SFG Transaction 

EXECUTION COPY 

AMENDED AND RESTATED 


LIMITED LIABILITY COMPANY OPERATING AGREEMENT 


2010-1 SFG VENTURE LLC 


Dated as ofMay 18, 2010 


Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
TABLE OF CONTENTS 


ARTICLE I 


1.1 

1.2 

ARTICLE II 


2.1 

2.2 

2.3 

2.4 

2.5 

2.6 

2.7 

ARTICLE III 


3.1 

3.2 

3.3 

3.4 

3.5 

3.6 

3.7 

3.8 

3.9 

3.10 

3.11 

3.12 

3.13 

3.14 

3.15 

ARTICLE IV 


4.1 

4.2 

4.3 

4.4 

4.5 

4.6 

ARTICLEV 

5.1 

5.2 

Certain Definitions ............................................................................................... 2 


Definitions ............................................................................................................2 


Construction........................................................................................................29 


Organization ofthe Company ............................................................................. 3D 


Formation; Continuation and Admission ofMembers....................................... 30 


Name................................................................................................................... 30 


Organizational Contributions and Related Actions ............................................ 30 


Registered Office; Chief Executive Office ......................................................... 31 


Purpose; Duration ............................................................................................... 31 


Single Purpose Entity; Limitations on Company's Activities ............................ 32 


Ratification ofCertain Actions ...........................................................................34 


Management and Operations ofthe Company ...................................................34 


Management ofthe Company's Affairs............................................................. 34 


Removal ofManager .......................................................................................... 36 


Employees and Services .....................................................................................36 


Restrictions on Manager and Private Owner ......................................................37 


Related Party Agreements .................................................................................. 39 


Real Property ...................................................................................................... 3 9 


Custodian and Paying Agent ..............................................................................39 


Relationships with Borrowers, etc ......................................................................40 


No Conflicting Obligations ................................................................................40 


Compliance with Law.........................................................................................40 


No Bankruptcy Filing .........................................................................................41 


No Liens ............................................................................................................. 41 


Remedies Upon an Event ofDefault; Security Interest ..................................... .41 


Purchase Right ofInitial Member ..................................................................... .45 


No ERISA Plan Assets .......................................................................................47 


Membership Interests; Rights and Duties of, and Restrictions on, 


Members .............................................................................................................47 


General................................................................................................................47 


LLC Interests......................................................................................................47 


Filings; Duty ofMembers to Cooperate .............................................................48 


Certain Restrictions and Requirements ..............................................................48 


Liability ofInitial Member.................................................................................48 


Indemnification...................................................................................................49 


Capital Contributions; Discretionary Funding Advance; Excess Working 


Capital Advance .................................................................................................53 


Capital Contributions .......................................................................................... 53 


Working Capital Reserve ....................................................................................54 


1 


Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
5.3 

5.4 

ARTICLE VI 


6.1 

6.2 

6.3 

6.4 

6.5 

6.6 

ARTICLE VII 


7.1 

7.2 

7.3 

7.4 

7.5 

7.6 

7.7 

ARTICLE VIII 


8.1 

8.2 

8.3 

8.4 

8.5 

8.6 

8.7 

8.8 

8.9 

ARTICLE IX 


9.1 

9.2 

9.3 

ARTICLE X 


10.1 

ARTICLE XI 


11.1 

ARTICLE XII 


12.1 

TABLE OF CONTENTS 

(Continued) 

Discretionary Funding Advance ......................................................................... 54 


Excess Working Capital Advances ..................................................................... 55 


Capital Accounts; Allocations; Priority ofPayments; Distributions..................55 


Capital Accounts ................................................................................................. 55 


Allocations to Capital Accounts .........................................................................56 


Tax Allocations................................................................................................... 57 


Determinations by Tax Matters Member............................................................ 58 


Priority ofPayments ...........................................................................................59 


Distributions....................................................................................................... 59 


Accounting, Reporting and Taxation.................................................................. 61 


Fiscal Year ..........................................................................................................61 


Maintenance of Books and Records................................................................... 61 


Financial Statements ........................................................................................... 63 


Additional Reporting and Notice Requirements ................................................ 63 


Designation ofTax Matters Member .................................................................. 66 


Tax Information..................................................................................................66 


Business Plans .................................................................................................... 67 


Restrictions on Disposition ofLLC Interests ..................................................... 68 


Limitations on Disposition ofLLC Interests ...................................................... 68 


Change ofControl ..............................................................................................69 


Additional Provisions Relating to Permitted Dispositions .................................69 


Effect ofPermitted Dispositions ......................................................................... 70 


Effect ofProhibited Dispositions .......................................................................70 


Distributions After Disposition .......................................................................... 71 


Transfers By Initial Member .............................................................................. 71 


Resignation; Dissolution ..................................................................................... 71 


Applicable Law Withdrawal............................................................................... 72 


Dissolution and Winding-Up ofthe Company ................................................... 72 


Dissolution.......................................................................................................... 72 


Winding-Up Procedures .....................................................................................73 


Termination ofthe Company .............................................................................. 74 


Qualified Transferees ......................................................................................... 74 


Qualified Transferees ......................................................................................... 74 


Manager Liability ............................................................................................... 77 


Liability ofManager........................................................................................... 77 


Servicing ofLoans..............................................................................................78 


Servicing............................................................................................................. 78 


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Structured Transaction Commercial 2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
12.2 

12.3 

12.4 

12.5 

12.6 

12.7 

12.8 

12.9 

12.10 

12.11 

12.12 

12.13 

12.14 

12.15 

12.16 

12.17 

12.18 

ARTICLE XIII 


13.1 

13.2 

13.3 

13.4 

13.5 

13.6 

13.7 

13.8 

13.9 

13.10 

13.11 

13.12 

13.13 

ANNEX I 


EXHIBIT A 

EXHIBITB 

EXHIBITC 

EXHIBITD 

TABLE OF CONTENTS 

(Continued) 

Servicing Standard ..............................................................................................82 


Servicing ofLoans.............................................................................................. 84 


Removal ofServicer........................................................................................... 87 


Interim Management Fee and Interim Servicing Fee; Management Fee ...........91 


Servicing Expenses .............................................................................................91 


Use ofLoan Proceeds......................................................................................... 91 


Collection Account ............................................................................................. 93 


Distribution Account .......................................................................................... 93 


Defeasance Account ........................................................................................... 93 


Working Capital Reserve Account ..................................................................... 93 


Certain Servicing and Loan Administration Decisions ......................................93 


Management and Disposition ofUnderlying Collateral.. ................................... 94 


Acquisition ofUnderlying Collateral................................................................. 94 


Administration ofREO Properties ..................................................................... 95 


Releases ofUnderlying Collatera1...................................................................... 97 


Clean-Up Call Rights .......................................................................................... 97 


Certain Transfer Obligations .............................................................................. 98 


Miscellaneous .....................................................................................................98 


Waiver ofRights ofPartition and Dissolution ................................................... 98 


Entire Agreement; Other Agreements ................................................................ 98 


Third Party Beneficiaries .................................................................................... 99 


Expenses ........................................................................................................... 100 


Waivers and Amendments ................................................................................ 1 00 


Notices .............................................................................................................. 101 


Counterparts; Facsimile Signatures .................................................................. ! 03 


Successors and Assigns .................................................................................... 1 03 


Compliance With Law; Severability ................................................................ 103 


Power ofAttorney............................................................................................ 104 


Governing Law ................................................................................................. 1 04 


Jurisdiction; Venue and Service ....................................................................... 105 


Waiver ofJury Trial ......................................................................................... 106 


Member Schedule .............................................................................................. I -1 


Certificate ofFormation ................ ; .................................................................. A-1 


Information, Form ofMonthly Report .............................................................B-1 


Form ofAssignment and Assumption Agreement ........................................... C-1 


Form ofLetter ofCredit ...................................................................................D-1 


iii 


Structured Transaction Commercial 20I0-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
2010-1 SFG VENTURE LLC 


AMENDED AND RESTATED 


LIMITED LIABILITY COMPANY OPERATING AGREEMENT 


THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING 

AGREEMENT (as the same may be amended or modified from time to time in accordance with 

the terms hereof, this "Agreement"), is made and entered into as ofthe 18th day of May, 2010 

(the "Closing Date"), by and among the Federal Deposit Insurance Corporation (in any capacity, 

the "FDIC"), as the Receiver defined below (including its successors and assigns hereto, the 

"Initial Member"), Square Mile Lodging Recovery LLC, a Delaware limited liability company 

(the "Private Owner"), and 2010-1 SFG Venture LLC, a Delaware limited liability company 

(the "Company"). 

WHEREAS, the FDIC has been appointed receiver (in such capacity, the "Receiver") for 

Silverton Bank, N.A., a failed fmancial institution (the "Failed Bank"); 

WHEREAS, on May 6, 2010, the Initial Member formed the Company as a Delaware 

limited liability company and was admitted as its initial, and sole, member (owning a one 

hundred percent (1 00%) limited liability company interests), and the Initial Member and the 

Company entered into that certain Limited Liability Company Operating Agreement dated as of 

May 6, 2010 (the "Original LLC Operating Agreement") as the initial "limited liability 

company agreement" (as such term is defined in the Act) ofthe Company; 

WHEREAS, the Initial Member and the Company have entered into a Loan Contribution 

and Sale Agreement dated of even date herewith (the "Contribution Agreement") pursuant to 

which (i) the Initial Member has sold in part and contributed in part, in each case to the 

Company, and the Company purchased and accepted such contribution from the Initial Member, 

all of the Initial Member's right, title and interest in and to the Loans, and assumed the 

Obligations (as defined in the Contribution Agreement), (ii) the Company has executed and 

delivered to the Initial Member (as the sole member ofthe Company at such time) those certain 

Purchase Money Notes for the benefit of the Initial Member and dated the date herewith (the 

"Purchase Money Notes"); and (iii) the FDIC, in its corporate capacity (the "Purchase Money 

Notes Guarantor") guaranteed payment of principal on the Purchase Money Notes pursuant to 

the terms of a Guaranty Agreement dated the date hereof between the FDIC, in its corporate 

capacity, and the Initial Member (the "Purchase Money Notes Guaranty"), and obtained a 

security interest in the Loans and Underlying Collateral under the Reimbursement, Security and 

Guaranty Agreement; 

WHEREAS, the Initial Member has agreed to provide additional financing to the 

Company in the maximum amount not to exceed $30,000,000 to enable the Company to fund 

Working Capital Expenses in connection with the Loans (the "Revolver"), which funding shall 

be provided pursuant to, and in accordance with, the terms of that Revolving Credit Agreement 

dated of even date herewith (the "Revolving Credit Agreement") between the Initial Member, 

as lender (in such capacity, the "Revolver Lender"), and the Company, as borrower, with the 

repayment obligations under the Revolver being secured by the assets ofthe Company pursuant 

to the Revolving Credit Agreement and the other Revolver Documents; 

1 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
WHEREAS, following closing of the transactions contemplated by the Contribution 

Agreement and the execution of the Original LLC Operating Agreement, the Initial Member 

agreed, pursuant to the terms of that certain Limited Liability Company Interest Sale and 

Assignment Agreement dated of even date herewith (the "Transferred LLC Interest Sale 

Agreement"), to sell to the Private Owner, effective as of the Closing Date an LLC Interest 

representing a forty percent ( 40%) equity interest in the Company; 

WHEREAS, after giving effect to the transactions contemplated by the Transferred LLC 

Interest Sale Agreement, as ofthe Closing Date, the Initial Member and the Private Owner will 

own all the issued and outstanding limited liability company interests in the Company; 

WHEREAS, upon the occurrence of the First Incentive Threshold Event, the Private 

Owner will own an LLC Interest representing a thirty-five percent (35%) equity interest in the 

Company and the Initial Member will own an LLC Interest representing a sixty-five percent 

(65%) equity interest in the Company; and upon the occurrence of the Second Incentive 

Threshold Event, the Private Owner will own an LLC Interest representing a thirty percent 

(30%) equity interest in the Company and the Initial Member will own an LLC Interest 

representing a seventy percent (70%) equity interest in the Company; and 

WHEREAS, the parties desire to amend and restate the Original LLC Operating 

Agreement in its entirety in order to reflect the admission ofthe Private Owner as a Member of 

the Company and to set forth the terms and conditions on which the Company shall be owned 

and operated. 

NOW, THEREFORE, in consideration of the premises and the other covenants and 

conditions contained herein, and for other good and valuable consideration the receipt and 

sufficiency ofwhich are hereby acknowledged, the parties hereto agree as follows: 

ARTICLE I 


Certain Definitions 


1.1 Definitions. This Agreement constitutes the "limited liability company 

agreement" (as such term is defmed in the Act) ofthe Company. For purposes ofthis Agreement, 

the following terms shall have the meanings and definitions hereinafter respectively set forth. 

"Acceptable Rating" shall mean (i) a rating of "Average (Select Servicer List)" 

for construction loan servicers by Standard and Poor's Ratings Service, a division of The 

McGraw-Hill Companies, Inc., (ii) a rating of "Acceptable" for construction loan servicers by 

Fitch, Inc., (iii) a rating of "Approved" for construction loan servicers by Moody's Investors 

Service, or (iv) a rating that complies with the standards set forth in the definition of "Qualified 

Servicer". 

"Account Control Agreement" shall have the meaning given in the Custodial 

and Paying Agency Agreement. 

"Accountants" shall mean the independent certified public accountants of the 

Company. 

2 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Acquired Property" shall mean (i) Underlying Collateral to which title is 

acquired by or on behalf ofthe Company or any Ownership Entity, SFG, the Failed Bank or the 

Receiver by foreclosure, by deed in lieu of foreclosure, by power of sale or by sale pursuant to 

the Uniform Commercial Code; (ii) the equity interests in the Ownership Entities and (iii) the 

assets held directly or indirectly by the Ownership Entities. 

"Act" shall mean the Delaware Limited Liability Company Act, 6 DeL C. § § 18­

101 et seq. 

"Additional Security" shall have the meaning given in Section 3.13(d). 

"Adjusted Capital Account Deficit" means, with respect to any Member, the 

deficit balance, if any, in such Member's Capital Account as of the end of the relevant Fiscal 

Year, after giving effect to the following adjustments: 

(A) Credit to such Capital Account any amounts that such Member is 

obligated to restore or is deemed to be obligated to restore pursuant to Treasury 

Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5); and 

(B) Debit to such Capital Account the items described in Treasury Regulations 

Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The 

foregoing definition of Adjusted Capital Account Deficit is intended with the provisions 

of Treasury Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently 

therewith. 

"Affiliate" shall mean, with respect to any specified Person, (i) any other Person 

directly or indirectly Controlling or Controlled by or under common Control with such specified 

Person, (ii) any Person owning or Controlling ten percent (10%) or more of the outstanding 

voting securities, voting equity interests, or beneficial interests of the Person specified, (iii) any 

officer, director, general partner, managing member, trustee, employee or promoter ofthe Person 

specified or any Immediate Family Member of such officer, director, general partner, managing 

member, trustee, employee or promoter, (iv) any corporation, partnership, limited liability 

company or trust for which any Person referred to in clause (ii) or (iii) acts in that capacity, or 

(v) any Person who is an officer, director, general partner, managing member, trustee or holder 

of ten percent (10%) or more of the outstanding voting securities, voting equity interests or 

beneficial interests of any Person described in clauses (i) through (iv); provided, however, that 

none ofthe Initial Member, the Revolver Lender (or any agent thereof) under the Revolver, the 

Purchase Money Notes Guarantor, the Collateral Agent or any Affiliate (for this purpose 

determined disregarding clauses (ii), (iii) and (iv) of this definition (including in the context of 

clause (v) of this definition) and disregarding the Company and any Person Controlled by the 

Company) of any ofthe foregoing shall be deemed to be an "Affiliate" ofthe Company or of any 

Person Controlled by the Company. 

"Agreement" shall have the meaning given in the preamble. 

"Ancillary Documents" shall mean the Contribution Agreement, the Servicing 

Agreement (including the Electronic Tracking Agreement), the Custodial and Paying Agency 

3 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
Agreement, the Revolver Documents, the Private Owner Pledged Account Control Agreement, 

any Qualifying Letter of Credit, one or more Account Control Agreements, the Purchase Money 

Notes (and any promissory note reissued in respect thereof pursuant to Section 2.8 of the 

Custodial and Paying Agency Agreement), the Purchase Money Notes Guaranty, the 

Reimbursement, Security and Guaranty Agreement and the Transferred LLC Interest Sale 

Agreement, in each case once executed and delivered, and any and all other agreements and 

instruments executed and delivered in connection with the Closing or the transactions 

contemplated thereby. 

"Book Value" shall mean, (i) with respect to contributed property, the initial Fair 

Market Value of such property, and (ii) with respect to any other Company asset, the adjusted 

basis of such asset for federal income tax purposes; provided. however, that the Book Values of 

all Company assets shall be adjusted to equal their respective Fair Market Values, in accordance 

with the rules set forth in Section 1.704-l(b)(2)(iv)(f) of the Treasury Regulations, except as 

otherwise provided herein, immediately prior to: (a) the date ofthe acquisition of any additional 

LLC Interest by any new or existing Member in exchange for more than a de minimis Capital 

Contribution; (b) the date of the actual distribution of more than a de minimis amount of 

Company property (other than a pro rata distribution) to a Member in connection with the 

redemption of all or part of such Member's LLC Interest; or (c) the date ofthe actual liquidation 

of the Company within the meaning of Section I.704-1(b)(2)(ii)(g) ofthe Treasury Regulations; 

and provided further, that adjustments pursuant to clauses (a) and (b) above shall be made only if 

the Tax Matters Member reasonably determines, after consultation with the Initial Member, that 

such adjustments are necessary or appropriate to reflect the relative economic interests of the 

Members. The Book Value of any Company Property distributed to any Member shall be 

adjusted immediately prior to such distribution to equal its Fair Market Value as ofsuch date. 

"Borrower" shall mean any borrower with respect to any Loan. 

"Bulk Sale" shall mean the sale or other disposition, in a single transaction or a 

series of related transactions (and directly or indirectly), to a single buyer (or two (2) or more 

related buyers) of two (2) or more assets (consisting of Loans, including any separate REO 

Property or other Acquired Property into which any Loan is converted) that (i) are not from a 

single borrower relationship or (ii) otherwise do not involve (or are not secured by) items of 

REO Property that are part of the same project and/or physically adjacent to one another; 

provided however, if multiple assets (including Loans) are marketed and offered at the same 

time, and each such asset is marketed individually and offers are solicited with respect thereto 

individually, the transaction will not be considered a Bulk Sale if multiple assets are sold to a 

single buyer (or two (2) or more related buyers) provided that the single buyer's (or related 

buyer's) overall price for such specific assets exceeds the aggregate value of the highest 

individual prices offered by other buyers for each individual asset included in that specific 

transaction (based on net cash proceeds to be received by the Company). 

"Business" shall mean the acquisition of the Loans pursuant to the Contribution 

Agreement and the ownership, servicing, administration, management and liquidation of the 

Loans and Acquired Properties. 

4 

Structured Transaction Cornmercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.00l7 
"Business Day" shall mean any day except a Saturday, Sunday or other day on 

which commercial banks in Washington, D.C. or United States federal government offices are 

required or authorized by Law to close. 

"Business Plan" shall have the meaning given in Section 7.7. 

"Buy-Out Closing" shall have the meaning given in Section 3.14(a). 

"Buy-Out Closing Date" shall have the meaning given in Section 3 .14(b)(i). 

"Buy-Out Notice" shall have the meaning given in Section 3.14(a). 

"Buy-Out Valuation Date" shall have the meaning given in Section 3.14(a). 

"Capital Account" shall mean the capital account of a Member related to such 

Member's outstanding LLC Interests, as adjusted to account for allocations ofNet Income (and 

items thereof) and Net Loss (and items thereof), and contributions and distributions relating to 

such LLC Interests, as provided in greater detail in Section 6.2 and elsewhere in this Agreement. 

"Capital Contribution" shall mean a contribution to the capital of the Company 

made, deemed to be made, or to be made pursuant to the Original LLC Operating Agreement, the 

Contribution Agreement, or this Agreement. 

"Certificate" shall have the meaning given in Section 2.1Ca). 

"Change of Control" shall mean (a) with respect to the Private Owner, (i) the 

Private Owner's Specified Parent for any reason (x) failing or ceasing to Control the Private 

Owner or (y) failing or ceasing to own, beneficially and of record, and directly or indirectly 

(including through one or more Subsidiaries), at least fifty and one tenths percent (50.1 %) in 

value of all of the equity interests in the Private Owner, or (ii) any Person other than the Private 

Owner's Specified Parent (and its wholly-owned Subsidiaries) at any time, when considered 

together with all of such Person's Affiliates (excluding, as applicable, the Private Owner's 

Specified Parent and its wholly-owned subsidiaries), directly or indirectly acquiring or holding, 

ofrecord or beneficially, twenty-five percent (25%) in value of all ofthe equity interests in the 

Private Owner; and (b) with respect to the Servicer, (i) the Servicer's Specified Parent for any 

reason (x) failing or ceasing to Control the Servicer or (y) failing or ceasing to own, beneficially 

and of record, and directly or indirectly (including through one or more Subsidiaries), at least 

fifty and one tenths percent (50.1 %) in value of all ofthe equity interests in the Servicer, or (ii) 

without limitation of clause (i), in the event the Servicer is (or at the time it became the Servicer, 

was) an Affiliate ofthe Private Owner, any Change ofControl ofthe Private Owner. 

"Clean-up Call" shall have the meaning set forth in Section 12.17(a). 

"Closing" shall mean the consummation of the transactions contemplated in the 

Transferred LLC Interest Sale Agreement. 

"Closing Date" shall have the meaning given in the preamble. 

5 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Code" shall mean the United States Internal Revenue Code of 1986, as amended. 

"Collateral Agent" shall mean the FDIC, in its capacity as the Collateral Agent 

under (and as defined in) the Reimbursement, Security and Guaranty Agreement, and any 

successor Collateral Agent thereunder. 

"Collection Account" shall mean a segregated trust or custodial account 

established and maintained at a branch ofthe Paying Agent (as the "Collection Account" defined 

therein) in accordance with, and for the purposes set forth in, the Custodial and Paying Agency 

Agreement. 

"Company" shall have the meaning given in the preamble. 

"Company Property" shall mean all property, whether real or personal, tangible 

or intangible, owned by the Company, including the Loans contributed or sold by the Initial 

Member to the Company pursuant to the Contribution Agreement. 

"Consolidated Business Plan" shall have the meaning given in Section 7.7. 

"Contract for Deed" shall mean an executory contract with a third party to 

convey real property to such third party upon payment ofthe amounts set forth therein and/or the 

performance of any other obligations described therein, including any installment land sale 

contract. 

"Contribution Agreement" shall have the meaning given in the recitals. 

"Control" (including the phrases "Controlled by" and "under common Control 

with") when used with respect to any specified Person shall mean the possession, direct or 

indirect, of the power to direct or cause the direction of the management and policies of such 

Person, whether through the ownership ofvoting securities or interests, by contract or otherwise. 

"Covered Persons" shall have the meaning given in Section 4.6(f). 

"Custodial and Paying Agency Agreement" shall mean, initially, that certain 

Custodial and Paying Agency Agreement dated as of May 18, 2010, by and between the 

Company, the Purchase Money Notes Guarantor, the Revolver Lender and the initial Custodian 

and Paying Agent, and thereafter any replacement agreement entered into with a Custodian and 

Paying Agent pursuant to Section 3. 7. 

"Custodial Documents" shall have the meaning given m the Custodial and 

Paying Agency Agreement. 

"Custodian" shall have the meaning given in Section 3.7. 

"Custodian and Paying Agent Report" shall have the meaning given in the 

Custodial and Paying Agency Agreement. 

"Cut-OffDate" shall have the meaning given in the Contribution Agreement. 

6 

Structured Transaction Commercial 20 I 0-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Damages" shall mean any and all damages, disbursements, suits, claims, 

liabilities, obligations, judgments, fines, penalties, charges, amounts paid in settlement, costs and 

expenses (including, without limitation, attorneys' fees and expenses) arising out of or related to 

litigation and interest on any ofthe foregoing. 

"Debt" of any Person shall mean (i) all indebtedness ofsuch Person for borrowed 

money, (ii) all obligations ofsuch Person for the deferred purchase price of property or services 

(excluding non-Affiliated trade payables (or Mfiliated trade payables, incurred in a manner 

consistent with applicable requirements herein and in the Ancillary Documents, that are 

expressly subordinated in writing to such Person's obligations under this Agreement and the 

Ancillary Documents on terms satisfactory to the Initial Member and, prior to the Purchase 

Money Notes Defeasance Date, the Purchase Money Notes Guarantor) arising in the ordinary 

course of business), (iii) all obligations ofsuch Person evidenced by notes, bonds, debentures or 

other similar instruments, (iv) all indebtedness created or arising under any conditional sale or 

other title retention agreement with respect to property acquired by such Person (even though the 

rights and remedies of the seller or lender under such agreement in the event of default are 

limited to repossession or sale of such property), (v) all obligations of such Person as lessee 

under leases that have been or should be, in accordance with GAAP, recorded as capital leases, 

(vi) all liabilities or obligations of any nature whatsoever secured by a consensual pledge, 

consensual security interest or other consensual Lien of, in or on any property or asset of such 

Person (other than (x) if such Person is the Private Owner, any such pledge, security interest or 

other Lien granted to the Initial Member under this Agreement, and (y) customary rights of setoff, revocation, refund or chargeback under deposit agreements or under the Uniform 

Commercial Code of banks or other similar :fmancial institutions where such Person maintains 

deposits), or (vii) all indebtedness or obligations of others of the kinds referred to in clauses 

(i) through (vi) above in respect ofwhich such Person has entered into or issued any Guarantee. 

"Debtor Relief Laws" shall mean Title 11 ofthe United States Code (11 U.S.C. 

§ § 101, et seq.), and all other liquidation, conservatorship, bankruptcy, assignment for the benefit 

of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar 

debtor relief Laws of the United States or other applicable jurisdictions from time to time in 

effect and affecting the rights ofcreditors generally. 

"Defeasance Account" shall have the meanings given in Custodial and Paying 

Agency Agreement 

"Direct Owner" shall mean, with respect to any Person, any other Person who 

has any direct ownership interest in such Person. 

"Discretionary Funding Advance" shall have the meaning given in 

Section 5.3(a). 

"Disposition" shall mean any sale, assignment, alienation, gift, exchange, 

conveyance, transfer, pledge, hypothecation, granting of a security interest or other disposition or 

attempted disposition whatsoever, in each case, whether voluntary or involuntary, and including 

any ofthe foregoing by operation of law (including any merger into, or any consolidation with, 

any other Person). For the avoidance of doubt, it is understood and agreed that a statutory 

7 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
conversion of a Person into another form of Person does not constitute a Disposition. The term 

"Dispose" shall mean to make or consummate a "Disposition". 

"Dispute Resolution Procedure" shall mean the following procedure solely for 

the purpose ofdetermining a particular amount: 

Each Member shall submit to the other, within five (5) Business Days of referral 

to this procedure, its proposed amount. If either Member fails to submit such a proposal within 

such time period, then the amount shall be the single proposal provided. Ifthe higher ofthe two 

(2) proposals is not greater than one hundred ten percent (110%) ofthe lower proposal, then the 

amount shall be the average of such two (2) proposals. Ifthe higher ofsuch two (2) proposals is 

greater than one hundred ten percent (110%) ofthe lower amount then the Members shall, within 

seven (7) days of their submission of such proposals, jointly select a nationally recognized 

investment banking frrm which shall, within fifteen (15) days of its appointment, select the 

proposed amount previously submitted by the Members pursuant to this procedure that in its 

opinion more closely reflects the amount being determined as described in this Agreement, and 

the proposal thus selected shall be considered the amount for purposes ofthis Agreement. If the 

Members fail to agree on such investment banking firm within such seven (7)-day period, then 

each Member shall nominate, within such seven (7)-day period, a nationally recognized 

investment banking firm that is not an Affiliate thereof and the investment banking firm that is to 

make such determination shall be chosen by the two (2) nominated firms promptly after the 

expiration of such seven (7)-day period; provided, that if either Member shall fail to nominate 

such an investment banking firm within such seven (7)-day period, such determination shall be 

made by the investment banking firm nominated by the other Member. The fees of the selected 

investment-banking frrm shall be paid in the manner provided in this Agreement. Any 

determination of any amount made by any investment-banking firm selected in accordance with 

this procedure shall be final and binding on the Members and, without limitation of the 

foregoing, may be enforced by any court having jurisdiction in the premises. 

"Dissolution Event" shall mean, with respect to any specified Person, (i) in the 

case of a specified Person that is a partnership or limited partnership or a limited liability 

company, the dissolution and commencement of winding up of such partnership, limited 

partnership or limited liability company, (ii) in the case of a specified Person that is a 

corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation or the 

revocation of its charter and the expiration of ninety (90) days after the date of notice to the 

corporation of such revocation without a reinstatement of its charter, and (iii) in the case of any 

other specified entity, the termination ofsuch entity. For the avoidance of doubt, it is understood 

and agreed that a statutory conversion of a Person into another form ofPerson does not constitute 

a "Dissolution Event." 

