PROPERTY MANAGEMENT AGREEMENT
This Property Management Agreement (the “Agreement”) is made and entered into as
of February 3, 2012 (the “Effective Date”), by and between Two Harbors Property
Investment LLC, a Delaware limited liability company (“Master Servicer”) and
Silver Bay Property Management LLC, a Delaware limited liability company
(“Manager”) (each sometimes referred to as a “Party” and, collectively, the
“Parties”) with reference to the following:
RECITALS
A.One or more potential owners (each an “Owner” and collectively referred to
herein as “Owner”) of single-family and other residential properties, each of
which are Affiliates of Master Servicer, has engaged Master Servicer to provide
asset management services with respect to such properties on Owner’s behalf.
B.Pursuant to an Acquisition Services Agreement between Manager and Master
Servicer dated as of the Effective Date (the “Acquisition Agreement”), Manager
will assist Master Servicer in advising Owner with respect to acquiring a
portfolio of single-family and other residential properties (collectively
referred to as the “Properties” and individually as a “Property”) located in the
geographic areas designated from time to time in writing by Master Servicer (the
“Geographic Areas”).
C.Manager is engaged in the business of acquiring, leasing and managing
single-family and other residences located in the Geographic Areas.
D.Manager may enter into third-party acquisition and property management service
agreements to carry out its duties and responsibilities set forth below.
E.Manager and Owner have developed a Property Management Plan for the operation,
maintenance and repair of the Properties (the “Management Plan”) and a Leasing
Plan for the leasing of the Properties (the “Leasing Plan”), copies of which are
attached hereto respectively as Exhibits B and C.
F.Master Servicer has established an electronic data room (the “Data Room”) that
will include descriptions of each of the Properties and all of the information,
contacts, reports, leases, lease applications, accounting information
recommendations and the other data described in this Agreement.
G.Pursuant to a separate Letter Agreement dated as of the Effective Date between
Master Servicer and Manager (the “Letter Agreement”), Master Servicer has agreed
to pay certain compensation to Manager for the performance of Manager’s services
under this Agreement.
H.Upon the terms and conditions set forth below, Master Servicer desires to
retain the services of Manager to operate, maintain, repair, manage and lease
the Properties for the benefit of Owner, to supplement and update the Data Room
from time to time, and to provide the other services

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described herein.
I.Unless the context otherwise specifies or requires, the Parties intend that
capitalized terms used in this Agreement shall have the meanings set forth
herein and on Exhibit A.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Master Servicer and Manager agree as follows:
1.APPOINTMENT; PROFESSIONAL MANAGEMENT STANDARDS.
1.1    Engagement. Master Servicer hereby engages Manager to be the manager of
the Properties, and Manager hereby accepts the engagement, on the terms and
conditions set forth herein.
1.2    Manager Status. It is expressly understood and agreed by the Parties that
Manager shall not be deemed to be a joint venturer, partner or employee of Owner
or Master Servicer. In the performance of its duties hereunder, Manager shall
act solely as agent for the account of Master Servicer but only to the extent
expressly set forth herein. Master Servicer and Manager agree that the limited
agency expressly granted herein is terminable in accordance with the provisions
of this Agreement. Notwithstanding any such agency, except as may be explicitly
contemplated in this Agreement, Manager shall not pledge Owner’s credit or incur
any liabilities or obligations in Master Servicer’s or Owner’s name without
Master Servicer’s or Owner’s prior written consent, which Master Servicer or
Owner may withhold or grant in Owner’s sole discretion.
1.3    Standards. Master Servicer is entering into this Agreement in reliance
upon Manager’s special and unique abilities to perform the services described
below. Manager will perform the Services required by Manager to be performed
under this Agreement (the “Services”) (a) in accordance with commercially
reasonable professional standards, (b) in compliance with all Legal
Requirements; and (c) using skill, good judgment, good faith and commercially
reasonable efforts.
1.4    Master Servicer’s Instructions. Notwithstanding the authority granted in
this Agreement, except to the extent prohibited by Legal Requirements, Manager
agrees to abide by those standards and instructions that Owner may issue from
time to time regarding the Properties and shall have no power to perform any act
contrary to written instructions given to it by Master Servicer.
2.    TERM.
2.1    Initial Term. The initial term of this Agreement shall commence on the
Effective Date and end on the one year anniversary of the Effective Date (the
“Term”).
2.2    Renewal. Following the initial Term, this Agreement shall automatically
and without further action by either Party be extended for additional one (1)
year periods (each a “Renewal Term”), until terminated in accordance with
Article 11.

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2.3    Early Termination. Notwithstanding the foregoing, this Agreement may be
terminated as provided in Section 11.
3.    PROPERTIES.
3.1    Properties Acquired Pursuant to Acquisition Agreement. Properties that
Manager assists Owner to acquire pursuant to the Acquisition Agreement shall
automatically become subject to this Agreement on the date when acquired by
Owner.
3.2    Other Future Properties Acquired by Owner. From time to time hereafter,
Master Servicer and Owner shall have the right at their sole option to cause
additional single-family and other residential properties located within one or
more Geographic Areas that are acquired by Owner but not acquired pursuant to
the Acquisition Agreement to become Properties that are subject to the terms of
this Agreement by written notice to Manager (an “Acquisition Notice”).
4.    MANAGER’S RESPONSIBILITIES.
4.1    Property Management Report. Manager shall promptly cause all Properties
that become subject to this Agreement to be specifically identified and
described by completing and delivering to the Data Room a “Property Management
Report” in the form attached as Exhibit D, which may be revised from time to
time. Each Property Management Report shall include, but shall not be limited
to, information describing each Property, estimated annual income with
corresponding components including: projected rent, vacancy, management fees,
taxes, insurance, HOA dues, if applicable, repairs, maintenance and capital
expenditures, if any, together with a projected annual net return on investment
for such Property. Upon receipt of an Acquisition Notice, Manager shall promptly
and diligently prepare the Property Management Report for the newly acquired
Property and shall deliver the same to the Data Room for Master Servicer’s
approval.
4.2    Management and Maintenance. Manager shall maintain and manage the
Properties pursuant to the applicable Property Management Report and shall do so
in full compliance with, and shall otherwise fully comply with, the Management
Plan. Manager shall update the Property Management Report at least annually not
less than thirty (30) days before submitting the proposed budget as provided
below in Section 4.9. In the event of any conflict between this Agreement and
the terms of the Property Management Report, this Agreement shall control.
4.3    Leasing. Manager shall use commercially reasonable efforts to keep the
Properties leased pursuant to the rent projections set forth on the applicable
Property Management Report and shall do so in full compliance with, and shall
otherwise fully comply with, the Leasing Plan.
4.3.1    Lease and Leasing Forms. Manager shall lease the Properties using a
lease form (each, a “Lease Form”) conforming to the Association of Realtors
Residential Real Estate Lease Form for the state in which the Qualified Property
is located (as an example, the form for the state of Arizona is attached as
Exhibit E).

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4.3.2    Lease Parameters. Manager shall negotiate leases in compliance with the
Lease Parameters attached as Exhibit F which Master Servicer may revise from
time to time in Master Servicer’s sole and absolute discretion (the “Lease
Parameters”).
4.3.3    Authority. Subject to the terms of this Agreement, Manager is
authorized to enter into Leases with Tenants.
4.4    Marketing.
4.4.1    Advertising. Manager shall use commercially reasonable efforts and
advertising to attract, procure and retain Tenants at each of the Properties.
Advertising may include signs on the Property if permitted by Legal
Requirements, Multiple Listing Service (“MLS”) (if approved in advance by Master
Servicer), craigslist.com ads, Back Page, Section 8 Housing lists, Military
Housing publications, daily/weekly street signage and website and other internet
marketing. If Master Servicer elects to allow one or more of the Properties to
be advertised through MLS, Master Servicer authorizes Manager to install and use
a lockbox on the Property containing the key to the Property.
4.4.2    Website. Manager shall maintain a website that advertises each of the
Properties that is available for rent (the “Website”); provided, however, that
all of the content of the Website that relates to the Properties shall be the
property of Master Servicer.
4.4.3    Cooperation. Manager shall cooperate with outside brokers and agents in
securing Tenants for the Properties.
4.5    Legal Proceedings and Legal Counsel. The selection of attorneys and
related professionals and experts for the handling of legal matters that arise
in the ordinary course of operating, managing or leasing the Properties,
including collection and eviction proceedings and tort and contract claims
litigation, shall be subject to Master Servicer’s prior approval. Legal action
with respect to the Properties, Leases, or Tenants shall be undertaken in
Owner’s name only provided, however, that Manager shall not commence any legal
action except as follows: Manager may file unlawful detainer actions and actions
to recover rent, late charges, insufficient fund charges and other amounts
payable by a Tenant provided the amount in controversy does not exceed $3,000
and that the legal fees do not exceed $1,500 per controversy. Any such legal
fees incurred by Manager (not to exceed $1,500) shall be considered “Operating
Expenses” hereunder. No other actions may be filed by Manager without Master
Servicer’s prior written consent. If any claim is asserted against Owner, Master
Servicer or Manager arising out of a Lease, Manager shall notify Master Servicer
as promptly as practicable.
4.6    Government Approvals/Rental Taxes. Manager shall timely secure such
individual tax or business licenses in the name of Owner or Master Servicer as
may be required for the rental of the Properties and shall register each
Property with appropriate governmental authorities as a rental property to the
extent required by Legal Requirements in the applicable Geographic Areas.
Manager will make such filings and timely pay such taxes and fees as part of the
Operating Expenses, and submit monthly sales tax forms with the appropriate
governmental

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agency.
4.7    Cooperation With Financing and Sales Efforts. Manager and its Employees
shall cooperate with and provide commercially reasonable transaction support to
Owner and Master Servicer in connection with the financing, sale, or any other
transfer or disposition of any or all of the Properties. Upon Master Servicer
determining to finance, sell, or otherwise transfer or dispose of any or all of
the Properties, Manager shall cooperate with Master Servicer’s sale personnel,
Master Servicer’s finance personnel, any broker (other than Manager) engaged by
Master Servicer with respect to the sale or financing, and any prospective
lender or buyer, so that the respective activities of Manager, Master Servicer
and Master Servicer’s sales and finance personnel and brokers shall be carried
on with full cooperation. Without limiting the foregoing, Manager shall ensure
that the Data Room and all files (digital and otherwise) related to the
Properties are organized and up to date and available for review by potential
buyers or lenders. Manager shall also prepare and verify income and expense
proration data in such format as Master Servicer may require, and work with
Master Servicer to verify any post-closing final prorations of such income and
expenses after a sale. From time to time, upon written request by Master
Servicer in connection with a sale or financing of any or all of the Properties,
Manager shall certify to Master Servicer with respect to any and all matters for
which Manager is responsible under this Agreement, including: (a) updated rent
rolls, delinquency reports, operating statements, lists of service contracts and
warranties, inventories of personal property and readily removable appliances,
fixtures or furnishings at the Properties, lists of any alleged violations of
Legal Requirements or terms and conditions contained in any leases, service
contracts and other agreements required to be complied with by Master Servicer
with respect to the Properties, lists of insurance claims, lists of any pending
or threatened litigation, and any other information that Manager is required to
maintain under this Agreement; (b) copies of all documents evidencing any of the
foregoing; and (c) certifying to Master Servicer that such information and
copies are true, correct and complete. Manager agrees that such cooperation by
Manager is required of Manager in consideration of the compensation provided
hereunder, and such cooperation shall not give rise to a claim by Manager for a
commission or other compensation in connection with any such sale. Manager
agrees that failure on its part to extend commercially reasonable cooperation to
Master Servicer or any such broker or lender is a material default on its part
under this Agreement and shall constitute cause for immediate termination of
this Agreement. If Master Servicer sells a Property to a Tenant or to a person
who was formerly a tenant at the Property during the Term of this Agreement,
then at the closing of the sale and from the sales proceeds amounts shall be
disbursed to Manager as described in the Letter Agreement.
4.8    Accounts.
4.8.1    Trust Deposit Account.  Subject to applicable local law, all funds
received by Manager as a refundable security deposit (the “Security Deposits”)
in connection with Leases shall be placed in trust for Master Servicer’s benefit
into an interest-bearing account at a financial institution approved in advance
by Master Servicer whose deposits are insured by the Federal Deposit Insurance
Corporation (the “FDIC”) and in a manner to indicate the custodial nature of
such account (the “Trust Deposit Account”).  Interest earned on the Trust
Deposit Account in excess of the related banking fees and charges that are
incurred for the account shall be retained by

