’s records.

“Receivable Subsequent Draw Amount” means, with respect to any Notable Receivable, the aggregate principal amount dispersed to the related Obligor in accordance with the terms of the related Loan Agreement from and excluding the Cutoff Date relating to the last Purchase Date upon which the Borrower purchased the Receivable Initial Amount or a Receivable Subsequent Draw Amount relating to such Loan to and including the Cutoff Date relating to such Receivable Subsequent Draw Amount. For the avoidance of doubt, with respect to any Notable Receivable, the sum of the related Receivable Initial Amount plus all Receivable Subsequent Draw Amounts cannot exceed the Receivable Original Amount for such Notable Receivable.

“Receivables List” has the meaning specified in Section 2.2(b) of the Transfer Agreement.

“Register” has the meaning specified in Section 11.06(e) of the Credit Agreement.

“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

“Regulation T”, “Regulation U” and “Regulation X” mean Regulation T, U and X, respectively, of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Regulatory Change” has the meaning specified in Section 2.09(a) of the Credit Agreement.

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“Regulatory Event” shall mean (a) the commencement by written notice by any Governmental Authority of any lawsuit or similar adversarial court or regulatory proceeding against the Borrower or any of its Affiliates or, to the knowledge of the Borrower, the Originator or the Servicer, challenging such Person’s authority to originate, hold, own, service, pledge, collect or enforce any Facility Receivable, or otherwise alleging any material non-compliance by any of the Borrower, the Originator or the Servicer or any of their respective Affiliates with any Applicable Laws restricting the ability of such Person to originate, hold, own, service, pledge, collect or enforce such Facility Receivable, which lawsuit or proceeding is not released or terminated in a manner acceptable to Administrative Agent within ninety (90) calendar days of commencement thereof or (b) the issuance or entering of any stay, order, judgment, cease and desist order, injunction, temporary restraining order, or other judicial or non-judicial sanction (other than the imposition of a monetary fine), order or ruling against any of the Borrower or any of its Affiliates or, to the knowledge of the Borrower, the Originator or the Servicer, restricting the ability of such Person to originate, hold, own, service, pledge, collect or enforce any Facility Receivables, and which, in the case of any such lawsuit, proceeding or other event described in clause (a) or (b) above, has a material adverse effect on the enforceability, collectability or ability to service such Facility Receivable or renders the Purchase Agreement unenforceable in such jurisdiction, as determined by the Administrative Agent in its reasonable judgment; provided, that, in each case, upon the favorable resolution of any such lawsuit, proceeding or other event, or if such determination by the Administrative Agent shall have ceased to be applicable, such Regulatory Event shall cease to exist.

“Related Documents” means, with respect to any Notable Receivable, all agreements or documents evidencing, guaranteeing, securing, governing or giving rise to such Notable Receivable, including the Loan Agreement under which an extension of credit is made by the Originator to the related Obligor through the Seller’s lending platform, such agreements not to include the Concierge Mastercard Program Agreement for Concierge Cardholder or any agreement servicing an equivalent function.

“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

“Repurchased Receivable” has the meaning assigned to such term in Section 6.1 of the Purchase Agreement.

“Request for Advance” has the meaning assigned to such term in Section 2.02 of the Credit Agreement.

“Requested Amount” has the meaning assigned to such term in Section 2.02 of the Credit Agreement.

“Reserve Account” means any account established by the Borrower at the Account Bank, in the name of the Borrower, which account has been designated as the Reserve Account and is subject to the Account Control Agreement.

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“Reserve Account Available Amount” means, at any time, the amount on deposit in the Reserve Account.

“Reserve Account Deficit” means, at any time, the excess, if any, of (A) the Reserve Account Required Amount over (B) the Reserve Account Available Amount.

“Reserve Account Required Amount” means, as of any date of determination including any Borrowing Date, an amount equal to the product of (i) the Eligible Pool Balance as of such date and (ii) 3.0%; provided, however, that if there are no Obligations outstanding under the Credit Agreement, the Reserve Account Required Amount shall equal zero.

“Reserve Account Withdrawal Amount” has the meaning specified in Section 8.03(b) of the Credit Agreement.

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

“Responsible Officer” means (a) in the case of a corporation, partnership or limited liability company that, pursuant to its Constituent Documents, has officers, any chief executive officer, chief financial officer, chief capital officer, chief administrative officer, head of finance, head of capital markets, president, senior vice president, vice president, assistant vice president, treasurer, secretary, assistant secretary, director or manager, (b) in the case of a limited partnership, the Responsible Officer of the general partner, acting on behalf of such general partner in its capacity as general partner, (c) additionally, in the case of a limited liability company, any Responsible Officer of the sole member or managing member, acting on behalf of the sole member or managing member in its capacity as sole member or managing member, (d) in the case of a trust, the Responsible Officer of the trustee, acting on behalf of such trustee in its capacity as trustee and (e) in the case of the Administrative Agent, an officer of the Administrative Agent as applicable responsible for the administration of the Credit Agreement.

“Restricted Payments” means the declaration of any distribution or dividends or the payment of any other amount by the Borrower to any shareholder, partner, member or other equity investor in the Borrower on account of any share, membership interest, partnership interest or other equity interest in respect of the Borrower, or the payment on account of, or the setting apart of assets for a sinking or other analogous fund for, or the purchase or other acquisition of any class of stock of or other equity interest in the Borrower or of any warrants, options or other rights to acquire the same (or to make any “phantom stock” or other similar payments in the nature of distributions or dividends in respect of equity to any Person), whether now or hereafter outstanding, either directly or indirectly, whether in cash, property (including marketable securities), or any payment or setting apart of assets for the redemption, withdrawal, retirement, acquisition, cancellation or termination of any share, membership interest, partnership interest or other equity interest in respect of the Borrower.

“Retransfer Date” has the meaning assigned to such term in Section 6.2 of the Purchase Agreement.

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“Revolving Period” means the period from and including the Closing Date to and including the earliest of (a) the Amortization Date or (b) the date of the termination of the Commitments pursuant to Section 6.02 of the Credit Agreement.

“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any comprehensive Sanctions (currently Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, or by another governmental authority with jurisdiction over the Borrower or the Seller, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned 50 percent or more in the aggregate by one or more such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) any other governmental authorities with jurisdiction over the Borrower or the Seller.

“S&P” means S&P Global Ratings, together with its successors.

“Scheduled Revolving Period Termination Date” means July 28, 2022 or such later date as may be agreed to in writing by the Borrower, the Administrative Agent and each of the Lenders; provided that, if the Scheduled Revolving Period Termination Date would otherwise not be a Business Day, then the Scheduled Revolving Period Termination Date shall be the immediately preceding Business Day.

“Secured Parties” means the Administrative Agent, the Lenders and their respective permitted successors and assigns.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, all as from time to time in effect, or any successor law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision.

“Securitisation Regulations” means the EU Securitisation Regulation and the UK Securitisation Regulation.

“Seller” means Compass Concierge, LLC.

“Servicer” means Notable, in its capacity as “Servicer” under the Servicing Agreement, or any other Person acting as successor servicer and that has been approved in writing by the Administrative Agent.

“Servicer Event of Default” is defined in Section 4.01 of the Servicing Agreement.

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“Servicing Agreement” means that certain Amended and Restated Servicing Agreement, dated as of the date hereof, between the Servicer and the Borrower.

“Servicing Fee” means, with respect to any Payment Date, an amount equal to the product of (i) the Servicing Fee Rate, (ii) 1/12 and (iii) the average of the aggregate Principal Balance of the Facility Receivables as of the end of (x) the first day of the immediately preceding Collection Period and (y) the last day of such preceding Collection Period. For the avoidance of doubt, no Servicing Fee is charged on Charged-Off Receivables.

“Servicing Fee Rate” means 0.75%.

“Servicing File” means, with respect to any Facility Receivable, the items, documents, files and records pertaining to the servicing of the related Loan, including, but not limited to, the computer files, data tapes, books, records, notes, copies of the Related Documents, and all additional documents generated as a result of, or utilized in originating and/or servicing such Facility Receivable and the related Loan, which are delivered to, or generated by, the Servicer.

“Servicing Standard” is defined in Section 2.02 of the Servicing Agreement.

“SOFR” means a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rate from time to time).

“Solvency Certificate” means a Closing Date Certificate or Amendment Effective Date Certificate substantially in the form of Exhibit G to the Credit Agreement.

“Solvent” means, with respect to any Person, that as of the date of determination, both (i) (a) the sum of such Person’s debt (including contingent liabilities) does not exceed the present fair market value of such Person’s present assets; (b) such Person’s capital is not unreasonably small in relation to its business as contemplated on the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under the Bankruptcy Code, Section 271 of the Debtor and Creditor Law of the State of New York or other Applicable Laws relating to fraudulent transfers and conveyances.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Administrative Agent is subject with respect to the LIBOR Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Such reserve percentage shall include those imposed pursuant to Regulation D. Advances made using the applicable LIBOR Rate shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

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“Subsidiaries” means, with respect to any Person, any corporation or other Person of which more than 50% of the outstanding Equity Interests having ordinary voting power to elect members of the board of directors, board of managers or other governing body of such Person (other than Equity Interests having such power only by reason of the happening of a contingency), are at the time, directly or indirectly, owned by, or the management of which is otherwise controlled, directly or indirectly, by, such Person and one or more of its other Subsidiaries or a combination thereof.

“Successor Servicing Excess Servicing Fee” means such portion of the Servicing Fee accruing at a rate per annum in excess of the Servicing Fee Rate.

“Successor Servicing Transition Fee” has the meaning set forth in the Backup Servicing Agreement.

“Tangible Net Worth” means, as of any date, the aggregate total assets of the Parent and its Subsidiaries, calculated in accordance with GAAP, minus the aggregate total debt of the Parent and its Subsidiaries, calculated in accordance with GAAP, minus the amount of all intangible items reflected therein, including all unamortized debt discount and expense, goodwill, patents, trademarks, service marks, trade names, copyrights, and all similar items that should properly be treated as intangibles in accordance with GAAP.

“Taxes” has the meaning assigned to such term in Section 11.03(a) of the Credit Agreement.

“Term SOFR” means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

“Total Liabilities” means, for any Person, as at any date of determination, the aggregate amount of all Indebtedness of such Person, as determined on a consolidated basis in accordance with GAAP.

“Transfer Agreement” means that certain Amended and Restated Transfer Agreement, dated as of the date hereof, between the Originator and the Seller.

“Transferred Receivable” has the meaning specified in Section 1.1 of the Purchase Agreement.

“UCC” means the Uniform Commercial Code, as from time to time in effect in the State of New York; provided that if, by reason of any mandatory provisions of law, the perfection, the effect of perfection or non-perfection or priority of the security interests granted to the Administrative Agent pursuant to the Credit Agreement are governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than the State of New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of such perfection, effect of perfection or non-perfection or priority.

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“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

“UK Securitisation Regulation” means Regulation (EU) 2017/2402 as it forms part of the United Kingdom domestic law by operation of the EUWA, and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019, as amended and in effect from time to time, together with all relevant technical standards applicable in relation thereto, and any relevant guidance relating thereto.

“United States” means the United States of America.

“Unmatured Event of Default” means any event which, with the passage of time specified in the related cure period for such event, the giving of notice, or both, would constitute an Event of Default.

“Unmatured Servicer Event of Default” means any event which, with the passage of time, the giving of notice, or both, would constitute a Servicer Event of Default.

“Unrestricted Cash” means, with respect to any calendar month or fiscal quarter, (i) the cash and cash equivalents of the Parent and its consolidated Subsidiaries that, in accordance with GAAP, is reflected on the consolidated balance sheet of the Parent and its consolidated Subsidiaries, as of the end of such calendar month or fiscal quarter, as applicable, but only to the extent that such cash and cash equivalents (or any deposit account or securities account in which such cash and cash equivalents are held) are not controlled by or subject to any Lien or other preferential arrangement in favor of any creditor, including any cash or cash equivalents collateralizing any letters of credit and (ii) investments in money market funds or securities issued, or directly and fully guaranteed or insured, by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six (6) months from the date of acquisition; provided, that the calculation of Unrestricted Cash to the extent attributable to any Subsidiary shall be the Unrestricted Cash of such Subsidiary multiplied by the percentage Equity Interests in such Subsidiary held by the Parent (measured against all Equity Interests in such Subsidiary held by all Persons).

“Unused Fees” has the meaning assigned to such term in the Fee Letter.

“U.S. Tax Compliance Certificate” has the meaning specified in Section 11.03(g)(ii) of the Credit Agreement.

“Volcker Rule” means the common rule entitled “Proprietary Trading and Certain Interests and Relationships with Covered Funds” published at 79 Fed. Reg. 5779 et seq.

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“Weighted Average Advance Rate” means, as of any date of determination, a percentage equal to (a) the aggregate product of (i) the Discounted Principal Balance for each Eligible Receivable as of such date, multiplied by (ii) the applicable Advance Rate for each such Eligible Receivable as of such date, divided by (b) the Eligible Pool Balance.

“Weighted Average FICO Score” means, with respect to any pool of Eligible Receivables as of any date of determination, the ratio (expressed as a number) obtained by (a) summing the products obtained by multiplying, for each such Eligible Receivable as of such date and in respect of which the related Obligor has a FICO Score:

The FICO Score of the Obligor of such Eligible Receivable X The Discounted Principal Balance of such Eligible Receivable as of such date

and (b) dividing such sum by the Aggregate Discounted Principal Balance of such pool of Eligible Receivables in respect of which the related Obligor has a FICO Score as of such date of determination.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

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EX-10.2

Exhibit 10.2

GLOBAL NOTICE OF RESTRICTED STOCK UNIT AWARD

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

You (the “Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Compass, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”) subject to the terms and conditions of the Plan, this Global Notice of Restricted Stock Unit Award (this “Notice”), and the attached Global Restricted Stock Unit Award Agreement (the “Agreement”), including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of the Agreement.

Unless otherwise defined herein, the terms defined in the Plan will have the same meanings in this Notice and the electronic representation of this Notice established and maintained by the Company or a third party designated by the Company.

Name:
Grant Number:
Number of RSUs:
Date of Grant:
Vesting Commencement Date:
Expiration Date:	The earlier to occur of: (a) the date on which settlement of all RSUs granted hereunder occurs, and (b) the tenth anniversary of the Date of Grant. This RSU expires earlier if Participant’s Service terminates earlier, as described in the Agreement.
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan, and the Agreement, the RSUs will vest in accordance with the following schedule: [insert applicable vesting schedule]

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant acknowledges and agrees to the following:

1) Participant understands that Participant’s Service is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), except where otherwise prohibited by applicable law, and that nothing in this Notice, the Agreement, or the Plan changes the nature of that relationship. Participant acknowledges that the vesting of the RSUs pursuant to this Notice is subject to Participant’s continuing Service. To the extent permitted by applicable law, Participant agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Participant’s Service status changes between full- and part-time and/or in the event the Participant is on a leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as determined by the Committee.

2) This grant is made under and governed by the Plan, the Agreement, and this Notice, and this Notice is subject to the terms and conditions of the Agreement and the Plan, both of which are incorporated herein by reference. Participant has read the Notice, the Agreement, and the Plan.

3) Participant has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Participant acquires or disposes of the Company’s securities.

4) By accepting the RSUs, Participant consents to electronic delivery and participation as set forth in the Agreement.

You do not have to accept the RSUs. If you wish to decline your RSU award, you should promptly notify Compass, Inc. of your decision at equity@compass.com. If you do not provide such notification by the last day of the calendar month prior to the first vesting date (as described in the Vesting Schedule above), you will be deemed to have accepted your RSUs on the terms and conditions set forth herein.

GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

Unless otherwise defined in this Global Restricted Stock Unit Award Agreement (this “Agreement”), any capitalized terms used herein will have the same meaning ascribed to them in the Compass, Inc. 2021 Equity Incentive Plan (the “Plan”).

Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions, and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”), and this Agreement, including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of this Agreement. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of the Notice or this Agreement, the terms and conditions of the Plan will prevail.

1. Settlement. Settlement of RSUs shall be made in the same calendar year as the applicable date of vesting under the vesting schedule set forth in the Notice; provided, however, that if a vesting date under the vesting schedule set forth in the Notice occurs in December, then settlement of any RSUs that vest in December shall be made within 30 days of vesting. Settlement of RSUs shall be in Shares. Settlement means the delivery to Participant of the Shares vested under the RSUs. No fractional RSUs or rights for fractional Shares will be created pursuant to this Agreement.

2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant will have no ownership of the Shares allocated to the RSUs and will have no rights to dividends or to vote such Shares.

3. Dividend Equivalents. Dividend equivalents, if any (whether in cash or Shares), will not be credited to Participant, except as permitted by the Committee.

4. Non-Transferability of RSUs. The RSUs and any interest therein will not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.