"Distributable Cash" shall have the meaning given in Section 6.5. 

"Distribution Account" shall mean a segregated trust or custodial account 

established and maintained under the Custodial and Paying Agency Agreement (as the 

"Distribution Account" is defmed therein) at a branch of the Paying Agent for the sole purpose 

of holding and distributing Loan Proceeds in accordance with the Custodial and Paying Agency 

Agreement. 

8 

Structured Transaction Cornrnercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Distribution Date" shall have the meaning given in the Custodial and Paying 

Agency Agreement. 

"Distribution Date Report" shall have the meaning given in the Custodial and 

Paying Agency Agreement, which report shall be prepared and distributed by the Manager to the 

Paying Agent as part ofthe Monthly Report in accordance with Section 7.4(b). 

"Due Period" shall have the meaning given in the Custodial and Paying Agency 

Agreement. 

"Electronic Tracking Agreement" shall have the meaning given in the Servicing 

Agreement. 

"Embargoed Person" shall mean any Person subject to trade restrictions under 

United States Law, including, without limitation, the International Emergency Economic Powers 

Act, 50 U.S.C. §§1701, et seq., The Trading with the Enemy Act, 50 U.S.C. §§ App. 1, et seq., 

any foreign assets control regulations of the United States Treasury Department (31 C.F.R., 

Subtitle B, Chapter V, as amended), or any enabling legislation or regulations promulgated 

thereunder or any executive order relating thereto (including Executive Order 13224 of 

September 21,2001 Blocking Property and Prohibiting Transactions With Persons who Commit, 

Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079 (2001)) or 31 C.F.R. §594.101, et 

seq.) with the result that a purchase of assets or any other transaction entered into with respect to 

any assets (including, without limitation, any investment in any structured transaction), whether 

directly or indirectly, is prohibited by or in violation ofLaw. 

"Environmental Hazard" means the presence at, in or under any Underlying 

Collateral (whether held in fee simple or subject to a ground lease or otherwise, and including 

any improvements whether by buildings or facilities, and any personal property, fixtures, leases 

and other property or rights pertaining thereto), of any "hazardous substance," as such term is 

defined in Section 101(14) ofthe Comprehensive Environmental Response, Compensation and 

Liability Act of 1980, 42 U.S.C. §9601(14), or any petroleum (including crude oil or any fraction 

thereof that is liquid at standard conditions of temperature and pressure), at a level or in an 

amount that requires remediation or abatement pursuant to applicable Law. 

"ERISA" shall have the meaning given in Section 10.1(r). 

"Escrow Account" shall have the meaning given in the Contribution Agreement. 

"Escrow Advance" shall mean any advance made to pay Taxes or insurance 

premiums or any other cost or expense that, but for a shortfall in the Borrower's Escrow 

Account, is payable using funds in the Borrower's Escrow Account. 

"Event of Default" shall mean any one of the following events (whatever the 

reason for such Event of Default and whether it shall be voluntary or involuntary or be effected 

by operation of law or pursuant to any judgment, decree or order of any court or any order, rule 

or regulation of any administrative or governmental body): 

9 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
(a) the receipt by the Company ofnotice from the Revolver Lender (or 

any agent under the Revolver) that an Event ofDefault under and as defined in the Revolver has 

occurred, or from the Collateral Agent that an Event of Default under and as defined in the 

Reimbursement, Security and Guaranty Agreement, has occurred (in each case, unless such an 

Event ofDefault has not actually so occurred); or 

(b) the occurrence of any Insolvency Event (without any cure period 

other than as may be provided for in the definition ofInsolvency Event or in clause (ii)) (i) with 

respect to the Company or the Private Owner; or (ii) with respect to any Servicer or any 

Subservicer; provided, that such Insolvency Event under this clause (ii) (that is not otherwise an 

Insolvency Event under clause (i) hereof) shall not be an Event ofDefault hereunder (but shall in 

all events be a default under the applicable Servicing Agreement or Subservicing Agreement) so 

long as the Manager shall have fully replaced (or caused the replacement of) such affected 

Servicer or Subservicer within thirty (30) days after the occurrence of such Insolvency Event; or 

(iii) the occurrence ofany Dissolution Event with respect to the Private Owner; or 

(c) any failure of the Company to pay any Servicing Expense when 

due in accordance with Section 12.6 ofthis Agreement, which failure continues unremedied for a 

period ofthirty (30) days after the date on which written notice ofsuch failure requiring the same 

to be remedied shall have been given by the Initial Member to the Company; or 

(d) the failure ofthe Company or the Private Owner (for the avoidance 

of doubt, in any capacity, including as a Member and/or as the Manager) to comply in any 

material respect with or enforce the provisions of this Agreement, which continues unremedied 

for a period ofthirty (30) days after the date on which written notice ofsuch failure requiring the 

same to be remedied shall have been given by the Initial Member to the Private Owner; or 

(e) the occurrence of either (i) a failure by the Servicer to perform in 

any material respect its obligations under the Servicing Agreement, which continues unremedied 

for a period ofthirty (30) days after the date on which written notice of such failure requiring the 

same to be remedied shall have been given by the Manager (in its individual capacity) or the 

Initial Member to the Servicer, or (ii) a failure by the Manager (in its individual capacity) to 

replace the Servicer upon the occurrence of either (x) an Event of Default under the 

Reimbursement, Security and Guaranty Agreement as a result ofthe Servicer' s acts or omissions 

or (y) a material breach of or event of default under the Servicing Agreement by the Servicer, in 

either case which continues unremedied for a period of thirty (30) days after the date on which 

written notice of such failure requiring the same to be remedied shall have been given by the 

Initial Member to the Manager (in any capacity); or 

(f) the failure of the Manager (in any capacity) to comply in any 

material respect with its obligations under the Servicing Agreement or the Company to comply 

in any material respect with its obligations under the Custodial and Paying Agency Agreement 

(including any failure to pay fees or expenses when due thereunder) which, in either case, 

remains unremedied for a period ofthirty (30) days after the date on which written notice ofsuch 

failure requiring the same to be remedied shall have been given by the Initial Member or, as 

applicable, the Custodian or the Paying Agent, to the Manager (in any capacity) or the Company, 

as applicable; or 

10 

Structured Transaction Commercial 2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
(g) there shall be a change in the Private Owner or the Manager or 

there shall occur a Change ofControl with respect to the Private Owner (other than as expressly 

permitted pursuant to Section 8.2) or any Restricted Servicer Change of Control; provided, that, 

any such Restricted Servicer Change of Control shall not be an Event of Default hereunder (but 

shall in all events by a default under the applicable Servicing Agreement) so long as the Manager 

shall have fully replaced (or caused the replacement of) such affected Servicer within thirty (30) 

days after the occurrence ofsuch Restricted Servicer Change ofControl; or 

(h) the failure of the Company to remit or cause to be remitted all 

Loan Proceeds to the Paying Agent (or to the applicable account maintained with the Paying 

Agent) as and when required; or 

(i) the failure ofthe Manager to cause the Company to repay (or remit 

available funds for the repayment of) Discretionary Funding Advances to the full extent Loan 

Proceeds from the applicable Loan are available for such repayment; or 

G) any failure, for any reason, of the amount of the Additional 

Security to be equal to or exceed Five Million Dollars ($5,000,000), or any failure by an Issuing 

Bank to comply with any terms, agreements or conditions ofany Qualifying Letter ofCredit. 

"Excess Working Capital Advance" shall have the meaning given m 

Section 5.4. 

"Excluded Expenses" shall have the meaning given in Section 12.7®. 

"Existing Servicer" shall have the meaning given in the Contribution Agreement. 

"Failed Bank" shall have the meaning given in the preamble. 

"Fair Market Value" shall mean, with respect to any asset on a given date, the 

gross fair market value of such asset, unreduced by any liability, on such date as determined in 

good faith by the Manager after consultation with the Initial Member; provided, however, that 

the parties hereto acknowledge and agree that, as ofthe Closing Date, the Fair Market Value of 

the Capital Contribution made by the Initial Member shall be based on the Transferred LLC 

Interest Sale Price, as set forth in the Transferred LLC Interest Sale Agreement, and such Fair 

Market Value shall be utilized for determining the initial Capital Accounts ofthe Members as of 

the Closing Date. 

"FDIC" shall have the meaning given in the recitals. 

"Final Distribution" shall have the meaning given in Section 6.6(fl. 

"First Incentive Threshold Event" shall have the meaning given m 

Section 6.6{b)(iii). 

"Fiscal Year" shall have the meaning given in Section 7.1. 

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Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
"Funding Draw" shall mean (i) any principal advance with respect to a Loan 

pursuant to the funding provisions ofthe applicable Loan Documents and in accordance with the 

Servicing Standard, in each case so long as (a) if required by applicable Law or if otherwise 

deemed necessary by the Manager or required hereunder, an endorsement to each applicable title 

policy insuring the Loan, which endorsement shall be in form and content acceptable to the 

Manager, is obtained that (1) brings down the effective date of the title policy to the date on 

which the applicable Funding Draw it covers is made, (2) increases the liability limit ofthe title 

policy by an amount equal to the principal amount of such Funding Draw, and (3) contains no 

new exceptions to title; (b) notwithstanding anything to the contrary contained in this 

Agreement, ifthe then outstanding unpaid principal balance ofthe Loan exceeds (or would, after 

taking into account the applicable Funding Draw, so exceed) the value of the Underlying 

Collateral, the Manager shall make or permit any such Funding Draw only if the Manager 

determines, in its reasonable judgment, that the Borrower is reasonably likely to be able to repay 

the Loan, or that the making ofthe Funding Draw is in the best interests (in terms ofmaximizing 

the value ofthe Loan) ofthe Company and the Initial Member, or that the Company is otherwise 

legally obligated to make such Funding Draw under the applicable Loan Documents; and (c) 

such advance is made in accordance with the terms of the Loan and the Loan Documents, 

provided, however, that ifsuch advance would result in the principal amount ofsuch Loan being 

in excess of the related unfunded commitment with respect thereto (as set forth in the Loan 

Documents) or if any term with respect to the Loan or the Loan Documents precludes such 

advance in the event of a Borrower default, the applicable unfunded commitment may be 

increased (and such advance may be made) and/or such term may be waived, in each case only if 

the Manager determines, in its reasonable judgment and in accordance with the Servicing 

Standard, that such increase to the unfunded commitment (and related advance) and/or waiver is 

in the best interests ofthe Company and the Initial Member in terms ofmaximizing the value of 

the Loan and, in the case of any such increase to the unfunded commitment (or other advance not 

contemplated in the existing Loan Documents), (x) such increased commitment and the related 

advance are evidenced by an applicable Note (or Notes) and amendments to the Loan Documents 

(including Underlying Collateral Documents) pursuant to which such increased commitment and 

advance shall be secured by all ofthe Underlying Collateral for such Loan and otherwise subject 

to the general provisions with respect to other outstanding amounts under such Loan, all on terms 

and conditions consistent with the Loan Documents as in effect prior to such amendment, and (y) 

the Manager complies with the requirements in item (i)(a) above; and (ii) payments of costs and 

expenses associated with the continued construction ofREO Property (including the payment of 

so-called "soft costs" payable during construction (such as real estate Taxes, ground rents and 

insurance premiums)) as would typically have been paid out of funding of a construction loan 

relating to such REO Property (as reasonably determined by the Manager), in each case (x) only 

to the extent the Manager determines, in its reasonable judgment, that the payment ofsuch costs 

and expenses is in the best interests (in terms of maximizing the value of the Loan and REO 

Property) of the Company and the Initial Member, and (y) in accordance with the Servicing 

Standard and the Loan Documents that were applicable to the REO Property before it became an 

REO Property (not including payment of debt service under the applicable Loan Documents, and 

without reference to the unfunded commitment, if any, having been in effect with respect to such 

REO Property under the Loan Documents); provided, that, in no event shall any such costs and 

expenses payable pursuant to any such Funding Draw include any Excluded Expenses. 

12 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"GAAP" shall mean United States generally accepted accounting principles as in 

effect from time to time. 

"Governmental Authority" shall mean (i) any United States or non-United 

States national, federal, state, local, municipal, provincial or international government or any 

political subdivision of any thereof or (ii) any governmental, regulatory or administrative 

authority, agency or commission, or judicial or arbitral body of any ofthe foregoing described in 

clause (i). 

"ground lease" shall have the meaning given in Section 12.15(g). 

"Guarantee" shall mean, with respect to any particular indebtedness or other 

obligation, (i) any direct or indirect guarantee thereof by a Person other than the obligor with 

respect to such indebtedness or other obligation or any transaction or arrangement intended to 

have the effect of directly or indirectly guaranteeing such indebtedness or other obligation, 

including without limitation any agreement by a Person other than the obligor with respect to 

such indebtedness or other obligation (A) to pay or purchase such indebtedness or other 

obligation or to advance or supply funds for the payment or purchase of such indebtedness or 

other obligation, (B) to purchase, sell or lease (as lessee or lessor) property of, to purchase or sell 

services from or to, to supply funds to or in any other manner invest in, the obligor with respect 

to such indebtedness or other obligation (including any agreement to pay for property or services 

of the obligor irrespective of whether such property is received or such services are rendered), 

primarily for the purpose of enabling the obligor to make payment of such indebtedness or other 

obligation or to assure the holder or other obligee of such indebtedness or other obligation 

against loss, or (C) otherwise to assure the obligee of such indebtedness or other obligation 

against loss with respect thereto, or (ii) any grant (or agreement in favor of the obligee of such 

indebtedness or other obligation to grant such obligee, under any circumstances) by a Person 

other than the obligor with respect to such indebtedness or other obligation of a security interest 

in, or other Lien on, any property or other interest of such Person, whether or not such other 

Person has not assumed or become liable for the payment of such indebtedness or other 

obligation. 

"Immediate Family Member'' shall mean, with respect to any individual, his or 

her spouse, parents, parents-in-law, grandparents, descendants, nephews, nieces, brothers, sisters, 

brothers-in-law, sisters-in-law, children (whether natural or adopted), children-in-law, 

stepchildren, grandchildren and grandchildren-in-law. 

"Incentive Threshold" shall have the meaning given in Section 6.6(b)(iv). 

"Incentive Threshold Base Amount" shall have the meaning given m 

Section 6.6(b)(iv)(A). 

"Indemnified Parties" shall have the meaning given in Section 4.6(a). 

"Initial Member" shall have the meaning given in the preamble. 

13 

Structured Transaction Commercial20IO-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Initial Member Capital Contribution" shall have the meaning given m 

Section 2.3(a)(i). 

"Initial Member LLC Interest" shall mean, (i) the limited liability company 

interests in the Company held by the Initial Member, including the rights to share in the income, 

gain, loss, deductions and credits of, and the right to receive distributions from, the Company, 

(ii) all other rights, benefits and privileges enjoyed by the Initial Member (under the Act, this 

Agreement or otherwise) in its capacity as a Member, including rights to vote, consent and 

approve, and (iii) all other rights, benefits, privileges and claims (whether known or unknown) of 

the Initial Member under, or arising under, this Agreement. 

"Insolvency Event" shall mean, with respect to any specified Person, the 

occurrence ofany ofthe following events: 

1. 	 the specified Person makes an assignment for the benefit ofcreditors; 

2. 	 the specified Person files a voluntary petition for relief in any Insolvency 

Proceeding; 

3. 	 the specified Person is adjudged bankrupt or insolvent or there is entered 

against the specified Person an order for relief in any Insolvency 

Proceeding; 

4. 	 the specified Person files a petition or answer seeking for the specified 

Person any reorganization, arrangement, composition, readjustment, 

liquidation, dissolution, or similar relief under any Law; 

5. 	 the specified Person seeks, consents to, or acquiesces in the appointment 

of a trustee, receiver or liquidator of the specified Person or of all or any 

substantial part ofthe specified Person's properties; 

6. 	 the specified Person files an answer or other pleading admitting or failing 

to contest the material allegations of a petition filed against the specified 

Person in any proceeding described in clauses (1) through (5); 

7. 	 the specified Person becomes unable to pay its obligations (other than, 

with respect to the Revolver, the Company, the Purchase Money Notes 

unless a Purchase Money Note Trigger Event (as defined in the 

Reimbursement, Security and Guaranty Agreement) has occurred and is 

continuing and is not cured within ten (10) Business Days) as they become 

due, or the sum ofsuch specified Person's debts is greater than all ofsuch 

Person's property, at a fair valuation; or 

8. 	 (i) at least sixty (60) days have passed following the commencement of 

any proceeding against the specified Person seeking reorganization, 

arrangement, composition, readjustment, liquidation, dissolution or similar 

relief under any Law and such proceeding has not been dismissed, or (ii) 

14 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
(x) at least sixty (60) days have passed following the appointment of a 

trustee, receiver or liquidator for the specified Person or all or any 

substantial part of the specified Person's properties without the specified 

Person's agreement or acquiescence, and such appointment has not been 

vacated or stayed, or (y) ifsuch appointment has been stayed, at least sixty 

(60) days have passed following the expiration of the stay and such 

appointment has not been vacated. 

"Insolvency Proceeding" shall mean any proceeding under Title 11 ofthe United 

States Code (11 U.S.C. §§101, et seq.) or any proceeding under any other Debtor ReliefLaw. 

"Interim Management Fee" shall have the meaning given in the Custodial and 

Paying Agency Agreement. 

"Interim Servicing Fee" shall have the meaning given m the Contribution 

Agreement. 

"Interim Servicing Period" shall have the meaning given in the Contribution 

Agreement. 

"Investment Company Act" shall mean the Investment Company Act of 1940, 

as amended from time to time. 

"Issuing Bank" shall mean, with respect to any Qualifying Letter of Credit, the 

applicable issuing banlc 

"Law" shall mean any applicable statute, law, ordinance, regulation, rule, code, 

injunction, judgment, decree or order (including any executive order) of any Governmental 

Authority. 

"LC Reissuance/Extension Failure" shall mean, with respect to any Qualifying 

Letter of Credit, (i) any failure of Issuing Bank to be and remain a Qualified Issuer, or (ii) any 

failure ofsuch Qualifying Letter ofCredit to be automatically renewed (for an additional year) at 

least sixty (60) days prior to the then-scheduled expiry ofsuch Qualifying Letter ofCredit, or the 

receipt by the Initial Member of any notice to the effect that such Qualifying Letter of Credit will 

not be automatically renewed (for such additional one year period), in each case unless, within 

ten (10) days of the occurrence of such failure or the Initial Member's receipt of such notice, as 

the case may be, the Private Owner shall have fully replaced such Qualifying Letter of Credit 

with a new Qualifying Letter of Credit issued by a Qualified Issuer (in conformance with all of 

the requirements set forth in this Agreement with respect to Qualifying Letters of Credit) or 

otherwise provided Qualifying Cash Collateral in the full undrawn face amount of such 

Qualifying Letter ofCredit. 

"LIBOR Rate" shall mean, with respect to each Due Period (and interest 

accruing on Discretionary Funding Advances during such Due Period), the rate per annum equal 

to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or 

other commercially available source providing quotations of BBA LIBOR as selected by the 

15 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
Paying Agent from time to time), as determined at approximately 11 :00 a.m. New York time two 

(2) Business Days prior to the first day of such Due Period, for U.S. Dollar deposits with a term 

of one month. 

"Lien" shall mean any mortgage, deed oftrust, pledge, deed to secure debt, trust 

deed, security interest, charge, restriction on or condition to transfer, voting or exercise or 

enjoyment of any right or beneficial interest, option, right of first refusal, easement, covenant, . 

restriction and any other lien, claim or encumbrance ofany nature whatsoever. 

"LLC Interest" shall mean, (i) the limited liability company interests in the 

Company held by the Members, including the rights to share in the income, gain, loss, 

deductions and credits of, and the right to receive distributions from, the Company, (ii) all other 

rights, benefits and privileges enjoyed by the Members (under the Act, this Agreement or 

otherwise) in their capacity as Members, including rights to vote, consent and approve, and (iii) 

all other rights, benefits, privileges and claims (whether known or unknown) of the Members 

under, or arising under, this Agreement. For purposes of clarification, references in this 

Agreement to the term "limited liability company interest" shall mean a "limited liability 

company interest" as such term is defined in the Act. 

"Loan" shall mean any loan, Loan Participation, Ownership Entity (including any 

cash and cash equivalents held directly or indirectly by such Ownership Entities) or Acquired 

Property listed on the Loan Schedule, and any loan into which any listed loan or Loan 

Participation is refmanced or modified, and includes with respect to each such loan, Loan 

Participation, Ownership Entity, Acquired Property or other related asset or Related Agreements: 

(i) any obligation evidenced by a Note; (ii) all rights, powers or Liens of the Company or any 

Ownership Entity in or under the Underlying Collateral and Underlying Collateral Documents 

and in and to Acquired Property (including all Ownership Entities and REO Property held by any 

Ownership Entity); (iii) all rights of the Company or any Ownership Entity pursuant to any 

Contract for Deed and in or to the real property that is subject to any such Contract for Deed; (iv) 

all rights ofthe Company or any Ownership Entity pursuant to any lease and in or to the related 

leased property; ( v) all rights to causes of action, lawsuits, judgments, claims and demands of 

any nature available to or being pursued by or for the benefit ofthe Company or any Ownership 

Entity with respect to the Loans, the Underlying Collateral or the ownership, use, function, value 

of or other rights pertaining thereto, whether arising by way of counterclaim or otherwise, other 

than any claims retained by the Initial Member pursuant to Section 2.7 of the Contribution 

Agreement; (vi) all guaranties, warranties, indemnities and similar rights in favor of the 

Company or any Ownership Entity with respect to any of the Loans; (vii) all rights of the 

Company or any Ownership Entity under the Related Agreements; and (viii) all rights of the 

Initial Member, SFG or the Failed Bank to any Deficiency Balances (as defined in the 

Contribution Agreement). 

"Loan Documents" shall have the meaning given in the Contribution Agreement. 

"Loan File" shall have the meaning given in the Contribution Agreement. 

"Loan Participation" shall mean any loan listed on the Loan Schedule subject to 

a shared credit, participation, co lending or similar inter-creditor agreement under which the 

16 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
Initial Member, SFG, the Failed Bank, or the Receiver was, or the Company is, the lead or agent 

financial depository institution or otherwise managed or held the credit or sold participations, or 

under which the Initial Member, SFG, the Failed Bank or the Receiver was, or the Company is, a 

participating financial depository institution or purchased participations in a credit managed by 

another Person. 

"Loan Participation Agreement" shall mean an agreement under which SFG or 

the Receiver was, or the Company is, the lead or agent financial depository institution or 

otherwise managed or held a shared credit or sold participations, or under which SFG or the 

Receiver was, or the Company is, a participating financial depository institution or purchased 

participations in a credit managed by another Person. 

"Loan Proceeds" shall mean all of the following: (i) any and all proceeds with 

respect to any or all ofthe Loans and any or all ofthe Underlying Collateral, including principal, 

interest, default interest, prepayment fees, premiums and charges, extension and exit fees, late 

fees, assumption fees, other fees and charges, insurance proceeds and condemnation payments 

(or any portion thereof) that are not used and disbursed to repair, replace or restore the related 

Underlying Collateral in accordance with the terms of the Loan Documents and the Ancillary 

Documents, and, with respect to any Acquired Property, operating cash flow realized from such 

Acquired Property net of Servicing Expenses, whether paid directly to the Company or payable 

to or distributed by an Ownership Entity; (ii) any and all proceeds from sales or other 

dispositions or refinancings of any or all of the Loans (including Acquired Property) net of 

Servicing Expenses incurred in connection with such sale or other disposition or refinancing; (iii) 

any proceeds from making a draw under any letter of credit or certificate of deposit held with 

respect to any Loan, provided that such draw is permitted by the terms ofthe Loan Documents; 

(iv) any recoveries from any Borrowers or Obligors of any kind or nature with respect to the 

Loans; and (v) any interest or other earnings accrued and paid on any of the amounts described 

in the foregoing clauses (i) through (iv) while held in the Collection Account or any other 

account other than (or the Defeasance Account); provided, however, that, with respect to 

proceeds of any Loan Participation (including as a result of any sale or other disposition of such 

Loan Participation or of Underlying Collateral relating thereto), the Loan Proceeds shall exclude 

any amounts payable to others under the applicable Loan Participation Agreement. 

"Loan Schedule" shall have the meaning given in the Contribution Agreement. 

"Losses" shall have the meaning given in Section 4.6(a). 

"Management Fee" shall mean, with respect to each Due Period, a fee payable to 

the Manager for each Loan for which the Servicing Transfer Date has occurred as of (or occurs 

on) the first day of such Due Period, which fee shall be calculated and earned as of the first day 

of such Due Period (and payable on the applicable Distribution Date for such Due Period in 

accordance with the Custodial and Paying Agency Agreement), and shall be in the amount 

determined by multiplying (i) the adjusted Unpaid Principal Balance ofsuch Loans calculated as 

ofthe first day ofsuch Due Period by (ii) one-halfof one percent (0.50% ), and by (iii) a fraction, 

the numerator of which is the number of days in the respective Due Period and the denominator 

of which is three hundred sixty (360). For purposes of clarification, in no event shall any 

Servicing Expenses be included in the determination of the Unpaid Principal Balance for 

17 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
purposes of calculation of the Management Fee, notwithstanding any provisions of the Loan 

Documents that would permit or require any such Servicing Expenses to be treated as advances 

(or otherwise as part ofthe principal amount of any such Loan). 

"Manager" shall have the meaning given in Section 3.1(a). 

"Members" shall mean (i) the Person from time to time constituting the "Initial 

Member" in accordance with this Agreement, and (ii) from and after the Closing Date, the 

Person from time to time constituting the "Private Owner" in accordance with this Agreement, in 

each case so long as such Person remains a member of the Company. For purposes of 

clarification, references in this Agreement to the term "member" (lowercase) shall mean a 

"member" as such term is defined in the Act. 

"Member Schedule" shall mean the schedule attached hereto (and hereby 

incorporated in this Agreement) as Annex I, as amended, restated, supplemented or otherwise 

modified from time to time. 

"MERS" shall mean Mortgage Electronic Registration Systems, Incorporated. 

"MERS® System" shall mean the MERSCORP, Inc. mortgage electronic registry 

system, as more particularly described in the MERS Procedures Manual (a copy of which is 

attached as an exhibit to the Electronic Tracking Agreement). 

"Modification" shall mean any extension, renewal, substitution, replacement, 

supplement, amendment or modification of any agreement, certificate, document, instrument or 

other writing, whether or not contemplated in the original agreement, document or instrument. 

"Monthly Adjusted Annualized Yield" is (i) for purposes ofthe First Incentive 

Threshold Event, equal to 1.8769 percent, derived as follows: (1 + Annualized Yield 

Threshold)1112 - 1 or (1 + 0.25)l/12 - 1, where the Annualized Yield Threshold is 25%, and (ii) for 

purposes of the Second Incentive Threshold Event, equal to 2.5324 percent, derived as follows: 

(1 + Annualized Yield Threshold)1112 - 1 or (1 + 0.35)1112 - 1, where the Annualized Yield 

Threshold is 35%. 

"Monthly Report" shall mean a report in electronic format in the form set forth 

in Exhibit B hereto, which report shall be prepared and distributed by the Manager in accordance 

with Section 7 .4(b). 

"Net Income and Net Loss" shall mean, for each Fiscal Year or other period, the 

taxable income or loss of the Company, or particular items thereof, determined in accordance 

with the accounting method used by the Company for federal income tax purposes with the 

following adjustments: (a) all items of income, gain, loss, deduction or expense specially 

allocated pursuant to this Agreement (including pursuant to Sections 6.2(b)(i) through (iv)) shall 

not be taken into account in computing such taxable income or loss; (b) any income of the 

Company that is exempt from federal income taxation and not otherwise taken into account in 

computing the taxable income of the Company shall be added to such taxable income or loss; 

(c) if the Book Value of any asset differs from its adjusted tax basis for federal income tax 

18 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
purposes, any gain or loss resulting from a disposition of such asset shall be calculated with 

reference to such Book Value; (d) upon an adjustment to the Book Value of any asset pursuant to 

the definition of Book Value, the amount of the adjustment shall be included as gain or loss in 

computing such Net Income or Net Loss; (e) if the Book Value of any asset differs from its 

adjusted tax basis for federal income tax purposes, the amount of depreciation, amortization or 

cost recovery deductions with respect to such asset for purposes of determining Net Income or 

Net Loss shall be an amount which bears the same ratio to such Book Value as the federal 

income tax depreciation, amortization or other cost recovery deductions bears to such adjusted 

tax basis (provided that if the federal income tax depreciation, amortization or other cost 

recovery deduction is zero, the Tax Matters Member may use any reasonable method for 

purposes of determining depreciation, amortization or other cost recovery deductions in 

calculating Net Income or Net Loss); and (f) except for items in (a) above, any expenditures of 

the Company not deductible in computing taxable income or loss, not properly capitalizable and 

not otherwise taken into account in computing Net Income or Net Loss pursuant to this 

definition, shall be treated as deductible items. 

"Note" shall have the meaning given in the Contribution Agreement. 