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Manager. 
4.8.2    Trust Operating Account. Subject to applicable local law, except for
Security Deposits as provided above in Section 4.8.1, all Gross Collections
shall be placed in trust for Master Servicer’s benefit into an interest-bearing
account at a financial institution approved in advance by Master Servicer whose
deposits are insured by the FDIC and in a manner to indicate the custodial
nature of such account (the “Trust Operating Account”). Interest earned on the
Trust Operating Account in excess of the related banking fees and charges that
are incurred for the account shall be retained by Manager.
4.8.3    No Commingling. In no event shall any Security Deposits, any Gross
Collections or any other funds of Master Servicer or Owner be commingled with
Manager’s own funds or the funds of any other of Manager’s clients.
4.8.4    Access to Accounts. Master Servicer shall be given read-only access to
the Trust Deposit Account and the Trust Operating Account. On the Effective
Date, Manager will give the account number and access password to Master
Servicer. Manager shall not thereafter change any account number or password
without the prior written consent of Master Servicer, except in an Emergency
when, in the opinion of Manager, the change is required in order to prevent
unauthorized access to one or more of the accounts. In the event of such an
Emergency, Manager shall notify Master Servicer immediately of the new account
number and password and the reason for the change.
4.9    Budgets.
4.9.1    Initial Budget. For each Property that is acquired pursuant to the
Acquisition Agreement, Manager will have prepared and Master Servicer will have
approved the initial projected budget for the operation, maintenance, repair and
leasing of each of the Properties (each, an “Initial Budget”), which Initial
Budget shall be included in the applicable Property Management Report. As to
other Properties acquired pursuant to Section 3.2, upon receipt of an
Acquisition Notice, Manager shall promptly and diligently prepare an initial
budget for the operation, maintenance, repair and leasing of each Property and
shall submit it, along with the remainder of the information required in the
applicable Property Management Report, to the Data Room for Master Servicer’s
approval in accordance with Section 4.1 hereof.
4.9.2    Updated Budgets. On a monthly basis, Manager shall prepare and submit
to Master Servicer for Master Servicer’s approval a proposed updated budget for
the Properties. If Master Servicer disapproves of such proposed budget, Master
Servicer shall provide Manager with specific reasons for Master Servicer’s
disapproval within five (5) business days after receiving Manager’s proposed
budget. In that event, Manager shall within five (5) business days provide an
appropriately revised budget to Master Servicer. This process will continue
until Master Servicer has approved the budget for the Properties for the next
calendar year (each, an “Approved Budget”). Any Approved Budget shall be
included in the applicable Property Management Report. If Master Servicer or
Owner has not requested an updated budget or if a proposed updated budget has
not yet been approved, Manager shall continue to operate on the basis of the
Initial Budgets or the prior

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year’s Approved Budget (if there is one) until the new annual budget is
approved.
4.10    Disbursements.
4.10.1    Requests for Funds. Manager may provide a written request to Master
Servicer with respect to funding the Trust Operating Account for the ensuing
month to the extent reasonably required, based upon the Gross Collections for
the preceding month and the Initial Budgets or applicable Approved Budget.
Manager’s request shall describe and document any request for funds in excess of
those anticipated in the applicable budgets.
4.10.2    Operating Expenses. Manager shall pay all Operating Expenses on a
timely basis from the funds in the Trust Operating Account; provided, however,
that except as otherwise provided in the Initial Budget or the then-applicable
Approved Budget, any maintenance or repair outlay estimated to cost more than
$500.00 (or such higher figure as the Parties may mutually agree in writing) for
an individual Property shall require the prior written approval of Master
Servicer. This limitation shall not apply to Emergency repairs involving
imminent danger to persons or property or expenditures required to avoid
suspension of any necessary service in the event that Master Servicer is not
readily available for consultation, but in any such event, Manager shall use
prudent judgment regarding the same and shall promptly notify Master Servicer of
all relevant facts as soon as reasonably practical after the occurrence of the
event giving rise to such Emergency expenditure. In the event Master Servicer
elects to have any payments made in a manner other than as herein provided,
Master Servicer shall so notify Manager in writing.
4.10.3    Remittance to Master Servicer. Each month, after deducting all
authorized Operating Expenses from the Gross Collections from the Properties for
the immediately preceding calendar month, the net remaining amount of Gross
Collections in excess of a reserve that includes at least $200 for each of the
Properties shall be remitted by Manager to Master Servicer at the address
specified herein or as Master Servicer may otherwise direct in writing. Such
remittance shall be made no later than the tenth (10th) calendar day of each
month.
4.11    Data Room and Reports. Manager shall cause the following statements,
reports and documentation (collectively, the “Reports”) to be delivered to the
Data Room at the time and in the form and manner referenced below:
4.11.1    Additional Properties. Promptly after any additional Property is
acquired by Owner as provided in Article 3, Manager shall update the Data Room
with the applicable Property Management Report for the Properties.
4.11.2    Rent Rolls. On or before the fifth (5th) calendar day of each month,
Manager shall prepare and submit an up-to-date rent roll (“Rent Roll”) including
a Tenant delinquency report and a vacancy report for the Properties as of the
last day of the immediately preceding month, certified by Manager.
4.11.3    Periodic Inspections. Promptly after each inspection of a Property,
Manager shall update the records in the Data Room regarding the condition of
each Property.

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4.11.4    Damage Reports. Manager shall promptly deliver to the Data Room each
and every Damage Report (as defined in Section 7.5 hereof).
4.11.5    Claim Reports. Manager shall maintain a report that includes all
information pertaining to any claims that may be made by a Tenant or any other
Person arising out of the Properties relating to any injury, damage, loss,
liability, cost, expense or other similar issues, of whether or not covered by
insurance (the “Claims Report”); provided, however, that the Claims Report need
not include claims of a de minimis nature as determined by Manager, in Manager’s
reasonable discretion. For purposes of this section, any claim for less than
$1,000 shall be deemed de minimis.
4.11.6    Account Reconciliations. Manager shall prepare and deliver to the Data
Room a monthly reconciliation of the Trust Deposit Account and Trust Operating
Account and all deposits, disbursements, fees and charges, fund balances and all
related information (the “Account Reconciliations”). Manager shall deliver the
reconciliation and supporting data to the Data Room not later than fifteen (15)
calendar days following the end of each month.
4.11.7    Monthly Reports. Each month Manager shall prepare a monthly financial
report containing a balance sheet, income statement and statement of cash flows
as well as an income and expense report (on a form furnished or approved by
Master Servicer and certified by Manager) that shows detail of all Gross
Collections, all Operating Expenses for the Properties and Net Operating Income
for the month (the “Monthly Report”). Manager shall also deliver supporting
data, invoices or vouchers, as appropriate. The Monthly Report shall separately
set forth data for both the current month and the year to date. Manager shall
deliver the Monthly Report to the Data Room not later than five (5) calendar
days following the end of each month and shall simultaneously also deliver to
Master Servicer any supporting data, including a copy of the check register
relating to expenditures for the Properties.
4.11.8    Annual Financial Reports. If requested by Master Servicer in writing
at least ninety (90) days prior to any fiscal year end, Manager shall cause an
annual financial report containing a balance sheet, income statement, statement
of sources and uses of funds and any other reports requested by Master Servicer,
to be prepared by a certified public accountant designated by Master Servicer
(the “Annual Financial Report”). The report shall be certified by the preparer
and delivered to Master Servicer within thirty (30) days following year end, or
such other time period as agreed to by Master Servicer in writing. Compensation
for the preparer’s services shall be paid by Owner as an Operating Expense.
4.11.9    Cooperation. Manager will cooperate with Master Servicer and its
agents in reconciling any discrepancies found in statements and providing
reasonably requested backup for income and expense items to satisfy Master
Servicer’s accountants and administrators.
4.12    Filing of Tax and Other Returns and Reports. Manager shall timely
prepare and file all returns and other documents required under the Federal
Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act, or any
similar federal or state legislation, and all withholding tax returns required
for Manager and its Employees and for contractors or material

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suppliers, including 1099s and W‑2s. Manager will timely pay all amounts
required to be paid under the Federal Unemployment Tax Act, or any similar
federal or state legislation, and all withholding taxes. Manager shall also
timely prepare and file the following: (a) all payroll forms and reports
concerning Employees; (b) workers’ compensation forms; (c) business and property
tax forms; and (d) any applicable health, welfare or other forms.
4.13    Records. Manager shall organize and maintain accurate records of all of
the information and data prepared by or utilized by Manager in the performance
of its duties, including the following (collectively, the “Records”):
4.13.1    All Security Deposits, Gross Collections, Operating Expenses and
Management Fees;
4.13.2    Each Initial Budget, proposed budget and Approved Budget and all
related correspondence;
4.13.3    The Property Management Report;
4.13.4    The original of each Lease and Tenant application
4.13.5    The Rent Rolls;
4.13.6    The Monthly Reports and Annual Financial Reports;
4.13.7    Separate accounting records for each Property, reflecting its income
and expenses;
4.13.8    The banking statements, Account Reconciliations and all back-up
information (including proposals, invoices, receipts, etc.) for both the Trust
Deposit Account and Trust Operating Account; and
4.13.9    Insurance policies, Claims Reports, Damage Reports and all
correspondence and activities with respect thereto.
4.13.10    All such Records shall be maintained at Manager’s office located at
14601 27th Avenue North, Suite 102, Plymouth, MN, 55447, and in the Data Room.
If the location of Manager’s office changes, then Manager shall provide written
notice to Master Servicer as promptly as practicable. The Records at Manager’s
office shall be open for inspection by Master Servicer at all reasonable times.
Manager shall keep safe and intact all such Records for a period of three (3)
years after the date of submission of the annual financial report to which such
records pertain. Master Servicer reserves the right to have an audit made of all
Records, wherever located. Subject to the remainder of this subsection 4.13.11,
the cost of such audit shall be paid for by Master Servicer. If an Annual
Financial Report is found to be incorrect by such audit by an amount in excess
of two percent (2%) of the average gross monthly collections for the period
covered by the audit, then the Party economically advantaged by such discrepancy
shall pay the costs of such audit and shall