5. Termination; Leave of Absence; Change in Status. If Participant’s Service terminates for any reason, all unvested RSUs will be forfeited to the Company immediately, and all rights of Participant to such RSUs automatically terminate without payment of any consideration to Participant. Participant’s Service will be considered terminated as of the date Participant is no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any) and will not, subject to the laws applicable to Participant’s Award, be extended by any notice period mandated under local laws (e.g., Service would not include a period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any). Participant acknowledges and agrees that the Vesting Schedule may change prospectively in the event Participant’s service status changes between full- and part-time status and/or in the event Participant is on an approved leave of absence in accordance the Company’s policies relating to work schedules and vesting of awards or as determined by the Committee. Participant acknowledges that the vesting of the Shares pursuant to this Notice and Agreement is subject to Participant’s continued Service. In case of any dispute as to whether termination of Service has occurred, the Committee will have sole discretion to determine whether such termination of Service has occurred and the effective date of such termination (including whether Participant may still be considered to be providing services while on an approved leave of absence).

6. Taxes.

(a) Responsibility for Taxes. To the extent permitted by applicable law, Participant acknowledges that, regardless of any action taken by the Company or, if different, a Parent, Subsidiary or Affiliate employing or retaining Participant (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”) is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs and the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends, and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. PARTICIPANT SHOULD CONSULT A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH PARTICIPANT RESIDES OR IS SUBJECT TO TAXATION.

(b) Withholding. Prior to any relevant taxable or tax withholding event, to the extent permitted by applicable law and as applicable, Participant agrees to make arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following:

(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or

(ii) withholding from proceeds of the sale of Shares acquired upon settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization and without further consent);

(iii) withholding Shares to be issued upon settlement of the RSUs, provided the Company only withholds the number of Shares necessary to satisfy no more than the maximum applicable statutory withholding amounts;

(iv) Participant’s payment of a cash amount (including by check representing readily available funds or a wire transfer); or

(v) any other arrangement approved by the Committee and permitted under applicable law;

all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided however, that if Participant is a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale (unless the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish an alternate method prior to the taxable or withholding event).

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including up to the maximum permissible statutory rate for Participant’s tax jurisdiction(s) in which case Participant will have no entitlement to the equivalent amount in Shares and will receive a refund of any over-withheld amount in cash in accordance with applicable law. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the withholding obligation for Tax-Related Items.

Finally, Participant agrees to pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company has no obligation to deliver Shares or proceeds from the sale of Shares to Participant until Participant has satisfied the obligations in connection with the Tax-Related Items as described in this Section.

7. Nature of Grant. By accepting the RSUs, Participant acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the RSUs is exceptional, voluntary, and occasional, and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;

(d) Participant is voluntarily participating in the Plan;

(e) the RSUs and Participant’s participation in the Plan will not create a right to employment or be interpreted as forming or amending an employment or service contract with the Company or the Employer and will not interfere with the ability of the Company or the Employer, as applicable, to terminate Participant’s employment or service relationship (if any);

(f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation;

(g) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement, or welfare benefits or similar payments;

(h) unless otherwise agreed with the Company, the RSUs, and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, the service Participant may provide as a director of a Parent, Subsidiary, or Affiliate;

(i) the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty;

(j) no claim or entitlement to compensation or damages will arise from forfeiture of the RSUs resulting from Participant’s termination of Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), and in consideration of the grant of the RSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Employer, the Company, and any Parent, Subsidiary or Affiliate; waives his or her ability, if any, to bring any such claim; and releases the Employer, the Company, and any Parent, Subsidiary, or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant will be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any Corporate Transaction affecting the Shares; and

(l) the following provisions apply only if Participant is providing services outside the United States:

(i) the RSUs and the Shares subject to the RSUs are not part of normal or expected compensation or salary for any purpose;

(ii) Participant acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.

8. No Advice Regarding Grant. The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant acknowledges, understands and agrees he or she should consult with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and any Parent, Subsidiary or Affiliate for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to the Company’s broker, or other third party (“Online Administrator”) and its affiliated companies or such other stock plan service provider as may be designated by the Company from time to time that is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. Participant authorizes the Company, the Company’s broker, or such other stock plan service provider as may be designated by the Company from time to time, and any other possible recipients that may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan.

Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service with the Employer will not be affected; the only consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant RSUs or other equity awards to Participant or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

Finally, upon request of the Company or the Employer, Participant agrees to provide an executed data privacy consent form (or any other agreements or consents) that the Company or the Employer may deem necessary to obtain from Participant for the purpose of administering Participant’s participation in the Plan in compliance with the data privacy laws in Participant’s country, either now or in the future. Participant understands and agrees that Participant will not be able to participate in the Plan if Participant fails to provide any such consent or agreement requested by the Company and/or the Employer.

10. Language. Participant acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. Furthermore, if Participant has received this Agreement or any other document related to the RSU and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

11. Appendix. Notwithstanding any provisions in this Agreement, the RSUs will be subject to any special terms and conditions set forth in any appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

12. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

13. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement, and the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

14. Entire Agreement; Enforcement of Rights. This Agreement, the Plan, and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments, or negotiations concerning the purchase of the Shares hereunder are superseded. No adverse modification of or adverse amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the parties to this Agreement (which writing and signing may be electronic). The failure by either party to enforce any rights under this Agreement will not be construed as a waiver of any rights of such

party. Notwithstanding the foregoing, if Participant is a party to any employment or severance agreement with the Company that provides for any additional or replacements terms with respect to the RSUs (including with respect to acceleration of vesting and/or the period during which the RSUs remain outstanding post-termination), then the RSUs shall be subject to any additional terms and conditions set forth therein.

15. Compliance with Laws and Regulations. The issuance of Shares and the sale of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state, federal, local and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Shares may be listed or quoted at the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or qualify the Common Stock with any state, federal, or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, Participant agrees that the Company will have unilateral authority to amend the Plan and this RSU Agreement without Participant’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this RSU Agreement will be endorsed with appropriate legends, if any, determined by the Company.

16. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision will be excluded from this Agreement, (b) the balance of this Agreement will be interpreted as if such provision were so excluded and (c) the balance of this Agreement will be enforceable in accordance with its terms.

17. Governing Law and Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be governed, construed, and interpreted in accordance with the laws of the State of Delaware, without giving effect to such state’s conflict of laws rules.

Any and all disputes relating to, concerning or arising from this Agreement, or relating to, concerning or arising from the relationship between the parties evidenced by the Plan or this Agreement, will be brought and heard exclusively in the state and federal courts in New York City, New York. Each of the parties hereby represents and agrees that such party is subject to the personal jurisdiction of said courts; hereby irrevocably consents to the jurisdiction of such courts in any legal or equitable proceedings related to, concerning, or arising from such dispute, and waives, to the fullest extent permitted by law, any objection which such party may now or hereafter have that the laying of the venue of any legal or equitable proceedings related to, concerning, or arising from such dispute which is brought in such courts is improper or that such proceedings have been brought in an inconvenient forum.

18. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall create a right to employment or other Service or be interpreted as forming or amending an employment, service contract or relationship with the Company and this Agreement shall not affect in any manner whatsoever any right or power of the Company, or a Parent, Subsidiary or Affiliate, to terminate Participant’s Service, for any reason, with or without Cause.

19. Consent to Electronic Delivery of All Plan Documents and Disclosures. By Participant’s acceptance of the RSUs (whether in writing or electronically), Participant and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Plan, the Notice, and this Agreement. Participant has reviewed the Plan, the Notice, and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and Agreement, and fully understands all provisions of the Plan, the Notice, and this Agreement. Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice, and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address. By acceptance of the RSUs, Participant agrees to participate

in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company and consents to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements), or other communications or information related to the RSUs and current or future participation in the Plan. Electronic delivery may include the delivery of a link to the Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail, or such other delivery determined at the Company’s discretion. Participant acknowledges that Participant may receive from the Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service, or electronic mail to Stock Administration. Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service, or electronic mail to Stock Administration. Finally, Participant understands that Participant is not required to consent to electronic delivery if local laws prohibit such consent.

20. Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that, depending on Participant’s country of residence, the broker’s country, or the country in which the Shares are listed, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect Participant’s ability to, directly or indirectly, acquire or sell the Shares or rights to Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders Participant placed before possessing the inside information. Furthermore, Participant may be prohibited from (i) disclosing the inside information to any third party, including fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant acknowledges that it is Participant’s responsibility to comply with any applicable restrictions and understands that Participant should consult his or her personal legal advisor on such matters. In addition, Participant acknowledges that he or she read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Participant acquires or disposes of the Company’s securities.

21. Foreign Asset/Account, Exchange Control and Tax Reporting. Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash resulting from his or her participation in the Plan. Participant may be required to report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in Participant’s country and/or repatriate funds received in connection with the Plan within certain time limits or according to specified procedures. Participant acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal and tax advisors on such matters.

22. Code Section 409A. For purposes of this Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this RSU Agreement in connection with Participant’s termination of employment constitute deferred compensation subject to Section 409A, and

Participant is deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment will not be made or commence until the earlier of (a) the expiration of the six (6) month period measured from Participant’s separation from service to the Employer or the Company, or (b) the date of Participant’s death following such a separation from service; provided, however, that such deferral will only be effected to the extent required to avoid adverse tax treatment to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment will be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

23. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the RSUs will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other Service that is applicable to Participant. In addition to any other remedies available under such policy and applicable law, the Company may require the cancellation of Participant’s RSUs (whether vested or unvested) and the recoupment of any gains realized with respect to Participant’s RSUs.

BY ACCEPTING THIS AWARD OF RSUS, PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

APPENDIX

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT

COUNTRY SPECIFIC PROVISIONS FOR EMPLOYEES OUTSIDE THE U.S.

Terms and Conditions

At such time as the Committee issues an RSU under the Plan to a Participant who resides and/or works outside of the United States, the Committee may adopt and include in this Appendix additional terms and conditions that govern such RSU. This Appendix forms part of the Agreement. Any capitalized term used in this Appendix without definition will have the meaning ascribed to it in the Notice, the Agreement or the Plan, as applicable.

If Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working, or Participant transfers employment and/or residency between countries after the Date of Grant, the Company will, in its sole discretion, determine to what extent the additional terms and conditions included herein will apply to Participant under these circumstances.

Notifications

This Appendix also includes information relating to exchange control, securities laws, foreign asset/account reporting and other issues of which Participant should be aware with respect to Participant’s participation in the Plan. The information is based on the securities, exchange control, foreign asset/account reporting and other laws in effect in the respective countries as of the dates set forth below. Such laws are complex and change frequently. As a result, Participant should not rely on the information herein as the only source of information relating to the consequences of Participant’s participation in the Plan because the information may be out of date at the time that Participant vests in the RSUs, sells Shares acquired under the Plan or takes any other action in connection with the Plan.

In addition, the information is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result. Accordingly, Participant should seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.

Finally, if Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working and/or residing, or Participant transfers employment and/or residency after the Date of Grant, the information contained herein may not apply to Participant in the same manner.

Country-Specific Terms

ARGENTINA (AS OF JUNE 2021)

Terms and Conditions

General Matters. In the event that Participant’s Service with the Company or any Subsidiary or Affiliate terminates, all unvested RSUs will be forfeited.

Exchange Control. Certain restrictions and requirements may apply if and when Participant transfers proceeds from the sale of Shares, or any cash dividends paid with respect to such Shares, into Argentina. Exchange control regulations in Argentina are subject to change. Prior to the vesting of the RSUs or the remittance of funds into Argentina, Participant should consult Participant’s personal legal advisor regarding any exchange control obligations Participant may have in connection with Participant’s participation in the Plan.

Notifications

Securities Laws. The RSUs and Participant’s participation in the Plan is an opportunity to invest in the Company’s capital stock and is not risk free. Neither the RSUs nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina. The offer is a private placement directed only to the Participant and not subject to the supervision of any Argentine governmental authority.

Foreign Asset Reporting. Participant is required to report any cash or share accounts held in a foreign institution. The information must be submitted to Argentinian tax authorities. In addition, when Participant buys, sells, transfers or otherwise disposes of the Shares, Participant must register the transaction with the Federal Tax Administration.

CANADA (AS OF JUNE 2021)

Terms and Conditions

Award Payable Only in Shares. The grant of the RSUs does not give Participant any right to receive a cash payment, and the RSUs are payable in Shares only.

French Language Provisions. The following provisions will apply if Participant is a resident of Quebec: The parties acknowledge that it is their express wish that the RSU Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la redaction en anglais de cette convention (“Agreement”), ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention.

Corporate Transactions. The following shall be added to the end of Section 21.1 of the Plan:

“All adjustments or substitutions hereunder shall be made in compliance with paragraph 7(1.4) of the Income Tax Act (Canada) to the extent applicable.”

INDIA (AS OF MAY 2021)

Notifications

Exchange Control. Any proceeds from the sale of Shares acquired under the plan must be repatriated to India within 90 days from the date of sale of such securities notification of receipt of such foreign currencies by the bank or the date of remittance. Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the foreign currency is deposited and should retain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the employer requests proof of such repatriation. Additionally, any Participant who receives any foreign currency from dividends is required to remit such funds to India within 60 days from the date of notification of receipt of such foreign currencies by the bank or the date of remittance.

Foreign Asset Reporting

Participant is required to report any cash or share accounts held in a foreign institution. The information must be submitted to the Tax Authorities (on Form Schedule FA of the Income Tax Return - Form ITR 2) by July 31.

EX-10.3

Exhibit 10.3

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

GLOBAL NOTICE OF STOCK OPTION GRANT

You (the “Optionee”) have been granted an option to purchase shares of Common Stock of the Company (the “Option”) under the Compass, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”), subject to the terms and conditions of the Plan, this Global Notice of Stock Option Grant (the “Notice”), and the attached Global Stock Option Agreement (the “Option Agreement”), including any applicable country-specific provisions in the appendix attached here (the “Appendix”), which constitutes part of the Option Agreement.

Unless otherwise defined herein, the terms defined in the Plan will have the same meanings in this Notice and the electronic representation of this Notice established and maintained by the Company or a third party designated by the Company.

Name:
Address:
Grant Number:
Date of Grant:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares:
Type of Option:	Non-Qualified Stock Option
[(for U.S. tax purposes)]
	[            Incentive Stock Option]
Expiration Date:	________ __, 20__; the Option expires earlier if Optionee’s Service terminates earlier, as described in the Option Agreement.
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan, and the Agreement, the Option will vest in accordance with the following schedule: [insert applicable vesting schedule, which may include performance metrics]

By accepting (whether in writing, electronically, or otherwise) the Option, Optionee acknowledges and agrees to the following:

1) Optionee understands that Optionee’s Service is for an unspecified duration, can be terminated at any time (i.e., is “at-will”) except where otherwise prohibited by applicable law, and that nothing in this Notice, the Option Agreement, or the Plan changes the nature of that relationship. Optionee acknowledges that the vesting of the Option pursuant to this Notice is subject to Optionee’s continuing Service. To the extent permitted by applicable law, Optionee agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Optionee’s Service status changes between full- and part-time and/or in the event the Optionee is on a leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as determined by the Committee. Optionee

2) This grant is made under and governed by the Plan, the Agreement, and this Notice, and this Notice is subject to the terms and conditions of the Agreement and the Plan, both of which are incorporated herein by reference. Optionee has read the Notice, the Option Agreement and, the Plan.

3) Optionee has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Optionee acquires or disposes of the Company’s securities.

4) By accepting the Option, Optionee consents to electronic delivery and participation as set forth in the Option Agreement.

You do not have to accept the Option. If you wish to decline your Option award, you should promptly notify Compass, Inc. of your decision at [email]. If you do not provide such notification within 14 days of the Date of Grant, you will be deemed to have accepted your Option on the terms and conditions set forth herein.

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

GLOBAL STOCK OPTION AGREEMENT

Unless otherwise defined in this Global Stock Option Agreement (this “Option Agreement”), any capitalized terms used herein will have the same meaning ascribed to them in the Compass, Inc. 2021 Equity Incentive Plan (the “Plan”).

Optionee has been granted an option to purchase Shares (the “Option”) of Compass, Inc. (the “Company”), subject to the terms, restrictions, and conditions of the Plan, the Notice of Stock Option Grant (the “Notice”), and this Option Agreement, including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of this Option Agreement. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of the Notice or this Option Agreement, the terms and conditions of the Plan will prevail.

1. Vesting Rights. Subject to the applicable provisions of the Plan and this Option Agreement, the Option may be exercised, in whole or in part, in accordance with the Vesting Schedule set forth in the Notice. Optionee acknowledges and agrees that the Vesting Schedule may change prospectively in the event Optionee’s Service status changes between full and part-time and/or in the event Optionee is on a leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as determined by the Committee. Optionee acknowledges that the vesting of the Option pursuant to this Notice and Agreement is subject to Optionee’s continuing Service.

2. Grant of Option. Optionee has been granted an Option for the number of Shares set forth in the Notice at the exercise price per Share in U.S. Dollars set forth in the Notice (the “Exercise Price”). [If designated in the Notice as an Incentive Stock Option (“ISO”), the Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if the Option is intended to be an ISO, to the extent that it exceeds the U.S. $100,000 rule of Code Section 422(d) it will be treated as a Nonqualified Stock Option (“NSO”).]