"Obligor" shall mean (i) any guarantor of all or any portion of any Loan or all or 

any of any Borrower's obligations set forth and described in the Loan Documents or (ii) any 

other Person (other than a Borrower, the lender(s) and any administrative or other agent) that is 

obligated pursuant to the Loan Documents with respect to a Loan, and shall include the guarantor 

under any completion guaranty or similar document. 

"Original LLC Operating Agreement" shall have the meaning given in the 

recitals. 

"Ownership Entity" shall mean a Single Purpose Entity that is a Subsidiary of 

the Company, whether contributed by the Initial Member on the Clo!)ing Date or formed or 

acquired by the Company thereafter; provided, that, with respect to any entity transferred to the 

Company on the Closing Date pursuant to the Contribution Agreement that is not a Single 

Purpose Entity as of such date, any such entity shall be deemed to be an Ownership Entity; 

provided, further, that, the Company and the Manager shall take all necessary and appropriate 

actions to cause such entity to become a Single Purpose Entity as promptly as possible after the 

Closing. 

"Participated Loan" shall mean a Loan originated by the Initial Member, SFG or 

any oftheir predecessors-in-interest as lead lender, a portion ofwhich was participated to one (1) 

or more Persons and with respect to which the Initial Member, SFG or any oftheir predecessorsin-interest is the lead lender. 

"Paying Agent" shall mean have the meaning given in Section 3. 7. 

"Percentage Interest" shall mean, with respect to the LLC Interest held by the 

Initial Member prior to the Closing Date, one hundred percent (1 00%) and, with respect to the 

LLC Interests held by the Initial Member and Private Owner on and after the Closing Date, as set 

forth in Section 6.6(b)(ii). 

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Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Permitted Disposition" shall have the meaning given in Section 8.1. 

"Permitted Investments" shall have the meaning given in the Custodial and 

Paying Agency Agreement. 

"Person" shall mean any individual, corporation, partnership (general or limited), 

limited liability company, limited liability partnership, firm, joint venture, association, jointstock company, trust, estate, unincorporated organization, governmental or regulatory body or 

other entity. 

"Plan Asset Regulation" shall have the meaning given in Section 10.1 (r). 

"Pre-Approved Charges" shall have the meaning given in the Contribution 

Agreement. 

"Previously Approved Matters" shall have the meaning given in Section 2. 7. 

"Prior Servicer" shall have the meaning given in Section 12.1(b)(xiii). 

"Priority of Payments" shall have the meaning given in the Custodial and Paying 

Agency Agreement. 

"Private Owner" shall have the meaning given in the preamble. 

"Private Owner LLC Interest" shall mean, (i) the limited liability company 

interests in the Company held by the Private Owner, including the rights to share in the income, 

gain, loss, deductions and credits of, and the right to receive distributions from, the Company, 

(ii) all other rights, benefits and privileges enjoyed by the Private Owner (under the Act, this 

Agreement or otherwise) in its capacity as a Member, including rights to vote, consent and 

approve, and (iii) all other rights, benefits, privileges and claims (whether known or unknown) of 

the Private Owner under, or arising under, this Agreement. 

"Private Owner Obligations" shall have the meaning given in Section 3.13(c). 

"Private Owner Pledged Account" shall mean a segregated trust or custodial 

account ofthe Private Owner established and maintained under the Custodial and Paying Agency 

Agreement (as the "Private Owner Pledged Account" defined therein) at a branch of the Paying 

Agent for the sole purpose of holding the Required Cash Collateral (as defined therein), which 

account is and remains pledged to (and under the control of) the Initial Member (for itself and for 

the benefit of the Company and the Indemnified Parties) as collateral for the Private Owner 

Obligations. 

"Private Owner Pledged Account Control Agreement" shall mean that certain 

Account Control Agreement, dated as of the date hereof, among the Private Owner, the Paying 

Agent and the Initial Member, with respect to the Private Owner Pledged Account, as the same 

shall be amended, supplemented or otherwise modified from time to time. 

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Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Property" shall mean any property contributed to, acquired by or otherwise 

owned by the Company, including, without limitation, any real or personal, tangible or intangible 

property, including but not limited to any legal or equitable interest in such property, ownership 

interests in entities owning real or personal property, and money. 

"Purchase Money Notes" shall have the meaning given in the recitals. 

"Purchase Money Notes Defeasance Date" shall mean the date on which the 

Defeasance Account has been fully funded pursuant to the terms of the Custodial and Paying 

Agency Agreement (in an amount sufficient to repay all obligations with respect to the Purchase 

Money Notes in full) such that no further funds are be required to be deposited therein on any 

subsequent Distribution Date pursuant to the Custodial and Paying Agency Agreement. 

"Purchase Money Notes Guaranty" shall have the meaning given in the recitals. 

"Purchase Money Notes Guarantor" shall have the meaning given in the 

recitals. 

"Purchaser Eligibility Certification" shall mean, (i) with respect to the Private 

Owner, any Purchaser Eligibility Certification delivered by the Private Owner or any of its 

Affiliates to the Receiver in connection with the transactions contemplated in this Agreement 

and the Ancillary Documents, including the Purchaser Eligibility Certification delivered by the 

Private Owner to the Receiver on or about the Closing Date, and, (ii) with respect to any 

Permitted Disposition (and the applicable transferee in connection therewith), a Purchaser 

Eligibility Certification in substantially the form of the Purchaser Eligibility Certification 

referenced in item (i), with such changes as the Initial Member may require based on changes to 

such form ofPurchaser Eligibility Certification as maintained by the FDIC. 

"Qualified Custodian" shall mean any Person that (i) is a bank, trust company or 

title insurance company subject to supervision and examination by any federal or state regulatory 

authority, (ii) is experienced in providing services of the type required to be performed by the 

Custodian under the Custodial and Paying Agency Agreement, (iii) is qualified and licensed to 

do business in each such jurisdiction to the extent required unless and to the extent the failure to 

be so qualified or licensed will not have a material adverse effect on the Custodian or the ability 

of the Custodian to perform its obligations under the Custodial and Paying Agency Agreement, 

(iv) is not prohibited from exercising custodial powers in any jurisdiction in which the Custodial 

Documents are or will be held, (v) has combined capital and surplus of at least $50,000,000 as 

reported in its most recent report of condition, (vi) has the facilities to safeguard the Loan 

Documents and other Custodial Documents as required by the Custodial and Paying Agency 

Agreement, (vii) is not an Affiliate of the Company or the Servicer, and (viii) is acceptable to 

and approved by the Initial Member (such approval not to be unreasonably withheld, delayed or 

conditioned). 

"Qualified Issuer" shall mean any FDIC-insured depository institution that is 

''well capitalized" as defined in 12 U.S.C. § 1831o (b)(1)(A), is in the business of issuing letters 

of credit and maintains offices in either or both of New York City, NY and Washington, D.C. 

where presentation and drawings on such letters of credit can be duly made. 

21 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Qualified Servicer" shall mean any Person that (i) is properly licensed and 

qualified to conduct business in each jurisdiction in which such licenses and qualifications to 

conduct business are necessary for the servicing ofthe Loans and management ofthe Underlying 

Collateral and the Acquired Property, (ii) has the management capacity and experience to service 

Loans ofthe type held by the Company, especially performing and non-performing construction 

loans secured by hotels or commercial properties, as applicable, including the number and types 

of loans serviced, and the ability to track, process and post payments, and to furnish tax reports 

to borrowers, to monitor construction and to approve and disburse construction draws, (iii) either 

(x) has an Acceptable Rating or (y) is approved by and continues to be acceptable to the Initial 

Member in its sole discretion, and (iv) in the event any ofthe serviced Loans are (or are required 

pursuant to the terms hereofto be) registered on the MERS® System, is a member ofMERS. 

"Qualified Transferee" shall have the meaning given in Section 1 0.1. 

"Qualifying Cash Collateral" shall have the meaning given in Section 3.13(d). 

"Qualifying Letter of Credit" shall mean an irrevocable standby letter of credit, 

substantially in the form ofExhibit D hereto (or in such other form as may be acceptable to, and 

approved in writing by, the Initial Member), duly issued by an Issuing Bank that is, as ofthe date 

of issuance thereof, a Qualified Issuer and delivered to the Initial Member, drawable at such 

Issuing Bank's offices in New York City, NY or Washington, D.C., and having an initial term of 

one (1) year with automatic renewals thereafter (without amendment except for extension ofthe 

then current expiry date by an additional year) until the Initial Member has delivered written 

notice to the Issuing Bank to the effect that such Qualifying Letter of Credit is being released in 

its entirety. 

"Receiver" shall have the meaning given in the recitals. 

"Regulation AB" shall mean the regulations at 17 C.F.R. §§229.1100, et seq., as 

the same may be amended from time to time. 

"Reimbursable Company Administrative Expenses" shall mean (i) reasonable 

fees of outside auditors in connection with annual audits of the Company (and the Ownership 

Entities); and (ii) licensing, filing, membership and similar fees paid to applicable authorities or 

organizations (including MERS) in connection with obtaining and maintaining applicable 

Company (or Ownership Entity) licenses, registrations or memberships (including the 

Company's MERS membership) or with the preservation (and eventual dissolution) of the 

Company's (or any Ownership Entity's) existence in accordance herewith (including for 

purposes of compliance with Section 4.3 hereof). For purposes of clarification, in no event shall 

Reimbursable Company Administrative Expenses include fees in connection with audits, 

licenses, filings or memberships ofor with respect to the Manager, the Servicer, any Subservicer 

or any other Person (other than the Company and the Ownership Entities). 

"Reimbursement, Security and Guaranty Agreement" shall mean that certain 

Reimbursement, Security and Guaranty Agreement dated as of the Closing Date among the 

FDIC, acting in its corporate capacity and as Receiver and as Collateral Agent and as the 

Revolver Lender, the Company, and the guarantors party thereto. 

22 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Related Agreement" shall mean (i) any agreement, document or instrument 

(other than the Notes and Underlying Collateral Documents) relating to or evidencing any 

obligation to pay or securing any Loan (including any equipment lease, letter of credit, bankers' 

acceptance, draft, system confirmation of transaction, loan history, affidavit, general collection 

information, and correspondence and comments relating to any obligation), (ii) any agreement 

relating to real property or rights in or to any real property (including leases, tenancies, 

concessions, licenses or other rights of occupancy or use and security deposits related thereto), 

(iii) any collection, contingency fee, and Tax and other service agreements (including those 

referred to in Section 4.2 ofthe Contribution Agreement) that are specific to the Loans (or any of 

them) and that are assignable, (iv) any letter of assurance, letter of credit or similar instrument 

evidencing an obligation of SFG, the Failed Bank, the Initial Member, the Company or any 

Ownership Entity that was issued for the benefit of any Person and relates in any way to a Loan 

or the acquisition, development or construction of any project with respect to which the proceeds 

of such Loan were used or were intended to be used, and (v) any interest rate swap arrangement 

between the Borrower, SFG and the Failed Bank, the Initial Member or the Company (in each 

case as the applicable lender, agent or other creditor under the Loan) that relates to any Loan. 

"Related Party" shall mean with respect to any Person, any party related to such 

Person in the manner delineated in 26 U.S.C.A. § 267(b) and the regulations promulgated 

thereunder, as such Law and regulations may be amended from time to time. 

"Related Party Agreement" shall have the meaning given in Section 3.5. 

"Related Persons" shall have the meaning given in Section 4.5. 

"REO Property" shall mean any real property (and related personal property) 

included in the Acquired Property. 

"Restricted Servicer Change of Control" shall mean any Change of Control 

with respect to the Servicer that has not been approved in writing by the Manager and the Initial 

Member (which approval shall not be unreasonably withheld). 

"Revolver" shall have the meaning given in the recitals. 

"Revolver Documents" shall mean the Revolving Credit Agreement and all other 

agreements, instruments and other documents evidencing and/or securing the Revolver. 

"Revolver Lender" shall have the meaning given in the recitals. 

"Revolving Credit Agreement" shall have the meaning given in the recitals. 

"Second Incentive Threshold Event" shall have the meaning given m 

Section 6.6(b)(iii). 

"Secured Assets" shall have the meaning given in Section 3.13(c). 

"Securities Act" shall mean Securities Act of 1933, as amended. 

23 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
"Servicer" shall mean have the meaning given in Section 12.3(a). 

"Servicing Agreement" shall mean, initially, the Servicing Agreement dated as 

of the date hereof, by and between the Manager (in its individual capacity) and Midland Loan 

Services, Inc., and thereafter any replacement agreement entered into between the Manager (in 

its individual capacity) and the Person designated as the Servicer therein, which servicing 

agreement shall satisfy the requirements of Section 12.1(b) and shall be acceptable to the Initial 

Member in all respects. 

"Servicing Exuenses" shall mean all customary and reasonable out-of-pocket 

fees, costs, expenses and indemnified amounts incurred in connection with servicing the Loans 

and the Acquired Property, including (i) any and all out-of-pocket fees, costs, expenses and 

indemnified amounts which a Borrower is obligated to pay to any Person or to reimburse to the 

lender, in either case, pursuant to the applicable Note or any other Loan Documents, including 

Escrow Advances, (ii) any and all reasonable out-of-pocket expenses necessary to protect or 

preserve the value ofthe Underlying Collateral or the priority ofthe Liens and security interests 

created by the Loan Documents relating thereto, including Taxes, insurance premiums (including 

forced place insurance premiums), payment of ground rent, the costs of prevention of waste, 

repairs and maintenance, foreclosure expenses and legal fees and expenses relating to foreclosure 

or other litigation with respect to the Loans, (iii) any and all direct expenses related to the 

preservation, operation, management, leasing, and sale of the Acquired Property (including real 

estate brokerage fees), (iv) Reimbursable Company Administrative Expenses, (v) subject to 

Section 4.6 (and excluding any amounts or claims the Private Owner is required to bear or 

indemnify pursuant to such Section 4.6), to the extent not covered by any of clauses (i) through 

(iv), legal fees and expenses (including judgments, settlements and reasonable attorneys fees) 

incurred by the Company (including to reimburse the Manager, including for the Manager's 

reimbursement ofthe Servicer, including for the Servicer's reimbursement of any Subservicer) in 

its (or the Manager's, the Servicer's or any Subservicer's) defense of claims asserted against the 

Company or any Ownership Entity (or the Manager, the Servicer or any Subservicer) that relate 

to one or more Loans or the conduct ofthe Business, and allege, as the basis for such claims, any 

act or omission of the Company or any Ownership Entity (or the Manager, the Servicer or any 

Subservicer) but only if (1) such claims are not attributable to any act or omission of the 

Company, the Manager, the Servicer or any Subservicer in a manner inconsistent with, or in 

violation of, the Servicing Standard or any of the provisions ofthis Agreement or any Ancillary 

Document, and (2) (x) such claims are decided and there are final non appealable orders or 

judgments (unless the Initial Member has agreed in writing that no appeal needs to be taken) in 

favor ofthe Company (and the Manager and the Servicer, to the extent any such claim has been 

asserted against the same) or if decided against the Company (or the Manager or the Servicer or 

any Subservicer) without any finding of bad faith, gross negligence or willful misconduct on the 

part of any of the foregoing or (y) there is entered into a final settlement of any such claim with 

the prior written consent of the Initial Member, (vi) subject to Section 4.6 of this Agreement, 

(x) expenses incurred in accordance with Section 4.5(c) of the Contribution Agreement and 

(y) expenses incurred in connection with any litigation (including any bankruptcy action) 

included in the Obligations (as such term is defined in the Contribution Agreement) and assumed 

pursuant to Section 4.5(a) or (b) or Section 4.6 ofthe Contribution Agreement, (vii) any and all 

fees, costs and expenses in connection with the registration of the Purchase Money Notes as 

24 

Structured Transaction Commercial 2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
described in Article 2 of the Custodial and Paying Agency Agreement, including the fees for the 

registration of the Purchase Money Notes with the Depository Trust Company, and (viii) the 

costs of preparing, negotiating and recording any REO Mortgage (as defined in the 

Reimbursement, Security and Guaranty Agreement, including mortgage recording taxes) and the 

costs associated with the additional documentation required pursuant to Section 8.11 of the 

Reimbursement, Security and Guaranty Agreement, in each case pursuant to Section 8.11 of the 

Reimbursement, Security and Guaranty Agreement; provided, however, that Servicing Expenses 

shall not include any (A) Excluded Expenses or (B) costs or expenses to be funded (or which, 

assuming relevant conditions are satisfied, could be funded) using the proceeds available under 

the Revolver. 

"Servicing Obligations" shall have the meaning given in Section 12.1 (a). 

"Servicing Standard" shall have the meaning given in Section 12.l(a). 

"Servicing Transfer Date" shall have the meaning given in the Contribution 

Agreement. 

"SFG" shall mean Specialty Finance Group, LLC, a Georgia limited liability 

company. 

"Single Purpose Entity" shall mean 

(A) with respect to an Ownership Entity, a corporation or limited liability 

company that (i) is organized under the Laws of any state ofthe United States or the District of 

Columbia, (ii) the equity of which is uncertificated, (iii) has no material assets other than the 

Acquired Property, (iv) is not engaged in any business operations except in connection with the 

Acquired Property and conducted pursuant to terms of this Agreement and the Ancillary 

Documents, ( v) does or causes to be done all things necessary to preserve and keep in full force 

and effect its existence, rights (charter and statutory) and franchises, (vi) at all times holds itself 

out to the public as a legal entity separate from any other Person (including any Mfiliate), (vii) 

except as expressly contemplated by this Agreement, or the Ancillary Documents, does not 

commingle its assets with assets of any other Person, (viii) conducts its business in its own name 

and strictly complies with all organizational formalities to maintain its separate existence, (ix) 

maintains an arm's length relationship with any Affiliate upon terms that are commercially 

reasonable and on terms no less favorable to it than could be obtained in a comparable arm's 

length transaction with an unrelated Person, (x) has no Debt other than as expressly permitted by 

the Ancillary Documents and (xi) except as otherwise consented to in writing by the Initial 

Member, is a pass-through entity for Tax purposes; 

(B) with respect to the Company, a limited liability company that (i) is 

organized under the Laws of Delaware, (ii) the equity of which is uncertificated, (iii) has no 

material assets other than the Loans, including the Underlying Collateral and Ownership Entities, 

and its rights, title and interest in, to, and under this Agreement and the Ancillary Documents, 

(iv) is not engaged in any significant business operations except in connection with the Loans, 

including the Underlying Collateral and Ownership Entities and conducted in accordance with 

the terms of this Agreement and the Ancillary Documents, (v) does or causes to be done all 

25 

Structured Transaction Commercia12010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
things necessary to preserve and keep in full force and effect its existence, rights (charter and 

statutory) and franchises, (vi) at all times holds itself'out to the public as a legal entity separate 

from any other Person (including any Affiliate), (vii) except as expressly contemplated by this 

Agreement or by any other Ancillary Documents, does not commingle its assets with assets of 

any other Person, (viii) conducts its business in its own name and strictly complies with all 

organizational formalities to maintain its separate existence, (ix) maintains an arm's length 

relationship with any Affiliate upon terms that are commercially reasonable and on terms no less 

favorable to it than could be obtained in a comparable arm's length transaction with an unrelated 

Person other than as expressly provided by this Agreement and the Ancillary Documents, (x) has 

no Debt other than as provided in this Agreement and the Ancillary Documents and (xi) except 

as otherwise consented to in writing by the Initial Member, is a pass-through entity for Tax 

purposes; and 

(C) with respect to the Private Owner (or any Qualified Transferee thereof), a 

corporation or limited liability company that (i) is organized under the Laws of any state of the 

United States or the District of Columbia, (ii) the equity of which is uncertificated, (iii) has no 

material assets other than cash and cash equivalents and its rights, title and interest in, to, and 

under this Agreement and the Ancillary Documents, (iv) is not engaged in any significant 

business operations except in connection with the performance of its obligations under this 

Agreement and the Ancillary Documents, (v) does or causes to be done all things necessary to 

preserve and keep in full force and effect its existence, rights (charter and statutory) and 

franchises, (vi) at all times holds itself out to the public as a legal entity separate from any other 

Person (including any Affiliate), (vii) except as expressly contemplated by this Agreement or the 

Ancillary Documents, does not commingle its assets with assets of any other Person, (viii) 

conducts its business in its own name and strictly complies with all organizational formalities to 

maintain its separate existence, (ix) maintains an arm's length relationship with any Affiliate 

upon terms that are commercially reasonable and on terms no less favorable to it than could be 

obtained in a comparable arm's length transaction with an unrelated Person other than as 

otherwise expressly provided by this Agreementand the Ancillary Documents, (x) has no Debt 

and (xi) except as otherwise consented to in writing by the Initial Member, is a pass-through 

entity for Tax purposes. 

"Site Assessment" shall have the meaning given in Section 12.14®. 

"Specified Parent" shall mean (i) with respect to the Private Owner, (x) unless 

clause (i)(y) is applicable, collectively and individually (A} Square Mile Partners III TE LP, a 

Delaware limited partnership and (B) Square Mile Partners III LP, a Delaware limited 

partnership, or (y) any other Person or Persons that the Private Owner and the Initial Member 

may agree from time to time shall be designated as the "Specified Parent" for purposes of this 

Agreement; and (ii) with respect to the Servicer shall mean any Person or Persons that the 

Manager and the Initial Member may agree from time to time shall be designated as the 

"Specified Parent" with respect to the Servicer; provided, that, for any such Servicer, the 

Manager shall cause its initial Specified Parent (as approved by Manager and the Initial Member) 

to be expressly specified in the applicable Servicing Agreement. 

"Subservicers" shall have the meaning given in Section 12.3(a). 

26 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0011 
"Subservicing Agreement" shall have the meaning given in Section 12.3(a). 

"Subsidiary" shall mean, with respect to any specified Person, each of (i) any 

other Person not less than a majority of the overall economic equity in which is owned, directly 

or indirectly through one of more intermediaries, by such specified Person, and (ii) without 

limitation of clause (i), any other Person who or which, directly or indirectly through one or 

more intermediaries, is Controlled by such specified Person (it being understood with respect to 

clause (i) that a pledge for collateral security purposes of an equity interest in a Person shall not 

be deemed to affect the ownership of such equity interest by the pledgor so long as such pledgor 

continues to be entitled, in all material respects, to all the income with respect to such equity 

interest). 

"Successor" shall mean, (i) with respect to a Member, any future Member which 

is a direct or indirect transferee (whether by Permitted Disposition, merger, consolidation or 

otherwise) of the LLC Interest of such Member; (ii) with respect to any former Member, the 

current Member which is the direct or indirect transferee (whether by Permitted Disposition, 

merger, consolidation or otherwise) of the LLC Interest of such former Member and (iii) with 

respect to the Initial Member, any Person that is a direct or indirect transferee (whether by 

Disposition, merger, consolidation or otherwise) of any of Initial Member's rights or interests 

under this Agreement or any other Ancillary Document. 

"Tax" shall mean any federal, state, county, local, or foreign tax, charge, fee, 

levy, duty, or other assessment, including any income, gross receipts, transfer, recording, capital, 

withholding, property, ad valorem, or other tax or governmental fee of any kind whatsoever, 

imposed or required to be withheld by any Governmental Authority having jurisdiction over the 

assessment, determination, collection, or other imposition of any Tax, including any interest, 

penalties and additions imposed thereon or with respect thereto. 

"Tax Matters Member" shall have the meaning given in Section 7.5. 

"Third Party Claim" shall have the meaning given in Section 4.6(a). 

"Threshold Increase Amount" as of any Distribution Date (and determined 

separately for purposes of the First Incentive Threshold Event and the Second Incentive 

Threshold Event) shall be equal to the product of (a) the applicable Incentive Threshold as ofthe 

preceding Distribution Date (or, in the case ofthe first Distribution Date, the Closing Date) and 

(b) the applicable Monthly Adjusted Annualized Yield. 

"Transferred LLC Interest Sale Agreement" shall have the meaning given in 

the recitals. 

"Transferred LLC Interest Sale Price" shall have the meaning given in the 

Transferred LLC Interest Sale Agreement. 

"Treasury Regulations" shall mean the regulations promulgated by the United 

States Department of the Treasury pursuant to and in respect of provisions of the Code, and all 

27 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
references to sections of the Treasury Regulations shall include any corresponding provision or 

provisions ofsucceeding, substitute, proposed or :fmal Treasury Regulations. 

"Underlying Collateral'' shall mean any and all real or personal property, 

whether tangible, intangible or mixed, securing or pledged to secure a Loan, including (i) any 

account, equipment, guarantee or contract right, equity, partnership or other interest that is the 

subject of any Underlying Collateral Document and (ii) as the context requires, Acquired 

Property, whether or not expressly specified. 

"Underlying Collateral Document" shall mean any pledge agreement, security 

agreement, personal, corporate or other guaranty, deed of trust, deed, trust deed, deed to secure 

Debt, mortgage, contract for the sale of real property, assignment, collateral agreement, stock 

power or other agreement or document of any kind, whether an original or a copy, whether 

similar to or different from those enumerated, (i) securing in any manner the performance or 

payment by any Borrower or any Obligor of its obligations or the obligations of any Borrower or 

any Obligor pursuant to any of the Loans or Notes evidencing the Loans, or (ii) evidencing 

ownership of any Acquired Property. 

"Uniform Commercial Code" shall mean the Uniform Commercial Code as in 

effect in any applicable jurisdiction, as amended from time to time. 

"Unpaid Principal Balance" shall mean, at any time, (a) when used in 

connection with multiple Loans, an amount equal to the aggregate then outstanding principal 

balance of such Loans, and (b) when used with respect to a single Loan, an amount equal to the 

then outstanding principal balance ofsuch Loan; provided, however, that: 

(i) with respect to any Loan Participation (and any related Acquired 

Property), the Unpaid Principal Balance of such Loan Participation shall include only the 

Company's (or, with respect any period prior to the effectiveness of the transfer of such Loan 

Participation to the Company on the Closing Date, the Initial Member's, the Receiver's, SFG's 

or the Failed Bank's, as applicable) allocable share thereof in accordance with the applicable 

Loan Participation Agreement; 

(ii) with respect to any Acquired Property that is included among the Loans on 

the Closing Date, the Unpaid Principal Balance of such Acquired Property shall initially be the 

amount set forth on the Loan Schedule, as adjusted to its Adjusted Cut-Off Date Unpaid 

Principal Balance (as defined in, and determinedpursuant to, the Contribution Agreement), and 

thereafter determined in the same manner as all other Acquired Property; 

(iii) in the case of a Loan for which some or all of the related Underlying 

Collateral has been converted to Acquired Property (including REO Property), until such time as 

the Acquired Property (or any portion thereof) is liquidated, the unpaid principal balance of such 

Loan shall be deemed to equal the amount ofthe unpaid principal balance ofsuch Loan (adjusted 

pro rata for debt forgiveness or retained indebtedness) at the time at which such Loan was 

converted to Acquired Property, plus, without duplication, any outstanding balance remaining on 

such Loan which is evidenced by a modification agreement or a replacement or successor 

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WDC99 1841479-7.084080.0017 
promissory note executed by the borrower, less the net proceeds of any sales of any portions of 

the Acquired Property effective after such conversion. 

(iv) the Unpaid Principal Balance with respect to any Acquired Property will 

be increased by the amount of, without duplication, (A) any Funding Draws (or equivalent 

advances by the Initial Member during the Interim Servicing Period under the Contribution 

Agreement or under the Revolver) applied with respect thereto in accordance herewith (or with 

the Contribution Agreement, as applicable), (B) any Servicing Expenses capitalized thereto in 

accordance with applicable Law to the extent that capitalizing such Servicing Expenses would 

have been permitted under the applicable Loan Documents prior to the conversion ofthe Loan to 

the Acquired Property, and (C) Discretionary Funding Advances with respect to such Acquired 

Property. 

"Unreimbursable Expense" shall have the meaning given in Section 4.6(e). 

"Working Capital Expenses" shall mean any Servicing Expenses, Pre-Approved 

Charges, Funding Draws (or permitted uses thereof, as the context may require), Management 

Fee, Interim Management Fee, Interim Servicing Fee or fees ofthe Custodian and Paying Agent. 

"i" shall mean lawful currency ofthe United States ofAmerica. 

1.2 Construction.Captions. Paragraph titles or captions contained in this Agreement 

are inserted only as a matter of convenience and for reference and in no way define, limit, extend 

or describe the scope of this Agreement or the intent of any provisions hereof. All Section and 

paragraph references contained herein shall refer to this Agreement unless otherwise specified. 

(b) References to Persons Exclusive. References to "Affiliates" or 

"Subsidiaries" of a specified Person refer to, and include, only other Persons which from time to 

time constitute "Mfiliates" or "Subsidiaries", as the case may be, ofsuch specified Person, and do 

not include, at any particular time, other Persons that may have been, but at such time have ceased 

to be, "Affiliates", or "Subsidiaries", as the case may be, of such specified Person, except to the 

extent that any such reference specifically provides otherwise. A reference to a Member or other 

Person, in and ofitself, does not, and shall not be deemed to, refer to or include any other Person 

having an interest in a Member or other Person (such as, without limitation, any stockholder or 

member of or partner in a Member, or other Person). 

(c) Use of"Or". The term "or" is not exclusive. 

(d) References to Laws. A reference in this Agreement to a Law includes any 

amendment, modification or replacement to such Law. 