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reimburse the Party economically disadvantaged by such discrepancy the entire
amount of such discrepancy as promptly as practicable. If pursuant to the
preceding sentence Manager is the Party economically advantaged by such
discrepancy, and Manager fails to reimburse Master Servicer for the costs of the
audit and such discrepancy within ten (10) days after Master Servicer’s demand
therefor, the amount shall be offset against any compensation payable to Manager
pursuant to this Agreement. No annual financial report submitted to Master
Servicer by Manager shall be deemed to be final and correct until the expiration
of the aforesaid three (3) year period. The provisions of this Section shall
survive any termination of this Agreement.
4.13.11    Compliance With Laws. Notwithstanding Manager’s obligations to cause
each of the Properties to comply with all Legal Requirements, Manager shall not
take any such action if Master Servicer has notified Manager that Master
Servicer is contesting or has affirmed its intention to contest and promptly
institute proceedings contesting such Legal Requirements, unless failure to
comply promptly with any such Legal Requirements would expose Manager to civil
and/or criminal liability.
4.13.12    Other Forms of Compensation Prohibited. Manager agrees that its
compensation as described in Section 5.2 below is to be paid in consideration of
all services to be rendered pursuant to the terms of this Agreement by Manager,
except as otherwise set forth in the Letter Agreement. Expenses related to
Manager’s Employees or to Manager’s office overhead (including marketing
expenses as contemplated in Section 4.4), whether or not allocable to services
rendered in the management of Properties, are not to be an Operating Expense of
the Properties. All rebates, discounts or commissions collected by Manager, or
credited to Manager’s use, that relate to the purchasing of supplies or to the
rendering of services for the Properties, shall be for the benefit of Owner,
other than de minimis discounts for bulk purchases or handling charges. Manager
shall not collect or charge any undisclosed fee, rebate or discount in
connection with the management or leasing of the Properties.
4.13.13    Inspections of Properties. Manager shall cooperate with Master
Servicer and Master Servicer’s representatives in order to allow them to inspect
the Properties at all reasonable times.
5.    OWNER’S RESPONSIBILITIES.
5.1    Funding of Trust Operating Account. Master Servicer shall at all times
respond promptly to Manager’s requests for funds pursuant to Section 4.10.1 and
cause to be maintained sufficient funds in the Trust Operating Account to enable
Manager to pay all Operating Expenses in a timely manner in accordance with the
then-applicable Initial Budget or Approved Budget. In instances where Manager
provides at least seven (7) days prior written notification that Gross
Collections will be insufficient or will not be received in time to satisfy this
requirement, Master Servicer shall timely provide Manager with the necessary
funds.
5.2    Compensation. Commencing on the Effective Date, Master Servicer shall pay
Manager compensation identified as Management Fees, Lease Fees, Maintenance
Fees, Rehabilitation Oversight Fees and Termination Fees, as provided in the
Letter Agreement and as

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defined therein. Manager shall be entitled to deduct all Management Fees, Lease
Fees, and Maintenance Fees for the immediately preceding calendar month from the
Trust Operating Account. The Monthly Report delivered pursuant to Section 4.11.7
shall include Manager’s calculation of each of those identified fees for the
immediately preceding calendar month, along with such calculations, accounting
records and financial statements sufficient to allow Master Servicer to verify
Manager’s calculation of such fees for such calendar month (as determined in
Master Servicers’ sole discretion). If Master Servicer determines that Master
Servicer has paid fees to Manager in excess of the amounts required under the
Letter Agreement, Manager shall reimburse any such excess amounts to Master
Servicer within five (5) business days after receipt of Master Servicer’s
written request for such excess amounts, which written request shall be
accompanied by reasonable proof of such excess amounts. Master Servicer shall
pay Termination Fees in the manner contemplated in the Letter Agreement.
5.3    Income Tax Returns. Each of Master Servicer and Owner shall be
responsible for preparing its own income tax returns. Notwithstanding the
foregoing, Manager agrees that the Records and Reports furnished to Master
Servicer by Manager under this Agreement shall set forth all required data as to
Operating Expenses and income and shall be otherwise sufficient for the
preparation of Master Servicer’s and Owner’s income tax returns.
6.    NO DISCRIMINATION.
Master Servicer and Manager acknowledge it is unlawful to discriminate in the
leasing of any of the Properties based upon any discrimination that is
prohibited by applicable law. Manager and its Employees and Affiliates shall not
permit any discrimination against or segregation of any person or group of
persons on account of age, race, color, religion, creed, handicap, sex or
national origin in the leasing or occupancy of the Properties, the selection or
location of the Properties, the number of residents or the use of any services
or amenities offered by Manager or its Affiliates; nor shall Manager allow any
such discrimination in its employment practices.
7.    INSURANCE AND INDEMNITY.
7.1    Carried by Manager. Manager shall at all times obtain and keep in force,
at no expense to Master Servicer or Owner, the following policies of insurance
with respect to the Properties:
7.1.1    a commercial general liability policy of insurance protecting Manager,
Master Servicer and Owner against claims and damages, including punitive
damages, for bodily injury, property damage and personal injury, based upon or
arising out of the ownership, use, occupancy or maintenance of the Properties
and all areas appurtenant thereto, to the extent arising out of an act or
omission of Manager. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount at limits of not less than Ten Million
Dollars ($10,000,000) per occurrence, with no aggregate limit;
7.1.2    statutory workers’ compensation and employers’ liability insurance with
minimum limits of $1,000,000 per accident, $1,000,000 per disease, and
$1,000,000 per policy

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limit, covering all of Manager’s Employees;
7.1.3    umbrella liability insurance with minimum limits of $10,000,000 per
occurrence with a $10,000,000 aggregate. The coverage shall not be more
restrictive than the primary general liability policy;
7.1.4    a fidelity bond or crime insurance including employee dishonesty
coverage with minimum limits of $1,000,000; and
7.1.5    professional liability or errors and omissions insurance with minimum
limits of at least $5,000,000 per occurrence, with a $5,000,000 aggregate limit,
including expense coverage for data or cyber breach of personal data (such as
social security numbers or credit card information), and with a minimum five (5)
year extended reporting period.
Deductibles shall be subject to Master Servicer’s approval, in its sole and
absolute discretion. The limits of the foregoing insurance shall not limit the
liability of Manager nor relieve Manager of any obligation hereunder. All
insurance carried by Manager shall be primary to and not contributory with any
similar insurance carried by Master Servicer or Owner, whose insurance shall be
considered excess insurance only. Manager shall name Master Servicer and Owner
and their respective directors, officers, members, managers, employees, and
agents as named or additional insureds on the commercial general liability and
umbrella liability policies; and name Master Servicer and Owner as Loss Payee on
the crime insurance policy. Manager shall not do or permit to be done anything
that invalidates the required insurance policies. Manager shall deliver to
Master Servicer certified copies of all policies of insurance or certificates
evidencing the existence and amounts of the required insurance within ten (10)
days following the execution of this Agreement. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Master Servicer. Manager shall, at least thirty (30) days
prior to the expiration of such policies, furnish Master Servicer with evidence
of renewals or “insurance binders” evidencing renewal thereof. The cost of
Manager’s insurance hereunder shall not be included in Operating Expenses.
Master Servicer may at its option obtain any insurance required by this
Section 7.1 and deduct the cost thereof from Manager’s fees hereunder, and may
terminate this Agreement upon notice to Manager if Manager does not timely
provide to Master Servicer the evidence of insurance required hereunder.
7.2    Contractors. Other than for services provided by a “handyman” costing
less than $1,000, or such other amount as may be specified in Legal Requirements
of the applicable Geographic Area pursuant to which a licensed contractor would
not be required to perform work, Manager shall require all contractors providing
services to the Properties to maintain workers’ compensation and other insurance
required by Legal Requirements at all times in accordance with this Agreement,
including a commercial general liability policy of insurance protecting Manager,
Master Servicer and Owner against claims based upon or arising out of the acts
or omissions of the contractor in connection with work performed on the
Properties, which shall be on an occurrence basis providing single limit
coverage in an amount not less than $1,000,000 per occurrence. Manager shall
deliver to the Data Room evidence that such insurance policies are valid and in
effect prior to a contractor beginning work on any of the Properties.

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7.3    Insurance Policies. The insurance policies required under this Agreement
shall contain the “Amendment of the Pollution Exclusion Endorsement” for damage
caused by heat, smoke or fumes from a fire. The policies shall not contain any
intra-insured exclusions as between insured persons or organizations. The
policies required herein shall be issued by companies duly licensed or admitted
to transact business in the state where the Properties are located, and
maintaining during the policy term a “General Policyholders Rating”, as set
forth in the most current issue of AM Best’s Insurance Guide, of A/VII or
higher. In the event of a rating downgrade below the required minimum level,
Manager shall immediately replace the policy with a carrier that has the
agreed-upon minimum rating.
7.4    Waiver of Subrogation. Manager shall request its respective insurance
carriers to waive any right to subrogation that such companies may have against
Owner, Master Servicer or Manager, as the case may be, so long as the insurance
is not invalidated thereby.
7.5    Damage. Manager shall promptly investigate and make a full timely written
report to Master Servicer and the applicable insurance carrier(s) of all damage
or destruction to the Properties and all accidents or claims for damages
relating to the ownership, operation or maintenance of the Properties (each, a
“Damage Report”). Each Damage Report shall include the estimated cost of repair
and replacement, including bids for such repair and replacement. Manager shall
also cooperate with and make any reports or satisfy any other requirements of
the insurance policy or policies covering a loss or claim. Notwithstanding the
foregoing, the Damage Report need not include claims for damages of a de minimis
nature as determined by Manager, in Manager’s reasonable discretion. For
purposes of this Section 7.5, any claim or damage totaling less than $1,000
shall be deemed de minimis.
7.6    Indemnity by Manager. Manager shall, to the full extent permitted by
applicable law, indemnify, defend (with counsel reasonably acceptable to Master
Servicer) and hold harmless Master Servicer, Owner and their respective
Affiliates, managers, members, certificate holders, partners, shareholders,
directors, officers, employees and agents for, from and against any and all
claims, liabilities, losses, damages, costs and expenses (including all costs
and reasonable attorneys’ fees, late fees, interest and penalties)
(collectively, “Liabilities”) arising from the gross negligence or intentional
misconduct of Manager or any of its Employees in connection with the management
and leasing of the Properties. The provisions of this Section 7.6 shall survive
the expiration or termination of this Agreement.
7.7    Indemnity by Master Servicer. Master Servicer shall, to the full extent
permitted by applicable law, indemnify, defend (with counsel reasonably
acceptable to Manager) and hold harmless Manager and its Affiliates, managers,
members, certificate holders, partners, shareholders, directors, officers,
employees and agents for, from and against any and all Liabilities arising as a
direct result of Manager’s management of the Properties and performance of
Manager’s duties under this Agreement, except to the extent arising as a result
of: (a) any material breach by Manager of this Agreement or the terms of any
Lease; (b) the failure of Manager or any of its Employees to comply with Legal
Requirements; (c) the gross negligence or intentional misconduct of Manager or
any of its Employees in connection with the management and leasing of the
Properties; or (d) any Liabilities incurred by or asserted by Manager’s
Employees that are solely