3. Termination Period.

(a) General Rule. If Optionee’s Service terminates for any reason except death or Disability, and other than for Cause, then the Option will expire at the close of business at Company headquarters on the date three (3) months after Optionee’s Termination Date (as defined below) (with any exercise beyond three (3) months after the date Optionee’s employment terminates deemed to be the exercise of an NSO). The Company determines when Optionee’s Service terminates for all purposes under this Option Agreement.

(b) Death; Disability. If Optionee dies before Optionee’s Service terminates (or Optionee dies within three (3) months of Optionee’s termination of Service other than for Cause), then the Option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of death (subject to the expiration details in Section 7). If Optionee’s Service terminates because of Optionee’s Disability, then the Option will expire at the close of business at Company headquarters on the date twelve (12) months after Optionee’s Termination Date (subject to the expiration details in Section 7).

(c) Cause. Unless otherwise determined by the Committee, the Option (whether or not vested) will terminate immediately upon the Optionee’s cessation of Services if the Company reasonably determines in good faith that such cessation of Services has resulted in connection with an act or failure to act constituting Cause (or the Optionee’s Services could have been terminated for Cause (without regard to the lapsing of any required notice or cure periods in connection therewith) at the time the Optionee terminated Services). If the Optionee is party to an employment or severance agreement with the Company that contains a definition of “cause” for termination of employment, “Cause” shall have the

meaning ascribed to such term in such agreement. The Optionee’s employment shall be considered to have been terminated for Cause if the Company determines, within 30 days after the Optionee’s resignation, that termination for Cause was warranted. In addition, if the Optionee violates the non-competition, non-solicitation, or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, the right to exercise this Option shall terminate immediately upon such violation.

(d) No Notification of Exercise Periods. Optionee is responsible for keeping track of these exercise periods following Optionee’s termination of Service for any reason. The Company will not provide further notice of such periods. In no event will the Option be exercised later than the Expiration Date set forth in the Notice.

(e) Termination. For purposes of this Option, Optionee’s Service will be considered terminated as of the date Optionee is no longer providing Service to the Company, its Parent or one of its Subsidiaries or Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any) (the “Termination Date”). The Committee will have the exclusive discretion to determine when Optionee is no longer actively providing services for purposes of Optionee’s Option (including whether Optionee may still be considered to be providing services while on an approved leave of absence). Unless otherwise provided in this Option Agreement or determined by the Company, Optionee’s right to vest in this Option under the Plan, if any, will terminate as of the Termination Date and will not be extended by any notice period (e.g., Optionee’s period of Service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any). Following the Termination Date, Optionee may exercise the Option only as set forth in the Notice and this Section, provided that the period (if any) during which Optionee may exercise the Option after the Termination Date, if any, will commence on the date Optionee ceases to provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where Optionee is employed or terms of Optionee’s employment agreement, if any. If Optionee does not exercise this Option within the termination period set forth in the Notice or the termination periods set forth above, the Option will terminate in its entirety. In no event, may any Option be exercised after the Expiration Date of the Option as set forth in the Notice.

4. Exercise of Option.

(a) Right to Exercise. The Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Option Agreement. In the event of Optionee’s death, Disability, termination for Cause, or other cessation of Service, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice, and this Option Agreement. The Option may not be exercised for a fraction of a Share.

(b) Method of Exercise. The Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”), which will state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice will be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice will be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares together with any applicable Tax-Related Items (as defined in Section 8 below). The Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price and payment of any applicable Tax-Related Items. No Shares will be issued pursuant to the exercise of the Option unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the Shares are then listed and any exchange control requirements. Assuming such compliance, for United States income tax purposes the Exercised Shares will be considered transferred to Optionee on the date the Option is exercised with respect to such Exercised Shares.

(c) Exercise by Another. If another person wants to exercise the Option after it has been transferred to him or her in compliance with this Option Agreement, that person must prove to the Company’s satisfaction that he or she is entitled to exercise the Option. That person must also complete the proper Exercise Notice form (as described above) and pay the Exercise Price (as described below) and any applicable Tax-Related Items (as described below).

5. Method of Payment. Payment of the aggregate Exercise Price will be by any of the following, or a combination thereof, at the election of Optionee:

(a) Optionee’s personal check (or readily available funds), wire transfer, or a cashier’s check;

(b) certificates for shares of Company stock that Optionee owns, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. Instead of surrendering shares of Company stock, Optionee may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to Optionee. However, Optionee may not surrender, or attest to the ownership of, shares of Company stock in payment of the Exercise Price of Optionee’s Option if Optionee’s action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;

(c) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by the Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price and any applicable Tax-Related Items. The balance of the sale proceeds, if any, will be delivered to Optionee. The directions must be given by signing a special notice of exercise form provided by the Company; or

(d) any other method authorized by the Company;

provided, however, that the Company may restrict the available methods of payment to facilitate compliance with applicable law or administration of the Plan. In particular, if Optionee is located outside the United States, Optionee should review the applicable provisions of the Appendix for any such restrictions that may currently apply.

6. Non-Transferability of Option. In general, except as provided below, only Optionee may exercise this Option prior to Optionee’s death. Optionee may not transfer or assign this Option, except as provided below. For instance, Optionee may not sell this Option or use it as security for a loan. If Optionee attempts to do any of these things, this Option will immediately become invalid. However, if Optionee is a U.S. taxpayer, Optionee may dispose of this Option in Optionee’s will. If Optionee is a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this Option as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing Optionee’s household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which Optionee or one or more of these persons control the management of assets, and any entity in which Optionee or one or more of these persons own more than 50% of the voting interest. In addition, if Optionee is a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this Option to Optionee’s spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow Optionee to transfer this Option only if both Optionee and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. This Option may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during Optionee’s lifetime only by Optionee, Optionee’s guardian, or legal

representative, as permitted in the Plan and applicable local laws. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee. The Committee may permit additional transfers on a case-by-case basis to extent permissible under applicable law. The terms of the Plan and this Option Agreement will be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

7. Term of Option. The Option will in any event expire on the expiration date set forth in the Notice, which date is no more than ten (10) years after the Date of Grant [(five (5) years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 5.3 of the Plan applies).]

8. Taxes.

(a) Responsibility for Taxes. Optionee acknowledges that, to the extent permitted by applicable law, regardless of any action taken by the Company or, if different, a Parent, Subsidiary, or Affiliate employing or retaining Optionee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account, or other tax related items related to Optionee’s participation in the Plan and legally applicable to Optionee (“Tax-Related Items”) is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, but not limited to, the grant, vesting, or exercise of this Option; the subsequent sale of Shares acquired pursuant to such exercise; and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if Optionee is subject to Tax-Related Items in more than one jurisdiction, Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. OPTIONEE SHOULD CONSULT A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH OPTIONEE RESIDES OR IS SUBJECT TO TAXATION PRIOR TO EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

(b) Withholding. Prior to any relevant taxable or tax withholding event, to the extent permitted by applicable law and as applicable, Optionee agrees to make arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following, all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy [and 10b5-1 Trading Plan Policy, if applicable]:

(i) withholding from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer; or

(ii) withholding from proceeds of the sale of Shares acquired at exercise of this Option either through a voluntary sale or through a mandatory sale arranged by the Company (on Optionee’s behalf pursuant to this authorization and without further consent);

(iii) withholding Shares to be issued upon exercise of the Option, provided the Company only withholds the number of Shares necessary to satisfy no more than applicable statutory withholding amounts;

(iv) Optionee’s payment of a cash amount (including by check representing readily available funds or a wire transfer); or

(v) any other arrangement approved by the Committee and permitted under applicable law;

provided, however, that if Optionee is a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale (unless the Committee as constituted in accordance with Rule 16b-3 of the Exchange Act shall establish an alternate method from alternatives (i) – (v) above prior to the Tax-Related Items withholding event).

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including up to the maximum permissible statutory rate for Optionee’s tax jurisdiction(s) in which case Optionee will have no entitlement to the equivalent amount in Shares and will receive a refund of any over-withheld amount in cash in accordance with applicable law. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued the full number of Exercised Shares; notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the withholding obligation for Tax-Related Items.

Finally, Optionee agrees to pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold or account for as a result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items.

(c) [Notice of Disqualifying Disposition of ISO Shares. If Optionee is subject to Tax-Related Items in the United States and sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i) two (2) years after the grant date, or (ii) one (1) year after the exercise date, Optionee will immediately notify the Company in writing of such disposition. Optionee agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out any wages or other cash compensation paid to Optionee by the Company and/or the Employer.]

9. Nature of Grant. By accepting the Option, Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the Option is exceptional, voluntary, and occasional, and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;

(d) Optionee is voluntarily participating in the Plan;

(e) the Option and Optionee’s participation in the Plan will not create a right to employment or be interpreted as forming or amending an employment or service contract with the Company or the Employer, and will not interfere with the ability of the Company or the Employer, as applicable, to terminate Optionee’s employment or service relationship (if any);

(f) the Option and the Shares subject to the Option, and the income and value of same, are not intended to replace any pension rights or compensation;

(g) the Option and the Shares subject to the Option, and the income and value of same, are not part of normal or expected compensation for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement, or welfare benefits or similar payments;

(h) unless otherwise agreed with the Company, the Option, and the Shares subject to the Option, and the income and value of same, are not granted as consideration for, or in connection with, the service Optionee may provide as a director of a Parent, Subsidiary, or Affiliate;

(i) the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty; if the underlying Shares do not increase in value, the Option will have no value; if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease, even below the Exercise Price;

(j) no claim or entitlement to compensation or damages will arise from forfeiture of the Option resulting from Optionee’s termination of Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any), and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably agrees never to institute any claim against the Employer, the Company, and any Parent, Subsidiary, or Affiliate; waives his or her ability, if any, to bring any such claim; and releases the Employer, the Company, and any Parent, Subsidiary, or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee will be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Option Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any Corporate Transaction affecting the Shares; and

(l) neither the Employer, the Company, or any Parent, Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between Optionee’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise.

(m) the following provisions apply only if Optionee is providing services outside the United States:

(i) the Option and the Shares subject to the Option are not part of normal or expected compensation or salary for any purpose; and

(ii) Optionee acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between Optionee’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercised

10. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s participation in the Plan or Optionee’s acquisition or sale of the underlying Shares. Optionee acknowledges, understands, and agrees that he or she should consult with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

11. Data Privacy. Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this Option Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and any Parent, Subsidiary or Affiliate for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan.

Optionee understands that the Company and the Employer may hold certain personal information about Optionee, including, but not limited to, Optionee’s name, home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Optionee understands that Data will be transferred to the Company’s broker, or other third party (“Online Administrator”) and its affiliated companies or such other stock plan service provider as may be designated by the Company from time to time that is assisting the Company with the implementation, administration and management of the Plan. Optionee understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than Optionee’s country. Optionee understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. Optionee authorizes the Company, the Company’s broker, or such other stock plan service provider as may be designated by the Company from time to time, and any other possible recipients that may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage Optionee’s participation in the Plan. Optionee understands if he or she resides outside the United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting his or her local human resources representative. Further, Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If Optionee does not consent, or if Optionee later seeks to revoke his or her consent, his or her employment status or service with the Employer will not be affected; the only consequence of refusing or withdrawing Optionee’s consent is that the Company would not be able to grant Options or other equity awards to Optionee or administer or maintain such awards. Therefore, Optionee understands that refusing or withdrawing his or her consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of Optionee’s refusal to consent or withdrawal of consent, Optionee understands that he or she may contact his or her local human resources representative.

Finally, upon request of the Company or the Employer, Optionee agrees to provide an executed data privacy consent form (or any other agreements or consents) that the Company or the Employer may deem necessary to obtain from Optionee for the purpose of administering Optionee’s participation in the Plan in compliance with the data privacy laws in Optionee’s country, either now or in the future. Optionee understands and agrees that Optionee will not be able to participate in the Plan if Optionee fails to provide any such consent or agreement requested by the Company and/or the Employer.

12. Language. Optionee acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Option Agreement. Furthermore, if Optionee has received this Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

13. Appendix. Notwithstanding any provisions in this Option Agreement, the Option will be subject to any special terms and conditions set forth in any appendix to this Option Agreement for

Optionee’s country. Moreover, if Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Option Agreement.

14. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option, and on any Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

15. Acknowledgement. The Company and Optionee agree that the Option is granted under and governed by the Notice, this Option Agreement and the Plan (incorporated herein by reference). Optionee: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Optionee has carefully read and is familiar with their provisions, and (c) hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

16. Entire Agreement; Enforcement of Rights. This Option Agreement, the Plan, and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments, or negotiations concerning the purchase of the Shares hereunder are superseded. No adverse modification of, or adverse amendment to, this Option Agreement, nor any waiver of any rights under this Option Agreement, will be effective unless in writing and signed by the parties to this Option Agreement (which writing and signing may be electronic). The failure by either party to enforce any rights under this Option Agreement will not be construed as a waiver of any rights of such party. Notwithstanding the foregoing, if Optionee is a party to any employment or severance agreement with the Company that provides for any additional or replacement terms with respect to this Option (including with respect to acceleration of vesting and/or the period during which the Option remains outstanding and/or exercisable post-termination), then the Option shall be subject to any additional terms and conditions set forth therein.

17. Compliance with Laws and Regulations. The issuance of Shares and the sale of Shares will be subject to and conditioned upon compliance by the Company and Optionee with all applicable state, federal, local and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Shares may be listed or quoted at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Common Stock with any state, federal, or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, Optionee agrees that the Company will have unilateral authority to amend the Plan and this Option Agreement without Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this Option Agreement will be endorsed with appropriate legends, if any, determined by the Company.

18. Severability. If one or more provisions of this Option Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision will be excluded from this Option Agreement, (b) the balance of this Option Agreement will be interpreted as if such provision were so excluded and (c) the balance of this Option Agreement will be enforceable in accordance with its terms.

19. Governing Law and Venue. This Option Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to such state’s conflict of laws rules.

Any and all disputes relating to, concerning or arising from this Option Agreement, or relating to, concerning or arising from the relationship between the parties evidenced by the Plan or this Option

Agreement, will be brought and heard exclusively in the state and federal courts in New York City, New York. Each of the parties hereby represents and agrees that such party is subject to the personal jurisdiction of said courts; hereby irrevocably consents to the jurisdiction of such courts in any legal or equitable proceedings related to, concerning, or arising from such dispute, and waives, to the fullest extent permitted by law, any objection which such party may now or hereafter have that the laying of the venue of any legal or equitable proceedings related to, concerning, or arising from such dispute which is brought in such courts is improper or that such proceedings have been brought in an inconvenient forum.

20. No Rights as Employee, Director or Consultant. Nothing in this Option Agreement will affect in any manner whatsoever any right or power of the Employer or the Company to terminate Optionee’s Service, for any reason, with or without Cause.

21. Consent to Electronic Delivery of All Plan Documents and Disclosures. By Optionee’s acceptance of the Notice (whether in writing or electronically), Optionee and the Company agree that the Option is granted under and governed by the terms and conditions of the Plan, the Notice, and this Option Agreement. Optionee has reviewed the Plan, the Notice, and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice and Agreement, and fully understands all provisions of the Plan, the Notice, and this Option Agreement. Optionee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice, and this Option Agreement. Optionee further agrees to notify the Company upon any change in Optionee’s residence address. By acceptance of the Option, Optionee agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company and consents to the electronic delivery of the Notice, this Option Agreement, the Plan, account statements, Plan prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements), or other communications or information related to the Option and current or future participation in the Plan. Electronic delivery may include the delivery of a link to the Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail, or such other delivery determined at the Company’s discretion. Optionee acknowledges that Optionee may receive from the Company a paper copy of any documents delivered electronically at no cost if Optionee contacts the Company by telephone, through a postal service, or electronic mail to Stock Administration. Optionee further acknowledges that Optionee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Optionee understands that Optionee must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Optionee understands that Optionee’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Optionee has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service, or electronic mail to Stock Administration. Finally, Optionee understands that Optionee is not required to consent to electronic delivery if local laws prohibit such consent.

22. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that, depending on Optionee’s country, the broker’s country, or the country in which the Shares are listed, Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect Optionee’s ability to, directly or indirectly, acquire or sell the Shares or rights to Shares under the Plan during such times as Optionee is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders Optionee placed before possessing the inside information. Furthermore, Optionee may be prohibited from (i) disclosing the inside information to any third party, including fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility to comply with any applicable restrictions and understands that Optionee should consult his or her personal legal advisor on such matters. In addition, Optionee acknowledges that he or she has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Optionee acquires or disposes of the Company’s securities.

23. Foreign Asset/Account, Exchange Control and Tax Reporting. Optionee may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash resulting from his or her participation in the Plan. Optionee may be required to report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in Optionee’s country and/or repatriate funds received in connection with the Plan within certain time limits or according to specified procedures. Optionee acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal and tax advisors on such matters.

24. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Option will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Optionee’s employment or other Service that is applicable to Optionee. In addition to any other remedies available under such policy and applicable law, the Company may require the cancellation of Optionee’s Option (whether vested or unvested) and the recoupment of any gains realized with respect to Optionee’s Option.

BY ACCEPTING THIS OPTION, OPTIONEE AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

APPENDIX

COMPASS, INC.

2021 EQUITY INCENTIVE PLAN

GLOBAL STOCK OPTION AWARD AGREEMENT

COUNTRY SPECIFIC PROVISIONS FOR EMPLOYEES OUTSIDE THE U.S.

Terms and Conditions

At such time as the Committee issues an Option under the Plan to an Optionee who resides and/or works outside of the United States, the Committee may adopt and include in this Appendix additional terms and conditions that govern such Option. This Appendix forms part of the Option Agreement. Any capitalized term used in this Appendix without definition will have the meaning ascribed to it in the Notice, the Option Agreement or the Plan, as applicable.

If Optionee is a citizen or resident of a country, or is considered resident of a country, other than the one in which Optionee is currently working, or Optionee transfers employment and/or residency between countries after the Date of Grant, the Company will, in its sole discretion, determine to what extent the additional terms and conditions included herein will apply to Optionee under these circumstances.

Notifications

This Appendix also includes information relating to exchange control, securities laws, foreign asset/account reporting and other issues of which Optionee should be aware with respect to Optionee’s participation in the Plan. The information is based on the securities, exchange control, foreign asset/account reporting and other laws in effect in the respective countries as of the dates set forth below. Such laws are complex and change frequently. As a result, Optionee should not rely on the information herein as the only source of information relating to the consequences of Optionee’s participation in the Plan because the information may be out of date at the time that Optionee exercises the Option, sells Shares acquired under the Plan or takes any other action in connection with the Plan.

In addition, the information is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to assure Optionee of any particular result. Accordingly, Optionee should seek appropriate professional advice as to how the relevant laws in Optionee’s country may apply to Optionee’s situation.

Finally, if Optionee is a citizen or resident of a country, or is considered resident of a country, other than the one in which Optionee is currently working and/or residing, or Optionee transfers employment and/or residency after the Date of Grant, the information contained herein may not apply to Optionee in the same manner.

Country-Specific Terms

INDIA (JULY 2021)

Terms and Conditions

Method of Payment. The following provisions supplement Section 5 of the Option Agreement:

Due to legal restrictions in India, Optionee will not be permitted to pay the Exercise Price by a cashless exercise through irrevocable directions to a securities broker approved by the Company to sell part of the Shares covered by this Option and deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price. However, Optionee will be permitted to pay the Exercise Price by a cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all of the Shares covered by this Option and deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price. The Company reserves the right to allow additional methods of payment depending on the development of local law.

Notifications

Exchange Control Information. Under the Liberalized Remittance Scheme (“LRS”), an employee is allowed to remit up to a maximum of USD 250,000 per year of foreign currency without the need for Reserve Bank of India (“RBI”) approval. Any amounts in excess of the annual USD 250,000 quota will require RBI approval. Alternatively, the Company may be able to fulfill the terms of the General Permission, outlined above, and rely on this exemption rather than the Liberalized Remittance Scheme. From October 1, 2020, any outward remittance under the LRS, which is for INR 700,000 or more, will be subject to a 5% tax at source (“TCS”), which will be collected by the authorized dealer.

The LRS permits employees to retain and reinvest the income earned abroad either from sale of shares or from dividends paid since no repatriation of such income is required. As a result, as long as the employee does not exceed the permitted annual investment limit, he or she could, in principle, participate in a dividend reinvestment plan without the need for RBI approval.

Under the LRS, the employee is required to file with the RBI a completed form A2 and make his or her remittances through an authorized dealer. Optionee is responsible for complying with applicable exchange controls laws of India; because these laws may change frequently, Optionee is advised to consult with Optionee’s personal advisor regarding Optionee’s obligations.

Any proceeds from the sale of shares acquired under the plan must be repatriated to India 90 days from the date of receipt of such foreign currencies by the bank. The employee will receive a foreign inward remittance certificate (“FIRC”) from the bank where the foreign currency is deposited and should retain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the employer requests proof of such repatriation. In addition, any employee who receives any foreign currency from dividends is required to remit such funds to India within 180 days from the date of notification of receipt of such foreign currencies by the bank or the date of remittance.

Foreign Asset Reporting. Optionee is required to report any cash or share accounts held in a foreign institution. The information must be submitted to the Tax Authorities (on Form Schedule FA of the Income Tax Return - Form ITR 2) by July 31.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Reffkin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Compass, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2021

By:	/s/ Robert Reffkin
	Robert Reffkin
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kristen Ankerbrandt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Compass, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2021

By:	/s/ Kristen Ankerbrandt
	Kristen Ankerbrandt
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Reffkin, Chief Executive Officer of Compass, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.

Date: August 10 2021

By:	/s/ Robert Reffkin
	Robert Reffkin
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kristen Ankerbrandt, Chief Financial Officer of Compass, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.

Date: August 10, 2021

By:	/s/ Kristen Ankerbrandt
	Kristen Ankerbrandt
	Chief Financial Officer
	(Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Aug. 05, 2021
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Registrant Name	Compass, Inc.
Entity Central Index Key	0001563190
Current Fiscal Year End Date	--12-31
Entity File Number	001-40291
Entity Tax Identification Number	30-0751604
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Trading Symbol	COMP
Security Exchange Name	NYSE
Title of 12(g) Security	Class A Common Stock, $0.00001 par value per share
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	90 Fifth Avenue, 3rd Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10011
City Area Code	212
Local Phone Number	913-9058
Entity Common Stock, Shares Outstanding		394,518,773

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	$ 810.7	$ 440.1
Accounts receivable, net of allowance of $8.6 and $8.1, respectively	66.6	54.8
Compass Concierge receivables, net of allowance of $19.3 and $17.2, respectively	48.1	49.5
Other current assets	73.2	54.9
Total current assets	998.6	599.3
Property and equipment, net	146.4	141.7
Operating lease right-of-use assets	438.3	426.6
Intangible assets, net	107.4	45.6
Goodwill	177.4	119.8
Other non-current assets	43.5	32.1
Total assets	1,911.6	1,365.1
Current liabilities
Accounts payable	31.8	36.6
Commissions payable	91.7	62.0
Accrued expenses and other current liabilities	140.2	106.8
Current lease liabilities	76.6	68.1
Concierge credit facility	11.1	8.4
Total current liabilities	351.4	281.9
Non-current lease liabilities	441.0	435.9
Other non-current liabilities	43.7	23.5
Total liabilities	836.1	741.3
Commitments and contingencies (Note 6)
Convertible preferred stock, $0.00001 par value, 0 and 246,430,170 shares authorized at June 30, 2021 and December 31, 2020, respectively; 0 and 237,047,550 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	0.0	1,486.7
Stockholders' Equity (Deficit)
Common stock, $0.00001 par value, 13,850,000,000 and 700,754,910 shares authorized at June 30, 2021 and December 31, 2020, respectively; 396,669,967 and 125,221,900 shares issued at June 30, 2021 and December 31, 2020, respectively; 394,419,967 and 122,971,900 shares outstanding at June 30, 2021 and December 31, 2020, respectively	0.0	0.0
Additional paid-in capital	2,395.9	238.0
Accumulated deficit	(1,320.4)	(1,100.9)
Total stockholders' equity (deficit)	1,075.5	(862.9)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)	$ 1,911.6	$ 1,365.1

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for credit loss on accounts receivable current	$ 8.6	$ 8.1
Allowance for credit loss on financing receivable current	$ 19.3	$ 17.2
Convertible preferred stock par or stated value per share	$ 0.00001	$ 0.00001
Convertible preferred stock shares authorized	0	246,430,170
Convertible preferred stock shares issued	0	237,047,550
Convertible preferred stock shares outstanding	0	237,047,550
Common stock par or stated value per share	$ 0.00001	$ 0.00001
Common stock shares authorized	13,850,000,000	700,754,910
Common stock shares issued	396,669,967	125,221,900
Common stock shares outstanding	394,419,967	122,971,900

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Revenue	$ 1,951.4	$ 682.1	$ 3,065.3	$ 1,302.0
Operating expenses
Commissions and other related expense	1,590.4	559.0	2,532.6	1,067.8
Sales and marketing	124.3	90.8	235.6	197.3
Operations and support	96.7	44.5	166.7	105.6
Research and development	73.5	34.2	170.1	73.0
General and administrative	59.4	26.5	152.3	53.0
Depreciation and amortization	14.9	12.7	28.4	25.1
Total operating expenses	1,959.2	767.7	3,285.7	1,521.8
Loss from operations	(7.8)	(85.6)	(220.4)	(219.8)
Investment income, net	0.0	0.5	0.0	2.0
Interest expense	(0.6)		(1.1)
Loss before income taxes	(8.4)	(85.1)	(221.5)	(217.8)
Benefit from income taxes	1.3	0.9	2.0	0.9
Net loss	$ (7.1)	$ (84.2)	$ (219.5)	$ (216.9)
Net loss per share attributable to common stockholders, basic and diluted	$ (0.02)	$ (0.77)	$ (0.87)	$ (1.99)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	377,615,338	109,120,449	252,958,956	108,942,655

XML

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment [Member]	Convertible Preferred Stock [member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Accumulated Deficit [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]
Beginning balance at Dec. 31, 2019	$ (681.6)		$ 1,525.7		$ 143.4	$ 0.1	$ (825.1)
Beginning balance, shares at Dec. 31, 2019			246,365,350	109,294,060
Cumulative change in accounting principle (ASU 2016-13)		$ (5.6)						$ (5.6)
Net loss	(216.9)						(216.9)
Unrealized loss on investments	(0.1)					(0.1)
Issuance of shares in connection with acquisition ,Shares				401,310
Issuance of Series G convertible preferred stock, net of issuance costs	1.2		$ 1.0		1.2
Issuance of Series G convertible preferred stock, net of issuance costs, Shares			64,820
Exercise of stock options	3.4				3.4
Exercise of stock options, Shares				950,120
Stock-based compensation	24.1				24.1
Ending balance at Jun. 30, 2020	(875.5)		$ 1,526.7		172.1	0.0	(1,047.6)
Ending balance, shares at Jun. 30, 2020			246,430,170	110,645,490
Beginning balance at Mar. 31, 2020	(808.6)		$ 1,526.7		154.7	0.1	(963.4)
Beginning balance, shares at Mar. 31, 2020			246,430,170	109,717,910
Net loss	(84.2)						(84.2)
Unrealized loss on investments	(0.1)					(0.1)
Issuance of shares in connection with acquisition	1.2				1.2
Issuance of shares in connection with acquisition ,Shares				179,920
Exercise of stock options	3.2				3.2
Exercise of stock options, Shares				747,660
Stock-based compensation	13.0				13.0
Ending balance at Jun. 30, 2020	(875.5)		$ 1,526.7		172.1	$ 0.0	(1,047.6)
Ending balance, shares at Jun. 30, 2020			246,430,170	110,645,490
Beginning balance at Dec. 31, 2020	(862.9)		$ 1,486.7		238.0		(1,100.9)
Beginning balance, shares at Dec. 31, 2020			237,047,550	122,971,900
Net loss	(219.5)						(219.5)
Issuance of shares in connection with acquisition	10.1				10.1
Issuance of shares in connection with acquisition ,Shares				855,740
Conversion of Series D convertible preferred stock	67.6		$ (67.6)		67.6
Conversion of Series D convertible preferred stock , Shares			(15,920,450)	15,920,450
Conversion of convertible preferred stock to common stock in connection with the initial public offering	1,419.1		$ (1,419.1)		1,419.1
Conversion of convertible preferred stock to common stock in connection with the initial public offering, Shares			(221,127,100)	223,033,725
Issuance of common stock in connection with the initial public offering, offering cost	438.7				438.7
Issuance of common stock in connection with the initial public offering, offering cost, Shares				26,296,438
Exercise of stock options	$ 11.2				11.2
Exercise of stock options, Shares	5,341,714			4,523,124
Early exercise of stock options				818,590
Vesting of early exercised of stock options	$ 2.5				2.5
Stock-based compensation	208.7				208.7
Ending balance at Jun. 30, 2021	1,075.5		$ 0.0		2,395.9		(1,320.4)
Ending balance, shares at Jun. 30, 2021			0	394,419,967
Beginning balance at Mar. 31, 2021	(827.3)		$ 1,419.1		486.0		(1,313.3)
Beginning balance, shares at Mar. 31, 2021			221,127,100	143,852,070
Net loss	(7.1)						(7.1)
Issuance of shares in connection with acquisition	5.8				5.8
Issuance of shares in connection with acquisition ,Shares				606,510
Conversion of convertible preferred stock to common stock in connection with the initial public offering	1,419.1		$ (1,419.1)		1,419.1
Conversion of convertible preferred stock to common stock in connection with the initial public offering, Shares			(221,127,100)	223,033,725
Issuance of common stock in connection with the initial public offering, offering cost	438.7				438.7
Issuance of common stock in connection with the initial public offering, offering cost, Shares				26,296,438
Exercise of stock options	$ 1.3				1.3
Exercise of stock options, Shares				550,194
Early exercise of stock options	81,030
Vesting of early exercised of stock options	$ 1.3				1.3
Stock-based compensation	43.7				43.7
Ending balance at Jun. 30, 2021	$ 1,075.5		$ 0.0		$ 2,395.9		$ (1,320.4)
Ending balance, shares at Jun. 30, 2021			0	394,419,967

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating Activities
Net loss	$ (219.5)	$ (216.9)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	28.4	25.1
Stock-based compensation	221.8	24.1
Change in acquisition related contingent consideration	(0.5)	1.9
Bad debt expense	6.2	9.6
Amortization of debt issuance costs	0.6
Changes in operating assets and liabilities:
Accounts receivable	(10.4)	(30.9)
Compass Concierge receivables	(3.3)	(28.0)
Other current assets	(18.2)	6.2
Other non-current assets	(10.8)	(3.1)
Operating lease right-of-use assets and operating lease liabilities	2.0	23.1
Accounts payable	(5.6)	(11.8)
Commissions payable	27.8	31.1
Accrued expenses and other liabilities	25.6	9.7
Net cash provided by (used in) operating activities	44.1	(159.9)
Investing Activities
Proceeds from sales and maturities of marketable securities	0.0	44.4
Capital expenditures	(20.1)	(19.2)
Payments for acquisitions, net of cash acquired	(103.8)	(0.8)
Net cash (used in) provided by investing activities	(123.9)	24.4
Financing Activities
Proceeds from issuance of convertible preferred stock, net of issuance costs	0.0	1.0
Proceeds from exercise and early exercise of stock options	16.2	3.4
Proceeds from drawdowns on Concierge credit facility	15.5
Repayments of drawdowns on Concierge credit facility	(12.8)
Payments of contingent consideration related to acquisitions	(6.7)	(1.4)
Payments of debt issuance costs for the Revolving Credit and Guaranty Agreement	(1.4)
Proceeds from issuance of common stock upon initial public offering, net of offering costs	439.6
Net cash provided by financing activities	450.4	3.0
Net increase (decrease) in cash and cash equivalents	370.6	(132.5)
Cash and cash equivalents at beginning of period	440.1	491.7
Cash and cash equivalents at end of period	810.7	359.2
Supplemental disclosures of cash flow information:
Cash paid for interest	0.5
Supplemental non-cash information:
Conversion of convertible preferred stock in connection with initial public offering	1,419.1
Conversion of Series D convertible preferred stock	67.6
Common Class A [Member]
Supplemental non-cash information:
Issuance of common stock for acquisitions	$ 10.1	$ 1.2

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Business and Basis of Presentation

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

1. Business and Basis of Presentation

Description of the Business

Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors of the Company approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc.

The Company provides an end-to-end platform that empowers its residential real estate agents to deliver exceptional service to seller and buyer clients. The Company’s platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service and other critical functionality, all custom-built for the real estate industry which enables the Company’s core brokerage services. The platform also uses proprietary data, analytics, artificial intelligence, and machine learning to deliver high value recommendations and outcomes for Compass agents and their clients.

The Company’s agents are independent contractors who affiliate their real estate licenses with the Company, operating their businesses on the Company’s platform and under the Compass brand. The Company generates revenue from clients through its agents by assisting home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, like title and escrow services, which comprise a smaller portion of the Company’s revenue to date. The Company currently generates substantially all of its revenue from commissions paid by clients at the time that a home is transacted.

Stock Split

In March 2021, the Company’s board of directors and the stockholders of the Company approved a ten-for-one forward stock split of the Company’s common stock and convertible preferred stock (collectively, the “Capital Stock”), which became effective on March 19, 2021. The authorized number of each class and series of Capital Stock was proportionally increased in accordance with the ten-for-one stock split and the par value of each class of Capital Stock was adjusted from $0.0001 to $0.00001 as a result of this forward stock split. All common stock, convertible preferred stock, stock options, restricted stock units (“RSUs”) and per share information presented within these condensed consolidated financial statements have been adjusted to reflect this forward stock split on a retroactive basis for all periods presented, except where otherwise noted.