(e) Use of Accounting Terms. Accounting terms used herein shall have the 

meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to 

which they refer. 

(f) References to Documents. References to any document, instrument or 

agreement (i) shall be deemed to include all appendices, exhibits, schedules and other attachments 

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thereto and all documents, instruments or agreements issued or executed in replacement thereof, 

and (ii) shall mean such document, instrument or agreement, or replacement thereof, as amended, 

modified and supplemented from time to time in accordance with its terms and as the same is in 

effect at any given time. 

(g) Use of"Herein". Unless otherwise specified, the words "hereof', "herein" 

and "hereunder" and words of similar import when used in this Agreement shall refer to this 

Agreement as a whole and not to any particular provision ofthis Agreement. 

(h) Use of "Including." The words "include" and "including" and words of 

similar import when used in this Agreement are not limiting and shall be construed to be followed 

by the words "without limitation", whether or not they are in fact followed by such words. 

(i) Use of "During." The word "during" when used in this Agreement with 

respect to a period oftime shall be construed to mean commencing at the beginning ofsuch period 

and continuing until the end ofsuch period. 

ARTICLE II 


Organization ofthe Company 


2.1 Formation; Continuation and Admission ofMembers. 

(a) On May 6, 2010, the Receiver caused the Certificate of Formation of the 

Company, in the form attached as Exhibit A hereto (the "Certificate"), to be filed in the office of 

the Secretary of State of the State of Delaware. The Certificate shall not be amended except to 

change the registered agent or office ofthe Company. 

(b) The Company shall continue as a limited liability company under the Act 

and in accordance with the further terms and provisions ofthis Agreement. 

(c) The Initial Member previously was, and the Private Owner hereby agrees 

to be, and is, admitted as a member ofthe Company such that, as of the Closing Date, the Initial 

Member and the Private Owner are the only members of the Company. Until the Company is 

dissolved pursuant to Section 9.1, and subject to the rights of the Initial Member under Section 

1~.5, the Company shall at all times have two, and only two (2), members. 

2.2 Name. 

(a) The name ofthe Company shall be "2010-1 SFG VENTURE LLC". 

(b) The Business shall be conducted only under the name ofthe Company or 

such other name or names that comply with applicable Law as the Members may select from time 

to time. 

2.3 Organizational Contributions and Related Actions. 

(a) Prior to the execution of this Agreement, pursuant to the terms of the 

Contribution Agreement, the Initial Member: 

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WDC99 1841479-7.084080.0017 
(i) made a Capital Contribution to the Company in the form of certain 

Loans (the "Initial Member Capital Contribution"); and 

(ii) sold and assigned to the Company, and the Company purchased 

and accepted such assignment from the Initial Member, Loans (other than that 

portion of the Loans comprising the Initial Member Capital Contribution) and 

assumed the Obligations (as defmed in the Contribution Agreement) in exchange 

for the Purchase Money Notes. 

(b) Contemporaneously with the execution of this Agreement, pursuant to the 

terms of the Transferred LLC Interest Sale Agreement, the Private Owner is acquiring from the 

Initial Member an LLC Interest representing forty percent ( 40%) of the issued and outstanding 

limited liability company interests in the Company for the Transferred LLC Interest Sale Price in 

accordance with the terms thereof. 

(c) Upon the consummation of the transactions contemplated in 

Sections 2.3(a) and (b) and prior to the occurrence of the First Incentive Threshold Event as 

described in Section 6.6(b)(iii), the Private Owner shall own forty percent (40%) ofthe issued and 

outstanding LLC Interests and the Initial Member shall own sixty percent (60%) ofthe issued and 

outstanding LLC Interests. Following the occurrence of the First Incentive Threshold Event and 

prior to the occurrence of the Second Incentive Threshold Event as described in Section 

6.6(b)(iii), the Private Owner shall own thirty-five percent (35%) of the issued and outstanding 

LLC Interests and the Initial Member shall own sixty-five percent (65%) of the issued and 

outstanding LLC Interests. Following the occurrence of the Second Incentive Threshold Event, 

the Private Owner shall own thirty percent (30%) ofthe issued and outstanding LLC Interests and 

the Initial Member shall own seventy percent (70%) ofthe issued and outstanding LLC Interests. 

2.4 Registered Office; Chief Executive Office. The Company shall maintain a 

registered office and registered agent in Delaware to the extent required by the Act, which office 

and agent shall be as determined by the Manager from time to time and which shall be set forth 

in the Certificate. Initially (and until otherwise determined by the Manager), the registered office 

in Delaware shall be, and the name and address of the Company's registered agent in Delaware 

shall be, as specified in the Certificate as originally filed, which may be amended by the 

Manager from time to time as necessary to correctly reflect the name and address of the 

Company's registered agent. The chief executive office ofthe Company shall be located at 450 

Park A venue, New York, New York 10022, or such other place as shall be determined by the 

Manager from time to time. 

2.5 Puroose; Duration. 

(a) The purpose of the Company is to engage in and conduct the Business, 

directly or, to the extent specifically authorized in this Agreement, indirectly through other 

Persons. The Company shall not form or have any Subsidiaries other than Ownership Entities or 

as otherwise authorized in or pursuant to this Agreement. The Company shall have all powers 

necessary, desirable or convenient, or which the Manager deems necessary, desirable or 

convenient, and may engage in any and all activities necessary, desirable or convenient, or which 

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the Manager deems necessary, desirable or convenient, in each case to accomplish the purposes of 

the Company or consistent with the furtherance thereof. 

(b) Subject to Section 9.1, the Company shall continue m existence 

perpetually. 

2.6 Single Purpose Entitv: Limitations on Company's Activities. Except to the extent 

expressly permitted by this Agreement or the Ancillary Documents, the following shall govern 

for so long as the Company is in existence: 

(a) Subject to Section 9.1, the Manager shall cause the Company to do or 

cause to be done all things necessary to preserve and keep in full force and effect its existence, 

rights (charter and statutory) and franchises, and the Manager also shall cause the Company to: 

(i) maintain financial statements separate from any Affiliate; 

provided, however, that each Ownership Entity shall be consolidated in the 

financial statements of the Company; and provided, further, that the assets, 

liabilities and results of operations of the Company may be included in the 

consolidated :fmancial statements of its parent or ultimate parent in accordance 

withGAAP; 

(ii) at all times hold itself out to the public as a legal entity separate 

from the Members and any other Person; 

(iii) file its own Tax returns, as may be required under applicable Law, 

and pay any Taxes so required to be paid under applicable Law; 

(iv) except as contemplated hereby or by the Ancillary Documents, 

segregate its assets and not commingle its assets with assets of any other Person; 

(v) conduct the Business in its own name and strictly comply with all 

organizational formalities to maintain its separate legal existence; 

(vi) pay its own liabilities only out ofits own funds; 

(vii) maintain an arm's length relationship with any Affiliate upon 

terms that are commercially reasonable and that are no less favorable to the 

Company than could be obtained in a comparable arm's length transaction with an 

unrelated Person; 

(viii) subject at all times to Section 3.3, pay the salaries of its own 

employees, if any, and maintain, or cause to be maintained, a sufficient number of 

employees, if any, in light ofthe contemplated operation ofthe Business; 

(ix) allocate, fairly and reasonably, shared expenses, including any 

overhead for shared office space; 

(x) use separate stationery, invoices and checks; 

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(xi) correct any known misunderstanding regarding its separate 

identity; and 

(xii) maintain adequate capital in light of its contemplated business 

purpose, transactions and liabilities, ifany. 

(b) Neither the Manager nor the Private Owner may cause or permit a 

Dissolution Event or an Insolvency Event to occur with respect to the Company or any of its 

Subsidiaries to which the Initial Member has not provided its written consent, and neither the 

Manager nor the Private Owner may, without the written consent ofthe Initial Member, cause or 

permit the Company or any ofits Subsidiaries to: 

(i) except as contemplated hereby or by the Ancillary Documents, 

hold out its credit or assets as being available to satisfy the obligations of others, 

or become bound by any Guarantee of, or otherwise obligate itselfwith respect to, 

the Debts of any other Person, including any Affiliate; 

(ii) except as contemplated hereby or by the Ancillary Documents 

(including the Revolver and the Purchase Money Notes (and any promissory note 

reissued in respect thereof pursuant to Section 2.8 of the Custodial and Paying 

Agency Agreement), the Purchase Money Notes Guaranty, and the 

Reimbursement, Security and Guaranty Agreement), pledge its assets for the 

benefit of any other Person, make any loans or advances to any other Person, or 

encumber or permit any Lien to be placed on the Loans, the Underlying 

Collateral, or the proceeds therefrom; provided that the Company may invest its 

funds in interest bearing accounts held by any bank that is not its Affiliate and 

make advances in accordance with Article XII; 

(iii) own any assets, or engage in any business, unrelated to the 

Business; 

(iv) incur, create or assume any Debt other than the Purchase Money 

Notes (and any promissory note reissued in respect thereof pursuant to Section 2.8 

of the Custodial and Paying Agency Agreement), any Discretionary Funding 

Advance, any advances under the Revolver, any Excess Working Capital 

Advance or as otherwise expressly permitted hereby or by the Ancillary 

Documents to which the Initial Member is a party; 

(v) make or permit to remain outstanding any loan or advance to, or 

own or acquire any stock or securities of, any Person (other than an Ownership 

Entity), except that the Company may invest in those investments permitted under 

the Ancillary Documents and may make any advance required or expressly 

permitted to be made pursuant to any provisions of Article XII or the Ancillary 

Documents and permit the same to remain outstanding in accordance with such 

provisions; 

(vi) acquire any LLC Interest (or any portion of any LLC Interest); 

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(vii) consolidate or merge with or into any other Person, convert into 

any other type of Person (including into a limited liability company organized 

under the laws of a jurisdiction other than the State of Delaware), transfer, 

domesticate or continue the Company or any Subsidiary ofthe Company pursuant 

to Section 18-213 of the Act, or take any other action for which the consent of 

some or all of the members of a limited liability company is (unless otherwise 

provided in the limited liability company agreement of such limited liability 

company) required by the Act; 

(viii) convey or transfer its properties and assets as an entirety or 

substantially as an entirety to any Person, transfer its ownership interests, or 

engage in any dissolution or liquidation, except in each case to the extent such 

activities are expressly permitted pursuant to any provision of this Agreement or 

the Ancillary Documents (and subject to obtaining any approvals required 

hereunder or thereunder, as applicable); 

(ix) except as contemplated or permitted by this Agreement, form, 

acquire or, subject to the second proviso of the definition of Ownership Entity, 

hold any Subsidiary other than an Ownership Entity or form any trust for the 

purpose ofholding Loans for the benefit ofthe Company; or 

(x) breach or violate any representation, warranties, covenants or 

agreements contained in any ofthe Ancillary Documents. 

(c) The failure of the Company, any Member and/or the Manager to comply 

with any ofthe foregoing covenants or any other covenants contained in this Agreement shall not 

affect the status ofthe Company as a separate legal entity or the limited liability ofthe Members. 

2.7 Ratification of Certain Actions. Prior to the Closing Date, the Company 

previously approved (a) each ofthe Ancillary Documents, (b) the issuance ofthe LLC Interests, 

and (c) the taking of all action reasonably necessary to effect the foregoing approvals, including 

without limitation the execution and performance of this Agreement and the Ancillary 

Documents (the "Previously Approved Matters"). The Previously Approved Matters, and all 

actions taken by the Company in furtherance of the Previously Approved Matters, are hereby 

ratified, approved and confirmed in their entirety by each Member and the Manager is hereby 

authorized and directed to execute and deliver, for and on behalf of the Company, any and all 

documents as may now or hereafter be reasonably required in order to effect the Previously 

Approved Matters. 

ARTICLE III 


Management and Operations ofthe Company 


3.1 Management ofthe Company's Affairs. 

(a) Subject to the terms and conditions ofthis Agreement, the management of 

the Company shall be vested exclusively in the Person appointed from time to time hereunder as 

the "Manager" ofthe Company (the "Manager"), which Manager may, but is not required to be, a 

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WDC99 1841479-7.084080.0017 
Member. Effective as ofthe Closing Date, the Private Owner is hereby appointed as the Manager. 

Subject to the terms and conditions ofthis Agreement, the Manager shall have full and exclusive 

power and discretion to, and shall, manage the business and affairs ofthe Company in accordance 

with this Agreement. The Private Owner may not resign as the Manager, may not Dispose of or 

delegate, in whole or in part, its rights, responsibilities or duties as the Manager to any other 

Person, and shall serve as Manager until such time as (i) the Private Owner's LLC Interest is 

Disposed of in accordance with the terms of this Agreement and the transferee is admitted as a 

Member of the Company and Successor to the Private Owner, in which case the transferee 

Member shall, effective upon such Disposition, be appointed as the "Manager" to the extent the 

Private Owner held such role immediately prior to such Disposition, (ii) the Private Owner is 

removed as the Manager by the Initial Member and replaced in accordance with Section 3.2 or 

Section 12.4 below; or (iii) the Company is dissolved, and the business and affairs of the 

Company are wound up, in accordance with the terms of this Agreement. The Manager shall 

devote such time to the affairs of the Company as is necessary to manage the Company as set 

forth in this Agreement. Without limitation of the foregoing, the Manager shall cooperate with 

the Tax Matters Member in all respects as reasonably requested by the Tax Matters Member, from 

time to time, in connection with the Tax Matters Member's performance of its obligations under 

this Agreement. The Private Owner (and any Successor to the Private Owner) hereby expressly 

acknowledges that (x) as it relates to its role as the Manager, this Agreement constitutes a personal 

services contract between the Private Owner and the Company, and (y) except as may otherwise 

expressly specified herein, it shall not be entitled to any salary, fees, reimbursement of costs or 

expenses, or other compensation with respect to its service as the Manager hereunder (including 

with respect to the Manager's Loan servicing and management obligations under Article XII). 

(b) Except as otherwise specifically provided in this Agreement and without 

limitation of the powers expressly granted to the Manager under any other provision of this 

Agreement, the authority, duties (including fiduciary duties) and functions ofthe Manager shall be 

identical to the authority, duties (including fiduciary duties) and functions ofthe board of directors 

and the officers of a corporation organized under the Delaware General Corporation Law (and not 

electing to be governed by subchapter XIV thereof). The Manager shall have no authority to take 

or authorize the taking of any action in contravention ofany express term ofthis Agreement. 

(c) No Person dealing with the Company or the Manager shall be required to 

determine, and any such Person may conclusively assume and rely upon, the authority of the 

Manager to execute any instrument or make any undertaking on behalf of the Company. No 

Person dealing with the Company or the Manager shall be required to determine any facts or 

circumstances bearing upon the existence of such authority. Without limitation of the foregoing, 

any Person dealing with the Company or the Manager is entitled to rely upon a certificate signed 

by the Manager as to: 

(i) the identity ofthe Members; 

(ii) the existence or non-existence of any fact or facts that constitute a 

condition precedent to acts by the Manager or are in any other manner germane to 

the affairs ofthe Company; 

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(iii) the identity of Persons who are authorized to execute and deliver 

any instrument or document ofor on behalf ofthe Company; or 

(iv) any act or failure to act by the Company or any other matter 

whatsoever involving the Company or the Members. 

(d) Notwithstanding anything to the contrary contained in this Agreement, the 

parties hereto acknowledge and agree that: 

(i) nothing contained in this Agreement creates any fiduciary duty or 

similar obligation owed by the Initial Member; 

(ii) the Private Owner and the Company each hereby expressly waives 

any fiduciary duties that may otherwise be deemed to be owed by the Initial 

Member to the Private Owner or the Company; and 

(iii) the Initial Member shall be entitled to act and exercise any right of 

approval or consent that it has under this Agreement in its interest, in its sole and 

absolute discretion, without regard to and against the interests of the Private 

Owner or the Company. 

(e) Unless and to the extent reimbursement is due under an express provision 

hereof or pursuant to a Related Party Agreement or any Ancillary Document, the Company shall 

not be liable for, and the Manager shall not seek reimbursement from the Company or any 

Member for, any expenses or costs incurred after the formation ofthe Company by the Manager 

and/or its Affiliates on behalf of or for the benefit ofthe Company. 

(f) This Section 3.1 is subject to any express requirement of direct Initial 

Member consent set forth elsewhere in this Agreement, including in Sections 2.6, 3.4, 3.8, tl, 

8.2, 8.8(a), 9.1, 12.3(g), and 12.7(b). Any purported action by the Company or the Manager 

requiring the consent of the Initial Member under this Agreement shall be null and void ab initio 

unless and until the Initial Member's consent is obtained. 

3.2 Removal of Manager. Upon an Event of Default (and so long as the Private 

Owner is then the Manager), the Initial Member may remove the Private Owner as the Manager 

and appoint a successor Manager in the sole discretion ofthe Initial Member in accordance with 

Section 12.4, whereupon such successor Manager shall immediately succeed to all, or such 

portion as the Initial Member and successor Manager agree, of the rights, powers, duties and 

obligations of the "Manager" hereunder, and the predecessor Manager shall promptly take such 

actions as may be reasonably requested by the Initial Member to facilitate the transition to such 

successor Manager. 

3.3 Employees and Services. After the Closing Date, the Manager shall cause to be 

made available to the Company, from time to time, employees, facilities and support services in 

a manner and to an extent reasonably required for it to fulfill its duties and obligations as the 

Manager and for the day-to-day operation of the Business, including the Manager's employees, 

facilities and support services. If necessary to meet the foregoing requirements, the Manager 

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shall enter into contractual arrangements to secure employees, facilities and support services 

from third parties (including its Affiliates); provided, however, that the Manager shall at all times 

provide for the servicing ofthe Loans through a Servicer under contract with the Manager (in its 

individual capacity) in accordance with Article XII and the safekeeping of the Notes and other 

Loan Documents by a Custodian under contract with the Company in accordance with the 

provisions of Section 3.7 below. Notwithstanding anything to the contrary contained in this 

Section 3.3, the Company shall not have any employees, no employees of the Manager or any 

third party (including any Affiliate) shall be deemed to be employees of the Company, any 

contractual relationships entered into by the Manager to provide employees, facilities or support 

services to the Company shall be relationships between the third parties (or Affiliates) and the 

Manager (and not the Company) and shall not relieve the Manager of its obligations or any 

liability hereunder, and no expenses incurred to secure or maintain employees, facilities or 

support services shall be an expense ofthe Company unless the same is expressly reimbursable 

by the Company pursuant to the provisions of Article XII below or is otherwise expressly set 

forth in this Agreement or in any Ancillary Documents to be an expense ofthe Company. 

3.4 Restrictions on Manager and Private Owner. Neither the Private Owner nor, 

notwithstanding any delegation of authority to it hereunder, the Manager may or shall in any 

event (x) do, or cause the Company to do, any act or take, or cause the Company to take, any 

action in contravention of any Law, or (y) take any ofthe following actions on behalf of, or with 

respect to, the Company, or otherwise cause the Company to take any ofthe following actions, in 

the case of all of the foregoing without the prior written approval of the Initial Member, the 

Revolver Lender and, until occurrence of the Purchase Money Notes Defeasance Date, the 

Purchase Money Notes Guarantor, which approval may be withheld or conditioned in the Initial 

Member's, the Revolver Lender's and the Purchase Money Notes Guarantor's sole and absolute 

discretion: 

(i) admitting additional or substitute members ofthe Company, except 

in accordance with Article VIII; 

(ii) changing the legal form of the Company to other than a limited 

liability company; 

(iii) taking any action that would cause the Company to be treated as 

other than a partnership for federal tax purposes; 

(iv) taking any action that would make it impossible to carry on the 

ordinary business ofthe Company; 

(v) conducting Bulk Sales during any of (A) the first three (3) 

successive 12-month periods after the Closing Date, or (B) any ofthe subsequent 

successive 12-month periods thereafter until the occurrence of the Purchase 

Money Notes Defeasance Date, in each case in an aggregate amount (for such 12­

month period) in excess of thirty-five percent (35%) of the aggregate Unpaid 

Principal Balance of all Loans as at the beginning of such 12-month period (or, 

for such first 12-month period, as at the Cut-Off Date as indicated on the Loan 

Schedule); provided, however that, for purposes ofthe foregoing (A) the amount 

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of any Bulk Sale shall be determined (I) for Loans, or any Bulk Sale of all or 

substantially all of the remaining Underlying Collateral (including any REO 

Property or other Acquired Property) with respect to any Loan, based on the 

aggregate Unpaid Principal Balance (including, as applicable, taking into account 

clauses (iii) and (iv) of the definition thereof) as of the time of such Bulk Sale, 

and (2) for Acquired Property (including REO Property) or any portion thereof 

where such Bulk Sale does not involve all or substantially all of the related Loan 

or other remaining Underlying Collateral (including any REO Property or other 

Acquired Property) with respect to such Loan, based on the value thereof as ofthe 

time of such sale or disposition, including, where available, based on the most 

recent appraisal price or broker opinion, and (B) the sale or other disposition of an 

Ownership Entity (or any voting or equity interest therein) shall constitute a sale 

or other disposition ofthe Acquired Property (including any REO Property) held 

directly or indirectly by such Ownership Entity; and provided further that, for 

purposes ofthis Section 3.4(v) and notwithstanding subsection (i) ofthe definition 

of Unpaid Principal Balance, the Unpaid Principal Balance of any Loan 

Participation (and any related Acquired Property) shall be the entire Unpaid 

Principal Balance ofthe whole loan to which the participation interest relates; 

(vi) incurring any liability on behalf of the Company (other than 

liabilities to trade creditors in the ordinary course of the Business and such other 

liabilities as may be permitted by this Agreement or any Ancillary Document); 

(vii) possessing or transferring Company Property for other than 

Company purposes; 

(viii) taking any action that would require the Company to register as an 

"investment company" (as defined in the Investment Company Act); 

(ix) selling or otherwise transferring any Loan, Underlying Collateral 

or Acquired Property (or any portion thereof) to the Manager, the Private Owner, 

any Servicer, any Subservicer, or any Affiliate of any of the foregoing or of the 

Company; 

(x) financing the sale or other transfer of any Loan, Underlying 

Collateral or Acquired Property (or any portion thereof); 

(xi) selling any Loan, Underlying Collateral or Acquired Property (or 

any portion thereof) in a transaction that provides for any recourse against the 

Company, the Initial Member or the FDIC, in any capacity, or against the LLC 

Interest held by the Initial Member or any share ofthe Loan Proceeds allocable to 

the Initial Member; 

(xii) disbursing funds from the Collection Account or other accounts 

created under this Agreement, the Custodial and Paying Agency Agreement, the 

Revolver or any Servicing Agreement other than in accordance with (and without 

violation of any requirement contained in) the provisions of this Agreement, the 

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Custodial and Paying Agency Agreement, the Revolver, the applicable Servicing 

Agreement and the Reimbursement, Security and Guaranty Agreement; 

(xiii) advancing additional funds that would increase the Unpaid 

Principal Balance of any Loan other than (A) Funding Draws or (B) Servicing 

Expenses to the extent that capitalizing such Servicing Expenses is or would have 

been, prior to the conversion of the Loan to Acquired Property, permitted under 

the applicable Loan Documents; 

(xiv) reimbursing the Manager for any expense or cost incurred by (or 

paid by) any Mfiliate of any ofthe Company, the Private Owner or the Manager, 

the Servicer or any Subservicer; 

(xv) taking any action or omitting to take any action that causes the 

Company to breach any representation, warranty, covenant or other agreement 

contained herein or in any Ancillary Document (for avoidance of doubt, nothing 

in this clause (xv) shall require the Private Owner or the Manager to make any 

capital contribution or advances which are not otherwise required of it under the 

express terms ofthis Agreement or any Ancillary Document); 

(xvi) taking any action for which the consent of some or all of the 

members of a limited liability company is (unless otherwise provided in the 

limited liability company agreement of such limited liability company) required 

by the Act; or 

(xvii) selling (or causing the Disposition) of any Participated Loan to a 

Borrower or a Related Party of the Borrower, whether directly or indirectly, 

without obtaining the prior written consent ofthe other participants in such Loan. 

3.5 Related Partv Agreements. Neither the Company nor any ofits Subsidiaries shall 

enter into any current or future contract, agreement, commitment, arrangement or transaction 

(including any agreement to sell Company Property, incur any Debt or become bound by any 

Guarantee of any obligations) with or for the benefit of, or pay any fee to, the Private Owner or 

any Affiliate of the Company or the Private Owner (a "Related Party Agreement"), except for 

the Purchase Money Notes or any promissory note reissued in respect thereof in accordance with 

Section 2.8 of the Custodial and Paying Agency Agreement or as may otherwise be expressly 

provided herein or in any Ancillary Document to which the Initial Member is a party or as may 

be approved by both Members. 

3.6 Real Property. The Company shall not take title in its own name to any REO 

Property, and any ownership of any such REO Property shall be governed by Section 12.14 and 

the relevant terms ofthe Servicing Agreement. 

3.7 Custodian and Paying Agent. The Manager shall cause the Company to retain 

and enter into and, at all times, be a party to written custodial agreement with a document 

custodian (the "Custodian") that is a Qualified Custodian and approved by the Initial Member, 

and such Custodian shall at all times have custody and possession of the Notes and other 

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Custodial Documents. The Manager shall also cause the Company to retain and enter into and, 

at all times, be a party to written paying agency agreement with a paying agent selected by the 

Company (the "Paying Agent"), which Paying Agent shall receive and distribute Loan Proceeds 

in accordance with the applicable Custodial and Paying Agency Agreement. Except as may be 

determined by the Initial Member in connection with an exercise ofits rights under Section 13.5 

below, the Custodian and the Paying Agent shall be the same; and the custodial and paying 

agency functions shall be performed on the terms set forth in a Custodial and Paying Agency 

Agreement that is acceptable to the Initial Member. At no time shall the Company have more 

than one (1) Custodian or one (1) Paying Agent. The fees and expenses paid to the Custodian 

and Paying Agent shall be no more than market rates and the Custodian and Paying Agent may 

be terminated by the Company upon no more than thirty (30) days notice provided to either, 

without cause under the Custodial and Paying Agency Agreement. In the event that the Manager 

removes, or causes the Company (or any Servicer) to remove, any Notes or other Custodial 

Documents from the possession ofthe Custodian (which shall be done only in accordance with 

the relevant Custodial and Paying Agency Agreement), (i) any loss or destruction of or damage 

to such Notes or Custodial Documents shall be the personal liability ofthe Manager (who, along 

with the relevant Servicer(s), shall be responsible for safeguarding such Notes and Custodial 

Documents when not in the possession ofthe Custodian), and (ii) such Notes shall be returned to 

the Custodian within the time provided under the applicable Uniform Commercial Code to 

maintain the perfection of the secured party's security interest therein by possession. If any 

Notes or other Custodial Documents are removed in connection with the modification or 

restructuring of a Loan, the Notes and other Custodial Documents removed in connection 

therewith shall be returned to the Custodian as soon as possible following the completion ofthe 

restructuring or modification (and, in any event, in accordance with clause (ii) of the 

immediately preceding sentence). The Manager shall ensure that the Initial Member receives a 

copy of each demand, notice or other communication given by the Manager under the Custodial 

and Paying Agency Agreement at the time that such notice or other communication is given by 

the Manager thereunder. 

3.8 Relationships with Borrowers. etc. Except as otherwise consented to by the Initial 

Member, neither the Private Owner nor the Manager shall, at any time, (a) be an Affiliate of or a 

partner or joint venturer with any Borrower, (b) be an agent of any Borrower, or allow any 

Borrower to be an agent of the Manager or the Company, or (c) except as is otherwise 

contemplated by the Company's ownership ofthe Loans and its right to hold Acquired Property, 

have any interest whatsoever in any Borrower, Obligor or other obligor with respect to any Loan 

or any ofthe Underlying CollateraL 

3.9 No Conflicting Obligations. The Manager shall cause the Company to comply 

with the Ancillary Documents in accordance with their terms, and shall not, at any time, enter 

into or become a party to any agreement that would conflict with the terms ofthis Agreement. 

3.10 Compliance with Law. The Manager shall, and shall cause the Company to, at all 

times, comply with applicable Law in connection with the performance or exercise of its rights, 

powers, duties or obligations under this Agreement. 

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3.11 No Bankruptcy Filing. Neither the Manager nor the Private Owner may cause or 

permit the Company to: (a) file a voluntary petition for bankruptcy, (b) file a petition or answer 

seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or 

similar relief under any Law, (c) make an assignment for the benefit of creditors, (d) seek, 

consent or acquiesce in the appointment of a trustee, receiver or liquidator or of all or any 

substantial part of its properties, (e) file an answer or other pleading admitting or failing to 

contest the material allegations of (i) a petition filed against it in any proceeding described in 

clauses (a) through (d), or (ii) any order adjudging it a bankrupt or insolvent or for relief against 

it in any bankruptcy or Insolvency Proceeding, or (f) allow itself to become unable to pay its 

obligations as they become due. 