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related to their employment by Manager.
8.    REPRESENTATIONS AND WARRANTIES.
8.1    Representations, Warranties and Covenants of Manager. Manager covenants,
represents and warrants to Master Servicer as of the Effective Date and any date
a Property becomes subject to this Agreement:
8.1.1    Due Organization and Authorization. Manager is a limited liability
company organized, validly existing and in good standing under the laws of the
State of Delaware. Manager has full power to enter into this Agreement; the
execution, delivery and performance of this Agreement have been duly and validly
authorized by all necessary limited liability company action on the part of
Manager; and this Agreement, when executed and delivered by the Parties, shall
be the valid and binding obligation of Manager.
8.1.2    No Conflicts. Manager has delivered to Master Servicer a certified copy
of its formation documents or certificate thereof together with a resolution
authorizing Manager to enter into this Agreement. The execution, delivery and
performance of this Agreement by Manager shall not: (a) conflict with or result
in a breach of any provision of its certificate of formation or operating
agreement; (b) cause a default under any agreement to which Manager is a Party
or by which any of its assets may be bound; or (c) require any consent or
approval that has not been obtained or at the appropriate time shall not have
been obtained.
8.1.3    Litigation. There is no pending, or, to the knowledge of Manager,
threatened, claim or litigation, arbitration proceeding, or action of any kind
against Manager, the outcome of which could have a material adverse effect on
the financial position, results of operations, or business of Manager, taken as
a whole, or which could question the validity of this Agreement.
8.1.4    Licenses. Manager and its Employees possess all licenses and permits
under the laws of the state in which the Properties are located as are necessary
for them to perform their respective duties set forth in this Agreement, and all
such licenses and permits are in good standing.
8.1.5    Financial Success. Manager has not relied on any historical financial
statement of the Properties, or any projection of earnings or any statements as
to the possibility of future success or other similar matter that may have been
delivered or made available to Manager, and Manager understands that neither
Master Servicer nor Owner makes or has made any guarantee as to the future
financial success of the Properties.
8.2    No Master Servicer or Owner Warranties or Representations as to the
Properties. Manager acknowledges and agrees that neither Master Servicer nor
Owner has made, nor shall Master Servicer nor Owner be deemed to have made, any
warranty or representation, express or implied, with respect to any of the
Properties, including any warranty or representation as to: (a) its fitness,
design or condition for any particular use or purpose; (b) the quality of the
material or workmanship therein; (c) the existence of any defect, latent or
patent; (d) compliance

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with specifications; (e) quality; (f) durability; (g) operation; (h) the
existence of any Hazardous Materials or hazardous condition or hazardous
activity; or (i) compliance of the Properties with any law. In the event of any
defect or deficiency in the Properties of any nature, whether latent or patent,
neither Master Servicer nor Owner shall have any responsibility or liability
with respect thereto or for any incidental or consequential damages (including
strict liability in tort). The provisions of this Section 8.2 have been
negotiated and are intended to be a complete exclusion and negation of any
warranty by Master Servicer or Owner, express or implied, with respect to the
Properties, arising pursuant to any law now or hereafter in effect or arising
otherwise.
8.3    Representations and Warranties of Master Servicer. Master Servicer
represents and warrants to Manager as follows:
8.3.1    Authorization. Master Servicer is a limited liability company
organized, validly existing and in good standing under the laws of the State of
Delaware. Master Servicer has full power to enter into this Agreement, the
execution, delivery and performance of this Agreement have been duly and validly
authorized by all necessary limited liability company action on the part of
Master Servicer, and this Agreement, when executed and delivered by the Parties,
shall be the valid and binding obligation of Master Servicer.
8.3.2    No Conflicts. The execution, delivery and performance of, this
Agreement by Master Servicer shall not: (a) conflict with or result in a breach
of any provision of its formation or constituent documents; or (b) cause a
default under any agreement to which Master Servicer is a Party or by which any
of its assets may be bound or (c) require any consent or approval that has not
been obtained or at the appropriate time shall not have been obtained.
8.3.3    Litigation. There is no pending, or, to the knowledge of Master
Servicer, threatened, claim or litigation, arbitration proceeding, or action of
any kind against Master Servicer, the outcome of which could have a material
adverse effect on the financial position, results of operations, or business of
Master Servicer or the Properties taken as a whole, or which could question the
validity of this Agreement.
9.    CONFIDENTIALITY.
Manager acknowledges that in connection with performing services for Master
Servicer under this Agreement, Manager will have access to Confidential
Information, which is the proprietary and non-public information of Master
Servicer, Master Servicer’s parent company, Two Harbors Investment Corp.
(“Parent Company”), or both Master Servicer and Parent Company. Manager will
shall exercise reasonable commercial efforts to protect the confidentiality of
all of the Confidential Information and agrees to restrict access to the
Confidential Information to those Employees, agents, advisors or representatives
who have a need to know the Confidential Information in order for Manager to
fulfill its obligations under this Agreement and who have been advised of the
confidential and proprietary nature of the Confidential Information (the
“Authorized Professionals”). Manager shall use reasonable commercial efforts to
prevent unauthorized disclosure or use of the Confidential Information and
acknowledges and agrees that it shall be responsible for its failure or the
failure by any of its Authorized Professionals to adhere to the

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provisions of this Article 9. Manager further agrees to reimburse, indemnify and
hold harmless Master Servicer, Parent Company and their officers, directors,
employees, agents and Affiliates from any Liability incurred as a result of the
use of Confidential Information by Manager or its Authorized Professionals in a
manner contrary to this Article 9. Manager understands and acknowledges and will
inform its Authorized Professionals that Parent Company is a public company, and
that the securities laws of the United States (as well as applicable stock
exchange regulations) prohibit any Person who has material, non-public
information concerning Parent Company from purchasing or selling Parent
Company’s securities when in possession of such information and from
communicating such information to any other Person under circumstances in which
it is reasonably foreseeable that such Person is likely to purchase or sell such
securities in reliance upon such information. The provisions of this Article 9
shall survive any termination of this Agreement.
10.    NON-EXCLUSIVITY.
Manager agrees that Master Servicer and Owner shall be entitled to engage other
Persons to operate, repair, maintain, manage and lease other single-family and
other residential properties, including properties within the Geographic Areas;
provided, however that Master Servicer or Owner, as applicable, shall notify
Manager of any such activities within the Geographic Areas.
Manager shall be entitled from time to time to operate, repair, maintain, manage
and lease single-family and other residential properties within the Geographic
Areas on behalf of Persons other than Master Servicer and Owner; provided that
Manager shall comply with all of its duties and obligations set forth in this
Agreement. If Manager shall at any time have reason to believe that there is a
conflict between its duties and obligations to Master Servicer and its duties
and obligations to any other Person, Manager shall notify Master Servicer
immediately.
The Parties affirmatively acknowledge and agree that Manager will be executing
an agreement substantially comparable to this Agreement with Provident Real
Estate Advisors LLC, a Minnesota limited liability company (the “Provident
Property Management Agreement”) and that the Parties’ expectation is that
Manager’s fulfillment of its obligations under the Provident Property Management
Agreement will require Manager to perform substantially comparable services to
the Services. Therefore, notwithstanding anything in this Agreement which may
suggest to the contrary, Master Servicer agrees that Manager’s rendering of
services under the Provident Property Management Agreement will not, on its
face, constitute or create any conflict between Manager’s duties and obligations
to Master Servicer under this Agreement; provided, however, that (i) Manager
agrees to act in good faith to represent and treat substantially equally all of
its clients, including Master Servicer and Provident Real Estate Advisors LLC,
in rendering the Services; and provided further, that, (ii) upon Master
Servicer’s reasonable request, Manager agrees to provide such data and reports
evidencing performance data by client (whose identity may be withheld) and
Geographic Area, including vacancy rates, turnover rates, average lease terms,
etc. For the avoidance of any confusion, the parties agree that the agreements
of Manager in items (i) and (ii) above shall be deemed “material” obligations of
Manager for all purposes hereunder, including Section 11.3(h) of this Agreement.

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11.    TERMINATION.
11.1    Termination.
11.1.1    Voluntary Termination. Manager may terminate this Agreement at any
time during the Term or any Renewal Term upon ninety (90) days written notice to
Master Servicer. Master Servicer may elect to terminate this Agreement at any
time during the Term upon ninety (90) days written notice to Manager (such
election, a “Voluntary Termination”). If Master Servicer exercises such
Voluntary Termination right, then except as provided in Section 11.3, Manager
shall be entitled to compensation as provided in the Letter Agreement.
11.1.2    Non-Renewal. Master Service may elect not to renew this Agreement
pursuant to Section 1.2 hereof by providing Manager with written notice at least
ninety (90) days prior to the end of any Term or Renewal Term (such election, a
“Non-Renewal”). If Master Servicer exercises such Non-Renewal right, then
Manager shall be entitled to compensation as provided in the Letter Agreement.
11.2    Effect of Dispositions. Notwithstanding anything to the contrary in this
Agreement, at the option of Master Servicer, this Agreement shall automatically
and immediately terminate with respect to any Property upon the sale or other
disposition of that Property. In the event that one or more of the Properties
(but less than all) is sold or otherwise disposed of during a month, the
Management Fee shall be prorated based upon the Gross Collections applicable to
such Property or Properties prorated through the date of disposition and
compensation as provided in the Letter Agreement.
11.3    Termination for Cause Without Prior Notice. In addition to all other
rights, remedies and recourses available by law, the occurrence of any of the
following items shall permit, at Master Servicer’s option, an immediate
termination of this Agreement by written notice with no Management Fee earned
beyond the termination date (the occurrence of any of which shall constitute
“Cause”): (a) dissolution or termination of the limited liability company
existence of Manager (including by reason of merger, consolidation,
reorganization, reconstitution or otherwise without Master Servicer’s prior
written consent); (b) change in the identity of the majority equity member of
Manager; (c) termination or suspension of any of Manager’s licenses required to
perform the Services pursuant to Legal Requirements; (d) cessation on Manager’s
part to continue to do business; (e) bankruptcy, insolvency, or assignment for
the benefit of creditors of Manager; (f) appointment of a receiver, liquidator
or trustee of Manager by court order; (g) gross negligence, intentional
misconduct or fraud in the performance of Manager’s duties and obligations under
this Agreement; (h) any breach of any material representation, warranty or
covenant of Manager hereunder; (i) conviction of any Senior Executive on any
criminal charge related to fraud or related to the type of Services provided
hereunder; or (j) a final non-appealable determination against Manager or any of
its Employees of any civil action or investigation by any licensing board or
other governmental or quasi-governmental entity which would materially impair
Manager’s ability to provide Services hereunder. Additionally and without
limiting the foregoing, if any Senior Executive has been indicted or arrested on
any criminal charge related to fraud or related to the type of Services provided
hereunder and which, if prosecuted to conviction, would materially