Initial Public Offering

On April 6, 2021, the Company completed its initial public offering (“IPO”) and the Company’s Class A common stock began trading on the New York Stock Exchange on April 1, 2021 under the symbol “COMP”. In connection with the IPO, the Company issued and sold 26,296,438 shares of its common stock at a public offering price of $18.00 per share. The Company received aggregate proceeds of $438.7 million from the IPO, net of the underwriting discount and offering costs of approximately $11.0 million (of which $0.9 million were paid in 2020). Offering costs, including the legal, accounting, printing and other IPO-related costs have been recorded in Additional paid-in capital against the proceeds from the offering. During April 2021, also in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of common stock and the Company reclassified $1.4 billion of convertible preferred stock to Additional paid-in-capital.

On March 31, 2021, in connection with the effectiveness of the Company’s IPO registration statement, the Company recognized $148.5 million in stock-based compensation expense for (i) certain RSUs that contained both service-based and liquidity event-based vesting conditions as the liquidity event-based vesting condition was satisfied upon effectiveness of the registration statement and (ii) certain stock options and RSU awards with service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange.

In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12,500,000,000 shares of Class A common stock, 1,250,000,000 shares of Class B common stock, 100,000,000 shares of Class C common stock and 25,000,000 shares of undesignated preferred stock. On March 31, 2021, in connection with the effectiveness of the Company’s IPO registration statement, 15,244,490 shares of Class A common stock held by the Company’s founder and Chief Executive Officer were exchanged for an equivalent number of shares of Class C common stock. In addition, any Class A common stock issued to the Company’s Chief Executive Officer from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock once the RSUs have been settled for the underlying Class A common stock. 

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all controlled subsidiaries. The condensed consolidated statements of operations include the results of entities acquired from the date of the acquisition.

The unaudited interim condensed consolidated financial statements and related disclosures have been prepared by management on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair statement of the interim periods presented. 

The results of the interim periods presented are not necessarily indicative of the results expected for the full year. Certain information and notes normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations. Accordingly, the unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2020, included in the final prospectus that forms a part of the Company’s IPO registration statement, dated as of March 31, 2021 and filed with the Securities and Exchange Commission on April 1, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) valuation of the Company’s common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) contingent considerations in connection with business combinations, (iv) incremental borrowing rate used for the Company’s operating leases, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. The Company determines its estimates and judgments based on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.

There are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact the Company’s operations and its customers for an indefinite period of time. The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and the Company’s financial condition, results of operations, or cash flows remain uncertain and depend on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on the Company’s business in particular. The Company will continue to assess the impacts of the COVID-19 pandemic and will adjust its operations as necessary.

Business Combinations

Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred.

Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. The Company recognizes forfeitures as they occur.

For stock options, which the Company issues to employees and affiliated agents, the Company generally estimates the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends.

The Company also issues RSUs to employees and affiliated agents. In addition to the issuance of RSUs to agents as equity compensation for the provision of services, the Company offers RSUs to affiliated agents through its Agent Equity Program. The Agent Equity Program offers affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs. RSUs issued in connection with the Agent Equity Program are granted at the beginning of the year following the calendar year in which the commissions were earned and are subject to the terms and conditions of the 2012 Stock Incentive Plan and the 2021 Equity Incentive Plan, as applicable.

The Company’s RSUs granted prior to December 2020 generally vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years, except for the RSUs associated with the 2020 Agent Equity Program which vested immediately on the date of issuance. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, generally defined as a change in control or the effective date of the registration statement for the Company’s IPO. Upon the satisfaction of both vesting conditions and any delayed settlement period, the Company will issue shares to the award holders from the pool of authorized but unissued common stock. The Company intends to settle RSUs for which all vesting conditions have been satisfied on September 28, 2021 (for affiliated agents) and October 28, 2021 (for employees). The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will begin to be recognized as expense when both the required service-based vesting condition and the liquidity event-based vesting condition has been achieved using the accelerated attribution method. The liquidity event-based vesting requirement was met on March 31, 2021, the effective date of the Company’s registration statement, see Note 1—“Business and Basis of Presentation—Initial Public Offering.”

Beginning in December 2020, the Company began issuing RSUs that vest upon the satisfaction of only a service-based vesting condition that is generally ranging from four to five years. The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense on a straight-line basis as the required service-based vesting condition is satisfied. Any vested RSUs that require only a service-based vesting condition will convert to common stock following vesting and their prescribed delayed settlement periods.

For RSUs to be granted in connection with the 2021 Agent Equity Program, the Company determines the value of the stock-based compensation expense at the time the underlying commission is earned and begins to recognize the associated expense on a straight-line basis over the requisite service periods beginning on the closing date of the underlying real estate commission transactions. The stock-based compensation expense is recorded as a liability and will be reclassified to additional paid-in capital at the end of the vesting period when the underlying RSUs are issued. For the six months ended June 30, 2021, the Company recognized stock-based compensation expense and an associated liability of $13.7 million in connection with RSUs earned as a part of the 2021 Agent Equity Program. The associated liability is recorded within Accrued expenses and other current liabilities in the condensed consolidated balance sheet.

On a limited basis, the Company has issued stock options and RSUs that contain service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange. Such awards are valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the IPO, are capitalized and recorded on the condensed consolidated balance sheets. As of December 31, 2020, $1.8 million of deferred offering costs were capitalized in Other non-current assets on the condensed consolidated balance sheet. During the three months ended June 30, 2021, $11.0 million of deferred offering costs were recorded against the proceeds from the initial public offering in Additional paid-in capital on the condensed consolidated balance sheet and as of June 30, 2021 there were no remaining deferred offering costs included on the condensed consolidated balance sheet.

New Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU is part of the FASB’s simplification initiative, and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The new standard became effective for public companies with fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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Acquisitions

6 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

During the six months ended June 30, 2021, the Company completed several business acquisitions including the acquisition of 100% of the ownership interests in KVS Title, LLC, a title insurance and escrow settlement services company, Glide Labs, Inc., a real estate technology company and four small real estate brokerages. The purpose of these acquisitions was to expand the Company’s title and escrow offerings, to grow the Company’s transaction management tools included in its end to end real estate platform, and to expand its existing brokerage business in key domestic markets. The Company has accounted for two of the real estate brokerages as asset acquisitions and the remaining acquisitions were accounted for as business combinations.

Total Consideration

The total consideration for acquisitions completed during the six months ended June 30, 2021 comprised $117.0 million of cash, net of cash acquired, $5.8 million in Class A Common Stock of the Company and up to $4.7 million of additional cash that may be paid contingent on certain earnings-based targets being met through 2023. During the six months ended June 30, 2021, $103.8 million in cash was paid in connection with these acquisitions, net of cash acquired, and up to an aggregate of $13.2 million will be paid once certain indemnification matters and pre-acquisition contingencies are resolved. Future cash payments were recorded as Accrued expenses and other current liabilities in the condensed consolidated balance sheet. 

The fair value of the assets acquired and the liabilities assumed primarily resulted in the recognition of: broker relationships of $55.9 million; trademark intangible assets of $10.8 million; acquired technology of $5.5 million; operating lease right-of-use assets of $6.2 million; $6.0 million of other current and non-current assets; lease liabilities of $6.2 million; and $8.3 million of other current and non-current liabilities. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill of $57.6 million. Acquired intangible assets are being amortized over their estimated useful lives of approximately 4 to 9 years.

Approximately $23.8 million of the goodwill recorded during the six months ended June 30, 2021 is deductible for tax purposes. The amount of tax-deductible goodwill may increase in the future to approximately $45.7 million dependent on the payment of certain holdbacks and acquisition related compensation arrangements. These amounts are not expected to have an impact on the income tax provision while the Company maintains a full valuation allowance on its U.S. deferred tax assets.

The Company has recorded the preliminary purchase price allocation as of the acquisition dates and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the respective transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the consolidated statements of operations.

Pro forma revenue and earnings for 2021 acquisitions have not been presented because they are not material to the Company’s consolidated revenue and results of operations, either individually or in the aggregate.

Contingent Consideration

Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired businesses in the event that certain targets and milestones are met. As of June 30, 2021, the undiscounted maximum payment under these arrangements was $87.4 million. Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Opening balance	$	28.0		$	17.1		$	39.8		$	16.4
Acquisitions		2.7			—			4.7			—
Payments and issuances		(0.4	)		(3.0	)		(11.0	)		(3.0	)
Fair value losses (gains) included in net loss		2.7			1.2			(0.5	)		1.9
Closing Balance	$	33.0		$	15.3		$	33.0		$	15.3

Other Acquisition Related Compensation

In connection with the Company’s acquisitions, certain amounts paid or to be paid to selling shareholders are subject to clawback and forfeiture dependent on certain employees and agents providing continued service to the Company. These retention-based payments are accounted for as compensation for future services and the Company recognizes the expenses over the service period. As of June 30, 2021, the Company expects to pay up to an additional $44.9 million in future compensation to such selling shareholders in connection with these arrangements. For the three months ended June 30, 2021 and 2020, the Company recognized $7.2 million and $(0.1) million, respectively, and for the six months ended June 30, 2021 and 2020, the Company recognized $11.4 million and $1.2 million, respectively, in compensation expense (income) within Operations and support in the accompanying condensed consolidated statements of operations related to these arrangements.

During the six months ended June 30, 2021, the Company granted 277,776 shares of common stock to sellers in accordance with arrangements where vesting of the shares is contingent on such sellers providing continued service to the Company. Accordingly, these share-based payments will be accounted for as stock-based compensation expense over the underlying retention periods. There was no stock-based compensation expense related to these compensation arrangements recognized during the six months ended June 30, 2021.

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Fair Value of Financial Assets and Liabilities

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

4. Fair Value of Financial Assets and Liabilities

The Company’s cash and cash equivalents of $810.7 million and $440.1 million as of June 30, 2021 and December 31, 2020, respectively, are held in cash and money market funds which are classified as Level 1 within the fair value hierarchy because they are valued using quoted prices in active markets. These are the Company’s only Level 1 financial instruments. The Company does not hold any Level 2 financial instruments. The Company’s contingent consideration liabilities of $33.0 million and $39.8 million as of June 30, 2021 and December 31, 2020, respectively, are the Company’s only Level 3 financial instruments.

See Note 3 – “Acquisitions” for changes in contingent consideration for the three and six months ended June 30, 2021 and 2020. The following table presents the balances of contingent consideration (in millions):

	June 30, 2021		December 31, 2020
Accrued expenses and other current liabilities	$	10.3	$	19.1
Other non-current liabilities		22.7		20.7
Total contingent consideration	$	33.0	$	39.8

There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

Level 3 Financial Liabilities

The Company’s Level 3 financial liabilities relate to acquisition-related contingent consideration arrangements. Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired entities in the event that certain targets and milestones are met. The Company estimated the fair value of the contingent consideration using a Monte Carlo simulation, which is based on significant inputs, primarily forecasted future results of the acquired businesses, not observable in the market, discount rates and earnings volatility measures. The changes in the fair value of Level 3 financial liabilities are included within Operations and support in the accompanying condensed consolidated statements of operations (see Note 3 – “Acquisitions”). 

The following tables present quantitative information regarding the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 liabilities, consisting of different contingent consideration agreements, measured at fair value on a recurring basis:

	June 30, 2021	December 31, 2020
Discount rate	0.0% - 2.0%	0.0% - 2.0%
Weighted average discount rate	1.6%	1.3%
Earnings volatility	0% - 18%	0% - 18%
Weighted average earnings volatility	8.7%	6.9%

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Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt

5. Debt

Concierge Credit Facility

In July 2020, the Company entered into a Revolving Credit and Security Agreement (the “Concierge Facility”) with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance, in part, the Company’s Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. Prior to July 29, 2021 borrowings under the Concierge Facility accrued interest at rates equal to the adjusted London interbank offered rate (“LIBOR”) plus a margin of 3.00 as adjusted, or an alternate rate of interest upon the occurrence of certain changes in LIBOR. Additionally, prior to July 29, 2021, the Company was required to pay an annual commitment fee of 0.50% on a quarterly basis based on the unused portion of the Concierge Facility irrespective of the Company’s utilization rate. On July 29, 2021, the Company amended and restated the Concierge Facility (the “A&R Concierge Facility”), extending the revolving period for another twelve months, lowering the interest rate to LIBOR plus a margin of 1.85%, which may be adjusted, and lowering the annual commitment fee to 0.35% if the Concierge Facility is utilized greater than 50% (the annual commitment fee remained the same, at 0.50%, if the Concierge Facility is utilized less than 50%). Pursuant to the A&R Concierge Facility, the principal amount, if any, is payable in full in January 2023, unless earlier terminated or extended. The interest rate on the Concierge Facility was 3.16% as of June 30, 2021. As of June 30, 2021 and December 31, 2020, there were $11.1 million and $8.4 million, respectively, in borrowings outstanding under the Concierge Facility.

The Company has the option to repay the borrowings under the Concierge Facility without premium or penalty prior to maturity. The Concierge Facility contains customary affirmative covenants, such as financial statement reporting requirements, as well as covenants that restrict its ability to, among other things, incur additional indebtedness, sell certain receivables, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. Additionally, in the event that the Company fails to comply with certain financial covenants that require the Company to meet certain liquidity-based measures, the commitments under the Concierge Facility will automatically be reduced to zero and the Company will be required to repay any outstanding loans under the Concierge Facility. As of June 30, 2021, the Company was in compliance with the covenants under the Concierge Facility.

Revolving Credit Facility

In March 2021, the Company entered into a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”) with several lenders and issuing banks and Barclays Bank PLC, as administrative agent and as collateral agent. The Revolving Credit Facility provides for a $350.0 million revolving credit facility, which may be increased by the greater of $250.0 million and 18.5% of the Company’s consolidated total assets, plus such additional amount so long as the Company’s total net leverage ratio does not exceed 4.50:1.00 on a pro forma basis as of the most recent test period, subject to the terms of the Revolving Credit Facility. The Revolving Credit Facility also includes a letter of credit sublimit which is the lesser of (i) $125.0 million and (ii) the aggregate unused amount of the revolving commitments then in effect under the Revolving Credit Facility. The Company’s obligations under the Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured by a first priority security interest in substantially all of the Company’s assets and the Company’s subsidiary guarantors.

Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the base rate plus a margin of 0.50% or (ii) a floating rate per annum equal to the rate at which dollar deposits are offered in the London interbank market plus a margin of 1.50%. In the Revolving Credit Facility, the base rate is defined as the highest of (a) the prime rate as quoted by The Wall Street Journal, (b) the federal funds effective rate plus 0.50%, (c) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period plus 1.00% and (d) 1.00%. During an event of default under the Revolving Credit Facility, the applicable interest rates are increased by 2.0% per annum.

The Company is also obligated to pay other customary fees for a credit facility of this size and type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175% per annum and fees associated with letters of credit. The principal amount, if any, is payable in full in March 2026, unless earlier terminated or extended.

The Company has the option to repay the Company’s borrowings, and to permanently reduce the loan commitments whole or in part, under the Revolving Credit Facility without premium or penalty prior to maturity. As of June 30, 2021, there were no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $15.3 million.

The Revolving Credit Facility contains customary representations, warranties, financial covenants applicable to the Company and to the Company’s restricted subsidiaries, affirmative covenants, such as financial statement reporting requirements, and negative covenant which restrict its ability, among other things, to incur liens and indebtedness, make certain investments, declare dividends, dispose of, transfer or sell assets, make stock repurchases and consummate certain other matters, all subject to certain exceptions. The financial covenants require that the Company maintain certain liquidity-based measures and total revenue requirements. As of June 30, 2021, the Company was in compliance with the covenants under the Revolving Credit Facility.

The Revolving Credit Facility includes customary events of default that include, among other things, nonpayment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility.

The Company incurred debt issuance costs of $1.4 million in connection with the Revolving Credit Facility, which are included in Other current assets and Other non-current assets in the condensed consolidated balance sheet. The unamortized debt issuance costs will be amortized within Interest expense in the consolidated statements of operations over the remaining term on a straight-line basis.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

Legal Proceedings

From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the Company’s business taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Legal costs related to the defense of loss contingencies are expensed as incurred.

Claims or regulatory actions against the Company, whether meritorious or not, could have an adverse impact on the Company due to legal costs, diversion of management resources and other elements. Except as identified with respect to the matters below, the Company does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.

Avi Dorfman v. Robert Reffkin and Urban Compass, Inc.

In July 2014, Avi Dorfman (“Dorfman”) and RentJolt, Inc. (“RentJolt”) (collectively, “Plaintiffs”) filed suit against the Company and Robert Reffkin (“Defendants”), seeking compensation for certain services, trade secrets and other contributions allegedly provided in the formation of the Company. After miscellaneous motion practice, in June 2018, Defendants moved for summary judgment, the court held oral argument in October 2018 and ultimately denied the Defendants’ motion for summary judgment in October 2019. In November 2019, Defendants appealed portions of the court’s summary judgment ruling. In February 2020, the appellate court granted in part and denied in part Defendants’ appeal resulting in one plaintiff (RentJolt) voluntarily discontinuing its only remaining claim and leaving the case. Defendants have one motion in limine pending. A trial date was previously set for September 2021; in August 2021, the trial date was rescheduled to January 2022.