3.12 No Liens. The Manager shall not cause the Company to place, or voluntarily 

permit to be placed, any Lien on any of the Loans, the Underlying Collateral, the Loan 

Documents, or the Loan Proceeds, except, in the case of Underlying Collateral, such Liens 

caused or permitted by the Manager (i) as permitted under the Loan Documents where the 

applicable Borrower is not in default thereunder and (ii) as permitted by the terms of the 

Revolver or the Reimbursement, Security and Guaranty Agreement; and the Manager shall not 

take any action to interfere with the Collateral Agent's rights as a secured party with respect to 

Loans, the Underlying Collateral and the Loan Proceeds. 

3.13 Remedies Upon an Event ofDefault; Securitv Interest. 

(a) Upon the occurrence of an Event of Default, in addition to all other 

remedies available hereunder or under the Ancillary Documents upon such an Event of Default, 

the Initial Member shall be entitled to (i) remove the Private Owner as the Manager or Servicer 

pursuant to Sections 3.2 and 12.4, (ii) remove the Private Owner as a Member, (iii) purchase (or 

cause a designee to purchase) the LLC Interest of the Private Owner pursuant to Section 3.14, 

(iv) designate itself or any applicable transferee Member as the Manager hereunder, and/or (v) 

with or without notice to or demand upon the Private Owner (except as may be required by Law), 

exercise any or all rights and remedies with respect to the Secured Assets and any Qualifying 

Letter of Credit, specifically including the right (A) to foreclose on the LLC Interest held by the 

Private Owner and transfer such LLC Interest to a third party (it being agreed that none of the 

Private Owner, the Manager or any of their Affiliates shall participate in any sale of the Private 

Owner's LLC Interest without the written consent ofthe Initial Member); (B) to draw upon any or 

all Qualifying Letters ofCredit, by presenting to the applicable Issuing Bank one or more drafts or 

demands and any other necessary documents, and to receive (in a lump sum or in several sums 

from time to time at the sole discretion of the Initial Member) any or all amounts available for 

drawing under each such Qualifying Letter of Credit, and/or (C) to exercise any rights under the 

Private Owner Pledged Account Control Agreement (or otherwise) with respect to the Private 

Owner Pledged Account, including the right to assume exclusive control over the Private Owner 

Pledged Account and to cause the funds therein to be remitted (in a lump sum or in several sums 

from time to time at the sole discretion of the Initial Member) to or at the direction of the Initial 

Member. The removal ofthe Private Owner as Member shall be subject to Section 8.4. 

(b) For the avoidance of doubt, in the event that the Initial Member 

determines to exercise its remedies against any Secured Assets or any Qualifying Letter ofCredit, 

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it shall have the absolute right to deduct from the proceeds ofsuch exercise ofremedies (including 

proceeds of any foreclosure sale with respect to the LLC Interests, any drawing on a Qualifying 

Letter of Credit and any receipt of funds from the Private Owner Pledged Account), any Losses 

arising out of or resulting from such Event of Default incurred by the Indemnified Parties, 

together with all costs and expenses (including, without limitation, attorneys' fees and 

disbursements) incurred by the Initial Member in connection with enforcing its rights and 

remedies hereunder and under the Ancillary Documents; and any Private Owner Obligations then 

due and payable (in each case in such order as the Initial Member may determine in its sole 

discretion); provided that the Initial Member may, in its sole discretion, hold any such proceeds as 

additional security for any existing or future Private Owner Obligations. Without limitation ofthe 

foregoing, in no event shall the Initial Member have any obligation (but it shall at all times have 

the right in its sole discretion) to use or apply any proceeds ofthe Secured Assets toward payment 

of any Private Owner Obligations owing to the Company (whether or not the same are due and 

payable), and the Private Owner shall remain fully obligated to pay and perform all such Private 

Owner Obligations owing to the Company notwithstanding any such election by the Initial 

Member to so refrain from applying such proceeds toward payment ofthe same; and, in the event 

that, for any reason, any such proceeds ofthe Secured Assets are used for payment of any Private 

Owner Obligations owing to the Company, any and all rights of the Private Owner to payments, 

reimbursements or distributions from the Company on account of any such payment to the 

Company (including rights to any repayment of any deemed Excess Working Capital Advances, 

to the extent any such proceeds are used to fund the same), shall be considered as part of the 

Secured Assets and shall, to the extent paid or payable by the Company, be paid directly to the 

Initial Member (and the Initial Member shall have the right to direct the Paying Agent to so remit 

to the Initial Member any applicable distributions or payments by the Paying Agent with respect 

thereto) to be held and applied by the Initial Member as part ofthe proceeds ofthe Secured Assets 

(as collateral for the Private Owner Obligations). Any Secured Assets or proceeds thereof as held 

by the Initial Member may be commingled with the Private Owner's own funds, without any need 

to pay interest or income thereon. Upon indefeasible payment and performance in full all of the 

Private Owner Obligations (following the dissolution of the Company), any remaining unapplied 

proceeds (from an exercise of remedies by the Initial Member against the rights of the Private 

Owner to the Secured Assets or any Qualifying Letter of Credit) so held by the Initial Member, 

shall be released to the Private Owner (or such other Person as may have applicable rights therein 

in accordance with applicable Law). In any event, the Private Owner shall remain liable for any 

deficiency in payment ofthe Private Owner Obligations. 

(c) This Agreement shall constitute a security agreement under applicable 

Law for the benefit ofthe Initial Member and, in furtherance thereof, the Private Owner (in all of 

its capacities) and the Company (as applicable) shall be deemed to have granted, and each does 

hereby grant, to the Initial Member, for itself (and its assignees), a valid and continuing first 

priority Lien on and security interest in all ofthe Private Owner's right, title and interest in, to and 

under, the Secured Assets, whether now owned or existing, or hereafter acquired and arising in, to 

and under the Secured Assets and all ofthe proceeds ofthe foregoing, as security for the payment 

and performance (when due) by the Private Owner (including in its roles as the Manager and the 

Tax Matters Member) of its duties, liabilities and obligations under this Agreement and the 

Ancillary Documents and the compliance by the Private Owner (including as the Manager and the 

Tax Matters Member) with the terms and conditions of this Agreement and the Ancillary 

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Documents (collectively, the "Private Owner Obligations"). For the avoidance of doubt, the 

parties acknowledge that the Secured Assets are not, pursuant to the foregoing, collateral for the 

separate payment obligations of the Company except to the extent that, pursuant to this 

Agreement or the Ancillary Documents, the Private Owner, in any capacity, is required to pay (or 

advance applicable funds to pay) or otherwise bear such obligations (and in such case, such 

Secured Assets secure such obligations of the Private Owner to the Company and, if applicable, 

the Initial Member and the Indemnified Parties only, and not any such separate obligations ofthe 

Company to any other Persons), such that the Secured Assets do not secure the Company's 

payment obligations under the Purchase Money Notes. For purposes ofthis Agreement, the term 

"Secured Assets" shall mean (x) all right, title and interest of the Private Owner in and to the 

Private Owner Pledged Account (and all funds therein and related rights thereto as more 

specifically described in the Private Owner Pledged Account Control Agreement), (y) the LLC 

Interest held by the Private Owner and all other rights of the Private Owner (in any capacity) 

under this Agreement and the Ancillary Documents (including rights to any distributions or 

payments on account of any Excess Working Capital Advances or Discretionary Funding 

Advances made by or on behalfofthe Private Owner), and (z) all proceeds of any ofthe foregoing 

at any time (including distributions thereon or other income in respect thereof). 

(d) As additional security for the Private Owner Obligations (and, as 

applicable, as part ofthe Secured Assets), the Private Owner shall deliver on the Closing Date and 

at all times thereafter cause to be maintained additional collateral (the "Additional Security") 

consisting of either (i) cash and any interest earned thereon (and Permitted Investments with 

respect thereto) in the Private Owner Pledged Account in an aggregate amount at least equal to 

Five Million Dollars ($5,000,000) ("Qualifying Cash Collateral") or (ii) undrawn (and available) 

amounts under one or more Qualifying Letters of Credit in an aggregate amount at least equal to 

Five Million Dollars ($5,000,000). In the event that the Private Owner determines to fulfill its 

obligation to provide the Additional Security by issuance of a Qualifying Letter of Credit, the 

Private Owner shall cause the issuance and delivery to the Initial Member, on the Closing Date, of 

a single Qualifying Letter of Credit in the full amount of such Additional Security. The Initial 

Member shall have the unilateral right to draw on any such Qualifying Letter of Credit and to 

provide instructions to the Paying Agent for the disposition of the Qualifying Cash Collateral in 

the Private Owner Pledged Account, in each case without any requirement for any further consent, 

corrfmnation or instructions from the Private Owner; provided, however, that as between the 

Initial Member and the Private Owner (and without creating any right or obligation ofthe Paying 

Agent or any Issuing Bank to refuse to honor, or inquire as to the accuracy or sufficiency of, any 

applicable instructions from the Initial Member), the Initial Member agrees that (i) it shall not 

exercise such rights to so draw on any such Qualifying Letter of Credit unless there shall have 

occurred an Event of Default (whether or not relating to any Qualifying Letter ofCredit) or an LC 

Reissuance/Extension Failure (with respect to such Qualifying Letter of Credit), and (ii) it shall 

not exercise such rights to so unilaterally direct the disposition ofthe Qualifying Cash Collateral 

from the Private Owner Pledged Account unless there shall have occurred an Event ofDefault. 

(e) On the Closing Date (and whether or not the Private Owner has elected to 

provide Additional Security in the form of Qualifying Cash Collateral), the Private Owner shall 

establish the Private Owner Pledged Account with the Paying Agent for the exclusive purpose of 

holding Qualifying Cash Collateral (including in the form of any proceeds from a drawing on a 

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Qualifying Letter of Credit at any time deposited in the Private Owner Pledged Account in 

accordance herewith). The Private Owner Pledged Account (and all funds and financial assets 

therein) shall be subject to the security interest granted herein for the benefit ofthe Initial Member 

pursuant to the terms of this Agreement, the Custodial and Paying Agency Agreement and the 

Private Owner Pledged Account Control Agreement. Funds in the Private Owner Pledged 

Account may be invested at the direction of the Private Owner from time to time in Permitted 

Investments in accordance with the Custodial and Paying Agency Agreement; provided, however 

that all such Permitted Investments shall remain in the Private Owner Pledged Account as 

Qualifying Cash Collateral, and in no event shall the Private Owner have any right or authority to 

withdraw any funds from such Private Owner Pledged Account. 

(f) Upon the occurrence of any LC Reissuance/Extension Failure, the Initial 

Member shall have the right (but not the obligation) to draw on all or any part of the undrawn 

amount of any Qualifying Letter of Credit subject to such LC Reissuance/Extension Failure; and 

in such case the funds received by the Initial Member as a result of any such draw shall be 

deposited in the Private Owner Pledged Account (as Qualifying Cash Collateral) and such LC 

Reissuance/Extension Failure shall not be deemed an Event of Default hereunder, in each case 

only so long as (i) there shall not have occurred any Event of Default (other than such LC 

Reissuance/Extension Failure), (ii) the Private Owner Pledged Account shall then be and remain 

open and subject to the Private Owner Pledged Account Control Agreement, and (iii) upon such 

deposit in the Private Owner Pledged Account (of the funds received by the Initial Member from 

such draw), the aggregate amount of the Additional Security (disregarding such affected 

Qualifying Letter ofCredit) shall be in an amount not less than Five Million Dollars ($5,000,000), 

it being understood that, in the event the foregoing conditions are not satisfied, the Initial Member 

shall have the right to hold and apply such funds pursuant to Section 3.13(b) above. 

(g) The Private Owner hereby authorizes the filing by the Initial Member and 

its assignees of such financing or continuation statements in such jurisdictions as the Initial 

Member or its assignees deem appropriate (in their sole and absolute discretion) to perfect and 

continue their first priority Lien and security interest with respect to the Secured Assets. The 

Private Owner shall deliver to the Initial Member an assignment and assumption agreement with 

respect to the LLC Interest held by it, in the form attached hereto as Exhibit C, endorsed in blank, 

and executed by the Private Owner. The Initial Member may use the assignment and assumption 

agreement to effect the assignment ofthe LLC Interest held by the Private Owner at any time if an 

Event ofDefault occurs and is continuing. 

(h) After all of the obligations secured by the Secured Assets have been 

indefeasibly paid and performed in full (following the dissolution of the Company), the Initial 

Member shall, upon the request of the Private Owner, release any then outstanding Qualifying 

Letters of Credit and consent to the termination of the Private Owner Pledged Account Control 

Agreement. 

(i) The Initial Member's rights and remedies under this Agreement, any 

Ancillary Document or otherwise are cumulative and may be exercised singularly (and in such 

order as the Initial Member may determine in its sole discretion) or concurrently. Neither any 

failure nor delay on the part of the Initial Member to exercise any other right or remedy shall 

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operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude 

any other or further exercise thereof or of any other right or remedy howsoever arising. In no 

event shall the Initial Member have any obligation to seek or exhaust any particular remedy prior 

to exercising any other remedy, and the Private Owner hereby waives any and all right to require 

the marshalling of assets in connection with any exercise by the Initial Member of its remedies 

hereunder or under any Ancillary Document. Under no circumstances shall the Initial Member be 

deemed or construed to have waived its right to draw upon any Qualifying Letter of Credit, to 

proceed against the Private Owner Pledged Account, to foreclose upon the LLC Interest of the 

Private Owner or to exercise any of its other rights or remedies unless such waiver is in writing 

and executed by a duly authorized representative ofthe Initial Member. A waiver of any right or 

remedy on any one occasion shall not operate as a waiver of such right or remedy on any future 

occasion or as a waiver of any other right or remedy. 

3.14 Purchase Right of Initial Member. Without prejudice to the rights ofthe Initial 

Member to foreclose on the LLC Interest ofthe Private Owner in accordance with Section 3.13: 

(a) Upon the occurrence and during the continuance of an Event of Default, 

the Initial Member may at any time, by notice (a "Buy-Out Notice") to the Private Owner, 

elect to purchase (or cause one or more designees to purchase) the Private Owner LLC Interest for 

an amount, payable in cash, equal to (x) the fair market value ofsuch LLC Interest (determined, if 

necessary, in accordance with Section 3.14(b)(iv)) as of a date (the "Buy-Out Valuation Date") 

selected by the Initial Member in its discretion between the date of the Buy-Out Notice and the 

closing of such purchase (the "Buy-Out Closing"), less (y) any amounts owed by the Private 

Owner pursuant Section 3.14(b)(v), and less (z) any distributions paid by the Company to or for 

the account of the Private Owner between the date of the Buy-Out Valuation Date and the BuyOut Closing. 

(b) If the Private Owner receives a Buy-Out Notice, the Buy-Out Closing 

shall be consummated as follows: 

(i) The Buy-Out Closing shall be held at the principal offices of the 

Company on a day selected by the Initial Member, which day shall, subject to 

Section 3.14(b)(iv), be no later than six (6}months after the Buy-Out Notice was 

delivered to the Private Owner or at such other place or on such other date as the 

Members may agree (the "Buy-Out Closing Date"). 

(ii) The Initial Member shall purchase (and/or cause one or more 

designees to purchase in the aggregate) all but not less than all of the of the 

Private Owner LLC Interest for the consideration set forth in Section 3.14(a), and 

against delivery of such consideration, the Private Owner shall deliver all such 

documents and instruments as are necessary to transfer to the Initial Member 

(and/or its designee(s)), and in any event shall be deemed to have transferred, and 

to have represented and warranted to the Initial Member (and/or its designee(s)) 

that it has transferred, to the Initial Member (and/or its designee(s)), good title to 

(and, in any event, all right, title and interest of the Private Owner in and to) the 

entire Private Owner LLC Interest, free and clear of all Liens other than those 

created by this Agreement and the Ancillary Documents. 

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WDC991841479-7.084080.0017 

(iii) The Private Owner shall obtain all material consents, approvals or 

waivers (including expiration or termination of a specified waiting period) of any 

Governmental Authority or Person that may be required in connection with the 

purchase and sale ofthe Private Owner LLC Interest (other than any such consent, 

approval or waiver which has, if permitted by Law, been waived by the Initial 

Member). 

(iv) In the event of the delivery of a Buy-Out Notice, the Members 

shall attempt to agree on the fair market value ofthe Private Owner LLC Interest 

as of the Buy-Out Valuation Date. If the Members are unable to agree on such 

value within fifteen (15) days after the date of delivery ofthe Buy-Out Notice (or, 

if sooner, by the Buy-Out Closing Date), then such value shall be determined 

immediately thereafter in accordance with the Dispute Resolution Procedure, and, 

if applicable, the Buy-Out Closing Date shall be delayed until such date (after 

completion ofthe applicable valuation) as may be selected by the Initial Member. 

For the avoidance of doubt, in no event shall the right under this Section 3.14 or 

any valuation resulting from a Dispute Resolution Procedure create any obligation 

with respect to, or otherwise limit the rights of the Initial Member in connection 

with, any concurrent or subsequent foreclosure (or sale) of the Private Owner's 

LLC Interest pursuant to Section 3.13 and/or exercise of relevant rights under the 

Uniform Commercial Code or otherwise, and the Private Owner acknowledges 

and agrees that any foreclosure and sale pursuant to Section 3.13 and relevant 

rights under the Uniform Commercial Code or otherwise may result in a sale price 

for the LLC Interest that is significantly lower than the fair market value of the 

Private Owner LLC Interest potentially (or having actually been) determined 

pursuant to this Section 3.14(b)(iv) or other price set out in any Buy-Out Notice. 

(v) All out-of-pocket costs and expenses incurred by the Initial 

Member in connection with the exercise of its rights under this Section 3.14 and 

the sale of the LLC Interest by the Private Owner (including fees of any 

investment banking firm retained in connection with the Dispute Resolution 

Procedure and legal fees and expenses incurred in connection with obtaining any 

necessary consents, approvals or waivers (including expiration or termination of a 

specified waiting period) of Governmental Authorities) shall be borne by the 

Private Owner and may be deducted from the purchase price otherwise payable by 

the Initial Member (or its designee(s)) for the Private Owner LLC Interest. 

(c) The failure of the Initial Member to exercise its rights under this Section 

3.14 in connection with any Event of Default shall in no way affect or limit the exercise of such 

rights in connection with any other Event ofDefault by the Private Owner. 

(d) At any time prior to the Buy-Out Closing, the Initial Member may elect 

not to proceed with the Buy-Out Closing (without any liability or further obligation with respect 

thereto), and the Private Owner shall remain responsible for amounts owed under Section 

3.14(b)(v) notwithstanding any such election by the Initial Member. 

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(e) Any distributions payable by the Company to the Private Owner after the 

Buy-Out Valuation Date shall, at the option of the Initial Member, be paid to and held by the 

Initial Member (or, if permitted by the Paying Agent, held by the Paying Agent in the Distribution 

Account) and, at the Buy-Out Closing or a reasonable time thereafter, be released to the Private 

Owner less, without duplication, any amounts owed by the Private Owner pursuant to this 

Agreement (including costs and expenses pursuant to Section 3.14(b){v)). For the avoidance of 

doubt, neither the Initial Member nor the Paying Agent shall have any obligation to segregate, or 

pay interest or other income in respect of, any sums held pursuant to this Section 3.14(e). 

3.15 No ERISA Plan Assets. The Manager shall use its reasonable best efforts to 

ensure that the Company's assets are not deemed to be "plan assets" within the meaning of 

Section 3(42) ofERISA and the Plan Asset Regulation. 

ARTICLE IV 


Membership Interests; Rights and Duties of, and Restrictions on, Members 


4.1 General. The membership of the Company shall consist of the Members listed 

from time to time in the Annex I (the Member Schedule), and such substituted Members as may 

be admitted to the Company pursuant to Article VIII. The Manager shall cause Annex I (the 

Member Schedule) to be amended from time to time to reflect the admission of any additional 

Members, additional Capital Contributions of the Members, the issuance of additional limited 

liability company interests, transfers of LLC Interests, repurchases, redemptions or cancellations 

of LLC Interests, the cessation or withdrawal of a Member for any reason or the receipt by the 

Company ofnotice of any change ofname or address of a Member. 

4.2 LLC Interests. 

(a) Creation and Issuance. The Company is only authorized to issue the LLC 

Interests that exist as ofthe date hereof, and the Company may not hereafter create or issue any 

limited liability company interest, provided that nothing in this sentence restricts the Disposition 

of any outstanding LLC Interest by any Member (which matter is governed by Article VIII). The 

Company's LLC Interests shall be uncertificated. The LLC Interests shall have the relative rights, 

powers, duties and obligations specified in this Section 4.2. As of the Closing Date, the LLC 

Interests are owned by the Initial Member and the Private Owner, as set forth in Annex I (the 

Member Schedule). Other than as set forth in this Agreement, each LLC Interest shall be identical 

in all respects to each other outstanding LLC Interest. 

(b) Distributions. Subject to Sections 6.6, distributions to the holders of LLC 

Interests shall be made as provided in Section 6.6(b) and Section 9.2. 

(c) No Retirement Fund or Conversion. The LLC Interests shall not be 

subject to the operation of a retirement or sinking fund to be applied to the purchase or redemption 

thereoffor retirement and shall not be convertible into any other class oflimited liability company 

interests. 

(d) Voting Rights. Except to the extent otherwise required by the Act or 

expressly provided in this Agreement, the holders ofthe LLC Interests shall be entitled to vote on 

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all matters upon which the Members have the right to vote as set forth in this Agreement or 

provided in the Act. Except as expressly set forth elsewhere in this Agreement (including 

Section 3.1 and Section 3.4), the voting rights of each holder of LLC Interests shall be based on 

such holder's Percentage Interest. 

4.3 Filings; Duty of Members to Cooperate. The Manager shall promptly cause to be 

executed, delivered, filed, recorded or published, as appropriate, and the Private Owner will, as 

requested by the Manager from time to time, execute and deliver, (a) all certificates, documents 

and other instruments that the Manager deems necessary or appropriate to form, qualifY or 

continue the existence or qualification ofthe Company as a limited liability company in the State 

of Delaware or as a foreign limited liability company in all other jurisdictions in which the 

Company may, or may desire to, conduct business or own Company Property, (b) any 

amendment to the Certificate or any instrument described in clause (a) required because of, or in 

order to effectuate, an amendment to this Agreement, or any change in the membership of the 

Company, in accordance with the terms hereof, (c) all certificates, documents and other 

instruments (including conveyances and a certificate of cancellation) that the Manager deems 

necessary or appropriate to reflect the dissolution and liquidation ofthe Company pursuant to the 

terms ofthis Agreement, and (d) such other certificates, documents and other instruments as are 

required by Law or by any Governmental Authority to be executed by them in connection with 

the Business as conducted or proposed to be conducted by the Company from time to time. As 

soon as reasonably practical after the date hereof, the Manager shall cause the Company to apply 

for, and thereafter use its reasonable best efforts to obtain, as quickly as possible, and maintain, 

all such licenses as are required to conduct the Business, including qualifications to conduct 

business in jurisdictions other than Delaware and licenses to purchase, own or manage the Loans, 

ifthe failure to so obtain such licenses would reasonably be expected to result in the imposition 

offines, penalties or other liabilities on the Company, claims and defenses being asserted against 

the Company (including counterclaims and defenses asserted by any Borrower under the Loans), 

or materially adversely affect the Company or the Company's ability to foreclose on the 

Underlying Collateral securing any Loan or otherwise realize the full value of any Loan or 

Acquired Property. 

4.4 Certain Restrictions and Requirements. 

(a) No Member may use or possess Company Property other than for a 

Company purpose, except as provided under license or other contractual arrangements. No 

Member shall have authority to bind, or otherwise to act on behalf of, the Company except 

pursuant to authority expressly granted herein or pursuant to authority granted by the Manager in 

accordance with the terms hereof. 

(b) From and after the Closing Date, no Person may or shall be admitted as a 

member ofthe Company except pursuant to and in accordance with Article VIII hereof. 

(c) Each Member, other than the Initial Member, shall at all times meet the 

qualifications of a Qualified Transferee. 

4.5 Liability of Initial Member. Neither the Initial Member nor any of its Affiliates, 

nor any officer, director, stockholder, member, manager, employee, agent or assign ofthe Initial 

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Member or any of its Affiliates (all ofthe foregoing, collectively, the "Related Persons"), shall 

be liable, responsible or accountable, whether directly or indirectly, in contract or tort or 

otherwise, to the Company, any other Person in which the Company has a direct or indirect 

interest or any Member (or any Affiliate of any of the foregoing), for any Damages asserted 

against, suffered or incurred by the Company, any Person in which the Company has a direct or 

indirect interest or any Member (or any Affiliate of any ofthe foregoing) arising out of, relating 

to or in connection with this Agreement or any act or failure to act pursuant to this Agreement or 

otherwise with respect to: 

(a) the management or conduct ofthe business and affairs ofthe Company or 

any Person in which the Company has a direct or indirect interest or any of their respective 

Affiliates (including, without limitation, actions taken or not taken by any Related Person as an 

officer or director of any Person in which the Company has a direct or indirect interest or any 

Affiliates ofsuch Person); 

(b) the offer and sale of limited liability company interests in the Company 

(including the LLC Interests) or the issuance ofPurchase Money Notes; and 

(c) the management or conduct of the business and affairs of any Related 

Person insofar as such business or affairs relate to the Company or any Person in which the 

Company has a direct or indirect interest or to any Member in its capacity as such, including, all: 

(i) activities in the conduct ofthe Business, and 

(ii) activities in the conduct of other business engaged in by any 

Related Person which might involve a conflict of interest vis-a-vis the Company 

or any Person in which the Company has a direct or indirect interest or any 

Member (or any of their respective Affiliates) or in which any Related Person 

realizes a profit or has an interest; 

except, in each case, Damages resulting from acts or omissions of such Related Person which 

were taken or omitted which constituted fraud, gross negligence, willful misconduct, or an 

intentional material breach ofthis Agreement or any Ancillary Document. 

4.6 Indemnification. 

(a) The Private Owner shall indemnify and hold harmless the Initial Member 

and the Initial Member's Affiliates, and their respective officers, directors, employees, partners, 

principals, agents and contractors (all of the foregoing, collectively, the "Indemnified Parties"), 

from and against any losses, Damages, liabilities, costs and expenses (including reasonable 

attorneys' fees and litigation and similar costs, and other out-of-pocket expenses incurred in 

investigating, defending, asserting or preparing the defense or assertion of any of the foregoing), 

deficiencies, claims, interest, awards, judgments, penalties and fmes (collectively, "Losses"), 

arising out of or resulting from (i) any breach after the Closing Date, by (x) the Company (during 

any period when the Private Owner is the Manager, and subject to the clarification set forth below 

in this Section 4.6(a)), the Private Owner (in any capacity, including as the Manager) or any of 

their respective Affiliates or (y) any of the respective officers, directors, employees, partners, 

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principals, agents or contractors of any Person described in sub-clause (x), of the obligations of 

the Company or the Private Owner (in any capacity, including as the Manager) under, or any other 

covenants, agreements or other terms and conditions contained in this Agreement or any Ancillary 

Document (including Losses relating to (1) the Company's obligations with respect to litigation 

referred to in Section 4.5 of the Contribution Agreement to the extent provided therein, (2) the 

Company's obligations under Sections 3.1 and 3.2 of the Contribution Agreement (including all 

costs and expenses of the Initial Member in completing any applicable transfers pursuant to 

exercise ofrights under such section), and (3) any claim asserted by the Initial Member against the 

Company or the Private Owner (in any capacity, including as the Manager) to enforce its rights 

hereunder or by any third party), or any third-party allegation or claim based upon facts alleged 

that, if true, would constitute such a breach; (ii) any gross negligence, bad faith or willful 

misconduct (including any act or omission constituting theft, embezzlement, breach of trust or 

violation of any Law) on the part of any Person described in sub-clause (i)(x) or (i)(y); or (iii) any 

Losses with respect to which the Initial Member was released, or with respect to which the 

Company should have obtained a release from the applicable Borrowers or other Obligors, in 

accordance with Section 4.17(b) ofthe Contribution Agreement. Such indemnity shall survive the 

termination ofthis Agreement. Each Indemnified Party shall deliver notice of a Loss or a claim or 

demand made by any Person against the Indemnified Party (a "Third Party Claim") to the 

Private Owner promptly after receipt by such Indemnified Party of written notice of the Third 

Party Claim, describing in reasonable detail the facts giving rise to any claim for indemnification 

hereunder, the amount ofsuch claim (if known) and such other information with respect thereto as 

is available to the Indemnified Party and as the Private Owner may reasonably request. The 

failure or delay to provide such notice, however, shall not release the Private Owner from any of 

its obligations under this Section 4.6 except to the extent that it is materially prejudiced by such 

failure or delay. The Private Owner acknowledges and agrees that it shall have no recourse 

against the Company for any amounts the Private Owner is required to pay pursuant to this 

Section 4.6. For the purposes of this Section 4.6, the term "Initial Member" shall be deemed to 

include any Person at any time constituting the "Initial Member" hereunder (other than for 

purposes of this Section 4.6) and (without limitation of the foregoing) any Person at any time 

holding all or any portion of the LLC Interest initially held by the Initial Member immediately 

after the Closing, in each case even if such Person has since ceased to be a member of the 

Company or to hold any limited liability company interest in the Company. For purposes of 

clarification, with respect solely to the obligations ofthe Private Owner under this Section 4.6(a) 

in connection with a breach by the Company (during any period when the Private Owner is the 

Manager), the Private Owner shall not be responsible for any Losses arising out of or resulting 

from any failure by the Company to pay its separate payment obligations (including such payment 

obligations under the Purchase Money Notes), to the extent that all of the following are satisfied: 

(1) such failure is the result of the Company having insufficient available funds notwithstanding 

the servicing ofthe Loans and management ofthe Company by the Manager (and, as applicable, 

the Servicer and any Subservicers) in accordance with this Agreement and the Ancillary 

Documents (including through exercise of any discretionary authority with respect to incurrence 

of payment obligations and maintenance and application of applicable reserves in a manner so as 

to reasonably avoid any such breach), (2) such failure and resulting Losses are not attributable in 

whole or in part to any breach (or other action or omission in violation ofthe Servicing Standard 

or any provision of this Agreement or any Ancillary Document) by the Private Owner (in any 

capacity, including as Manager) or any ofits Affiliates (other than the Company), or by any ofthe 

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respective officers, directors, employees, partners, principals, agents or contractors of any of the 

foregoing, and (3) the Private Owner (in any capacity) is not required to pay (or advance 

applicable funds to the Company for payment of) or otherwise bear such payment obligations 

pursuant to the terms ofthis Agreement or any Ancillary Document. 