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impair Manager’s ability to provide Services hereunder, then Master Servicer, at
its option, may immediately terminate this Agreement by written notice to
Manager, and shall have no obligation to continue using Manager to provide the
Services, but Manager shall remain entitled to receive such compensation as
would have been payable to Manager had such termination by Master Servicer been
done in accordance with Section 11.1.1 of this Agreement.
11.4    Effect of Termination. On termination or expiration of this Agreement,
Master Servicer and Manager agree as follows:
11.4.1    Manager shall deliver to Master Servicer as quickly as reasonably
practical but in any event within ten (10) days following the termination date
of this Agreement all original Records relating to the (including all electronic
or digital records and all of the content of the website that relates to the
Properties). Manager must (a) make such delivery via one or more electronic
formats utilizing technology that is then available to Manager at no additional
cost to Manager (unless such cost is borne in full by Service Provider) and that
will allow Master Servicer to continue to use the materials to the same degree
of functionality as Manager using comparable technology, and (b) provide each
original record in hard copy format as Master Servicer may request at Master
Servicer’s expense. Manager may retain copies of any transferred records at its
own expense which will remain subject to the confidentiality provisions of
Article 9 of this Agreement.
11.4.2    Manager shall deliver to Master Servicer as quickly as reasonably
practical but in any event within five (5) days following the termination date
of this Agreement all keys to the Properties and all other items of personal
property owned by Owner and in Manager’s possession.
11.4.3    Manager shall have no further access to the Data Room, nor the right
to withdraw any amount from the Trust Deposit Account or Trust Operating
Account.
11.4.4    Manager shall cooperate in transferring the Trust Deposit Account and
Trust Operating Account, as directed by Master Servicer, except as otherwise
required under the applicable landlord/tenant or similar laws of the Geographic
Areas.
11.4.5    Any payments for Master Servicer or Owner’s account received by
Manager following expiration of this Agreement shall forthwith be forwarded to
Master Servicer.
11.4.6    Manager shall immediately transfer control of any pending litigation
against Tenants or former Tenants to Master Servicer or its designee.
11.4.7    Manager shall, within thirty (30) days of such termination (and, in
the event of a disposition of the Properties, on or before the deadline set
forth in the applicable sale contract), deliver a final accounting reflecting
the balance of income and expenses for the Properties as of the date of
termination.
11.4.8    Manager’s right to compensation shall immediately cease upon the

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effective date of the termination and shall be prorated through that date.
11.4.9    The limited agency relationship created under this Agreement shall
cease, and thereafter Manager shall have no further right or authority to act
for or on behalf of Owner or Master Servicer.
11.4.10    Each Party shall, after the expiration or termination hereof, make
any information pertaining to this Agreement reasonably available to the
requesting Party if needed for any bona fide accounting or tax-related purpose.
12.    NOTICES.
12.1    Notice of Legal Proceedings. If either Party becomes aware of any
action, suit, investigation or other proceeding (at law or in equity or before
any governmental authority) that may affect Manager, any of the Properties or
this Agreement, then such Party shall promptly provide the other Party with
written notice thereof.
12.2    Notice of Certain Defaults. If either Party becomes aware of any breach
of, or default under, any contract, agreement or other instrument, which breach
or default adversely affects or could reasonably be expected to adversely affect
the Properties or this Agreement, then such Party shall promptly provide the
other Party with written notice thereof.
12.3    Notices to Parties. All notices, waivers, demands, requests or other
communications required or permitted by this Agreement (sometimes collectively
referred to herein as “Notices”), to be effective, shall be in writing, properly
addressed to the address specified below, and shall be given: (a) by personal
delivery; (b) by established overnight commercial courier with delivery charges
prepaid or duly charged; (c) by registered or certified mail, return receipt
requested, first class postage prepaid; or (d) by facsimile transmission, to the
address specified below.
If to Master Servicer:
Two Harbors Property Investment LLC
Brad Farrell

Chief Financial Officer
601 Carlson Parkway, Suite 150
Minnetonka, MN 55305

With a copy to:
Two Harbors Investment Corp.
Rebecca B. Sandberg, Senior Counsel
601 Carlson Parkway, Suite 150
Minnetonka, MN 55305

and:
Jonathan T. Brohard

Polsinelli Shughart PC
One East Washington, Suite 1200
Phoenix, AZ 85004

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If to Manager:
Silver Bay Property Management LLC
Attention: Irvin R. Kessler
14601 27th Avenue North, Suite 102
Plymouth, MN 55447

With a copy to:
Andrew J. Ritten
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, MN 55402

Notices delivered by personal delivery shall be deemed to have been given upon
tender to a natural person at the address shown. Notices delivered by overnight
courier shall be deemed to have been given the next business day after delivery
to such overnight commercial courier. Notices delivered by mail shall be deemed
to have been given on the third day after deposit into the United States Postal
System. Notices delivered by facsimile transmission shall be deemed to have been
given upon confirmation of transmission to the correct telecopy phone number of
the intended recipient. Either Party may change its address for notices by
giving notice to the other Party as provided herein.
13.    LIMITATION ON RECOURSE.
13.1    Limits of Recourse by Manager. Manager agrees to look solely to Master
Servicer for the satisfaction of any liability or obligation arising under this
Agreement or the transactions contemplated hereby, or for the performance of any
of the covenants, warranties, obligations or other agreements contained herein,
and further agrees not to sue or otherwise seek to enforce any personal
obligation against Owner, Master Servicer’s Affiliates or any of Owner’s
Affiliates with respect to any matters arising out of or in connection with this
Agreement or the duties and obligations contemplated hereby.
13.2    Limits of Recourse by Master Servicer. Master Servicer agrees to look
solely to Manager for the satisfaction of any liability or obligation arising
under this Agreement or the transactions contemplated hereby, or for the
performance of any of the covenants, warranties, obligations or other agreements
contained herein, and further agrees not to sue or otherwise seek to enforce any
personal obligation against any of Manager’s members or Affiliates thereof with
respect to any matters arising out of or in connection with this Agreement or
the duties and obligations contemplated hereby.
14.    POWER OF ATTORNEY.
To the extent herein specified, Master Servicer grants a Special Power of
Attorney to Manager with limited powers as provided below and authorizes Manager
to act as Master Servicer’s Attorney in Fact in relation to the Properties:
(a) to make contracts for any and all utilities including electricity, gas,
water, waste management, etc.; (b) to put these services in place in the Master
Servicer’s name (until a Tenant takes occupancy of the pertinent Property) with
billing delivered

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to Manager; (c) to obtain utility account information for the Properties; (d) to
communicate and act on Master Servicer’s behalf with respect to all HOA matters;
(e) to obtain any and all required sales tax licenses relative to the rents to
be collected from the Properties; (f) to engage and terminate tenancies using
the Lease Form; (g) to deliver to Tenants all notices required by all
landlord/tenant laws in the applicable Geographic Areas; and (h) to prosecute,
release, settle and otherwise pursue all legal actions in strict accordance with
Section 4.5 hereof.
15.    DISPUTE RESOLUTION.
15.1    Exclusions. The provisions of this Article 15 shall not apply to any
controversy, claim or dispute of whatever nature arising out of the termination
of this Agreement.
15.2    Negotiations.
15.2.1    Subject to Section 15.1, the Parties shall attempt in good faith to
resolve any other controversy, claim or dispute of whatever nature arising
between the Parties, including those arising out of or relating to this
Agreement or the construction, interpretation, performance or breach of this
Agreement, (a “Dispute”), promptly by negotiation between executives who have
authority to settle the Dispute (“Senior Party Representatives”).
15.2.2    Either Party may give the other Party written notice (a “Dispute
Notice”) of any Dispute that has not been resolved in the normal course of
business. Within fifteen (15) days after delivery of the Dispute Notice, the
receiving party shall submit to the other a written response (the “Response”).
The Dispute Notice and the Response shall include:
a.    A statement setting forth the position of the Party giving such notice and
a summary of arguments supporting such position; and
b.    The name and title of such Party’s Senior Party Representative and any
other persons who will accompany the Senior Party Representative at the meeting
at which the Parties will attempt to settle the Dispute.
15.2.3    Within thirty (30) days after delivery of the Dispute Notice, the
Senior Party Representatives of both Parties shall meet at a mutually acceptable
time and place, and then as often as they reasonably deem necessary, to attempt
to resolve the Dispute. All reasonable requests for information made by one
Party to the other will be honored.
15.2.4    If the Dispute has not been resolved within sixty (60) days after
delivery of the Dispute Notice, or if the Parties fail to meet within thirty
(30) days after delivery of the Dispute Notice as above provided, either Party
may initiate mediation of the Dispute as provided below.
15.2.5    All negotiations under this Section 15.2 shall be treated as
compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of those negotiations that is not otherwise
independently discoverable shall be offered or received

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as evidence or used for impeachment or for any other purpose in any current or
future arbitration or litigation.
15.3    Mediation.
15.3.1    If the Dispute has not been resolved by negotiation as above provided,
the Parties shall make a good faith attempt to settle the Dispute by mediation
under the provisions of this Section 15.2 before resorting to arbitration,
litigation or any other dispute resolution procedure.
15.3.2    Unless the Parties agree otherwise, the mediation shall be conducted
in accordance with the Commercial Mediation Rules of the American Arbitration
Association (the “AAA”) then in effect by a mediator who:
a.    Has the qualifications and experience set forth in Section 15.3.3; and
b.    Is selected as provided in Section 15.3.4.
15.3.3    Unless the Parties agree otherwise, the mediator shall be a neutral
and impartial lawyer with excellent academic and professional credentials:
a.    Who is or has been a partner in a highly respected law firm for at least
fifteen (15) years as a practicing attorney specializing in either general
commercial litigation or general corporate and commercial matters; and
b.    Who has had both training and experience as a mediator and who has
successfully mediated at least ten (10) cases.
15.3.4    Either Party (the “Initiating Party”) may initiate mediation of the
Dispute by giving the other Party (the “Recipient Party”) written notice (a
“Mediation Notice”) setting forth a list of the names and resumes of
qualifications and experience of three impartial persons who the Initiating
Party believes would be qualified as a mediator under Section 15.3.3. Within 15
days after the delivery of the Mediation Notice, the Recipient Party shall give
a counter-notice (the “Counter-Notice”) to the Initiating Party in which the
Recipient Party may designate a person to serve as ‘the mediator from among the
three persons listed by the Initiating Party in the Mediation Notice (in which
event that designated person shall be the mediator). If none of the persons
listed in the Mediation Notice is designated by the Recipient Party to serve as
the mediator, the Counter-Notice should list the names and resumes of three
impartial persons who the Recipient Party believes would be qualified as a
mediator under the provisions of Section 15.3.3. Within ten (10) days after the
delivery of the Counter-Notice, the Initiating Party may designate a person to
serve as the mediator from among the three persons listed by the Recipient Party
in the Counter-Notice (in which event that designated person shall be the
mediator). If the Parties cannot agree on a mediator from the three impartial
nominees submitted by each Party, each Party shall strike two names from the
other party’s list, and the two remaining persons on both lists will jointly
select as the mediator any person who has the qualifications and experience set
forth in Section 15.3.3. If they are unable to agree, the mediator will be
selected by the President of the Minnesota State Bar Association.