Realogy Holdings Corp., et al v. Urban Compass, Inc. and Compass Inc.

In July 2019, Realogy Holdings Corp., NRT New York LLC (“Corcoran”) and many of its related entities (collectively, “Plaintiffs”) filed a complaint against the Company in the New York Supreme Court. The complaint alleges various violations of New York and California state law related to claims of unfair competition and seeks unspecified damages. The Company filed a Motion to Dismiss in September 2019. In September 2019, Plaintiffs filed an amended complaint, removing one claim and adding a claim for defamation. In November 2019, the Company moved to compel arbitration related to claims asserted by Corcoran and moved to

dismiss all of the counts. In June 2020, the Court denied the motion to dismiss and denied the motion to compel arbitration as moot, granting Plaintiffs leave to amend the complaint as to claims asserted by Corcoran without prejudice to Defendants’ ability to move to compel or dismiss the Second Amended Complaint.

On July 3, 2020, Plaintiffs filed their Second Amended Complaint. On December 18, 2020, the Court denied the Company’s motion to compel arbitration on Plaintiffs’ second amended complaint without prejudice. Defendants’ Answer to the Second Amended Complaint and Counterclaims were filed on January 28, 2021. Additionally, the Company filed its appeal of the lower Court’s denial of the Company’s motion to dismiss and motion to compel arbitration on February 1, 2021. On June 1, 2021, the First Department affirmed the lower Court’s denial of the Company’s motion to compel arbitration. Discovery is proceeding, with an end date set for June 30, 2022. The Company is unable to predict the outcome of this action or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein.

Letter of Credit Agreements

The Company has irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities. As of June 30, 2021 and December 31, 2020, the Company was contingently liable for $57.3 million and $50.7 million, respectively, under these letters of credit. As of June 30, 2021, $15.3 million and $42.0 million of these letters of credit were collateralized by the Company’s Revolving Credit Facility and cash and cash equivalents, respectively. As of December 31, 2020, all letters of credit were collateralized by the Company’s cash and cash equivalents.

Escrow and Trust Deposits

As a service to its home buyers and home sellers, the Company administers escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. The escrow and trust deposits totaled $282.5 million and $46.1 million, respectively as of June 30, 2021 and December 31, 2020. These deposits are not assets of the Company and therefore are excluded from the accompanying condensed consolidated balance sheets. However, the Company remains contingently liable for the disposition of these deposits.

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Preferred Stock and Common stock

6 Months Ended

Jun. 30, 2021

Stockholders' Equity Note [Abstract]

Preferred Stock and Common stock

7. Preferred Stock and Common Stock

Convertible Preferred Stock

In March 2020, the Company issued an additional 64,820 shares of its Series G convertible preferred stock for proceeds of $1.0 million.

In March 2021, the holders of 15,920,450 shares of the Company’s Series D convertible preferred stock elected to convert such shares into an equal number of shares of Class A common stock.

During April 2021, in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of Class A common stock and the Company reclassified $1.4 billion of Convertible preferred stock to Additional paid-in-capital.

Undesignated Preferred Stock

In April 2021, the Company adopted a restated certificate of incorporation which provides for authorized undesignated preferred stock to 25,000,000. As of June 30, 2021, there are no shares of the Company’s preferred stock issued and outstanding.

Common Stock

In February 2021, the Company approved the establishment of Class C common stock and an agreement with the Company’s CEO to exchange his Class A common stock for Class C common stock. On March 31, 2021, in connection with the effectiveness of the registration statement for the Company’s IPO, 15,244,490 shares of Class A common stock held by the Company’s founder and CEO were automatically exchanged for an equivalent number of shares of Class C common stock. In addition, any Class A common stock issued to the Company’s Chief Executive Officer from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock. Each share of Class C common stock is entitled to twenty votes per share and will be convertible at any time into one share of Class A common stock and will automatically convert into Class A common stock under certain “sunset” provisions. Other than certain permitted transfers for estate planning purposes, upon a transfer of Class C common stock, the Class C common stock will convert into Class A common stock.

In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12,500,000,000 shares of Class A common stock, 1,250,000,000 shares of Class B common stock and 100,000,000 shares of Class C common stock. As of June 30, 2021, the Company had three classes of common stock: Class A common stock, Class B common stock and Class C common stock. Each class has par value of $0.00001.

	June 30, 2021
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		12,500,000,000		376,863,317		374,613,317
Class B common stock		1,250,000,000		4,562,160		4,562,160
Class C common stock		100,000,000		15,244,490		15,244,490
Total		13,850,000,000		396,669,967		394,419,967

As of December 31, 2020, the Company had two classes of common stock: Class A common stock and Class B common stock. Each class has a par value of $0.00001.

	December 31, 2020
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		530,136,050		118,549,390		116,299,390
Class B common stock		170,618,860		6,672,510		6,672,510
Total		700,754,910		125,221,900		122,971,900

Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are not entitled to vote. Holders of Class C common stock are entitled to twenty votes per share.

Each share of Class C common stock is convertible at any time of the option of the holder into one share of Class A common stock. Each share of Class C common stock will automatically convert into a share of Class A common stock upon sale or transfer, except for certain permitted transfers.

On July 1, 2021, the board of directors of the Company approved the conversion of all outstanding shares of the Company’s Class B common stock into the same number of shares of the Company’s Class A common stock effective on that date. A description of all other rights, preferences and privileges of the holders of the Company’s common stock are included in the Company’s IPO prospectus on Form S-1 filed with the Securities and Exchange Commission.

As of June 30, 2021 and December 31, 2020, the Company had shares of common stock reserved for issuance as follows:

	June 30, 2021		December 31, 2020
Convertible preferred stock outstanding		—		238,954,050
Options issued and outstanding		59,767,636		62,827,150
Restricted stock units issued and outstanding		55,268,499		32,556,160
Shares available for future stock-based incentive award issuances		35,035,925		11,679,150
Total		150,072,060		346,016,510

As of June 30, 2021 and December 31, 2020, the Company had 2,250,000 shares of Class A common stock issued and held as treasury stock which were subsequently retired on July 1, 2021.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

2012 Stock Incentive Plan

In October 2012, the Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”). Under the 2012 Plan, employees and non-employees could be granted options on common stock, RSUs and other stock-based awards, including awards earned in connection with the Agent Equity Program. Generally, these awards were based on stock agreements with ten-year contractional terms for stock options, and seven-year contractual terms for RSUs, subject to board approval.

2021 Equity Incentive Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Equity Incentive Plan (the “2021 Plan”), with an initial pool of 29,666,480 shares of common stock available for granting stock-based awards plus any reserved shares of common stock not issued or subject to outstanding awards granted under the Company’s 2012 Plan. In addition, on

January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the 2021 Plan shall be increased automatically by the number of shares equal to five percent (5%) of the total number of outstanding shares of common stock and shares of preferred stock of the Company outstanding (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of such increase in any particular year. The 2021 Plan became effective on March 30, 2021 and as of that date, the Company ceased granting new awards under the 2012 Plan and all remaining shares available under the 2012 Plan were transferred to the 2021 Plan. As of June 30, 2021, there were 35,035,925 shares available for future grants under the 2021 Plan, inclusive of those shares transferred from the 2012 Plan.

2021 Employee Stock Purchase Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP authorizes the issuance of 7,416,620 shares of common stock to purchase rights granted to the Company’s employees or to employees of its designated affiliates. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the ESPP shall be increased automatically by the number of shares equal to one percent (1%) of the total number of outstanding shares of common stock and shares of preferred stock of the Company outstanding (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of the increase in any particular year. No more than 150,000,000 shares of common stock may be issued over the term of the ESPP, subject to certain exceptions set forth in the ESPP. As of the date of this filing, no shares have been granted under the ESPP.

Stock Options

A summary of stock option activity under the 2012 Plan and the 2021 Plan, including 1,061,250 stock options that were granted outside of the 2012 Plan in 2019, is presented below (in millions, except share and per share amounts):

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)		Aggregate Intrinsic Value
Balances as of December 31, 2020		62,827,150		$	4.55		7.8	$	1,208.0
Granted		3,119,998			13.88
Exercised		(5,341,714	)		3.03
Forfeited		(837,798	)		6.42
Balances as of June 30, 2021		59,767,636		$	5.14		7.5	$	483.9
Exercisable and vested at June 30, 2021		34,154,376		$	3.61		6.5	$	325.5

During the six months ended June 30, 2021 and 2020, the intrinsic value of options exercised was $88.5 million and $2.7 million, respectively.

Restricted Stock Units

A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:

	Number of Shares		Weighted Average Grant Date Fair Value
Balances as of December 31, 2020	32,556,160		$	6.75
Granted	23,376,819			14.14
Vested and converted to common stock	—			—
Forfeited	(664,480	)		12.26
Balances as of June 30, 2021	55,268,499		$	9.81

Included in the table above are 8,611,810 RSUs granted to an executive employee during the three months ended March 31, 2021. These RSUs have service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange.

Stock-Based Compensation Expense

Total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30, 2021
	2021		2020		2021		2020
Commissions and other related expense	$	11.7	$	0.5	$	56.3	$	4.6
Sales and marketing		8.6		2.5		17.6		5.4
Operations and support		2.8		0.7		7.8		1.5
Research and development		13.5		0.3		63.0		0.8
General and administrative		17.7		9.0		77.1		11.8
Total stock-based compensation expense	$	54.3	$	13.0	$	221.8	$	24.1

As more fully described in Note 1 – “Business and Basis of Presentation”, the Company recognized $148.5 million in stock-based compensation expense in connection with the effectiveness of the Company’s IPO registration statement on March 31, 2021. Stock-based compensation expense for the six months ended June 30, 2021 includes the following amounts related to a one-time acceleration of stock-based compensation expense in connection with the IPO (in millions):

	IPO Related Expense
Commissions and other related expense	$	41.7
Sales and marketing		1.8
Operations and support		3.1
Research and development		46.9
General and administrative		55.0
Total stock-based compensation expense	$	148.5

As of June 30, 2021, unrecognized stock-based compensation expense totaled $523.4 million and is expected to be recognized over a weighted-average period of 3.3 years.

The Company has not recognized any tax benefits from stock-based compensation as a result of the full valuation allowance maintained on its deferred tax assets.

Early Exercise of Stock Options

A majority of the stock options granted under the 2012 Plan provide option holders the right to elect to exercise unvested options in exchange for restricted common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service until the stock options are fully vested at the lesser of the original issuance price or the fair value the Company’s common stock.

During the six months ended June 30, 2021, 818,590 stock options were early exercised for total proceeds of $5.0 million. As of June 30, 2021, 1,431,410 shares of common stock received by holders from an early exercise were subject to repurchase. The cash proceeds received for unvested shares of common stock recorded within Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheet was $8.1 million as of June 30, 2021. Amounts recorded are transferred into Common stock and Additional paid-in capital within the condensed consolidated balance sheets as the shares vest.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The Company recognized a benefit from income taxes of $1.3 million and $2.0 million for the three and six months ended June 30, 2021, respectively. This benefit resulted from a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions. Additionally, the Company incurred current tax expense from its operations in India, which was fully offset by a deferred tax benefit for future AMT tax credits. The Company recognized a benefit from income taxes of $0.9 million for the three and six months ended June 30, 2020.

The Company continues to maintain a full valuation allowance on all domestic net deferred tax assets based on numerous factors including estimated future taxable income and historic profitability.

The Company does not have any amount recorded related to uncertain tax positions as of the period ended June 30, 2021 nor does it expect a substantial increase in the next 12 months. If applicable, the Company recognizes interest and penalties related to uncertain tax positions in the income tax provision.

The United States is the Company’s only material tax jurisdiction and as a result of net operating loss carryforwards, the Company is subject to audit for all years for US federal income tax purposes.

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Net Loss Per Share Attributable to Common Stockholders

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Net Loss Per Share Attributable to Common Stockholders

10. Net Loss Per Share Attributable to Common Stockholders

The Company computes net loss per share under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock, Class B common stock and Class C common stock are substantially identical, other than voting rights. Accordingly, the net loss per share attributable to common stockholders will be the same for Class A common stock, Class B common stock and Class C common stock on an individual or combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in millions, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Numerator:
Net loss attributable to common stockholders	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Denominator:
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		377,615,338			109,120,449			252,958,956			108,942,655
Net loss per share attributable to common stockholders, basic and diluted	$	(0.02	)	$	(0.77	)	$	(0.87	)	$	(1.99	)

The following participating securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Convertible preferred stock		—		248,336,668		—		248,336,668
Outstanding stock options		59,767,636		55,434,110		59,767,636		55,434,110
Outstanding RSUs		55,268,499		28,333,160		55,268,499		28,333,160
Unvested early exercised options		1,431,410		—		1,431,410		—
Unvested common stock		689,316		869,100		689,316		869,100
Total		117,156,861		332,973,038		117,156,861		332,973,038

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Compass Concierge Receivables and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Compass Concierge Receivables and Allowance for Credit Losses

11. Compass Concierge Receivables and Allowance for Credit Losses

In 2018, the Company launched the Compass Concierge Program for home sellers who have engaged Compass as their exclusive listing agent. The program, initially launched by the Company, is based on a services model (“Concierge Classic”) provided by Compass Concierge, LLC (“Compass Concierge”), which includes items such as consultation on suggested cosmetic updates or modifications to a specific property or guidance on securing licensed contractors or vendors to perform non-structural property improvements. The Concierge Classic program provides for the payment of the up-front costs of specified home improvement services provided by unrelated vendors.

In 2019, the Compass Concierge Program was expanded to include a loan program underwritten by an independent third-party lender (the “Lender”) through a commercial arrangement with Compass Concierge (“Concierge Capital”). Under the Concierge Capital program, the Lender originates and services unsecured consumer loans to home sellers following its independent underwriting process pursuant to program-level criteria provided by the Company. Pursuant to the Company’s agreement with the Lender, the consumer

loans are unsecured, interest-free and have no associated fees except for late fees that the Lender may charge in its sole discretion. The Company has no right or obligation with respect to any individual consumer loan originated by the Lender. Under the agreement with the Lender, the Company has repayment rights against the Lender in connection with a corporate loan.

Payment to the Company for these services under the Concierge Classic model or repayment of the loan funds under the Concierge Capital model is due upon the earlier of a successful home sale, the termination of the listing agreement, or one year from the date in which costs were originally funded. Compass Concierge receivables (“Concierge Receivables”) are stated at the amount advanced to the home sellers, net of an estimated allowance for credit losses (“ACL”). The Company does not recognize any revenue or earn any fees from the Compass Concierge Program. The Company incurs service fees payable to the Lender and incurs bad debt expense in connection with the Compass Concierge Program.

The Company manages its credit risk by establishing a comprehensive credit policy for the approval of projects under the Concierge Classic program and new loans under the Concierge Capital program, while monitoring and reviewing the performance of its existing Concierge Receivables. Factors considered include but not limited to:

• No negative liens or judgements on the property;

• Seller’s available equity on the property;

• Loan to listing price ratio;

• FICO score (only for Concierge Capital program); and

• Macroeconomic conditions.

Credit Quality

The Company monitors credit quality by evaluating various attributes and utilizes such information in its evaluation of the appropriateness of the ACL. Based on the Company’s experience, the key credit quality indicator is whether the underlying properties associated with the Concierge Receivables will be sold or not. Concierge Receivables associated with properties that are eventually sold have a lower credit risk than those that are associated with properties that are not sold. For Concierge Receivables where repayments have not been triggered (i.e., earlier of (i) sale of the property, (ii) termination of a listing agreement or (iii) 12 months from the date costs were originally funded), the Company establishes an estimate as to the percentage of underlying properties that will be sold based on historical data. This estimate is updated quarterly and on an annual basis. As of June 30, 2021 and December 31, 2020, the amount of outstanding Concierge Receivables related to unsold properties was approximately 95% and 93%, respectively.