(b) If for any reason the indemnification provided for herein is unavailable or 

insufficient to hold harmless the Indemnified Parties, the Private Owner shall contribute to the 

amount paid or payable by the Indemnified Parties as a result of the Losses of the Indemnified 

Parties in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties, 

on the one hand, and the Private Owner (in any capacity, including as the Manager) (including the 

Servicer or any Subservicer), on the other hand, in connection with the matters that are the subject 

ofsuch Losses. 

(c) If the Private Owner confirms in writing to the Indemnified Party within 

fifteen (15) days after receipt of a Third Party Claim, the Private Owner's responsibility to 

indemnify and hold harmless the Indemnified Party therefor, the Private Owner may elect to 

assume control over the compromise or defense of such Third Party Claim at the Private Owner's 

sole expense and with counsel selected by the Private Owner, which counsel must be reasonably 

satisfactory to the Indemnified Party, provided that (i) the Indemnified Party may, if such 

Indemnified Party so desires, employ counsel at such Indemnified Party's own expense to assist in 

the handling (but not control the defense) of any Third Party Claim; (ii) the Private Owner shall 

keep the Indemnified Party advised of all material events with respect to any Third Party Claim; 

(iii) the Private Owner shall obtain the prior written approval of the Indemnified Party before 

ceasing to defend against any Third Party Claim or entering into any settlement, adjustment or 

compromise of such Third Party Claim involving injunctive or similar equitable relief being 

imposed upon the Indemnified Party or any of its Affiliates; and (iv) the Private Owner will not, 

without the prior written consent of the Indemnified Party, settle or compromise or consent to the 

entry of any judgment in any pending or threatened action in respect of which indemnification 

may be sought hereunder (whether or not any such Indemnified Party is a party to such action), 

unless such settlement, compromise or consent by its terms obligates the Private Owner to satisfy 

the full amount of the liability in connection with such Third Party Claim and includes an 

unconditional release of such Indemnified Party from all liability arising out of such Third Party 

Claim. 

(d) Notwithstanding anything contained herein to the contrary, the Private 

Owner shall not be entitled to control (and if the Indemnified Party so desires, it shall have sole 

control over) the defense, settlement, adjustment or compromise of (but the Private Owner shall 

nevertheless be required to pay all Losses incurred by the Indemnified Party in connection with 

such defense, settlement or compromise): (i) any Third Party Claim that seeks an order, injunction 

or other equitable relief against the Indemnified Party or any of its Affiliates; (ii) any action in 

which both the Private Owner (in any capacity, including as the Manager) or any Affiliate of the 

Private Owner, on one hand, and the Indemnified Party, on the other hand, are named as parties 

and either the Private Owner (or such Affiliate) or the Indemnified Party determines with advice 

of counsel that there may be one or more legal defenses available to it that are different from or 

additional to those available to the other party or that a conflict of interest between such parties 

may exist in respect of such action; and (iii) any matter that raises or implicates any issue relating 

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to any power, right or obligation ofthe FDIC under any Law. If the Private Owner elects not to 

assume the compromise or defense against the asserted liability, fails to timely and properly notify 

the Indemnified Party of its election as herein provided, or, at any time after assuming such 

defense, fails to diligently defend against such Third Party Claim in good faith, the Indemnified 

Party may pay, compromise or defend against such asserted liability (but the Private Owner shall 

nevertheless be required to pay all Losses incurred by the Indemnified Party in connection with 

such defense, settlement or compromise). In connection with any defense of a Third Party Claim 

(whether by the Private Owner or the Indemnified Party), all ofthe parties hereto shall, and shall 

cause their respective Affiliates to, cooperate in the defense or prosecution thereof and to in good 

faith retain and furnish such records, information and testimony, and attend such conferences, 

discovery proceedings, hearings, trials and appeals, as may be reasonably requested by a party 

hereto in connection therewith. 

(e) In the event the Company is reimbursed for or uses funds drawn under the 

Revolver or Excess Working Capital Advances to pay costs or expenses ofthe type referred to in 

clause (v) or (vi) ofthe definition of Servicing Expenses and it is subsequently determined that the 

Company was not entitled to reimbursement for (or to use Revolver funds or Excess Working 

Capital Advances to pay) all or any portion of such costs and expenses because the Company did 

not satisfy the requirements of Section 4.6(c) or clause (v) ofthe definition of Servicing Expenses 

(such costs and expenses, the "Unreimbursable Expenses"), the Manager shall, in addition to 

any other Losses for which the Manager may be liable with respect to the claim to which such 

costs and expenses relate, reimburse the cost of such Unreimbursable Expenses to each Member 

based on such Member's Percentage Interest as set forth below, except to the extent such 

Unreimbursable Expenses were funded through Excess Working Capital Advances that remain 

outstanding (in which case the portion of any such outstanding Excess Working Capital Advance 

that was so used for Unreimbursable Expenses shall itself become unreimbursable and be deemed 

forgiven with no further right of the Manager to collect or receive the same). Any such 

reimbursement by the Manager pursuant to the foregoing shall be as follows: within ten (1 0) 

Business Days after written demand therefor from either Member, the Manager shall pay each 

Member by wire transfer ofimmediately available funds to an account specified by each Member 

an amount equal to such Member's Percentage Interest (as of the later of (x) the date of such 

demand or (y) the date of such payment) multiplied by the amount of all such Unreimbursable 

Expenses. 

(f) The Company shall indemnify and hold harmless each Member and each 

Member's respective officers, directors, employees and members (all of the foregoing 

collectively, the "Covered Persons") for any Losses incurred by such Covered Person by reason 

of a Third Party Claim relating to any act or omission by or of such Covered Person in connection 

with the exercise or performance of the rights, powers, responsibilities and obligations of such 

Covered Person (or, if such Covered Person is other than a Member, ofthe Member in respect of 

which such Covered Person so constitutes a Covered Person) regarding the Company except for 

(i) any Third Party Claim or Losses resulting from fraud, gross negligence, willful misconduct or 

an intentional breach ofthis Agreement or any Ancillary Document by such Covered Person (or if 

such Covered Person is other than a Member, by the Member in respect of which such Covered 

Person so constitutes a Covered Person), and (ii) in the case ofthe Private Owner (in any capacity, 

including as the Manager), (x) any claim or demand by any Servicer or Subservicer (or, for the 

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avoidance of doubt, any Losses arising out of or related to such claim or demand) and (y) any 

Third Party Claim or Losses that is in whole or in part covered by or subject to an indemnification 

obligation of the Private Owner (in any capacity, including as the Manager) under any provision 

of this Agreement or any Ancillary Document, including the foregoing provisions of Section 

4.6(a). 

(g) Tax Liability of Ownership Entity. Notwithstanding anything to the 

contrary contained herein, if any Ownership Entity is not a pass-through entity with no entitylevel income tax obligations, distributions to the Initial Member pursuant to Section 6.6 (including 

for the purposes of Section 9.2(c)) shall be allocated before accrual or payment of any income tax 

payable by such Ownership Entity, and the Private Owner (or its successors or assigns) shall 

indemnify and hold harmless the Initial Member from and against any liability for any income 

taxes payable by the Ownership Entity; provided, however, that the foregoing special allocation 

and indemnity shall not apply if (i) the Private Owner (and each of its successors and assigns) has 

taken all steps necessary to secure pass-through treatment of the Ownership Entity and (ii) the 

liability for income taxes payable by the Ownership Entity arises solely as a result of a change in 

Law applicable to pass-through entities occurring after the date hereof and not as a result ofaction 

(or inaction) by the Private Owner (or its successors or assigns). 

(h) Offsets. Without limiting any other rights of the Initial Member 

hereunder, in the event the Initial Member exercises any rights or remedies as a result of or in 

connection with a breach hereunder or the occurrence of an Event ofDefault (including relating to 

a breach of Section 4.6), all costs and expenses (including reasonable attorneys' fees and litigation 

and similar costs, and other out-of-pocket expenses incurred in investigating, defending, asserting 

or preparing the defense or assertion of any claim) incurred by the Initial Member with respect 

thereto may be offset by the Initial Member against any payment or distribution otherwise payable 

to the Private Owner (including any Interim Management Fee or Management Fee), whether in its 

capacity as a Member or as the Manager (in each case except to the extent such breach or Event of 

Default is attributable exclusively to a Manager having been appointed by the Initial Member 

following removal ofthe Private Owner in such capacity, or to any applicable Servicer (and any 

of its Subservicers) having been engaged by the Initial Member, the Company or the applicable 

replacement Manager following such removal ofthe Private Owner as the Manager, in each case 

that is not an Affiliate ofthe Private Owner). For the avoidance of doubt, the effects of any ofthis 

Section 4.6(h) and Section 4.6(g) above shall be disregarded for purposes of calculations with 

respect to the First Incentive Threshold Event and the Second Incentive Threshold Event. 

ARTICLEV 

Capital Contributions; Discretionary Funding Advance; Excess Working Capital Advance 

5.1 Capital Contributions. 

(a) Members' Contribution. Pursuant to the Contribution Agreement, the 

Initial Member made a Capital Contribution to the Company in an amount equal to the Initial 

Member Capital Contribution. In connection with the Transferred LLC Interest Sale Agreement, 

the Private Owner acquired from the Initial Member the Transferred LLC Interest representing a 

forty percent (40%) equity interest in the Company in exchange for the Transferred LLC Interest 

Sale Price. After giving effect to the foregoing transactions, (and to the Capital Contributions 

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referenced in Section 6.2 below), the respective Capital Accounts of the Initial Member and the 

Private Owner as ofthe Closing Date are as set forth in the Annex I (the Member Schedule). 

(b) From and after the Closing Date (and except as provided in Section 5.2 

below), the Members shall have no obligation to make any additional Capital Contributions to the 

Company. 

5.2 Intentionally Omitted. 

5.3 Discretionary Funding Advance. 

(a) In the event there are (X) insufficient funds in the Collection Account to 

make Funding Draws or (Y) one (1) or more participants fails to fund its share of a Funding Draw 

with respect to a Participated Loan, in each case with respect to specific Loans (and related 

Acquired Property), the Manager may, in its discretion, make an advance to the Company (the 

"Discretionary Funding Advance"), to the extent (i) not otherwise available under the Revolver 

Documents (unless the Revolver Lender fails to fund an Advance Loan requested by the 

Company, as the borrower, under the Revolving Credit Agreement), and (ii) permitted by the 

other Ancillary Documents, which Discretionary Funding Advance shall be reimbursable (and 

shall accrue interest as set forth herein) only to the extent used exclusively for the applicable 

Funding Draws for specified Loans (or related Acquired Property). In no event may Discretionary 

Funding Advances be used for payment of any Working Capital Expenses other than Funding 

Draws. The proceeds of Discretionary Funding Advances shall be deposited into the Collection 

Account for disbursement therefrom for the making of the applicable Funding Draws. All 

Discretionary Funding Advances, together with a detailed statement of the sources and uses 

thereof (which shall be broken out by the reimbursable and unreimbursable portions thereof) and 

description of the allocation to the Loans for which such Discretionary Funding Advance was 

made, shall be reflected in the Monthly Report with respect to the calendar month during which 

the relevant Discretionary Funding Advance was made. 

(b) Discretionary Funding Advances shall bear interest on the outstanding 

principal amount thereof at a rate per annum equal to the LIBOR Rate in effect from time to time, 

plus three percent (3.0%). Interest shall be calculated on the basis of a 360 day year and actual 

days elapsed. Interest shall accrue on each Discretionary Funding Advance for the day on which 

the Discretionary Funding Advance is made, and shall not accrue on a Discretionary Funding 

Advance, or any portion thereof, for the day on which the Discretionary Funding Advance or such 

portion is paid. Each Discretionary Funding Advance, including interest accrued with respect 

thereto, shall be repaid in accordance with Sections 3.1 and 5.1 of the Custodial and Paying 

Agency Agreement, it being agreed that, as to any specific amounts to be so applied to the 

repayment of one or more Discretionary Funding Advances relating to the same Loan, such 

amounts shall be applied first to outstanding interest on such Discretionary Funding Advances (on 

a pro rata basis as among such Discretionary Funding Advances, if applicable) and then to the 

principal amount (on a pro rata basis as among such Discretionary Funding Advances, if 

applicable). The Manager may not assign, sell, transfer, participate, pledge, or hypothecate, in 

whole or in part, its interest in any Discretionary Funding Advances without the consent of the 

Initial Member, and until the Purchase Money Notes Defeasance Date, the Purchase Money Notes 

Guarantor. 

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5.4 Excess Working Capital Advances. In the event there are insufficient funds in the 

Collection Account and also insufficient available funds under the Revolver (including, as 

applicable, by a permitted release of such funds to the Collection Account or as otherwise 

permitted in the Custodial and Paying Agency Agreement) to (a) pay any Working Capital 

Expenses other than Funding Draws, or (b) fund the Defeasance Account by such amount as may 

be required to cure a Purchase Money Notes Trigger Event (as defined in the Reimbursement, 

Security and Guaranty Agreement), then the Manager (x) shall, except as otherwise provided in 

Section 12.6, make an advance ofits own funds to the Company to be used by the Company for 

payment of such permitted (or required, as applicable) Working Capital Expenses and (y) may 

(but shall not have an obligation to) make an advance of its own funds to the Company to be 

used by the Company for such funding of the Defeasance Account (any such advance to the 

Company pursuant to the foregoing, an "Excess Working Capital Advance"). In no event may 

Excess Working Capital Advances be used for the making of any Funding Draws. No Excess 

Working Capital Advance shall accrue any interest thereon. Excess Working Capital Advances 

shall be repaid in accordance with Section 5.1 of the Custodial and Paying Agency Agreement. 

The proceeds of Excess Working Capital Advances for payment of Working Capital Expenses 

shall be deposited into the Collection Account for disbursement therefrom for the payment of 

such permitted Working Capital Expenses. The proceeds of any Excess Working Capital 

Advance for an applicable funding of the Defeasance Account shall be deposited into (and the 

Manager shall remit such proceeds to the Paying Agent for such deposit into) the Defeasance 

Account. To the extent multiple Working Capital Expenses (payment ofwhich is permitted to be 

made using such Excess Working Capital Advance) are outstanding, any funding or use by the 

Manager ofExcess Working Capital Advances for payment ofall or any ofthe same shall follow 

the relevant priorities as set forth in the Priority of Payments and in Section 3.1 ofthe Custodial 

and Paying Agency Agreement, as applicable. All Excess Working Capital Advances, together 

with a detailed statement of the sources and uses thereof (which shall be broken out by the 

reimbursable and unreimbursable portions thereof), shall be reflected in the Monthly Report with 

respect to the calendar month during which the relevant Excess Working Capital Advance was 

made. The Manager may not assign, sell, transfer, participate, pledge, or hypothecate, in whole 

or in part, its interest in any Excess Working Capital Advances without the consent ofthe Initial 

Member. 

ARTICLE VI 


Capital Accounts; Allocations; Priority of Payments; Distributions 


6.1 Capital Accounts. A Capital Account shall be established and maintained for 

each Member to which shall be credited the Capital Contributions made by such Member and 

such Member's allocable share of Net Income (and items thereof), and from which shall be 

deducted distributions to such Member of cash or other Property and such Member's allocable 

share ofNet Loss (and items thereof). As to the Private Owner, the initial Capital Account shall 

be equal to the Transferred LLC Interest Sale Price. A Member's Capital Account also shall be 

adjusted for items specially allocated to such Member under this ARTICLE VI. The Capital 

Accounts of the Members generally shall be adjusted and maintained in accordance with 

Treasury Regulations Section 1.704-1(b)(2)(iv); provided, however, that such adjustments to, 

and maintenance of, the Capital Accounts shall not adversely affect the manner in which 

distributions are to be made to the Members under Section 6.6. 

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6.2 Allocations to Capital Accounts. Allocation ofNet Income and Net Loss shall be 

made as provided in this Article VI. 

(a) Except as otherwise provided in this Agreement, Net Income and Net Loss 

(and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the 

Company shall be allocated among the Members in a manner such that, after giving effect to the 

special allocations set forth in Section 6.2(b), the Capital Account balance of each Member, 

immediately after making such allocation, is, as nearly as possible, equal to (i) the distributions 

that would be made to such Member pursuant to Section 6.6 if the Company were dissolved, its 

affairs wound up and its assets sold for cash equal to their Book Value, all Company liabilities 

were satisfied (limited with respect to each nomecourse liability to the tax bases of the assets 

securing such liability), and the net assets of the Company were distributed, in accordance with 

Section 9.2(c), to the Members immediately after making such allocation, minus (ii) such 

Member's share of "partnership minimum gain" and "partner nomecourse debt minimum gain" 

(as such terms are used in Treasury Regulations Section 1.704-2), computed immediately prior to 

the hypothetical sale of assets. 

(b) Allocations in Special Circumstances. The following special allocations 

shall be made in the following order: 

(i) Minimum Gain Chargeback. Notwithstanding any other provision 

ofthis ARTICLE VI, ifthere is a net decrease in minimum gain (as it corresponds 

to the definition of "partnership minimum gain" in Treasury Regulations 

Section 1.704-2(b)(2) and (d)) during any Fiscal Year, the Members shall be 

specially allocated items of Company income and gain for such Fiscal Year (and, 

if necessary, subsequent Fiscal Years) in an amount equal to the portion of such 

Member's share of the net decrease in minimum gain, determined in accordance 

with Treasury Regulations Section 1.704-2(±) and (g). This Section 6.2(b)(i) is 

intended to comply with the "minimum gain chargeback" requirement in such 

section of the Treasury Regulations and shall be interpreted consistently 

therewith. 

(ii) Member Minimum Gain Chargeback. Notwithstanding any other 

provision of this ARTICLE VI other than Section 6.2(b)(i), if there is a net 

decrease in minimum gain attributable to a Member nomecourse debt (as it 

corresponds to the definition of "partnership nomecourse debt minimum gain" in 

Treasury Regulations Section 1.704-2(i)) during any Fiscal Year, each Member 

shall be specially allocated items of Company income and gain for such Fiscal 

Year (and, if necessary, subsequent Fiscal Years) in an amount equal to the 

portion of such Member's share of the net decrease in such minimum gain 

attributable to such Member's nomecourse debt, determined in accordance with 

Treasury Regulations Section 1.704-2(i). This Section 6.2(b)(ii) is intended to 

comply with the "partner minimum gain chargeback" requirement in such section 

ofthe Treasury Regulations and shall be interpreted consistently therewith. 

(iii) Qualified Income Offiet. In the event any Member, for any reason, 

whether expected or not, has an Adjusted Capital Account Deficit, items of 

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Company income and gain shall be specially allocated to each such Member in an 

amount and manner sufficient to eliminate, to the extent required by the Treasury 

Regulations, such Adjusted Capital Account Deficit as quickly as possible, 

provided that an allocation pursuant to this Section 6.2(b)(iii) shall be made only 

if and to the extent that such Member would have such Adjusted Capital Account 

Deficit after all other allocations provided for in Section 6.2 have been tentatively 

made as if this Section 6.2(b)(iii) were not in this Agreement. This 

Section 6.2(b)(iii) is intended to comply with the "qualified income offset" 

provisions in Treasury Regulations Section 1.704-l(b)(2)(ii)(d) and shall be 

interpreted consistently therewith. 

(iv) Nonrecourse Deductions. Any nonrecourse deductions attributable 

to a Member nonrecourse debt (as described in Treasury Regulations 

Section 1.704-2(i)) shall be allocated to the Member who bearsthe economic risk 

ofloss with respect to such nonrecourse debt. Otherwise, nonrecourse deductions 

shall be allocable in accordance with the Members' respective Percentage 

Interests. 

(v) Loss Allocation Limitation. No allocation ofNet Loss (or any item 

thereof) shall be made to any Member to the extent that such allocation would 

create or increase a Member's Adjusted Capital Account Deficit. If, in the 

allocation ofNet Loss (or any item thereof), less than all Members would have an 

Adjusted Capital Account Deficit as a result ofsuch allocation, then any Net Loss 

(or item thereof) not allocable to any such Member(s) as a result of such 

limitation shall be allocated (subject to such limitation) to the other Member so as 

to allocate the maximum permissible Net Loss to each Member under Treasury 

Regulation Section 1. 704-1 (b)(2)(ii)( d). 

(vi) Curative Allocations. The allocation provisiOns of this 

Section 6.2(b) are intended to comply with certain requirements of the Treasury 

Regulations. Notwithstanding any other provisions of this Article VI, any 

allocation effected pursuant to this Section 6.2(b) shall be taken into account in 

allocating Net Income and Net Loss among the Members such that the cumulative 

effect of all such allocations achieves the fundamental purpose of Section 6.2(a), 

so that the Capital Account balances correspond to the amounts distributable to 

the Members. 

(c) Transfer of or Change in LLC Interests. The Tax Matters Member is 

authorized to adopt any convention or combination of conventions likely to be upheld for federal 

income tax purposes regarding the allocation of items of Company income, gain, loss, deduction 

and expense with respect to a transferred LLC Interest. A transferee of an LLC Interest in the 

Company shall succeed to the Capital Account ofthe transferor Member to the extent it relates to 

the transferred LLC Interest. 

6.3 Tax Allocations. 

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(a) General Rules. Except as otherwise provided in Section 6.3(b), for each 

Fiscal Year, items of Company income, gain, loss, deduction and expense shall be allocated, for 

federal, state and local income tax purposes among the Members in the same manner as the Net 

Income (and items thereof) or Net Loss (and items thereof) of which such items are components 

were allocated pursuant to Section 6.2. 

(b) Section 704(c) of the Code. Income, gains, losses and deductions with 

respect to any property (other than cash) contributed or deemed contributed to the capital of the 

Company shall, solely for income tax purposes, be allocated among the Members so as to take 

account of any variation between the adjusted basis of such property to the Company for federal 

income tax purposes and its Fair Market Value at the time of the contribution or deemed 

contribution in accordance with Section 704(c) of the Code and the Treasury Regulations 

promulgated thereunder. Such allocations shall be made in such manner and utilizing such 

permissible tax elections as determined in good faith by the Tax Matters Member, following 

consultation with the Initial Member. In the event of a revaluation of Property pursuant to the 

definition of Book Value, subsequent allocations of income, gains, losses or deductions with 

respect to such Property shall take account of any variation between the Book Value and Fair 

Market Value of such Property, as so determined from time to time, in accordance with 

Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. Such 

allocations shall be made in such manner and utilizing such permissible Tax elections as 

determined in good faith by the Tax Matters Member, following consultation with the Initial 

Member. For the avoidance of doubt, any losses recognized by the Company that are attributable 

to property acquired by the Company pursuant to the Contribution Agreement and that are 

deferred pursuant to Section 707(b)(l) or Section 267(a) ofthe Code shall, solely for income tax 

purposes, be allocated to the Initial Member. 

(c) Capital Accounts Not Affected. Allocations pursuant to this Section 6.3 

are solely for federal, state and local tax purposes and shall not affect, or in any way be taken into 

account in computing, any Member's Capital Account or allocable share ofNet Income (or items 

thereof) or Net Loss (or items thereof). 

(d) Tax Allocations Binding. The Members acknowledge that they are aware 

ofthe Tax consequences ofthe allocations made by this Section 6.3 and hereby agree to be bound 

by the provisions of this Section 6.3 in reporting their respective shares of items of Company 

income, gain, loss, deduction and expense. 

6.4 Determinations bv Tax Matters Member. All matters concerning the computation 

of the Capital Accounts, the allocation of items of Company income, gain, loss, deduction and 

expense and the adoption of any accounting procedures not expressly provided for by the terms 

of this Agreement shall be determined by the Tax Matters Member in good faith, following 

consultation with the Initial Member. Following such consultation, such determinations shall be 

final and conclusive as to all the Members. Without in any way limiting the scope of the 

foregoing, if and to the extent that, for income tax purposes, any contribution to or distribution 

by the Company or any payment by any Member or by the Company is recharacterized, the Tax 

Matters Member may, in good faith following consultation with the Initial Member, specially 

allocate items of Company income, gain, loss, deduction or expense and/or make correlative 

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adjustments to the Capital Accounts of the Members in a manner so that the net amount of 

income, gain, loss, deduction and expense realized by each relevant party (after taking into 

account such special allocations) and the net Capital Account balances of the Members (after 

taking into account such special allocations and adjustments) shall, as nearly as possible, achieve 

the fundamental purpose of Section 6.2(a), such that the Capital Account balances correspond to 

the amounts distributable to the Members, as ifsuch recharacterization had not occurred. 

6.5 Prioritv of Pavments. Each calendar month the amounts deposited in the 

Distribution Account under the Custodial and Paying Agency Agreement shall be distributed by 

the Paying Agent in the order of the Priority of Payments; provided, however, that for the 

avoidance of doubt, to the extent amounts are available for distribution to the Members with 

respect to their respective LLC Interests (such available amounts, the "Distributable Cash"), 

such Distributable Cash shall be distributed to the Members in accordance with Section 6.6 

below. 

6.6 Distributions. 

(a) No Right to Withdraw. No Member shall have the right to withdraw 

capital or demand or receive distributions or other returns of any amount in its Capital Account, 

except as expressly provided in this Agreement. 

(b) Ordinary Distributions. 

(i) Timing. Distributable Cash, if any, shall be distributed to the 

Members on a monthly basis by the Paying Agent out ofthe Distribution Account 

in the manner set forth in the Custodial and Paying Agency Agreement; provided. 

however. that the Manager shall instruct the Paying Agent as to how such 

distributions are to be allocated as between the Initial Member and the Private 

Owner based on Section 6.6(b)(ii) below (which instructions shall be included in 

one or more reports to be provided to Paying Agent in accordance with 

Section 7 .4(b)). 

(ii) Distributions of Distributable Cash. Each distribution of 

Distributable Cash shall be made to the Members as follows: 

(A) first, sixty percent (60%) to the Initial Member and forty 

percent (40%) to the Private Owner, until the time at which the First 

Incentive Threshold Event occurs; and 

(B) thereafter, sixty-five percent (65%) to the Initial Member 

and thirty-five percent (35%) to the Private Owner, until the time at which 

the Second Incentive Threshold Event occurs; and 

(C) thereafter, seventy percent (70%) to the Initial Member and 

thirty percent (30%) to the Private Owner. 

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For the avoidance of doubt, distributions to the Members occurring on the 

Distribution Date on which any of the First Incentive Threshold Event or the 

Second Incentive Threshold Event occurs shall, (x) with respect to all 

distributions up to the amount required for reaching such First Incentive 

Threshold Event or Second Incentive Threshold Event, as applicable, be allocated 

without regard to the occurrence of such First Incentive Threshold Event or 

Second Incentive Threshold Event, as applicable, and (y) with respect to all 

remaining distributions on such Distribution Date, be allocated taking into 

account the occurrence of such First Incentive Threshold Event or Second 

Incentive Threshold Event, as applicable. 

(iii) Incentive Threshold Events. The "First Incentive Threshold 

Event" shall occur as of a Distribution Date if (A) the aggregate distributions 

made to the Private Owner pursuant to Section 6.6(b)(ii) as of such Distribution 

Date is equal to or greater than the product of two (2.0) and the Incentive 

Threshold Base Amount, and (B) the Incentive Threshold as of such Distribution 

Date (determined based on the Threshold Increase Amount for the First Incentive 

Threshold Event) is equal to zero. The "Second Incentive Threshold Event" 

shall occur as of a Distribution Date if(A) the aggregate distributions made to the 

Private Owner pursuant to Section 6.6(b)(ii) as of such Distribution Date is equal 

to or greater than the product of two and one-half (2.5) and the Incentive 

Threshold Base Amount, and (B) the Incentive Threshold as of such Distribution 

Date (determined based on the Threshold Increase Amount for the Second 

Incentive Threshold Event) is equal to zero. 