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15.3.5    Within thirty (30) days after the mediator has been selected as
provided above, both Parties and their respective attorneys shall meet with the
mediator for one mediation session of at least four hours, it being agreed that
each Party representative attending that mediation session shall be a Senior
Party Representative with authority to settle the Dispute. If the Dispute cannot
be settled at that mediation session or at any mutually agreed continuation of
that mediation session, either Party may give the other and the mediator a
written notice declaring the mediation process at an end, in which event the
Dispute may be resolved by arbitration, litigation or any other dispute
resolution procedure.
15.3.6    All conferences and discussions that occur in connection with the
mediation conducted under this Agreement shall be deemed settlement discussions,
and nothing said or disclosed, nor any document produced, that is not otherwise
independently discoverable, shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration or
litigation.
16.    MISCELLANEOUS.
16.1    Master Servicer’s Consent or Approval. Except as otherwise expressly
provided in this Agreement, whenever this Agreement provides for the consent or
approval of Master Servicer, such consent may be granted or withheld in Master
Servicer’s sole and absolute discretion (but a decision must be provided as soon
as reasonably practicable), and shall not be effective or binding upon Master
Servicer unless in writing.
16.2    Construction/Interpretation. The titles of Articles, Sections,
paragraphs and Exhibits in this Agreement are so used only for convenience in
locating various provisions of this Agreement and shall not be deemed to affect
the interpretation or construction of such provisions. References to Articles,
Sections, paragraphs and Exhibits are, unless specified otherwise, references to
articles, sections, paragraphs and exhibits of this Agreement. Words of any
gender shall include each other gender. Words in the singular shall include the
plural and words in the plural shall include the singular. The words “include”
and “including” shall be interpreted as if followed by the words “without
limitation.”
16.3    Relationship of the Parties. The relationship of Manager to Master
Servicer is that of an agent with limited authority as described herein and
otherwise, as an independent contractor, and it is not that of an employee,
partner or joint venturer.
16.4    Ambiguities Not to be Construed Against Drafting Party. The doctrine
that any ambiguity contained in a contract shall be construed against the Party
whose counsel has drafted the contract is expressly waived by each of the
Parties with respect to this Agreement.
16.5    Time of Essence. Time is of the essence in this Agreement.
16.6    Force Majeure. If either Party is delayed or prevented from fulfilling
any obligations (other than an obligation to pay money) under this Agreement by
any Force Majeure Event, then such Party shall not be liable under this
Agreement for such delay or failure, provided that such

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Party shall: (a) notify the other Party in writing not more than ten (10)
business days after the occurrence of such Force Majeure Event; and (b) use
reasonable efforts to mitigate the effect of such event.
16.7    Interest on Overdue Sums. Except as otherwise expressly provided in this
Agreement, if either Party fails to pay, when due, to the other Party any sum
payable to the latter under this Agreement, then the defaulting Party shall,
without notice to or demand upon it, be liable to the non-defaulting Party for
the payment of such sum together with interest thereon at the rate per annum
equal to the lesser of: (a) the Prime Rate plus four percent (4%); or (b) the
maximum rate of interest allowed by law from the date when such sum becomes due
to the date of actual payment.
16.8    No Assignment; Successors. Except with the prior written consent of
Master Servicer, Manager may not assign its rights or obligations hereunder, by
operation of law or otherwise. Except with the prior written consent of Manager,
which shall not be unreasonably withheld or delayed, Master Servicer may not
assign its rights or obligations hereunder, by operation of law or otherwise;
provided, however, that Master Servicer may, without Manager’s prior consent,
assign its rights or obligations hereunder to any entity which controls, is
controlled by or is under common control with Master Servicer. This Agreement
shall be for the benefit of and binding upon the permitted heirs, successors and
assigns of the Parties.
16.9    Waiver of Trial by Jury. MASTER SERVICER AND MANAGER, WITH ADVICE OF
LEGAL COUNSEL OF THEIR CHOICE, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
IRREVOCABLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CAUSE OF ACTION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
PROPERTIES OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACCOUNTS
OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF MASTER
SERVICER AND MANAGER ENTERING INTO THIS AGREEMENT.
16.10    Counterparts; Electronic Signatures. This Agreement may be executed by
original or facsimile signature in any number of counterparts, each of which
shall be an original, but such counterparts together shall constitute one and
the same instrument. Signatures delivered by facsimile or by portable document
format via electronic email shall be acceptable as original signatures.
16.11    Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without reference to the
choice of laws and conflicts of law rules and principles of such state.
16.12    Venue. Manager hereby agrees that all actions or proceedings initiated
by Manager and arising directly or indirectly out of this Agreement shall be
litigated in the Hennepin County District Court, Minneapolis, Minnesota, or at
Master Servicer’s election in the Federal District Court for the District of
Minnesota. Manager hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Master Servicer in such
court.

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The exclusive choice of forum for Borrower set forth in this Section 16.12 shall
not be deemed to preclude the enforcement, by Master Servicer, of any judgment
obtained in any other forum or the taking, by Master Servicer, of any action to
enforce the same in any other appropriate jurisdiction, and Manager hereby
waives the right, if any, to collaterally attack any such judgment or action.
16.13    Recitals. The Recitals on page 1 of this Agreement are incorporated
herein as part of this Agreement, and the Parties agree that they are true and
correct.
16.14    Modification. This Agreement may not be modified or amended except by a
written agreement executed by both Parties and only to the extent set forth
therein.
16.15    Severability. If any Article, Section, paragraph, sentence, clause or
phrase contained in this Agreement becomes or is held by any court of competent
jurisdiction to be illegal, null or void or against public policy, the remaining
Articles, Sections, paragraphs, sentences, clauses or phrases contained in this
Agreement shall not thereby be construed to also be illegal, null and void or
against public policy.
16.16    No Third Party Beneficiaries. This Agreement creates rights in favor of
Master Servicer, Owner, Manager and Parent Company only, and shall not be
construed as creating any rights enforceable by any other Person.
16.17    Subordination and Attornment. Manager agrees that the lien, operation
and effect of any mortgage, deed of trust or other security device in place on
the Properties, including any financing arrangements secured by equity pledges
of Owner, and the beneficiary’s right to payment under the loan documents in
connection therewith shall be superior to and shall have priority over this
Agreement as well as any claim, security interest or right to payment of Manager
arising out of or in any way connected with the Services. In furtherance of the
foregoing, Manager hereby fully and completely subordinates to the lien,
operation and effect of, such beneficiary’s right to payment under such loan
documents the following: (a) its rights under this Agreement; (b) any claim or
security interest Manager may now or hereafter have against the Properties
and/or the rents, issues, profits and income therefrom; and (c) any right to
payment of Manager arising out of or in any way connected with its services
performed under this Agreement.
16.18    Further Assurances. Each Party shall take all such actions, and execute
all such documents, as the other Party shall reasonably request to give effect
to this Agreement.
16.19    Entire Agreement. It is agreed that there are no prior or
contemporaneous oral agreements between the Parties with respect to the subject
matter of this Agreement and this Agreement supersedes and cancels any and all
prior discussions, negotiations and writings between the Parties which may have
occurred with respect to the subject matter of this Agreement.
17.    SPECIAL TRUSTEE PROVISIONS.
Manager acknowledges and agrees that:

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17.1    Without the express prior written consent of the Trustee in its
individual capacity (which may be withheld or conditioned by such Trustee in its
individual capacity for any reason in good faith), no real property of the Owner
(including any residential property) shall be taken or titled in the name of a
Trustee, and no mortgage or other lien of the Owner on any real property shall
be taken or recorded in the name of a Trustee (except when the Master Servicer
or Manager determines in its reasonable discretion that a court of competent
jurisdiction or the related county recorder requires, or Legal Requirements in
the particular case require, that such real property must be taken or titled, or
such mortgage or other lien must be taken or recorded, in the name of the
Certificate Trustee, in which case such consent of such Trustee shall not be
required but written notice shall be given to such Trustee); and
17.2    Unless Trustee in its individual capacity grants its express prior
written consent to the contrary (which may be withheld or conditioned by the
Trustee in its individual capacity for any reason in good faith):
17.2.1    Any real property (including any residential property) shall be taken
and titled, and any mortgage or other lien on any real property shall be taken
and recorded, only in the name of the Owner, in the name of the Master Servicer
or Manager as nominee of the Owner, or in the name of another nominee of the
Owner (other than a Trustee) pursuant to a nominee agreement (except when the
Master Servicer or Manager determines in its reasonable discretion that a court
of competent jurisdiction or the related county recorder requires, or Legal
Requirements in the particular case require, that such real property must be
taken or titled, or such mortgage or other lien must be taken or recorded, in
the name of the Certificate Trustee, in which case such consent of such Trustee
shall not be required but written notice shall be given to such Trustee); and
17.2.2    The Certificateholders, Master Servicer or Manager as the case may be
shall cause the deed or certificate of sale of any real property (including any
residential property) to be taken and such real property to be titled, only in
the name of the Owner, in the name of the Master Servicer or applicable Manager
as nominee of the Owner, or in the name of another nominee of the Owner (other
than a Trustee) pursuant to a nominee agreement, and the Certificateholders,
Master Servicer or Manager as the case may be shall cause any mortgage or other
lien on any real property to be taken and recorded only in the name of the
Owner, in the name of the Master Servicer or Manager as nominee of the Owner, or
in the name of another nominee of the Owner (other than a Trustee) pursuant to a
nominee agreement (except when the Master Servicer or Manager determines in its
reasonable discretion that a court of competent jurisdiction or the related
county recorder requires, or Legal Requirements in the particular case require,
that such real property must be taken or titled, or such mortgage or other lien
must be taken or recorded, in the name of the Certificate Trustee, in which case
such consent of such Trustee shall not be required but written notice shall be
given to such Trustee).
17.2.3    Manager to agrees to indemnify, defend, and hold harmless the Trustee
(as such and in its individual capacity) from and against any and all
Liabilities which may be imposed on, incurred by or asserted at any time against
such Trustee (as such or in its individual capacity) in any way relating to or
arising out of any act or omission by the Manager inconsistent with the
provisions of this Article 17.

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17.2.4    Trustee (as such and in its individual capacity) is an intended third
party beneficiary of this Agreement and Manager’s obligations thereunder.
17.2.5    Capitalized terms used in this Article 17 but not otherwise defined
herein shall have the following meanings:
a.    “Trustee” means the trustee of an Owner trust appointed to serve as
trustee pursuant to a master trust agreement or other similar agreement;
b.    “Certificate Trustee” means the Trustee that issues the Trust Certificate;
c.    “Trust Certificate” means the certificate issued to evidence the
beneficial ownership interest in the trust; and
d.    “Certificateholder” means the holder of the Trust Certificate(s).
*    *    *
[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Property Management Agreement
as of the Effective Date.