Allowance for credit losses

The Company maintains an ACL for the expected credit losses over the contractual life of the Concierge Receivables. The amount of ACL is based on ongoing, quarterly assessments by management. Historical loss experience is generally the starting point when the Company estimates the expected credit losses. The Company then considers whether (i) current conditions, such as the impact of COVID-19 and related economic uncertainty surrounding the pandemic, (ii) future economic conditions and (iii) any potential changes in the Compass Concierge Program that are reasonable and supportable would impact on its ACL. The following table summarizes the activity of the ACL for Concierge Receivables for the three and six months ended June 30, 2021 (in millions):

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Beginning of period	$	16.9		$	17.2
Allowances		2.8			4.7
Net write-offs and other		(0.4	)		(2.6	)
End of period	$	19.3		$	19.3

Aging Status

The Company generally considers Concierge Receivables to be past due after being outstanding for over 30 days after initial billing. Changes in the Company’s estimate to the ACL is recorded through bad debt expense as Sales and marketing expense in the condensed consolidated statements of operations and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. The following tables present the aging analysis of Concierge Receivables as of June 30, 2021 (in millions):

	31-90 days		Over 90 days		Total Past Due		Current		Total
June 30, 2021	$	3.6	$	15.0	$	18.6	$	48.8	$	67.4

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Restructuring Activities and COVID-19 Update

6 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

Restructuring Activities and COVID-19 Update

12. Restructuring Activities and COVID-19 Update

Beginning in March 2020, the onset of the COVID-19 pandemic resulted in a negative impact on the Company’s business in the second quarter of 2020 due to shelter-in-place and stay-at-home restrictions (in certain of the Company’s markets) which prohibited or reduced in-person residential real estate showings and the related impact on customer demand and housing inventory, as well as deteriorating economic conditions, such as increased unemployment rates. In light of the uncertain and rapidly evolving situation relating to COVID-19, the Company took a range of measures to address the uncertainties related to the COVID-19 pandemic including, but not limited to, reducing the size of its workforce, terminating certain lease obligations and reducing certain discretionary expenses during the first half of 2020. As a result of these cost-saving measures, the Company reduced its workforce by approximately 15%. Although the demand in the Company’s services had recovered starting in the second half of 2020, the duration of the pandemic and any impacts on consumer behavior are unknown, and the amount of that demand which will persist after the reversal of the stay-at-home orders is unknown. Additionally, the pandemic’s impacts on the overall economy and credit markets could significantly impact the Company’s estimates of fair value, which could affect the carrying amount of certain assets and liabilities. As of June 30, 2021, the impacts of the pandemic have not significantly impacted the carrying amount of the Company’s assets and liabilities.

The expenses resulting from these cost-saving measures were included in the consolidated statement of operations for the three and six months ended June 30, 2020, as follows (in millions):

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Severance		Lease Terminaion		Total		Severance		Lease Terminaion		Total
Sales and marketing	$	—	$	1.8	$	1.8	$	1.5	$	3.0	$	4.5
Operations and support		0.1		—		0.1		2.9		—		2.9
Research and development		—		—		—		0.7		—		0.7
General and administrative		0.5		—		0.5		0.9		—		0.9
Total	$	0.6	$	1.8	$	2.4	$	6.0	$	3.0	$	9.0

The Company did not recognize any restructuring expenses during the six months ended June 30, 2021. As of June 30, 2021 and December 31, 2020, the Company did not have any material remaining liabilities related to restructuring costs.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

On July 13, 2021, the Company and Guaranteed Rate, Inc. (“Guaranteed Rate”) announced the entry into a definitive agreement by their respective subsidiaries to form OriginPoint, a new mortgage origination company. OriginPoint will originate mortgages for the Company’s real estate brokerage clients, as well as the clients of any other brokerage, in order to make loans available to a broad consumer audience.

On July 19, 2021, the Randall Family of Companies, a group of Southern Coastal New England residential real-estate brokerage entities, joined the Company through a stock purchase agreement. 

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all controlled subsidiaries. The condensed consolidated statements of operations include the results of entities acquired from the date of the acquisition.

The unaudited interim condensed consolidated financial statements and related disclosures have been prepared by management on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair statement of the interim periods presented. 

The results of the interim periods presented are not necessarily indicative of the results expected for the full year. Certain information and notes normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations. Accordingly, the unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2020, included in the final prospectus that forms a part of the Company’s IPO registration statement, dated as of March 31, 2021 and filed with the Securities and Exchange Commission on April 1, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) valuation of the Company’s common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) contingent considerations in connection with business combinations, (iv) incremental borrowing rate used for the Company’s operating leases, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. The Company determines its estimates and judgments based on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.

There are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact the Company’s operations and its customers for an indefinite period of time. The extent and duration of the COVID-19 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and the Company’s financial condition, results of operations, or cash flows remain uncertain and depend on future developments that cannot be accurately predicted at this time. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the extent and effectiveness of containment actions taken, the timing, availability, and effectiveness of vaccines and the vaccination rates, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on the Company’s business in particular. The Company will continue to assess the impacts of the COVID-19 pandemic and will adjust its operations as necessary.

Business Combinations

Business Combinations

Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred.

Stock-Based Compensation

Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. The Company recognizes forfeitures as they occur.

For stock options, which the Company issues to employees and affiliated agents, the Company generally estimates the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends.

The Company also issues RSUs to employees and affiliated agents. In addition to the issuance of RSUs to agents as equity compensation for the provision of services, the Company offers RSUs to affiliated agents through its Agent Equity Program. The Agent Equity Program offers affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs. RSUs issued in connection with the Agent Equity Program are granted at the beginning of the year following the calendar year in which the commissions were earned and are subject to the terms and conditions of the 2012 Stock Incentive Plan and the 2021 Equity Incentive Plan, as applicable.

The Company’s RSUs granted prior to December 2020 generally vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years, except for the RSUs associated with the 2020 Agent Equity Program which vested immediately on the date of issuance. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, generally defined as a change in control or the effective date of the registration statement for the Company’s IPO. Upon the satisfaction of both vesting conditions and any delayed settlement period, the Company will issue shares to the award holders from the pool of authorized but unissued common stock. The Company intends to settle RSUs for which all vesting conditions have been satisfied on September 28, 2021 (for affiliated agents) and October 28, 2021 (for employees). The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will begin to be recognized as expense when both the required service-based vesting condition and the liquidity event-based vesting condition has been achieved using the accelerated attribution method. The liquidity event-based vesting requirement was met on March 31, 2021, the effective date of the Company’s registration statement, see Note 1—“Business and Basis of Presentation—Initial Public Offering.”

Beginning in December 2020, the Company began issuing RSUs that vest upon the satisfaction of only a service-based vesting condition that is generally ranging from four to five years. The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense on a straight-line basis as the required service-based vesting condition is satisfied. Any vested RSUs that require only a service-based vesting condition will convert to common stock following vesting and their prescribed delayed settlement periods.

For RSUs to be granted in connection with the 2021 Agent Equity Program, the Company determines the value of the stock-based compensation expense at the time the underlying commission is earned and begins to recognize the associated expense on a straight-line basis over the requisite service periods beginning on the closing date of the underlying real estate commission transactions. The stock-based compensation expense is recorded as a liability and will be reclassified to additional paid-in capital at the end of the vesting period when the underlying RSUs are issued. For the six months ended June 30, 2021, the Company recognized stock-based compensation expense and an associated liability of $13.7 million in connection with RSUs earned as a part of the 2021 Agent Equity Program. The associated liability is recorded within Accrued expenses and other current liabilities in the condensed consolidated balance sheet.

On a limited basis, the Company has issued stock options and RSUs that contain service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange. Such awards are valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.

Deferred Offering Costs

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the IPO, are capitalized and recorded on the condensed consolidated balance sheets. As of December 31, 2020, $1.8 million of deferred offering costs were capitalized in Other non-current assets on the condensed consolidated balance sheet. During the three months ended June 30, 2021, $11.0 million of deferred offering costs were recorded against the proceeds from the initial public offering in Additional paid-in capital on the condensed consolidated balance sheet and as of June 30, 2021 there were no remaining deferred offering costs included on the condensed consolidated balance sheet.

New Accounting Pronouncements

New Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU is part of the FASB’s simplification initiative, and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The new standard became effective for public companies with fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Summary of Changes in Contingent Consideration Measured at Fair Value on a Recurring Basis

Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Opening balance	$	28.0		$	17.1		$	39.8		$	16.4
Acquisitions		2.7			—			4.7			—
Payments and issuances		(0.4	)		(3.0	)		(11.0	)		(3.0	)
Fair value losses (gains) included in net loss		2.7			1.2			(0.5	)		1.9
Closing Balance	$	33.0		$	15.3		$	33.0		$	15.3

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Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Summary of Fair Value Measurements of Our Financial Instruments

The following table presents the balances of contingent consideration (in millions):

	June 30, 2021		December 31, 2020
Accrued expenses and other current liabilities	$	10.3	$	19.1
Other non-current liabilities		22.7		20.7
Total contingent consideration	$	33.0	$	39.8

Summary of Fair Value Measurement Inputs and Valuation Techniques

The following tables present quantitative information regarding the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 liabilities, consisting of different contingent consideration agreements, measured at fair value on a recurring basis:

	June 30, 2021	December 31, 2020
Discount rate	0.0% - 2.0%	0.0% - 2.0%
Weighted average discount rate	1.6%	1.3%
Earnings volatility	0% - 18%	0% - 18%
Weighted average earnings volatility	8.7%	6.9%

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Preferred Stock and Common stock (Tables)

6 Months Ended

Jun. 30, 2021

Stockholders' Equity Note [Abstract]

Summary of Stock by Class

As of June 30, 2021, the Company had three classes of common stock: Class A common stock, Class B common stock and Class C common stock. Each class has par value of $0.00001.

	June 30, 2021
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		12,500,000,000		376,863,317		374,613,317
Class B common stock		1,250,000,000		4,562,160		4,562,160
Class C common stock		100,000,000		15,244,490		15,244,490
Total		13,850,000,000		396,669,967		394,419,967

As of December 31, 2020, the Company had two classes of common stock: Class A common stock and Class B common stock. Each class has a par value of $0.00001.

	December 31, 2020
	Shares Authorized		Shares Issued		Shares Outstanding
Class A common stock		530,136,050		118,549,390		116,299,390
Class B common stock		170,618,860		6,672,510		6,672,510
Total		700,754,910		125,221,900		122,971,900

Summary of Common Stock Reserved For Issuance

As of June 30, 2021 and December 31, 2020, the Company had shares of common stock reserved for issuance as follows:

	June 30, 2021		December 31, 2020
Convertible preferred stock outstanding		—		238,954,050
Options issued and outstanding		59,767,636		62,827,150
Restricted stock units issued and outstanding		55,268,499		32,556,160
Shares available for future stock-based incentive award issuances		35,035,925		11,679,150
Total		150,072,060		346,016,510

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]

Summary of Stock Option Activity

A summary of stock option activity under the 2012 Plan and the 2021 Plan, including 1,061,250 stock options that were granted outside of the 2012 Plan in 2019, is presented below (in millions, except share and per share amounts):

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)		Aggregate Intrinsic Value
Balances as of December 31, 2020		62,827,150		$	4.55		7.8	$	1,208.0
Granted		3,119,998			13.88
Exercised		(5,341,714	)		3.03
Forfeited		(837,798	)		6.42
Balances as of June 30, 2021		59,767,636		$	5.14		7.5	$	483.9
Exercisable and vested at June 30, 2021		34,154,376		$	3.61		6.5	$	325.5

Summary of Restricted Stock Units Activity

A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:

	Number of Shares		Weighted Average Grant Date Fair Value
Balances as of December 31, 2020	32,556,160		$	6.75
Granted	23,376,819			14.14
Vested and converted to common stock	—			—
Forfeited	(664,480	)		12.26
Balances as of June 30, 2021	55,268,499		$	9.81

Summary of Share-based Payment Arrangement, Expensed and Capitalized, Amount

Total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30, 2021
	2021		2020		2021		2020
Commissions and other related expense	$	11.7	$	0.5	$	56.3	$	4.6
Sales and marketing		8.6		2.5		17.6		5.4
Operations and support		2.8		0.7		7.8		1.5
Research and development		13.5		0.3		63.0		0.8
General and administrative		17.7		9.0		77.1		11.8
Total stock-based compensation expense	$	54.3	$	13.0	$	221.8	$	24.1

IPO [Member]

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]

Summary of Share-based Payment Arrangement, Expensed and Capitalized, Amount

	IPO Related Expense
Commissions and other related expense	$	41.7
Sales and marketing		1.8
Operations and support		3.1
Research and development		46.9
General and administrative		55.0
Total stock-based compensation expense	$	148.5

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Net Loss Per Share Attributable to Common Stockholders (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in millions, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Numerator:
Net loss attributable to common stockholders	$	(7.1	)	$	(84.2	)	$	(219.5	)	$	(216.9	)
Denominator:
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		377,615,338			109,120,449			252,958,956			108,942,655
Net loss per share attributable to common stockholders, basic and diluted	$	(0.02	)	$	(0.77	)	$	(0.87	)	$	(1.99	)

Summary of Computation of Diluted Net Loss Per Share Attributable to Common Stockholders

The following participating securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Convertible preferred stock		—		248,336,668		—		248,336,668
Outstanding stock options		59,767,636		55,434,110		59,767,636		55,434,110
Outstanding RSUs		55,268,499		28,333,160		55,268,499		28,333,160
Unvested early exercised options		1,431,410		—		1,431,410		—
Unvested common stock		689,316		869,100		689,316		869,100
Total		117,156,861		332,973,038		117,156,861		332,973,038

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Compass Concierge Receivables and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Summary of ACL for Concierge Receivables

The following table summarizes the activity of the ACL for Concierge Receivables for the three and six months ended June 30, 2021 (in millions):

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Beginning of period	$	16.9		$	17.2
Allowances		2.8			4.7
Net write-offs and other		(0.4	)		(2.6	)
End of period	$	19.3		$	19.3

Summary of Aging Analysis of Concierge Receivables

The following tables present the aging analysis of Concierge Receivables as of June 30, 2021 (in millions):

	31-90 days		Over 90 days		Total Past Due		Current		Total
June 30, 2021	$	3.6	$	15.0	$	18.6	$	48.8	$	67.4

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Restructuring Activities and COVID-19 Update (Tables)

6 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

Summary of restructuring costs

The expenses resulting from these cost-saving measures were included in the consolidated statement of operations for the three and six months ended June 30, 2020, as follows (in millions):

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Severance		Lease Terminaion		Total		Severance		Lease Terminaion		Total
Sales and marketing	$	—	$	1.8	$	1.8	$	1.5	$	3.0	$	4.5
Operations and support		0.1		—		0.1		2.9		—		2.9
Research and development		—		—		—		0.7		—		0.7
General and administrative		0.5		—		0.5		0.9		—		0.9
Total	$	0.6	$	1.8	$	2.4	$	6.0	$	3.0	$	9.0

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Business and Basis of Presentation - Additional Information (Detail) $ / shares in Units, $ in Millions				3 Months Ended		6 Months Ended
	Apr. 01, 2021 USD ($) $ / shares shares	Mar. 31, 2021 shares	Mar. 19, 2021	Jun. 30, 2021 USD ($) shares	Mar. 31, 2021 USD ($)	Jun. 30, 2021 USD ($) shares	Apr. 30, 2021 shares	Dec. 31, 2020 shares	Apr. 01, 2020 USD ($)
Date of incorporation						Oct. 04, 2012
Stock split ratio common stock			10
Sale of stock net proceeds received on the transaction | $						$ 439.6
Deferred offering costs | $				$ 0.0		$ 0.0
Common stock shares authorized				13,850,000,000		13,850,000,000		700,754,910
Reclassification of convertible preferred stock into common stock	223,033,725
Reclassification of convertible preferred stock into common stock value | $				$ 1,419.1		$ 1,419.1
Restricted Stock Units [Member] | Service Based And Liquidity Event Based [Member]
Allocated share based compensation | $					$ 148.5
Additional Paid-in Capital [Member]
Reclassification of convertible preferred stock into common stock value | $	$ 1,400.0
IPO [Member]
Stock shares issued during the period shares	26,296,438
Sale of stock issue price per share | $ / shares	$ 18.00
Sale of stock net proceeds received on the transaction | $	$ 438.7
Deferred offering costs | $	$ 11.0								$ 0.9
Common Class A [Member]
Common stock shares authorized				12,500,000,000		12,500,000,000		530,136,050
Conversion of Stock, Shares Converted		15,244,490
Common Class A [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized							12,500,000,000
Common Class B [Member]
Common stock shares authorized				1,250,000,000		1,250,000,000		170,618,860
Common Class B [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized							1,250,000,000
Common Class C [Member]
Common stock shares authorized				100,000,000		100,000,000
Common Class C [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized							100,000,000
Undesignated Preferred Stock [Member] | Restated Certificate Of Incorporation [Member]
Preferred stock shares authorized							25,000,000

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Apr. 01, 2021	Apr. 01, 2020
Accounting Policies [Line Items]
Deferred offering costs	$ 0.0
Other Noncurrent Assets [Member]
Accounting Policies [Line Items]
Deferred offering costs		$ 1.8
IPO [Member]
Accounting Policies [Line Items]
Deferred offering costs			$ 11.0	$ 0.9
IPO [Member] | Additional Paid-in Capital [Member]
Accounting Policies [Line Items]
Deferred offering costs	11.0
Restricted Stock Units [Member]
Accounting Policies [Line Items]
Share based compensation by share based payment arrangement service based vesting period		4 years
Share-based Payment Arrangement, Amount Capitalized	$ 13.7
Restricted Stock Units [Member] | Maximum [Member]
Accounting Policies [Line Items]
Share based compensation by share based payment arrangement service based vesting period		5 years
Restricted Stock Units [Member] | Minimum [Member]
Accounting Policies [Line Items]
Share based compensation by share based payment arrangement service based vesting period		4 years