(iv) Incentive Threshold. The "Incentive Threshold" shall be 

determined as follows: 

(A) as of the Closing Date, the Incentive Threshold shall be 

equal to the Transferred LLC Interest Sale Price (the "Incentive 

Threshold Base Amount"); and 

(B) as of any Distribution Date, the Incentive Threshold (as 

determined separately with respect to each ofthe First Incentive Threshold 

Event and the Second Incentive Threshold Event) shall be an amount 

equal to (1) the sum of (i) the applicable Incentive Threshold as of the 

preceding Distribution Date (or, in the case of the first Distribution Date, 

the Closing Date), and (ii) the applicable Threshold Increase Amount, 

minus (2) the monthly distribution made to the Private Owner pursuant to 

Section 6.6(b)Cii) on such Distribution Date (excluding any payments in 

respect of the Management Fee and repayments of Excess Working 

Capital Advances and Discretionary Funding Advances); provided, that, 

if, as of any Distribution Date, the amount referred to in clause (B)(2) of 

Section 6.6(b)(iii) is greater than the amount referred to in clause (B)(l) of 

Section 6.6(b)Ciii), then the applicable Incentive Threshold shall be 

deemed to be zero for such Distribution Date and all subsequent 

Distribution Dates. 

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(c) Restrictions on Distributions. The foregoing provisions ofthis Article VI 

to the contrary notwithstanding, no distribution shall be made if such distribution would violate 

any contract or agreement to which the Company is then a party or any Law or directive of any 

Governmental Authority then applicable to the Company. 

(d) Withholding. Notwithstanding any other provision ofthis Agreement, the 

Manager is authorized to take any action that it determines to be necessary or appropriate to cause 

the Company to comply with any foreign or United States federal, state or local withholding 

requirement with respect to any allocation, payment or distribution by the Company to any 

Member or other Person. All amounts so withheld shall be treated as distributions to the 

applicable Members under the applicable provisions of this Agreement. If any such withholding 

requirement with respect to any Member exceeds the amount distributable to such Member under 

the applicable provisions of this Agreement, or if any such withholding requirement was not 

satisfied with respect to any amount previously allocated or distributed to such Member, such 

Member and any successor or assignee with respect to such Member's LLC Interest hereby agrees 

to indemnify and hold harmless the Manager and the Company for such excess amount or such 

withholding requirement, as the case may be. 

(e) Record Holders. Any distribution of Property, whether pursuant to this 

Article VI or otherwise, shall be made only to Persons that, according to the books and records of 

the Company, were the holders ofrecord ofLLC Interests on the date determined by the Manager 

as ofwhich the Members are entitled to any such distribution. 

(f) Final Distribution. The final distribution following dissolution of the 

Company (the "Final Distribution") shall be made in accordance with the provisions of 

Section 9.2. 

ARTICLE VII 


Accounting, Reporting and Taxation 


7.1 Fiscal Year. The books and records of the Company shall be kept on an accrual 

basis and the fiscal year ofthe Company shall commence on January 1 and end on December 31 

(the "Fiscal Year''). 

7.2 Maintenance ofBooks and Records. 

(a) Maintenance of Books and Records. At all times during the continuance 

of the Company, the Manager shall cause to be kept and maintained (including by the Servicer 

and any Ownership Entity and including records transferred by the Initial Member and any 

predecessors-in-interest (including SFG) to the Company in connection with its conveyance ofthe 

Loans to the Company under the Contribution Agreement), at all times, at the Company's chief 

executive office referred to in Section 2.4, a complete and accurate set of files, books and records 

regarding the Loans and the Underlying Collateral, and the Company's and the relevant secured 

parties' interests in the Loans and the Underlying Collateral, including records relating to the 

Collection Account, the Escrow Accounts, any account(s) created under the Revolver, any 

liquidity reserve account (if permitted), the Defeasance Account, and the disbursement of all Loan 

Proceeds. This obligation to maintain a complete and accurate set ofrecords shall encompass all 

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files in the Manager's or the Company's custody, possession or control pertaining to the Loans 

and the Underlying Collateral, including (except as required to be held by the Custodian pursuant 

to the Custodial and Paying Agency Agreement) all original and other documentation pertaining 

to the Loans and the Underlying Collateral, all documentation relating to items of income and 

expense pertaining to the Loans and the Underlying Collateral, and all of the Manager's (and the 

Servicer's and any Subservicer's) internal memoranda pertaining to the Loans and the Underlying 

Collateral. The books of account shall be maintained in a manner that provides sufficient 

assurance that: (a) transactions of the Company are executed in accordance with the general or 

specific authorization of the Manager consistent with the provisions of this Agreement; and 

(b) transactions of the Company are recorded in such form and manner as will: (i) permit 

preparation of federal, state and local income and franchise tax returns and information returns in 

accordance with this Agreement and as required by Law; (ii) permit preparation ofthe Company's 

financial statements in accordance with GAAP and as otherwise set forth herein and the 

provisions of the reports required to be provided hereunder; and (iii) maintain accountability for 

the Company's assets. 

(b) Retention ofBooks and Records. The Manager shall cause all such books 

and records to be maintained and retained until the date that is the later often (10) years after the 

Closing Date and three (3) years after the date on which the Final Distribution is made. All such 

books and records shall be available during such period for inspection by the Initial Member, the 

FDIC or any of their respective representatives (including any Governmental Authority) and 

agents at the Company's chief executive office referred to in Section 2.4 at all reasonable times 

during business hours on any Business Day (or, in the case of any such inspection after the term 

hereof, at such other location as is provided by notice to the Initial Member and the FDIC), in 

each instance upon two (2) Business Days' prior notice to the Manager. Upon request by the 

Initial Member or the FDIC, the Manager shall promptly send copies (the number of copies of 

which shall be reasonable) of such books and records to such requesting Person or its designee. 

The Manager shall provide the Initial Member and the FDIC with reasonable advance notice of 

the Manager's intention to destroy or dispose of any documents or files relating to the Loans and, 

upon the request ofthe Initial Member or the FDIC, shall allow such requesting Person to recover 

the same (or copies thereof) from the Company and in the case both the Initial Member and the 

FDIC so request the same, the FDIC shall have the right to recover such documents or files, but 

the Initial Member shall have the right to make copies of such applicable documents or files so 

long as such copies are made while such documents files remain with the Manager or the 

Company (and prior to recovery of the same by the FDIC). The Manager shall also maintain 

complete and accurate records reflecting the status of Taxes, ground leases or other recurring 

charges which could become a Lien on any Underlying CollateraL Any expense incurred by the 

Initial Member or the FDIC and any reasonable out-of-pocket expense incurred by the Company 

in connection with the exercise by the Initial Member or the FDIC of its respective rights in this 

Section 7 .2(b) to recover or make (or otherwise receive) copies of books, records, documents or 

files shall be borne by such Person so exercising such rights; provided, however, that any expense 

incident to the exercise of such rights pursuant to this Section 7.2(b) as a result of or during the 

continuance of an Event of Default shall in all cases be borne by the Private Owner (except to the 

extent such Event of Default is attributable exclusively to a Manager having been appointed by 

the Initial Member following removal of the Private Owner in such applicable capacity, or to any 

applicable Servicer (and any of its Subservicers) having been engaged by the Initial Member, the 

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Company or the applicable replacement Manager following such removal ofthe Private Owner as 

the Manager, in each case that is not an Affiliate ofthe Private Owner). 

7.3 Financial Statements. 

(a) Annual Financial Statements. As soon as practicable following, but no 

later than ninety (90) days immediately after, the end of each Fiscal Year (commencing with 

respect to the 2010 Fiscal Year), the Manager shall prepare and deliver to the Initial Member an 

audited consolidated balance sheet of the Company and the Ownership Entities as at the end of 

such Fiscal Year, and audited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such Fiscal Year, each prepared in accordance with 

GAAP and accompanied by the Accountants' report thereon, which shall be certified in the 

customary manner by the Accountants. 

(b) Quarterly Financial Information. As soon as practicable following, but no 

later than thirty (30) days immediately after, the end of each quarter of each Fiscal Year (other 

than the last quarter ofsuch Fiscal Year, and commencing with the calendar quarter ending on or 

about June 30, 2010), the Manager shall prepare and deliver to the Initial Member unaudited 

consolidated balance sheet of the Company and the Ownership Entities as at the end of such 

calendar quarter, and unaudited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such calendar quarter (for the first such report, covering 

the period from the Closing Date through the end of such calendar quarter), each prepared in 

accordance with GAAP. 

7.4 Additional Reporting and Notice Requirements. 

(a) Manager's Duty to Initial Member and Secured Parties; Deliverv of 

Certain Notices. In addition to such other reports and access to books, records and reports as are 

required to be provided under this Agreement, the Manager shall cause to be delivered to the 

Initial Member, the Revolver Lender and the Purchase Money Notes Guarantor such information 

as is specified in Exhibit B (in addition to the Monthly Report) and such other information relating 

to the Loans, the Underlying Collateral, the Company, the Servicers and any Subservicers as the 

Initial Member, the Revolver Lender or the Purchase Money Notes Guarantor may reasonably 

request from time to time and, in any case, shall ensure that the Initial Member, the Revolver 

Lender and the Purchase Money Notes Guarantor are promptly advised, in writing, of any matter 

of which the Manager, any Servicer or any Subservicer becomes aware relating to the Loans, the 

Underlying Collateral, the Collection Account, the Escrow Accounts, any accounts created under 

the Revolver, the Defeasance Account, or any Borrower or Obligor that materially and adversely 

affects the interests ofthe Initial Member hereunder, the Revolver Lender or of any secured party 

under the Reimbursement, Security and Guaranty Agreement. Without limiting the generality of 

the foregoing, the Manager shall cause to be delivered to the Initial Member information 

indicating any possible Environmental Hazards with respect to any Underlying Collateral. To the 

extent that the Initial Member requests information which is dependent upon obtaining such 

information from a Borrower, Obligor or other third party, the Manager shall cause to be made 

commercially reasonable efforts to obtain such information but it shall not be a breach by the 

Manager of this Agreement if the Manager fails to cause such information to be provided to the 

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Initial Member because a Borrower, Obligor or other Person has failed to provide such 

information after such efforts have been made. 

(b) Monthly Reports. On or prior to the Distribution Date for each month, 

commencing on the Distribution Date following the calendar month in which the Closing Date 

occurs, the Company shall deliver or cause the Manager to deliver to the Revolver Lender, the 

Paying Agent, the Initial Member and the Purchase Money Notes Guarantor the Monthly Report 

with respect to the relevant Due Period, which Monthly Report shall include the Distribution Date 

Report specifying the amounts and recipients of all funds to be distributed by the Paying Agent on 

such Distribution Date; provided however, that (unless the Company and the Initial Member agree 

otherwise) the Initial Member will prepare and deliver to the Revolver Lender, the Paying Agent 

and the Purchase Money Notes Guarantor the first Monthly Report (including a Distribution Date 

Report) on behalf of the Company on or before June 30, 2010 for all Due Periods ending on such 

date. Following receipt by the Paying Agent of the Monthly Report (including the Distribution 

Date Report) with respect to a given Due Period, the Paying Agent shall prepare and deliver the 

Custodian and Paying Agent Report with respect to such Due Period in accordance with the terms 

ofthe Custodial and Paying Agency Agreement. Each Monthly Report (including the Distribution 

Date Report) prepared and delivered by the Manager shall be certified by the chief financial 

officer (or an equivalent officer) ofthe Manager. Each Monthly Report prepared and delivered by 

the Manager shall also include a certification ofthe Manager that all withdrawals by the Manager 

from the Collection Account during such Due Period were made in accordance with the terms of 

this Agreement and the Custodial and Paying Agency Agreement. 

(c) Annual Compliance Certificates. The Manager shall, and shall cause each 

Servicer and any Subservicer to, deliver to the Initial Member, the Revolver Lender and the 

Purchase Money Notes Guarantor, on or before March 15 of each year, commencing in the year 

2011, an officer's certificate stating, as to the signer thereof, that (i) a review of such party's (in 

the case of the Manager, for the avoidance of doubt, in any capacity under this Agreement) 

activities during the preceding Fiscal Year (or other applicable period as set forth below in this 

Section 7.4(c))and of its performance under this Agreement (or, as applicable, the Servicing 

Agreement or any Subservicing Agreement) has been made under such officer's supervision, and 

(ii) to the best of such officer's knowledge and belief, based on such review, such party (in the 

case of the Manager, for the avoidance of doubt, in any capacity under this Agreement) has 

fulfilled all ofits obligations under this Agreement (or, as applicable, the Servicing Agreement or 

Subservicing Agreement) in all material respects throughout such year (or other applicable period 

as set forth below in this Section 7.4(c)) or, ifthere has been a failure to fulfill any such obligation 

in any material respect, specifying each such failure and the nature and status thereof. The first 

such officer's certificate shall cover the period commencing on the Closing Date (and with respect 

to each Loan, shall include relevant information with respect thereto for the period commencing 

on the Servicing Transfer Date for such Loan) and continuing through the end of the 2010 Fiscal 

Year. In the event a Servicer or any Subservicer was terminated, resigned or otherwise performed 

in such capacity for only part of a year (or other applicable period, as the case may be, with 

respect to the period commencing, with respect to any Loan, on the applicable Servicing Transfer 

Date through the end of the 2010 Fiscal Year), such party shall provide an officer's certificate 

pursuant to this Section 7.4(c) with respect to such portion ofthe year (or other applicable period). 

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(d) Annual Compliance Report. On or before March 15 of each year, 

commencing in the year 2011, the Manager shall cause each Servicer and Subservicer to provide 

to each of the Paying Agent, the Initial Member, the Revolver Lender and the Purchase Money 

Notes Guarantor the annual reports (including the independent accountant report) for the prior 

Fiscal Year (or other applicable period as set forth below) required under Section 1122 of 

Regulation AB (regardless of whether any such requirements apply, by their terms, only to 

companies registered or required to file reports with the Securities and Exchange Commission) 

with respect to the relevant servicing criteria provisions of Section 1122(d)(1) of Regulation AB 

that are applicable to the servicing being conducted under this Agreement (and the Servicing 

Agreement) pursuant to Section 12.3(d) below. The first such reports shall cover the period 

commencing on the Closing Date (and with respect to each Loan, shall include the relevant 

information with respect thereto for the period from the applicable Servicing Transfer Date) and 

continuing through the end ofthe 2010 Fiscal Year. 

(e) Audits. Until the later ofthe date that is ten (1 0) years after the Closing 

Date and the date that is three (3) years after the Final Distribution, the Manager shall, and shall 

cause each Servicer and any Subservicer to, (i) provide any representative of the Initial Member 

(including any Governmental Authority), during normal business hours and on reasonable notice, 

with access to all of the books of account, reports and records relating to the Loans or any 

Underlying Collateral, the Servicing Obligations, the Collection Account, the Escrow Accounts, 

any account created under the Servicing Agreement, the Defeasance Account, the Revolver 

Documents or accounts created thereunder, disbursements under the Custodial and Paying Agency 

Agreement, distributions hereunder or any other matters relating to this Agreement or the rights or 

obligations hereunder or under the Ancillary Documents; (ii) permit such representatives to make 

copies of and extracts from the same, (iii) allow the Initial Member to cause such books to be 

audited by accountants selected by the Initial Member, and (iv) allow the Initial Member's 

representatives to discuss the Company's, the Manager's and any Servicer's and any 

Subservicer' s affairs, finances and accounts, as they relate to the Loans, the Underlying Collateral, 

the Servicing Obligations, the Collection Account, the Escrow Accounts, any accounts created 

under the Revolver, the Defeasance Account, or any other matters relating to this Agreement, the 

Ancillary Documents, or the rights or obligations hereunder and thereunder, with the Company, 

the Manager's, the Servicer's and any Subservicer's officers, directors, employees, attorneys and 

accountants (and by this provision the Company and the Manager hereby authorize the 

Company's, the Manager's the Servicer's and any Subservicer's accountants to discuss such 

affairs, finances and accounts with such representatives). Any expense incurred by the Initial 

Member and any reasonable out-of-pocket expense incurred by the Company in connection with 

the exercise by the Initial Member of its rights in this Section 7.4(e) shall be borne by the Initial 

Member; provided, however, that any expense incident to the exercise by the Initial Member ofits 

rights pursuant to this Section 7.4(e) as a result of or during the continuance of an Event of 

Default shall in all cases be borne by the Private Owner (except to the extent such Event of 

Default is attributable exclusively to a Manager having been appointed by the Initial Member 

following removal of the Private Owner in such capacity, or to any applicable Servicer (and its 

Subservicers) having been engaged by the Initial Member, the Company or the applicable 

replacement Manager following such removal of the Private Owner as the Manager, in each case 

that is not an Affiliate ofthe Private Owner). 

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(f) In addition to the foregoing, the Manager shall provide or cause to be 

provided to the Initial Member, all reports, information (financial or otherwise), certificates and 

other documents required to be provided by the Company pursuant to the Revolver and pursuant 

to the Reimbursement, Security and Guaranty Agreement, and by the Servicer under the Servicing 

Agreement. 

(g) The rights afforded to the Members under this Section 7.4 are in addition 

to, and not in limitation of, the rights ofthe Members under Section 18-305(a) ofthe Act. Section 

18-305(c) ofthe Act shall not apply in relation to the Initial Member. 

7.5 Designation ofTax Matters Member. The Private Owner is hereby designated as 

the "Tax Matters Member" under Section 6231(a)(7) of the Code and under other similar Laws 

of other relevant jurisdictions, to manage, in consultation with the Initial Member, administrative 

tax proceedings conducted at the Company level by the Internal Revenue Service or other Tax 

authorities with respect to Company matters. Each Member expressly consents to such 

designation and agrees that, upon the request of the Tax Matters Member, it will execute, 

acknowledge, deliver, file and record at the appropriate public offices such documents as may be 

necessary or appropriate to evidence such consent. The Tax Matters Member is specifically 

directed and authorized to take whatever steps the Tax Matters Member in its sole and absolute 

discretion deems necessary or desirable to perfect such designation, including, without 

limitation, filing any forms or documents with the Internal Revenue Service (or other Tax 

authorities) and taking such other action as may from time to time be required under the Code, 

Treasury Regulations or other Laws. The Tax Matters Member shall keep the other Members 

fully informed as to any Tax audits of the Company, including promptly providing the other 

Members with copies of any correspondence from any Taxing authority and permitting the other 

Member to participate in any conferences or meetings with any Taxing authority and in any 

subsequent administrative or judicial proceedings. The Tax Matters Member shall have the 

authority, following consultation with the Initial Member, to make any Tax elections on behalf of 

the Company permitted to be made, including the election pursuant to Section 754, under any 

section ofthe Code or the Treasury Regulations promulgated thereunder or under other Laws. In 

the event the Company may be deemed to be a "small partnership" as described in 

Section 6231(a)(l)(B), each Member consents to the Company's electing to be treated as a 

partnership to which the provisions ofCode Section 6221 et. seq. apply (thereby electing to have 

Code Section 6231(a)(l)(B)(i) not apply). The Initial Member may, at any time following the 

occurrence and during the continuation of an Event of Default, remove the Private Owner as the 

Tax Matters Member, appoint itself (or any other willing Member at the time) as the Tax Matters 

Member, and serve (or cause such other Member to so serve) in such capacity; provided that 

such removal shall not relieve the Private Owner as Tax Matters Member of any obligations or 

liabilities under this Agreement or any Ancillary Document arising, relating to, occurring, or 

required to have been paid or performed by, the Private Owner as the Tax Matters Member in its 

capacity as such. 

7.6 Tax Information. Within ninety (90) days after the end of each Fiscal Year, the 

Tax Matters Member shall send, or cause to be sent to, each Person who was a Member at any 

time during the Fiscal Year then ended a Schedule K-1 and such Company tax information as the 

Tax Matters Member reasonably believes shall be necessary for the preparation by such Person 

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of its United States federal, state and local tax returns in accordance with any Law. Such 

information shall include a statement showing such Person's share of distributions, income, gain, 

loss, deductions and expenses and other relevant items of the Company for such Fiscal Year. 

Promptly upon the request of any Member (or any former Member, for tax years during which 

such Person was a Member), the Tax Matters Member will furnish to such Member (or former 

Member): 

(a) United States federal, state and local income tax returns or information 

returns, if any, filed by the Company; and 

(b) at the sole cost and expense of the requesting Member, such other 

information as such Member may reasonably request for the purpose of applying for refunds of 

withholding taxes. 

7.7 Business Plans. As promptly as possible, but in no event later than July 15, 2010 

(and, as applicable, with current information as of June 30, 2010) the Manager shall deliver to 

the Initial Member written plans (each, a "Business Plan") detailing the strategy to be used by it 

in managing and disposing of the assets of the Company in respect of all of the Loans for 

achieving the Company's purposes with respect thereto, in conformance with the Servicing 

Standard, based, to the extent appropriate, on information gathered by the Company with respect 

to the Loans, which shall include (i) individual Business Plans for (A) each ofthe ten (10) largest 

Loans based on their Unpaid Principal Balance as ofthe Cut-Off Date (as set forth on the Loan 

Schedule), and (B) the Construction Loans (as such term is defined in the Revolving Credit 

Agreement) that have outstanding Funding Draws as of the Cut-Off Date necessary for the 

completion of construction of the related Underlying Collateral, provided, however, that for 

purposes ifthis Section 7. 7, notwithstanding subsection (i) of the definition of Unpaid Principal 

Balance, the Unpaid Principal Balance of any Loan Participation shall be the Unpaid Principal 

Balance of the whole loan to which the participation interest relates, and (ii) a consolidated 

Business Plan covering all Loans (a "Consolidated Business Plan"). With respect to the first 

such Business Plans and Consolidated Business Plan, the Manager shall meet with the Initial 

Member as reasonably requested by the Initial Member from time to time during the thirty (30) 

Business Days following the Initial Member's receipt of the same, to review and discuss such 

Business Plans and Consolidated Business Plan, including changes thereto suggested by the 

Initial Member. Within thirty (30) Business Days following expiration of such review period, 

the Manager will deliver to the Initial Member a final version of such Business Plans and 

Consolidated Business Plan reflecting such changes as the Manager considers to be appropriate 

in light ofits discussions with the Initial Member during such review period. The Manager shall 

thereafter review and revise each Business Plan and Consolidated Business Plan as the 

circumstances may require, and in any event provide periodic updates to such Business Plans 

(and for each such update, the same shall cover the ten (10) largest Loans based on their Unpaid 

Principal Balance as of the time of such update determined by Unpaid Principal Balance on a 

whole loan basis for Loan Participations) and Consolidated Business Plan to the Initial Member, 

in January (current as ofDecember 31 ofthe immediately preceding year) and July (current as of 

June 30 ofsuch year) of each year, commencing in January 2011, with each such periodic update 

to de delivered as part ofthe Monthly Reports due at such time pursuant to Section 7 .4(b), Upon 

reasonable notice by the Initial Member, the Company shall make its personnel who are familiar 

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with such Business Plans and Consolidated Business Plans available during normal business 

hours for the purposes of discussing such Business Plans and Consolidated Business Plans with 

representatives ofthe Initial Member and responding to questions therefrom. 

(a) Each Business Plan and Consolidated Business Plan will set forth a 

strategy for the disposition of the Loans addressed thereby which strategy may consist of one or 

more ofthe following: (i) the pay-off of Loans at a discount; (ii) modifications ofthe related note 

and/or mortgage, including reductions in the mortgage loan interest rate, reductions in the 

principal balance and rescheduling principal payments; (iii) foreclosure upon the related 

Underlying Collateral (or acquisition thereof by deed in lieu of foreclosure) and subsequent sale 

thereof; (iv) assumptions ofLoans by new borrowers; (v) repairs to and, if applicable, completion 

of construction ofthe related Underlying Collateral, with a view towards selling such Underlying 

Collateral or the Loan secured thereby; (vi) sale of a Loan, either singly or in pools, before or after 

restructuring; and (vii) any other method of work-out, rehabilitation and disposition consistent 

with the Servicing Standard and other general duties ofthe Company specified in this Agreement. 

(b) Each Business Plan and Consolidated Business Plan will set forth a 

strategy for the disposition of each related Acquired Property which strategy may consist of one or 

more ofthe following: (i) the sale or leasing ofthe Acquired Property in whole or in parts, or in 

pools; (ii) making repairs to and, if applicable, completion of construction the Acquired Property 

or making changes to the Acquired Property so that it may be used for uses other than its current 

use, with a view toward selling the Acquired Property; (iii) rehabilitation or improvement and, if 

applicable, completion of construction of the Acquired Property, with a view toward selling the 

Acquired Property; (iv) continued leasing or sales activity with respect to the Acquired Property 

available for leasing or sale (in whole or in part) at the time it is transferred to a Ownership Entity; 

and (v) maintenance, landscaping and general upkeep ofthe Acquired Property. 

(c) Each Business Plan or Consolidated Business Plan shall contain the 

Company's estimate ofthe present value ofthe net amount that is recoverable with respect to each 

related Loan and projected Working Capital Expenses with respect thereto, and, in reasonable 

detail, the manner of calculation ofsuch estimates. The Consolidated Business Plan shall include 

projected financials including statements of income, assets, and cash flows for the Company. 

Such cash flow projections shall, for the Consolidated Business Plan and each update thereto, 

include an Excel model of projected cash flows by month, as ofJun 30 and December 31 of each 

year (or, in the case of the initial Consolidated Business Plan, as of the date of preparation and 

delivery thereof) and covering a period not less than the upcoming six (6) months, including 

projected monthly cash inflows on the Loans and REO Property, projected Excess Working 

Capital Advances and/or Discretionary Funding Advances, projected outflows of Servicing 

Expenses, projected Funding Draws, projected funding draws under the Revolver, projected net 

monthly cash available for deposit into the Defeasance Account, and the amount and allocation of 

any projected distributions to the Initial Member and the Private Owner. 

ARTICLE VIII 


Restrictions on Disposition ofLLC Interests 


8.1 Limitations on Disposition ofLLC Interests. Except as otherwise provided in this 

ARTICLE VIII, the Private Owner shall not directly Dispose of or permit to be Disposed of, all 

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or any part of its LLC Interest or any of its rights or interests under this Agreement, except only 

that the Private Owner may make a direct, outright transfer of its entire (but not less than its 

entire) LLC Interest if, and only if, (a) (i) the transferee is a single Person that is a Qualified 

Transferee, (ii) such transferee delivers to the Initial Member a Purchaser Eligibility Certification 

and the representations and warranties made by such transferee therein shall be true and correct 

both before and after giving effect to such transfer of the LLC Interest, and (iii) the Private 

Owner first obtains the prior written consent of the Initial Member and, until the Purchase 

Money Notes Defeasance Date, the Purchase Money Notes Guarantor to such transfer, or 

(b) such Disposition is done by or at the direction ofthe Initial Member pursuant to Sections 3.13 

or 3.14. Transfers of indirect interest in the Private Owner shall be permitted so long as such 

transfers, either individually or in the aggregate, do not result in (X) a Change of Control or (Y) 

the Private Owner no longer constituting a Qualified Transferee. Notwithstanding anything in 

this Agreement to the contrary, the Private Owner may not under any circumstances, directly 

Dispose (or cause the disposition) of less than all ofthe Private Owner LLC Interest. Transfers 

by the Private Member satisfying the foregoing criteria are hereinafter referred to as "Permitted 

Dispositions." 

8.2 Change of ControL The Private Owner will not permit any Change of Control to 

occur with respect to the Private Owner unless (i) it first obtains the prior written consent ofthe 

Initial Member, and (ii) following such Change of Control, the Private Owner would be a 

Qualified Transferee. Without limitation of the preceding sentence, the Private Owner will 

provide the Initial Member with immediate notice at the address specified in Section 13.6 ofthe 

occurrence ofany Change ofControl with respect to the Private Owner. 

8.3 Additional Provisions Relating to Permitted Dispositions. Except as otherwise 

expressly provided in this Section 8.3, the following provisions shall apply to each Permitted 

Disposition under this Article VIII: 

(a) In the event the Private Owner proposes to make a Permitted Disposition, 

the Private Owner shall be required to pay any and all filing and recording fees, fees of counsel 

and accountants and other out-of-pocket costs and expenses reasonably incurred by the Initial 

Member and/or the Company in connection with such Permitted Disposition. 

(b) The transferee in a Permitted Disposition shall deliver to the Company, 

with a copy to the Initial Member, an agreement, in form and substance reasonably satisfactory to 

the Initial Member, by which such transferee shall (i) agree to become a party to and be bound by 

this Agreement as the "Private Owner," agree (if the transferor Member, prior to such transfer, 

also was the Manager) to be appointed as the "Manager", and without limitation ofthe generality 

ofthe foregoing, agree to be bound by the other terms of Section 8.4 hereof, (ii) assume and agree 

to perform when due all ofthe obligations ofthe Private Owner and the Manager (ifthe transferor 

Member, prior to such transfer, also was the Manager) under this Agreement, and (iii) represent 

and warrant that it complies with the requirements set forth in Article X 

(c) In connection with each Permitted Disposition, the Private Owner and the 

transferee shall deliver to the Company and the Initial Member such other documents and 

instruments as the Initial Member reasonably may request and which are required to effect the 

Permitted Disposition and substitute the transferee as a Member. 

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8.4 Effect ofPermitted Dispositions. 