MANAGER:

SILVER BAY PROPERTY
MANAGEMENT LLC,
a Delaware limited liability company

By:   /s/ Irvin Kessler    
Name:   Irvin Kessler     
Title: Manager    

MASTER SERVICER:

TWO HARBORS PROPERTY INVESTMENT LLC,
a Delaware limited liability company

By:   /s/ Brad Farrell    
Name:   Brad Farrell    
Title:   Chief Financial Officer

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EXHIBIT A
DEFINITIONS

“Affiliate” of a Person means a Person who, directly or indirectly through one
or more intermediaries, owns or controls, is owned or controlled by or is under
common control or ownership with the Person in question. For purposes of this
definition, “own” or “ownership” means ownership by one Person of fifty percent
(50%) or more of the voting stock of the controlled Person, in the case of a
corporation or, in the case of Persons other than corporations, entitlement of
the controlling Person, directly or indirectly, to receive fifty percent (50%)
or more of the dividends, profits or similar economic benefit from the
controlled Person; and “control” means the possession, directly, or indirectly,
of the power to direct or cause the direction of the management and policies of
the controlled Person.
“Building Systems” means the electrical, mechanical, plumbing, heating,
ventilating, and air conditioning, hot water, landscape irrigation, swimming
pool, spa fountain or other circulation or filtration systems at a Property.
“Confidential Information” means all confidential and proprietary information
Master Servicer discloses to Manager, including non-public financial
information, strategic business plans or initiatives of the Master Servicer, any
Owner, Parent Company or any of their respective Affiliates, and includes the
terms and conditions of this Agreement, the Records and any other information
that derives independent economic value, actual or potential, from not being
generally known to the public or to other Persons who can obtain economic value
from its disclosure or use and is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy (and includes information
developed internally or received from a third Party subject to a continuing
obligation to maintain its confidentiality). Confidential Information may be in
written, oral or electronic form, and, and includes those portions of written
memoranda, notes, analyses, reports, compilations, or studies prepared by the
Manager or its Authorized Professionals that contain or are derived from such
information. The term “Confidential Information” does not include information
which: (a) is now or is in the future in the public domain through no fault of
Manager or its Authorized Professionals; (b) prior to disclosure pursuant to
this Agreement, is properly within the legitimate possession of Manager; (c)
subsequent to disclosure pursuant to this Agreement, is lawfully received from a
third party having rights in the information and to the knowledge of Manager, is
not restricted from disclosing the information; (d) is independently developed
by Manager without use of or benefit from access to Confidential Information; or
(e) is obligated to be produced by law, under order of a court of competent
jurisdiction or other similar requirement of a governmental agency, so long as
Manager provides Master Servicer with prior written notice, if permitted by law,
of any required disclosure pursuant to such law, order, rule, regulation, or
requirement.
“CCRs” means, collectively, the declarations of covenants, conditions, easements
and restrictions of any HOA plus the applicable bylaws of the HOA and its rules
and regulations.

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“Emergency” means a situation or event which, in the reasonable opinion of
Manager, requires immediate repairs or other action to protect the funds in the
Trust Operating Account or Trust Deposit Account, to protect Property from
damage, or to prevent injuries or damage to life or to the property of others,
to avoid fines or penalties, or to maintain services to a Tenant as required in
the Lease or by applicable Legal Requirements, including the applicable
landlord/tenant or similar laws of the Geographic Areas, which describes an
emergency as a failure to provide heat, air conditioning, cooling, water, hot
water or any other essential service.
“Employees” means those Persons employed by the Manager to provide the services
described in this Agreement to or for the benefit of the Properties.
“Environmental Laws” means and includes all federal, state and local laws
including statutes, regulations, ordinances and other governmental restrictions
and requirements and common law relating to the presence, discharge or
remediation of air pollutants, water pollutants or process wastewater or
otherwise relating to the protection of human health, the environment, toxic or
hazardous substances, pesticides, herbicides, fertilizer, mold, asbestos or
radon, including, but not limited to, the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(“CERCLA”), the Federal Water Pollution Control Act, the Federal Occupational
Safety and Health Act (“OSHA”), the Federal Emergency Planning and Community
Right to Know Act, the Federal Mine Safety Act, the Federal Safe Drinking Water
Act, regulations of the Environmental Protection Agency, Nuclear Regulatory
Agency and any other federal agency, and regulations of any state department of
natural resources or state environmental protection agency now or at any time
hereafter in effect.
“Force Majeure Event” means any act occasioned by a cause beyond the reasonable
control of Master Servicer or Manager including casualties, war, insurrection,
strikes, lockouts, civil unrest and governmental actions, travel advisories
issued by governmental authorities, revolution, insurgency, terrorism, sabotage,
hurricanes, earthquakes or other natural catastrophes or extreme weather
conditions and any other causes that threaten public safety generally or that
create a substantial disruption in commercial activities in the area in which
the Properties are located.
“Gross Collections” means all amounts actually collected in respect of all the
Properties, including, rents, utility payments and deposit forfeitures, fees
received for applications or credit checks, interest earned on the Trust
Operating Account, interest earned on the Trust Deposit Account in excess of
related banking charges, and other collected revenues. Notwithstanding the
foregoing, it is expressly agreed that Gross Collections shall exclude: (a) late
charges and insufficient fund charges collected by Manager from Tenants in
excess of expenses incurred to collect such amounts; (b) Security Deposits and
other refundable deposits received from Tenants that have not been forfeited;
(c) any and all proceeds from property insurance policies (excluding any rental
interruption proceeds relating to the Properties); (d) the proceeds of any
taking by condemnation or eminent domain; and (e) any awards from suits not
related to the collection of rent and related charges.

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“Hazardous Materials” means any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “toxic substances,” “wastes,” “regulated substances,” “industrial
solid wastes,” or “pollutants” under the Environmental Laws, as defined below,
including, but not limited to, air pollutants, water pollutants, wastewater,
pesticides, herbicides, fertilizer, mold, asbestos, radon or other health or
environment threatening substances; provided, however, that “Hazardous
Materials” shall not include commercially reasonable amounts of cleaning
products used in the ordinary course of operation of the Property which are used
and stored in accordance with all applicable Environmental Laws.
“HOA” means any homeowners or condominium association that includes one or more
of the Properties.
“Lease” means a lease agreement for one of the Properties entered into in
accordance with this Agreement.
“Leasing Concessions” means reductions in rent or free rent given by Manager as
an inducement for the execution of any Tenant lease for one of the Properties in
accordance with the Leasing Parameters.
“Leasing Incentives” means referral fees, gift cards, vouchers, coupons or other
inducements (except Leasing Concessions) given by Manager as an inducement for
the execution of any Tenant lease for one of the Properties in accordance with
the Leasing Plan.
“Leasing Plan” means the plan developed by Manager and approved by Master
Servicer pursuant to the Acquisition Agreement, as amended from time to time
with the approval of both Parties.
“Legal Requirements” means governmental statutes, laws, constitutions, codes,
ordinances, regulations or rules of governmental entities having jurisdiction
over the Manager or the Properties, orders of any insurance company, and the
CCRs, rules and regulations and bylaws of any HOAs.
“Net Operating Income” means Gross Collections minus Operating Expenses.
“Operating Expenses” means: (a) the Management Fee calculated in accordance with
the terms of this Agreement and (b) all expenses reasonably and necessarily
incurred in connection with the business, operation and maintenance of the
Properties during the Term as provided in the applicable budget, including
rental taxes, utilities, casualty and liability insurance premiums, real and
personal property taxes, an annual capital replacement reserve in the amount of
$200.00 per unit, costs and expenses of Operating Supplies, but excluding
Leasing Incentives and costs of debt service and depreciation.
“Operating Supplies” means consumables used by Manager or its Employees in the
operation of the Properties, including light bulbs, cleaning supplies,
batteries, furnace filters, pool chemicals,

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and other items of a similar nature.
“Person” means any natural person, or any partnership, joint venture, limited
liability company, limited partnership, corporation, association, trust or
trustee, or any other legal entity.
“Tenant” means, collectively, any person leasing or otherwise entitled to occupy
any one of the Properties pursuant to a Lease.

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EXHIBIT B
MANAGEMENT PLAN

Manager shall:
1.Cause the Properties to comply with all applicable Legal Requirements, and
forward to Master Servicer promptly upon receipt all notices of violation,
default or other notices from any governmental authority; HOA, board of fire
underwriters, insurance company or other person or entity furnishing any notice,
written or oral, with respect to Legal Requirements, and make appropriate
recommendations to Master Servicer regarding compliance with such notices;
2.    Cause the Properties to be and remain in compliance with all Environmental
Laws; promptly notify Master Servicer in the event that Manager shall become
aware of any violation of any of the Environmental Laws or that Hazardous
Materials are present at or have been disposed of or released from the
Properties or in the event that any mold, mildew or infestation by pests or
rodents is present at the Properties; make appropriate recommendations regarding
compliance or correction of the condition; and implement Master Servicer’s
directives;
3.    Cause the Properties to be maintained in a good, clean and sanitary
condition acceptable to Master Servicer at all times, and to be repaired as
necessary to maintain this condition;
4.    Conduct inspections of the Properties as frequently as necessary to
fulfill Manager’s obligations under this Agreement, and in any case at least
semi-annually, and use reasonable care through its policy of periodic
inspections to monitor the condition of each Property, including the condition
of the Building Systems, the roof and the lawns, trees, plants, and other
landscaping;
5.    Arrange for systematic routine inspection and maintenance of the
Properties including pest control, replacing of furnace filters, roof
inspections and clearing debris from downspouts and rain gutters, etc., and
arrange for semi-annual “winterizing” and “summerizing” of HVAC systems,
including operations checks and filter checks and changes;
6.    Purchase materials, supplies, equipment, tools, appliances and services
that are necessary for the operation and maintenance of the Properties as
provided herein, using suppliers approved by Master Servicer; provided that a
purchase that is not included in the pertinent Approved Budget shall not be made
by Manager without the prior consent of Master Servicer;
7.    Cause to be delivered to Tenants any and all disclosures and as when
required by Legal Requirements;
8.    Prepare, disseminate and enforce rules and regulations for conduct of
Tenants and their invitees at the Properties, subject to Master Servicer’s
approval;