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Acquisitions - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Business Acquisition [Line Items]
Payment to acquire business net of cash acquired			$ 103.8	$ 0.8
Stock based compensation expense	$ 54.3	$ 13.0	221.8	24.1
Business Combinations contingent liabilities undiscounted maximum payment	87,400.0		$ 87,400.0
Maximum [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired remaining useful lives			9 years
Minimum [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired remaining useful lives			4 years
2021 Acquistions [Member]
Business Acquisition [Line Items]
Payment to acquire business			$ 117.0
Business combination contingent consideration	4.7		4.7
Business combination operating lease right of use assets acquired	6.2		6.2
Goodwill arising out of business combination acquisitions	57.6		57.6
Business combination future consideration to be paid to the acquirees	44.9		44.9
Business acquistion compensation expenses	7.2	$ (0.1)	11.4	$ 1.2
Business combination other current assets and non current assets	6.0		6.0
Payment to acquire business net of cash acquired			103.8
Business combination other current and non current liabilities	8.3		8.3
Consideration of lease liability	6.2		6.2
Amount of Goodwill is deductible for tax purposes	23.8		23.8
Amount of tax-deductible goodwill may increase in the future,dependent on contingent consideration milestones being achieved			$ 45.7
Sharebased compensation arrangement, shares of common stock granted to sellers			277,776
Stock based compensation expense			$ 0.0
2021 Acquistions [Member] | Common Class A [Member]
Business Acquisition [Line Items]
Business combination contingent consideration, Stock			5.8
2021 Acquistions [Member] | Accrued Expenses And Other Current Liabilities [Member]
Business Acquisition [Line Items]
Business combination contingent consideration	$ 13.2		13.2
2021 Acquistions [Member] | Broker Relationships [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired			55.9
2021 Acquistions [Member] | Trademarks [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired			10.8
2021 Acquistions [Member] | Technology [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired			$ 5.5

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Acquisitions - Summary of Changes in Contingent Consideration Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Business Combinations [Abstract]
Opening balance	$ 28.0	$ 17.1	$ 39.8	$ 16.4
Acquisitions	2.7		4.7
Payments and issuances	(0.4)	(3.0)	(11.0)	(3.0)
Fair value losses (gains) included in net loss	2.7	1.2	(0.5)	1.9
Closing Balance	$ 33.0	$ 15.3	$ 33.0	$ 15.3

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Fair Value of Financial Assets and Liabilities - Summary of Fair Value Measurements of Our Financial Instruments (Parenthetical) (Detail) - USD ($) $ in Millions	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Accrued expenses and other current liabilities	$ 10.3		$ 19.1
Other non-current liabilities	22.7		20.7
Total contingent consideration	$ 33.0	$ 28.0	$ 39.8	$ 15.3	$ 17.1	$ 16.4

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Fair Value of Financial Assets and Liabilities - Summary of Fair Value Measurement Inputs and Valuation Techniques (Detail)	Jun. 30, 2021	Dec. 31, 2020
Measurement Input, Discount Rate [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	2.0	2.0
Measurement Input, Discount Rate [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	0.0	0.0
Measurement Input, Discount Rate [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	1.6	1.3
Measurement Input Earnings Volatility [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	18	18
Measurement Input Earnings Volatility [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	0	0
Measurement Input Earnings Volatility [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Business combination contingent consideration liability measurement input	8.7	6.9

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Fair Value of Financial Assets and Liabilities - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Inputs, Level 3 [Member]
Business combination contingent consideration fair value disclosure	$ 33.0	$ 39.8
Cash And Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents fair value disclosure	$ 810.7	$ 440.1

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Debt - Additional Information (Detail) - USD ($) $ in Millions			6 Months Ended
	Jul. 29, 2021	Jul. 31, 2020	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Debt [Line Items]
Letters of credit outstanding, amount			$ 57.3		$ 50.7
Concierge Revolving Credit Facility [Member]
Debt [Line Items]
Maximum borrowing capacity		$ 75.0
Interest rate basis	1.85	3.00
Unused capacity commitment fee percentage		0.50%
Line of credit facility expiration month and year			2023
Debt instrument interest rate		3.16%
Outstanding Borrowings			$ 11.1		$ 8.4
Covenant compliance			the Company was in compliance with the covenants under the Concierge Facility.
Concierge Revolving Credit Facility [Member] | Concierge Facility Used Greater Than Fifty Percent [Member]
Debt [Line Items]
Unused capacity commitment fee percentage	0.35%
Concierge Revolving Credit Facility [Member] | Concierge Facility Used Less Than Fifty Percent [Member]
Debt [Line Items]
Unused capacity commitment fee percentage	0.50%
Revolving Credit Facility [Member]
Debt [Line Items]
Maximum borrowing capacity				$ 350.0
Interest rate basis			1.00
Unused capacity commitment fee percentage			0.175%
Line of credit facility expiration month and year			2026
Outstanding Borrowings			$ 0.0
Additional borrowing capacity				$ 250.0
Additional borrowing capacity percentage threshold to assets				18.50%
Net leverage ratio				4.50
Letters of credit				$ 125.0
Revolving Credit Facility [Member] | Other Current Assets [Member]
Debt [Line Items]
Covenant compliance			the Company was in compliance with the covenants under the Revolving Credit Facility.
Debt issuance costs			$ 1.4
Revolving Credit Facility [Member] | Base Rate [Member]
Debt [Line Items]
Interest rate basis			0.50
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt [Line Items]
Interest rate basis			1.50
Revolving Credit Facility [Member] | Federal Funds Effective Swap Rate [Member]
Debt [Line Items]
Interest rate basis			0.50
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) Swap Rate [Member]
Debt [Line Items]
Interest rate basis			1.00
Revolving Credit Facility [Member] | Debt Default Interest Rate [Member]
Debt [Line Items]
Interest rate basis			2.0
Letter of Credit [Member]
Debt [Line Items]
Letters of credit outstanding, amount			$ 15.3

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Escrow and trust deposits	$ 282.5	$ 46.1
Letters of credit	57.3	$ 50.7
Revolving Credit Facility [Member]
Letters of credit outstanding	15.3
Cash and Cash Equivalents [Member]
Letters of credit outstanding	$ 42.0

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Preferred Stock and Common stock - Additional Information (Detail) - USD ($) $ in Millions				1 Months Ended		3 Months Ended	6 Months Ended
	Apr. 01, 2021	Mar. 31, 2021	Feb. 28, 2021	Mar. 31, 2021	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2020	Apr. 30, 2021	Dec. 31, 2020
Proceeds from Issuance of Convertible Preferred Stock							$ 0.0	$ 1.0
Common stock shares authorized						13,850,000,000	13,850,000,000			700,754,910
Reclassification of convertible preferred stock into common stock value						$ 1,419.1	$ 1,419.1
Preferred stock shares issued						0	0
Preferred stock shares outstanding						0	0
Additional Paid-in Capital [Member]
Reclassification of convertible preferred stock into common stock value	$ 1,400.0
Series D Convertible Preferred Stock [Member]
Conversion of Stock, Shares Converted				15,920,450
Series G Convertible Preferred Stock [Member]
Temporary Equity Stock Issued During Period Shares New Issues					64,820
Proceeds from Issuance of Convertible Preferred Stock					$ 1.0
Common Class A [Member]
Conversion of Stock, Shares Converted		15,244,490
Convertible Preferred Stock, Shares Issued upon Conversion	223,033,725
Treasury Stock, Common, Shares						2,250,000	2,250,000			2,250,000
Common stock shares authorized						12,500,000,000	12,500,000,000			530,136,050
Treasury stock, retired							Jul. 01, 2021
Common Class A [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized									12,500,000,000
Common Class C [Member]
Conversion of Stock, Shares Issued		15,244,490
Common Stock, Voting Rights			Each share of Class C common stock is entitled to twenty votes
Common stock shares authorized						100,000,000	100,000,000
Common Class C [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized									100,000,000
Common Class B [Member]
Common stock shares authorized						1,250,000,000	1,250,000,000			170,618,860
Common Class B [Member] | Restated Certificate Of Incorporation [Member]
Common stock shares authorized									1,250,000,000
Undesignated Preferred Stock [Member] | Restated Certificate Of Incorporation [Member]
Preferred stock shares authorized									25,000,000

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Preferred Stock and Common stock - Schedule of Stock by Class (Detail) - shares	Jun. 30, 2021	Dec. 31, 2020
Class of Stock [Line Items]
Shares Authorized	13,850,000,000	700,754,910
Shares Issued	396,669,967	125,221,900
Shares Outstanding	394,419,967	122,971,900
Class A common stock [Member]
Class of Stock [Line Items]
Shares Authorized	12,500,000,000	530,136,050
Shares Issued	376,863,317	118,549,390
Shares Outstanding	374,613,317	116,299,390
Class B common stock [Member]
Class of Stock [Line Items]
Shares Authorized	1,250,000,000	170,618,860
Shares Issued	4,562,160	6,672,510
Shares Outstanding	4,562,160	6,672,510
Class C common stock [Member]
Class of Stock [Line Items]
Shares Authorized	100,000,000
Shares Issued	15,244,490
Shares Outstanding	15,244,490

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Preferred Stock and Common stock - Summary of Common Stock Reserved For Issuance (Detail) - shares	Jun. 30, 2021	Dec. 31, 2020
Class of Stock [Line Items]
Common stock reserved for issuance	150,072,060	346,016,510
Convertible preferred stock outstanding [Member]
Class of Stock [Line Items]
Common stock reserved for issuance	0	238,954,050
Options issued and outstanding [Member]
Class of Stock [Line Items]
Common stock reserved for issuance	59,767,636	62,827,150
Restricted stock units issued and outstanding [Member]
Class of Stock [Line Items]
Common stock reserved for issuance	55,268,499	32,556,160
Shares available for future stock-based incentive award issuances [Member]
Class of Stock [Line Items]
Common stock reserved for issuance	35,035,925	11,679,150

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Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions		3 Months Ended			6 Months Ended		12 Months Ended
	Feb. 28, 2021	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted during the period					818,590		1,061,250
Intrinsic value of stock options exercised					$ 88.5	$ 2.7
Allocated share based compensation expense		$ 54.3		$ 13.0	221.8	24.1
Options unrecognized compensation		523.4			$ 523.4
Options unrecognized compensation period of recognition					3 years 3 months 18 days
Proceeds from exercise of stock options					$ 16.2	$ 3.4
Share based compensation by share based payment arrangement stock options granted during the period					3,119,998
Other non-current liabilities		$ 43.7			$ 43.7			$ 23.5
SHARES Granted Under Stock Plans Subject To Repurchase [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares subject to repurchase		1,431,410			1,431,410
IPO Based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share based compensation expense			$ 148.5
Performance Shares [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share based payment award restricted stock units granted			8,611,810
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from exercise of stock options					$ 5.0
Other non-current liabilities		$ 8.1			$ 8.1
2012 Stock Incentive Plan [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term					10 years
2012 Stock Incentive Plan [Member] | Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term					7 years
2021 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	29,666,480	35,035,925			35,035,925
2021 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	7,416,620
Share based compensation by share based payment arrangement increase in the shares authorised for issuance as a percentage of shares outstanding	1.00%
Share based compensation by share based payment arrangement stock options granted during the period	0
2021 Employee Stock Purchase Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	150,000,000

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Stock-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Share-based Payment Arrangement, Additional Disclosure [Abstract]
Number of Shares, Opening Balance | shares	62,827,150
Number of Shares, Granted | shares	3,119,998
Number of Shares, Exercised | shares	(5,341,714)
Number of Shares, Forfeited | shares	(837,798)
Number of Shares, Ending Balance | shares	59,767,636	62,827,150
Exercisable and vested | shares	34,154,376
Weighted Average Exercise Price, Opening Balance | $ / shares	$ 4.55
Weighted Average Exercise Price,Granted | $ / shares	13.88
Weighted Average Exercise Price,Exercised | $ / shares	3.03
Weighted Average Exercise Price,Forfeited | $ / shares	6.42
Weighted Average Exercise Price, Ending Balance | $ / shares	5.14	$ 4.55
Weighted Average Exercise Price, Exercisable and vested | $ / shares	$ 3.61
Weighted Average Remaining Contract Term, December 31, 2020		7 years 9 months 18 days
Weighted Average Remaining Contract Term, June 30, 2021		7 years 9 months 18 days
Weighted Average Remaining Contract Term, Exercisable and vested
Aggregate Intrinsic Value | $	$ 483.9	$ 1,208.0
Aggregate Intrinsic Value, Exercisable and vested | $	$ 325.5

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Stock-Based Compensation - Summary of Restricted Stock Units Activity (Detail)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share-based Payment Arrangement [Abstract]
Number of Shares, Opening Balance | shares	32,556,160
Number of Shares, Granted | shares	23,376,819
Number of Shares, Vested and converted to common stock | shares	0
Number of Shares, Forfeited | shares	(664,480)
Number of Shares, Ending Balance | shares	55,268,499
Weighted Average Grant Date Fair Value, Opening Balance | $ / shares	$ 6.75
Weighted Average Grant Date Fair Value, Granted | $ / shares	14.14
Weighted Average Grant Date Fair Value, Vested and converted to common stock | $ / shares	0
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	12.26
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares	$ 9.81

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Stock-Based Compensation - Share-based Payment Arrangement, Expensed and Capitalized, Amount (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 54.3	$ 13.0	$ 221.8	$ 24.1
Commissions and other related expense
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	11.7	0.5	56.3	4.6
Sales and marketing [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	8.6	2.5	17.6	5.4
Operations and support [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	2.8	0.7	7.8	1.5
Research and development[Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	13.5	0.3	63.0	0.8
General and administrative [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 17.7	$ 9.0	77.1	$ 11.8
IPO Related Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			148.5
IPO Related Expense [Member] | Commissions and other related expense
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			41.7
IPO Related Expense [Member] | Sales and marketing [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			1.8
IPO Related Expense [Member] | Operations and support [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			3.1
IPO Related Expense [Member] | Research and development[Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			46.9
IPO Related Expense [Member] | General and administrative [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense			$ 55.0

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Benefit from income taxes	$ 1.3	$ 0.9	$ 2.0	$ 0.9

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Net Loss Per Share Attributable to Common Stockholders - Schedule of Computation of Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders	117,156,861	332,973,038	117,156,861	332,973,038
Convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders		248,336,668	0	248,336,668
Outstanding stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders	59,767,636	55,434,110	59,767,636	55,434,110
Outstanding RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders	55,268,499	28,333,160	55,268,499	28,333,160
Unvested early exercised options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders	1,431,410		1,431,410
Unvested common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted net loss per share attributable to common stockholders	689,316	869,100	689,316	869,100

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Net Loss Per Share Attributable to Common Stockholders - Schedule of Computation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Numerator:
Net loss attributable to common stockholders	$ (7.1)	$ (84.2)	$ (219.5)	$ (216.9)
Denominator:
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted	377,615,338	109,120,449	252,958,956	108,942,655
Net loss per share attributable to common stockholders, basic and diluted	$ (0.02)	$ (0.77)	$ (0.87)	$ (1.99)

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Compass Concierge Receivables and Allowance for Credit Losses - Additional Information (Detail)	Jun. 30, 2021	Dec. 31, 2020
Receivables [Abstract]
Percentage of financing receivables related to unsold properties	95.00%	93.00%

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Compass Concierge Receivables and Allowance for Credit Losses - Summary of ACL for Concierge Receivables (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021
Accounting Policies [Abstract]
Beginning of period	$ 16.9	$ 17.2
Allowances	2.8	4.7
Net write-offs and other	(0.4)	(2.6)
End of period	$ 19.3	$ 19.3

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Compass Concierge Receivables and Allowance for Credit Losses - Summary of Aging Analysis of Concierge Receivables (Detail) $ in Millions	Jun. 30, 2021 USD ($)
Financing Receivable, Past Due [Line Items]
Financing Receivable, Past Due	$ 18.6
Financing Receivable, Not Past Due	48.8
Financing Receivable, before Allowance for Credit Loss	67.4
Financing Receivables Overdue Up to Thirty One Days And Less Than Ninety Days [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Past Due	3.6
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Past Due	$ 15.0

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Restructuring Activities and COVID -19 Update - Summary of restructuring costs (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 2.4	$ 9.0
Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	0.6	6.0
Lease Terminaion [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1.8	3.0
Sales and marketing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1.8	4.5
Sales and marketing [Member] | Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		1.5
Sales and marketing [Member] | Lease Terminaion [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1.8	3.0
Operations and support [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	0.1	2.9
Operations and support [Member] | Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	0.1	2.9
Research and development[Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		0.7
Research and development[Member] | Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		0.7
General and administrative [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	0.5	0.9
General and administrative [Member] | Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 0.5	$ 0.9

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Restructuring Activities and COVID -19 Update - Additional Information (Detail) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Restructuring and Related Activities [Abstract]
Restructuring and Related Cost, Number of Positions Eliminated, Percent	15.00%
Liabilities related to restructuring costs	$ 0	$ 0