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9.    Prepare for Master Servicer’s approval a life safety plan for each of the
Properties to be used in the event of fire or other casualty at a Property and
take such actions as may be required to familiarize Tenants with the plan, as
the same may be modified from time to time;
10.    Systematically, diligently and promptly receive and investigate all
service requests from Tenants, take any necessary actions and maintain in the
Data Room records of requests and the action taken, provided, however, that
without limiting the foregoing, Manager shall respond to all Emergency requests
within not more than twenty-four (24) hours and shall promptly notify Master
Servicer of the nature of any such Emergency, the action taken and the expenses
incurred;
11.    Not knowingly permit the use of the Properties for any purpose that might
void any policy of insurance held by Master Servicer, Owner or Manager, or limit
the recovery for any loss thereunder;
12.    Promptly investigate and report in detail to Master Servicer all
significant accidents and all claims for damage relating to the ownership,
operation or maintenance of the Properties, any damage or destruction to the
Properties and the estimated costs of repair thereof, and prepare for approval
by Master Servicer all reports required by any insurance company in connection
with any such accident, claim, damage or destruction; provided, however, that
without the prior written approval of Master Servicer, Manager shall not have
authority to settle any claim against an insurance company or to take any other
action with respect thereto;
13.    If required by the applicable HOA, notify such HOA that the Property is
being rented; and provide all rental information to such HOA or its management
company as is required per the applicable CCRs; and direct that all written
materials from the HOA (including meeting, voting assessment and violation
notices) be sent to Tenants and to Master Servicer in care of Manager and
providing Tenants with the HOA documentation required by the CCRs for Tenants;
14.    Pay as and when due all applicable HOA assessments and HOA property
management fees with respect to the Properties; and work in good faith with the
HOAs, their management companies, Master Servicer and Tenants to assure the
Properties are in compliance with the CCRs;
15.    Charge Tenants for violations of the CCRs caused by Tenants or their
invitees;
16.    Perform other services reasonably necessary for the care and protection
of the Tenants and their invitees, for the prevention of waste, damage or injury
to the Properties;
17.    Pursuant to the Initial Budget and subsequent Approved Budgets, employ
and supervise all independent contractors and Employees, if any, necessary for
the operation, maintenance and repair of the Properties, including: (a) the
performance of all interior and exterior cleaning, painting, decorating and
carpentry at the Properties; (b) the maintenance and repair of roofs and
Building Systems at the Properties; (c) the maintenance of outdoor grounds,
landscaping, improvements and facilities at the Properties, including sprinkling
or irrigation systems, swimming pools, spas, fountains and other water features,
if any; and (d) any other maintenance, alterations,

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repairs and improvements for the Properties. Unless otherwise required by law,
independent contractors are not required to be licensed contractors and Manager
is authorized by Master Servicer to use a “handyman” for work performed on the
Premises; provided, however, repairs costing in excess of $1,000 (unless a
lesser amount is specified by Legal Requirements of the applicable Geographic
Area) and repairs to the roofs and Building Systems will be done by a licensed
and bonded contractor, except with Master Servicer’s prior approval. No such
individuals shall be deemed employees of Master Servicer. Manager shall engage
in negotiations with third-Party contractors and vendors for such services;
provided that Manager may not enter into any agreements for such services that
would have a non-cancellable term exceeding thirty (30) days without the prior
written consent of Master Servicer. In no event shall Employees be deemed to be
employees or agents of, or otherwise acting on behalf of Master Servicer.
Although Manager shall be the sole employer of all such Employees, Master
Servicer shall have the right to require Manager to terminate the employment of
any Employee if Master Servicer reasonably determines that termination is in the
best interests of the Properties;
18.    Enter into contracts for electricity, gas, fuel, water, trash, or rubbish
hauling and other utility services at the Properties (excluding telephone,
television or internet services) as Manager may deem advisable;
19.    Monitor on Master Servicer’s behalf the provision of all services and
utilities necessary for the efficient operation and maintenance of the
Properties;
20.    When Properties are vacant, pay from the Trust Operating Account the
costs of all utilities and services and the costs of any other services that
would be the Tenant’s responsibility if the Property were occupied, including
pool, fountain and spa maintenance, landscape maintenance, etc.; and
21.    Pay applicable real estate taxes as part of the Operating Expenses of the
Properties set forth in the Approved Budget; cooperate with and assist
appraisers or counsel retained by Master Servicer to evaluate the Properties or
to appeal assessed values; and advise Master Servicer when it believes an
assessment on the Properties is too high or erroneous and should be challenged
or appealed.

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EXHIBIT C
LEASING PLAN

1.    Applications. Manager will use commercially reasonable efforts to secure
the most appropriate tenant candidates possible; and to require all prospective
Tenants to complete Manager’s rental application and qualifying process as
provided in the “Applicant Policies” section of Schedule 2 attached hereto (the
“Applicant Policies”), which may be revised from time to time. The cost of the
above, to the extent possible, shall be paid by the prospective Tenant.
2.    Tenant Policies. Manager shall adhere to the “Tenant Policies” section of
Schedule 2 attached hereto (the “Tenant Policies”), which may be revised from
time to time.
3.    Other Leasing Forms. Manager shall develop and maintain such forms and
other printed materials as may be desirable for the leasing of the Properties.
4.    Lease Renewals, Modifications. Except as otherwise expressly provided in
the Lease Parameters, Manager may not bind Owner to any lease renewal or
modification without Master Servicer’s prior written consent (which consent
shall not be required for lease renewals of one year or less). Manager shall
coordinate any and all lease renewals (not to exceed one year without Master
Servicer’s approval), and will raise the rent when feasible and in accordance
with the Leasing Plan or when directed by Master Servicer.
5.    Utilities. Once a Property is leased, Manager shall require the Tenant to
post any utility deposit and to pay all utility bills.
6.    Move-Out/Pre-Occupancy Inspections. Prior to a Tenant taking occupancy of
a Property, Manager shall verify that the Property is clean, that the Building
Systems and all light bulbs, fireplaces, appliances (if any), fire and smoke
detectors are in good operating conditions; shall ensure that the Property is in
a good and habitable condition; and shall document these conditions. Manager
shall require that each Tenant complete its own move-in inspection and document
such inspection.
7.    Tenant Negotiations; Problems. Manager shall receive, consider and
promptly investigate and respond to all Tenant complaints or problems in a
professional and businesslike manner, consistent with Manager’s authority and
duties as described in this Agreement. Complaints of a serious nature shall,
after investigation, be reported immediately to Master Servicer with appropriate
recommendations.
8.    Collections. Manager shall use commercially reasonable efforts to collect,
and enforce the collection of, all rentals and other charges due to Master
Servicer from Tenants of the Properties in accordance with the Lease Enforcement
Plan and cause all sums recovered (except late charges and insufficient funds
charges collected from Tenants by Manager) to be deposited

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promptly in the Trust Operating Account. Manager shall handle calculation,
collection and refunds, if needed, with respect to any amounts reimbursed by
Tenants or to be reimbursed to Tenants.
9.    Lease Enforcement. Manager shall enforce the Leases in accordance with the
Lease Enforcement Plan attached hereto as Schedule 3 (the “Lease Enforcement
Plan”), which may be revised from time to time, including the “Eviction
Guidelines for Delinquent Tenants.” Manager is authorized to serve notices to
vacate on Tenants and to institute any action or proceeding it deems necessary
to: (a) recover possession of a leased Property; or (b) recover rent, charges or
other sums payable to Master Servicer; and may compromise and settle or
otherwise discontinue any such action or proceeding, provided however that
Manager first obtains Master Servicer’s written approval. Depending on the
circumstances, some or all charges related to such enforcement actions shall be
billed to Tenant as additional rent.
10.    Leasing Incentives. Leasing incentives may be granted only in accordance
with attached Schedule 4 (“Leasing Incentives”), which may be revised from time
to time.

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EXHIBIT D
PROPERTY MANAGEMENT REPORT

[See attached]

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EXHIBIT E
LEASE FORM

[See attached]

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EXHIBIT F
LEASING PARAMETERS

1.
Manager is not authorized to enter into a Lease with a prospective Tenant who
does not meet the following screening requirements without Master Servicer’s
prior written approval.

a.    Rental History. Manager will verify two years of rental history whenever
possible. Any late payments or negative references in the rental history may
cause an application to be denied or the application may be approved subject to
additional conditions being met, such as, for example, requiring additional
security deposit. Prior evictions will cause an application to be denied unless
Manager is provided evidence from the prior landlord that the balance due has
been satisfied in full, in which case the application may be approved subject to
additional conditions being met, such as, for example, requiring additional
security deposit.
b.    Income/Employment. Prospective Tenants must have verifiable income of at
least three (3) times the monthly rental rate.  Applicants must provide copies
of their most recent paystub or bank statement to verify income, or,
alternatively, a letter verifying employment and income from a supervisor on
employer letterhead.
c.    Felonies. Manager will perform a criminal background check for every
applicant prior to approval of the application. Manager shall take into
consideration past criminal backgrounds and approve or deny such application
subject to Manager’s commercially reasonable judgment.
2.
Manager will obtain a security deposit from each tenant and Manager shall, in
Manager’s commercially reasonable judgment, determine the level of such security
deposit dependent upon considerations such as FICO Score, past rental history,
and other factors as Manager deems appropriate.

3.
The minimal monthly rental amounts for each Property shall be approved by Master
Servicer in advance and updated upon the termination of a Lease for any reason
(a “Turnover Event”) or upon Master Servicer’s request.

4.
Except as otherwise required by Legal Requirements, the terms of a Lease shall
not exceed or be less than one (1) year unless otherwise approved by the Master
Servicer.

5.
Manager may allow the Tenant to terminate its Lease early dependent upon certain
conditions being met such as Tenant paying applicable termination fees as
determined by Manager using commercially reasonable judgment, Property is in
good and clean condition, and any other conditions the Manager deems
appropriate.

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6.
If pets are allowed on the Property, Tenant will pay a minimum $150.00 per pet
as a refundable pet deposit.

7.
In addition to rent and deposits, each Tenant shall be required to pay
applicable rent tax, procure in Tenant’s own name all utilities that are
typically required to be in a Tenant’s name, pay for all utilities consumed
during Tenant’s tenancy, and perform any duties or pay any other utilities or
fees as outlined in the Lease.

8.
No Tenant shall be granted occupancy without Master Servicer’s prior, written
approval unless there is a fully signed Lease and all prepaid rent and
security/pet deposits have been paid.

Leasing Concessions, including, for example, the abatement of any rent, may be
granted only on a case-by-case basis after approval in writing by Master
Servicer.
  

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SCHEDULE 1
GEOGRAPHIC AREAS

[See attached]

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SCHEDULE 2
APPLICANT POLICIES AND TENANT POLICIES

[See attached]

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SCHEDULE 3

LEASE ENFORCEMENT PLAN

[See attached]

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SCHEDULE 4

APPROVED LEASING INCENTIVES

Leasing Incentives at the Expense of Master Servicer: To the extent permitted by
law, Manager may grant a referral fee to any current Tenant in an amount of up
to $150, payable as an Operating Expense from the Trust Operating Account if
that current Tenant refers a new Tenant that enters into a one year Lease at one
of the Properties other than the Property occupied by the referring Tenant,
leases that other Property for a term of at least twelve (12) months and pays
all rent and other charges for a period of at least three (3) consecutive months
without a late payment.
Other Leasing Incentives at the Expense of Manager: Manager may offer other
leasing incentives at its own expense with the consent of Master Servicer.
Other Leasing Incentives: Manager may offer other leasing incentives at Owner’s
expense (such as rent concessions), but only upon Master Servicer’s prior,
written consent.