(a) Upon consummation of any Permitted Disposition: 

(i) the transferee shall be admitted as a member of the Company and 

be deemed to be a party to this Agreement as the "Private Owner" and, if the 

transferor Member, prior to such transfer, also was the Manager, such transferee 

shall be appointed as the Manager (in the place ofthe transferor Member); 

(ii) the transferred LLC Interest shall continue to be subject to all the 

provisions of this Agreement, and the transferee Member shall have the same 

status as the Private Owner had at the time of consummation of such Permitted 

Disposition and, without limiting the generality ofthe foregoing, any outstanding 

breach, misrepresentation, violation or default (with respect to this Agreement or 

any Ancillary Document) by any direct or indirect predecessor to the transferee as 

the Member, or by any Affiliate of any such predecessor Member, shall be 

deemed to constitute an outstanding breach, misrepresentation, violation or 

default as the case may be, by the transferee Member; 

(iii) subject to Section 8.4(b) and the last sentence of Section 13.8, the 

transferor Member shall cease to be a member ofthe Company (and accordingly, 

except as expressly otherwise provided in Section 8.4(b) or the last sentence of 

Section 13.8, shall cease to be responsible for the payment or performance of any 

ofthe obligations or liabilities under this Agreement ofthe Private Owner, in any 

capacity hereunder). 

(b) No Permitted Disposition (and no resulting withdrawal or resignation of 

the transferor Member from the Company) shall: 

(i) relieve the transferor Member of any of the obligations or 

liabilities ofthe transferor Member, in any capacity, under this Agreement or any 

Ancillary Document required to have been paid or performed prior to the 

consummation of such Permitted Disposition (or of any liability it may have 

arising out of any breach, misrepresentation, violation or default by the transferor 

Member prior to such consummation); 

(ii) result in the termination of, relieve the transferor Member (or any 

ofits Affiliates) of, or otherwise affect, any ofthe obligations or liabilities ofthe 

transferor Member, in any capacity, or its Affiliates under, any Related Party 

Agreement (such Related Party Agreements to continue in effect in accordance 

with their respective terms), except to the extent expressly provided in such 

Related Party Agreement; or 

(iii) dissolve the Company. 

8.5 Effect of Prohibited Dispositions. Any attempted or purported Disposition ofthe 

Private Owner LLC Interest (or any portion thereof) not strictly in accordance with the terms of 

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this Agreement shall be void ab initio and of no force or effect whatsoever. The Private Owner 

shall not be entitled, and hereby specifically waives any right, to receive Company distributions 

during (i) the period between any attempted or purported Disposition ofthe Private Owner LLC 

Interest (or any portion thereof) not strictly in accordance with the terms ofthis Agreement and 

the express rescission of such attempted or purported Disposition by the Private Owner and (ii) 

during any period when a Member is in violation of Section 8.2, provided that all such omitted 

Company distributions shall (subject to Section 8.6) be made to the Private Owner (without 

interest) forthwith after the end ofthe relevant suspension period. 

8.6 Distributions After Disposition. Distributions with respect to an LLC Interest 

made on or after the effective date of the Permitted Disposition of such LLC Interest shall be 

made to the transferee Member with respect to such LLC Interest, regardless of when such 

distributions accrued on the books ofthe Company. 

8.7 Transfers By Initial Member. Notwithstanding anything to the contrary contained 

in this Agreement, except as provided by applicable Law, there shall be no restriction on the 

Initial Member's ability to Dispose ofthe Initial Member LLC Interest, directly or indirectly, to 

any Person and the Private Owner shall have no right to purchase or right-of-first-refusal in 

connection with any such sale; provided, however, that, the Initial Member may not assign the 

consent and voting rights associated with the Initial Member LLC Interest to more than one (1) 

Person (for the avoidance of doubt, except as expressly provided above, the foregoing restriction 

shall not otherwise limit the Initial Member's right to Dispose of any interest associated with the 

Initial Member LLC Interest); and provided, further, that in the event the Initial Member 

determines to sell the Initial Member LLC Interest through an auction process, the Private Owner 

shall be entitled to participate in such auction on the same terms that apply generally to other 

participants in the auction. At the election of the Person then constituting the "Initial Member" 

under this Agreement, the transferee in any direct Disposition of any portion of the Initial 

Member LLC Interest shall, upon delivery to the Company, with a copy to the Private Owner, of 

an agreement by which such transferee shall agree to become a party to and be bound by this 

Agreement as the "Initial Member," be admitted as a member ofthe Company and be deemed to 

be a party to this Agreement as the "Initial Member", and thereupon, subject to last sentence of 

Section 13.8, the transferor Member shall cease to be a member of the Company (and 

accordingly, except as expressly otherwise provided in last sentence of Section 13.8, shall cease 

to be responsible for the payment or performance of any of the obligations or liabilities under 

this Agreement ofthe Initial Member). 

8.8 Resignation: Dissolution. 

(a) The Private Owner may not withdraw or resign from the Company, except 

(i) in connection with a Permitted Disposition made in accordance with the applicable provisions 

ofthis Article VIII or (ii) with the prior written consent ofthe Initial Member. 

(b) The Private Owner covenants that it shall not allow a Dissolution Event to 

occur with respect to itself. 

(c) Section 18-304 ofthe Act shall not apply to the Company. Nothing in this 

Section 8.8(c) shall limit the terms ofSection 9.1 hereof. 

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(d) Except as is otherwise expressly provided in this Agreement, no Member 

shall be entitled to receive any payment pursuant to Section 18-604 ofthe Act. 

8.9 Applicable Law Withdrawal. If, as a result of applicable Law, the ownership of 

an LLC Interest by a Member becomes illegal or is likely to become illegal or the applicable 

Law more likely than not requires divestiture of such Member's LLC Interest, or the applicable 

Law would require the Company to register as an investment company under the Investment 

Company Act, then the Manager and such Member shall use their respective commercially 

reasonable efforts to avoid a violation of any such applicable Law by such Member or the need 

for the Company to register as an investment company. These steps may include, depending on 

the provisions of such applicable Law, (i) arranging for the sale ofthe Member's LLC Interest to 

a third party upon terms reasonably satisfactory to the Member in a transaction that complies 

with ARTICLE VIII and ARTICLE X; (ii) making any appropriate applications to the relevant 

Governmental Authority, (iii) prohibiting such Member from making further Capital 

Contributions, and converting its LLC Interest into a special interest with no voting or similar 

rights but with only an economic right (identical to its prior rights as a Member), or 

(iv) permitting the Member to withdraw from the Company for a "payment" to such Member 

equal to the value ofits LLC Interest at the time ofwithdrawal, such value to be determined by a 

third party appraiser mutually agreeable to the Manager and all Members. The aforesaid 

"payment" shall be made in cash unless the Manager determines that the payment in cash would 

be economically detrimental to the Company, in which case such payment may be made in kind, 

subject to the applicable Law. The timing ofany such withdrawal must be mutually agreeable to 

the Member and the Manager taking proper account ofthe effective date of the applicable Law 

or registration requirement that is the basis for the withdrawal or other remedy provided herein 

and the need ofthe Manager for a reasonable period oftime to find a solution to the illegality or 

requirement for divestiture. Such illegality or registration requirement must be established by 

(x) an opinion of counsel (which counsel shall be reasonably satisfactory to the Manager and the 

Initial Member) substantially to the effect that the ownership of the LLC Interest more likely 

than not will result in such illegality or requirement for registration or divestiture or (y) upon a 

ruling or order from a Governmental Authority. 

ARTICLE IX 


Dissolution and Winding-Up ofthe Company 


9.1 Dissolution. A dissolution ofthe Company shall take place upon the first to occur 

ofthe following: 

(a) the agreement by all Members to dissolve the Company (it being 

understood and agreed that neither Member, acting alone, shall have the right unilaterally to 

dissolve the Company); 

(b) the sale of all or substantially all of the Company Property (other than 

cash and cash equivalent instruments), including as an entirety or substantially as an entirety; or 

(c) notice to such effect to the Private Owner from the Initial Member at any 

time after the occurrence of a Dissolution Event or an Insolvency Event with respect to the Private 

Owner or any Person that Controls the Private Owner; or 

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(d) exercise of the Clean-Up Call and liquidation of all remaining Loans and 

Acquired Property ofthe Company in accordance with Section 12.17. 

9.2 Winding-Up Procedures. If a dissolution ofthe Company pursuant to Section 9.1 

occurs, subject to the Company's compliance with its obligation under the other agreements to 

which it is a party, the other terms and conditions ofthis Agreement or the Ancillary Documents, 

the Manager shall proceed as promptly as practicable to wind up the affairs of the Company in 

an orderly and businesslike manner. A fmal accounting shall be made by the Manager. As part 

ofthe winding up ofthe affairs ofthe Company, the following steps will be taken: 

(a) The assets ofthe Company shall be sold except to the extent that some or 

all ofthe assets of the Company are retained by the Company for distribution to the Members as 

hereinafter provided. 

(b) The Company shall comply with Section 18-804(b) ofthe Act. 

(c) Distributions of the assets of the Company after a dissolution of the 

Company shall be conducted as follows: 

(i) first, to creditors, but excluding the Members who are creditors 

(other than the Revolver Lender and the Initial Member (to the extent it continues 

to hold the Purchase Money Notes)), to the extent otherwise permitted by Law 

(and, to the extent permitted, in accordance with the Priority of Payments), in 

satisfaction of liabilities of the Company (whether by payment or the making of 

reasonable provision for payment thereof); 

(ii) second, to the Members or former Members who are creditors, to 

the extent otherwise permitted by Law, in satisfaction of liabilities of the 

Company (whether by payment or the making of reasonable provision for 

payment thereof) other than liabilities for which reasonable provision for payment 

has been made and liabilities for distributions to the Members and former 

Members under Section 18-601 ofthe Act; 

(iii) third, to the Members and former Members in satisfaction of 

liabilities (if any) for distributions under Section 18-601 ofthe Act; and 

(iv) finally, to the Members in the manner set forth in Section 6.6Cb). 

(d) Upon dissolution, the Manager, may, with the consent of all the Members, 

(i) liquidate all or a portion of the Company assets and apply the proceeds of such liquidation in 

the manner set forth in Section 9.2(c) and/or (ii) hire independent appraisers to appraise the value 

of Company assets not sold or otherwise disposed of or determine the Fair Market Value of such 

assets, and allocate any unrealized gain or loss determined by such appraisal to the Members' 

respective Capital Accounts as though the properties in question had been sold on the date of 

distribution and, after giving effect to any such adjustment, distribute said assets in the manner set 

forth in Section 9.2(c), provided that the Manager shall in good faith attempt to liquidate sufficient 

C9mpany assets to satisfy in cash the debts and liabilities described in Section 9.2. If a Member 

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shall, upon the advice of counsel, determine that there is a reasonable likelihood that any 

distribution in kind of an asset would cause such Member to be in violation of any Law, such 

Member and the Manager shall each use its best efforts to make alternative arrangements for the 

sale or transfer into an escrow account of any such distribution on mutually agreeable terms. 

9.3 Termination ofthe Company. 

Upon the dissolution of the Company and the completion of the winding up 

process set forth in Section 9 .2, the Manager (or such other Person or Persons as the Act may 

require or permit) shall cause the cancellation ofthe Certificate and any filings made as provided 

in clause (c) of Section 4.3 and shall take (or cause to be taken) such other actions as may be 

necessary to terminate the Company. 

ARTICLE X 


Qualified Transferees 


10.1 Qualified Transferees. Each Member, other than the Initial Member (including, 

for the avoidance of doubt, its Successors and transferees), shall at all times be in compliance 

with the following (and any proposed transferee of any LLC Interest in compliance with the 

following shall be deemed a "Qualified Transferee''): 

(a) Organization; Good Standing; Licenses. Such Member (i) is a Single 

Purpose Entity duly organized, validly existing and in good standing under the Laws of the state 

of its organization, (ii) has qualified or will qualify to do business as a foreign corporation, 

partnership or other entity and will remain so qualified, and is and will remain in good standing, in 

each jurisdiction in which the character of its properties or the nature of its activities makes such 

qualification necessary and in which failure to so qualify would have a material adverse effect 

upon such Member or its ability to perform its obligations hereunder, (iii) has full power to own 

its property, to carry on its business as presently conducted, and to enter into and perform its 

obligations under this Agreement, (iv) has all licenses or other governmental approvals necessary 

to perform its obligations hereunder; and (v) in the case of the Private Owner, as of the Closing 

Date, is, directly or indirectly, at least 50.1% owned, and is Controlled, by its Specified Parent. 

(b) Authorization; No Violation. The execution and delivery by such Member 

ofthis Agreement and the consummation ofthe transactions contemplated hereby have been duly 

and validly authorized by all necessary action. Neither the execution and delivery of this 

Agreement, nor the consummation of the transactions herein contemplated, nor compliance with 

the provisions hereof, will conflict with or result in a breach of, or constitute a default under, 

(i) any ofthe provisions of any Law binding on such Member or its properties, (ii) the constituent 

documents ofsuch Member, or (iii) any ofthe provisions of any indenture, mortgage, contract or 

other instrument to which such Member is a party or by which it is bound or result in the creation 

or imposition of any Lien upon any of its property pursuant to the terms of any such indenture, 

mortgage, contract or other instrument. 

(c) Governmental Aoorovals. All actions, approvals, consents, waivers, 

exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to 

be taken, given or obtained, as the case may be, by or from any Governmental Authority or 

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agency that are necessary in connection with the execution and delivery by such Member of this 

Agreement and the consummation ofthe transactions contemplated hereby and the performance of 

its obligations hereunder, have been duly taken, given or obtained, as the case may be, are in full 

force and effect, are not subject to any pending proceedings or appeals {administrative, judicial or 

otherwise) and either the time within which any appeal therefrom may be taken or review thereof 

may be obtained has expired or no review thereof may be obtained or appeal therefrom taken. 

{d) No Litigation. On the date such Member becomes a party to this 

Agreement, there is no action, suit, proceeding or investigation pending or threatened against such 

Member before any Governmental Authority. 

(e) No Violation of Orders.. Decrees.. etc. Such Member is not in default with 

respect to any order or decree of any Governmental Authority or in violation of any Law. 

(f) Third Party Consents. No consents, approvals, waivers or notifications of 

stockholders, creditors, lessors or other nongovernmental persons are required to be obtained by 

such Member in connection with the execution and delivery of this Agreement and the 

consummation of all the transactions herein contemplated and the performance of its obligations 

hereunder. 

(g) Owners Accredited Investors. All of the equity owners of such Member 

are "accredited investors," as that term is defined in Rule 501 under the Securities Act. 

(h) Knowledge and Experience. Such Member, either by itself or through its 

advisers and principals, has such knowledge and experience in the origination, servicing, sale 

and/or purchase of performing and non-performing or distressed loans, including construction 

loans and loans secured by commercial properties, as well as financial and business matters, as to 

enable such Member to utilize the information made available to it with respect to the LLC 

Interest acquired by it and the Loans to evaluate the merits and risks of a purchase of the Private 

Owner LLC Interest and, indirectly, the Loans, and to make an informed decision with respect 

thereto. 

(i) Economic Risks. Such Member acknowledges, understands and 

represents that it is able to bear the economic risks associated with the acquisition and ownership 

ofthe Private Owner LLC Interest and, indirectly, the Loans, including the risk of a total loss of 

its investment in the Company and, indirectly, the Loans and/or the risk that it may be required to 

hold the Private Owner LLC Interest and, indirectly, the Loans for an indefinite period oftime. 

G) No Representations. Such Member hereby acknowledges that, except as is 

otherwise expressly provided in this Agreement, the Transferred LLC Interest Sale Agreement, or 

the Contribution Agreement, none ofthe Initial Member or the FDIC or any Affiliate of either, or 

any of their respective officers, directors, employees, agents or contractors, makes or has made 

any representation or warranty regarding the Company, the LLC Interests or the Loans or the 

value of any Underlying Collateral. 

(k) Due Diligence. Such Member acknowledges and agrees that, whether or 

not information is available with respect to the LLC Interests or the Loans and whether or not it 

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chooses to review any information that is or was made available to it regarding the LLC Interests 

or the Loans, such Member, by itself or through its advisers or principals, has the ability and shall 

be responsible for making its own independent investigation and evaluation ofthe LLC Interests 

and the Loans and the economic, credit or other risks involved in an acquisition of the Private 

Owner LLC Interest and, indirectly, the Loans. Except as is otherwise expressly provided in this 

Agreement, none of the Initial Member or the FDIC or any Affiliate of either, or any of their 

respective officers, directors, employees, agents or contractors, makes or has made any 

representation or warranty as to the completeness or accuracy of any information provided. 

(1) No Securities. Such Member acknowledges and agrees that (i) neither the 

offer nor the sale of the Private Owner LLC Interest (and, indirectly, the Loans) is intended to 

constitute an offer or sale of a "security" within the meaning of the Securities Act or any 

applicable federal or state securities Laws, (ii) no inference that any of the LLC Interests or the 

Loans is a "security" under such federal or state securities Laws shall be drawn from any of the 

certifications, representations or warranties made by any Person in this Agreement, (iii) it is not 

contemplated that any filing will be made with the Securities and Exchange Commission or 

pursuant to the "Blue Sky" or securities Laws of any jurisdiction, and (iv) if any of the LLC 

Interests or the Loans is a security, such may not be resold or otherwise transferred by such 

Member except in accordance with any and all applicable securities and Blue Sky Laws. 

(m) Resales. Such Member is acquiring the Private Owner LLC Interest (and, 

indirectly, the Loans) for its own account and not with a view toward resale in a distribution 

within the meaning ofthe Securities Act. 

(n) Resales in Compliance with Law. Such Member will not (i) offer, pledge, 

sell or otherwise dispose ofthe Private Owner LLC Interest (or any interest therein) or any Loan 

(or any interest therein or evidence thereof) to, or (ii) solicit any offer to buy or accept a transfer, 

pledge or other disposition ofthe Private Owner LLC Interest (or any interest therein) or any Loan 

(or any interest therein or evidence thereof) from, or (iii) otherwise approach or negotiate with 

respect to the Private Owner LLC Interest (or any interest therein) or any Loan (or any interest 

therein or evidence thereof) with, any person or entity in any manner, or take any other action, that 

would (A) not comply with Article VIII, or (B) render the transfer to such Member ofthe Private 

Owner LLC Interest or any interest in any Loan a violation of any Law relating to the issuance, 

regulation, registration or disposition of securities, nor will it authorize any person or entity to so 

act, in any manner with respect to the Private Owner LLC Interest (or any interest therein) or any 

Loan (or interest therein or evidence thereof). 

(o) Acquisition in Compliance with Law. Such Member's acquisition of the 

Private Owner LLC Interest and the resulting investment in the Loans will comply with all 

applicable Laws, including any and all Laws and/or restrictions imposed on resale of the Private 

Owner LLC Interest and the Loans by federal and state securities or Blue Sky Laws. 

(p) Independent Evaluation. Such Member has made an independent 

evaluation of the Company and its assets (including the Loans and related Loan files and/or any 

electronic data made available to it pertaining to the Loans held by the Company). Such Member 

also has conducted such other investigations as it deems appropriate, including searches of 

Uniform Commercial Code, title, court, bankruptcy and other public records. Such Member 

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agrees and represents that it is entering into this Agreement solely on the basis of its own 

investigations and its judgment as to the value of the Private Owner LLC Interest and the nature, 

validity, enforceability, collectability and value of the Loans and all other facts material to their 

ownership, including the legal matters and risks relating to collection and enforcement, and the 

performance of any obligations under any ofthe Loans in any jurisdiction. Such Member further 

acknowledges that no officer, director, employee, agent, representative or contractor ofthe Initial 

Member or any of its Affiliates has been authorized to make any statements or representations 

other than those specifically contained in this Agreement or the Contribution Agreement. 

(q) Embargoed Person. Such Member certifies, represents and warrants that 

(i) no consideration that such Member or any of its Affiliates contributes hereunder or under the 

Ancillary Documents in connection with any transaction regarding any assets will have been 

derived from or related to any activity that is deemed criminal under United States Law; 

(ii) neither it nor any ofits Affiliates or Direct Owners is an Embargoed Person; (iii) neither it nor 

any of its Affiliates or Direct Owners engages in any dealings or transactions, or is otherwise 

"associated with" (as defined in 31 C.F.R. 594.101, et seq.), any Embargoed Person; and (iv) if 

and to the extent such Member or any of its Affiliates are required by Law to maintain an antimoney laundering compliance program under applicable anti-money laundering Laws and 

regulations, including without limitation, the Uniting and Strengthening America by Providing 

Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107­

56)) such compliance programs are currently being maintained. The foregoing certifications, 

representations and warranties shall be based upon a due inquiry and investigation; provided, 

however, that for purposes of determining whether any of the same with respect to indirect 

ownership are true, the undersigned shall not be required to make an investigation into the 

ownership of publicly-traded securities (including securities of open-end investment companies 

registered under the Investment Company Act) or the ownership of assets by a collective 

investment fund that holds assets for employee benefit plans or retirement arrangements. 

(r) ERISA Plan Asset. The assets ofsuch Member (including any successor to 

or transferee of such Member) are not deemed to be "plan assets" within the meaning of Section 

3(42) of the Employee Retirement Income Security Act of 1974 (as amended) ("ERISA")) and 

the "plan asset" regulations set forth in 29 C.F.R. Section 2510.3-101 as promulgated under 

ERISA, modified to the extent applicable by Section 3(42) of ERISA (the "Plan Asset 

Regulation"). 

(s) Purchase Eligibility. Each of such Member and any person that, together 

with its Affiliates, directly or indirectly holds twenty-five percent (25%) or more of the equity 

interests of such Member is and remains capable of truthfully making the representations and 

warranties in the Purchaser Eligibility Certification. 

ARTICLE XI 


Manager Liability 


11.1 Liability ofManager. 

(a) Except as otherwise specifically provided in this Agreement (including in 

the other subsections ofthis Section 11.1 ), the duties (including fiduciary duties) and obligations 

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owed to the Company and the Initial Member by the Manager shall be as provided m 

Section 3.1 (b) hereof. 

(b) The Manager may rely, and shall be protected in acting or refraining from 

acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, 

consent, order, bond, debenture or other paper or document reasonably believed by it to be 

genuine and to have been signed or presented by the proper party or parties. 

(c) The Manager may consult with legal counsel, accountants, appraisers, 

management consultants, investment bankers and other consultants and advisers selected by it, 

and any act taken or omitted to be taken in reliance upon the opinion ofsuch Persons as to matters 

that the Manager reasonably believes to be within such Person's professional or expert 

competence shall be conclusively presumed to have been done or omitted in good faith and in 

accordance with such opinion. 

(d) The Manager shall not be liable to the Company or the Members for its 

good faith reliance on the provisions ofthis Agreement. 

(e) The limitations and exculpation afforded by each provisiOn of this 

Section 11.1 are cumulative and not exclusive. Nothing in this Section 11.1 is intended, or shall 

be deemed, to permit conduct that would otherwise constitute misappropriation of a trade secret of 

the Company under applicable Law or conduct that, even disregarding the terms hereof, otherwise 

would be actionable by the Company or any Member. 

ARTICLE XII 


Servicing of Loans 


12.1 Servicing. 

(a) Appointment and Acceptance as Servicer. Effective as of the Closing 

Date, but subject to Section 3.3 ofthe Contribution Agreement (with which the Manager agrees to 

comply), the Manager is hereby appointed (and hereby accepts the appointment) with full 

authority and responsibility, in its own name, to act as the servicer for the Loans and any 

Underlying Collateral. Until such time as the Company is dissolved and liquidated pursuant to 

Article IX, and except as otherwise provided in Section 12.4 and subject to the interim servicing 

being provided by or on behalf ofthe Initial Member pursuant to Section 3.3 ofthe Contribution 

Agreement, the Manager, shall from and after the Cut-Off Date, be responsible for (and hereby 

assumes responsibility for) servicing, administering, managing and disposing ofthe Loans and the 

Underlying Collateral in accordance with the standards (collectively, the "Servicing Standard") 

set forth in Section 12.2 (such obligations referred to collectively herein as the "Servicing 

Obligations") and the other provisions of this Article XII, including the provisions of 

Section 12.3 (which require that servicing be performed through one or more Qualified Servicers). 

Without in any way limiting the foregoing, but subject to Section 3.3 of the Contribution 

Agreement, the Manager shall cause the Loans (including, for all purposes under this Article XII, 

the related Underlying Collateral) to be serviced as follows: (a) such Loan shall, except as 

provided in the immediately following subsection (b), be serviced by the Servicer(s) appointed in 

accordance with Section 12.3 below, and (b) following the replacement ofthe Servicer as a result 

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of an Event of Default, the Loans shall be serviced by a Servicer appointed by the Initial Member 

in accordance with Section 12.4 below. All servicing of Loans following the Closing Date shall 

be performed in accordance with the terms ofthe Contribution Agreement and this Article XII. 

(b) Servicing and Subservicing Agreement Requirements. Except as is 

otherwise agreed in writing by the Initial Member, each Servicing Agreement (and any 

Subservicing Agreement with any Subservicer) shall, among other things, 

(i) provide for the servicing of the Loans and management of the 

Underlying Collateral by the Servicer (or any Subservicer) in accordance with the 

Servicing Standard and the other terms ofthis Agreement; 

(ii) be terminable upon no more than thirty (30) days prior notice if an 

Event of Default or any default under the Servicing Agreement (or Subservicing 

Agreement) has occurred; 

(iii) provide that the Manager (in its individual capacity) and the Initial 

Member (and, in the case of any Subservicing Agreement, the Servicer) shall be 

entitled to exercise termination rights under the relevant Servicing Agreement or 

Subservicing Agreement (it being understood that the Initial Member shall only 

exercise such termination rights as contemplated or permitted in this Agreement); 

(iv) provide that the Servicer (or any Subservicer) and the Manager (in 

its individual capacity) acknowledge that the Servicing Agreement (or the 

Subservicing Agreement) constitutes a personal services agreement between the 

Manager (in its individual capacity) and the Servicer (or between the Servicer and 

the Subservicer, as applicable); 

(v) provide that (A) each ofthe Company, the Purchase Money Notes 

Guarantor, the Revolver Lender and the FDIC are third party beneficiaries 

thereunder to the extent of any rights expressly granted to such Person under the 

Servicing Agreement or Subservicing Agreement and is entitled to enforce the 

Servicing Agreement or Subservicing Agreement, as applicable, with respect to 

such rights, (B) the Initial Member and, in the case of any Subservicing 

Agreement, the Manager (in its individual capacity) is a third party beneficiary 

thereunder; and further provide that in no event shall any amendment or waiver to 

any such Servicing Agreement or Subservicing Agreement limit or affect any 

rights of any such third party beneficiary thereunder without the express written 

consent ofsuch third party beneficiary; 

(vi) provide that (A) upon the removal of the Private Owner as the 

Manager or the occurrence of an Event of Default, the Initial Member (and any 

successor Manager) may exercise all ofthe rights ofthe Manager thereunder and 

cause the termination or assignment of the same from the Private Owner as the 

Manager to any other Person, without penalty or payment of any fee, and (B) 

upon the occurrence of any default under the Servicing Agreement, the Initial 

Member (and any successor Manager) may exercise all of the rights of (1) the 

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Manager under such Servicing Agreement and cause the termination or 

assignment of the same from the Private Owner as the Manager to any other 

Person, without penalty or payment of any fee, and (2) the Servicer under the 

Subservicing Agreement and cause the termination or assignment of the 

Subservicing Agreement from the Private Owner as the Manager to any other 

Person, without penalty or payment of any fee (it being understood that the Initial 

Member shall only exercise the foregoing rights as contemplated or permitted in 

this Agreement); 

(vii) provide that the Initial Member, the Manager, the Revolver 

Lender, the Purchase Money Notes Guarantor and the Company (and each oftheir 

respective representatives) shall each have access to and the right to review, copy 

and audit the books and records of each Servicer and any Subservicers and that all 

Servicers and all Subservicers shall make available their respective officers, 

directors, employees, accountants and attorneys to answer the Initial Member's, 

the Manager's, the Revolver Lender's, the Purchase Money Notes Guarantor's 

and the Company's (and each of their respective representatives') questions or to 

discuss any matter relating to the Servicer's or Subservicer's affairs, finances and 

accounts, as they relate to the Loans, the Underlying Collateral, the Collection 

Account or any other accounts established or maintained pursuant to this 

Agreement, the Revolver Documents, the Custodial and Paying Agency 

Agreement, the Servicing Agreement or any Subservicing Agreement, or any 

matters relating to the Servicing Agreement or any Subservicing Agreement or 

the rights or obligations thereunder; 

(viii) provide that all Loan Proceeds are to be deposited into the 

Collection Account on a daily basis (without reduction or setoff) within two (2) 

Business Days of receipt and that under no circumstances are funds, other than 

Loan Proceeds and interest and earnings thereon and the proceeds of Excess 

Working Capital Advances and Discretionary Funding Advances, to be 

commingled in the Collection Account; 

(ix) provide that the Servicer or any Subservicer shall not sell, transfer 

or assign its rights under the Servicing Agreement or Subservicing Agreement, as 

applicable, other than Servicer' s rights to delegate to Subservicers certain 

responsibilities thereunder as and to the extent permitted by this Agreement, and 

that any such prohibited sale, transfer or assignment shall be void ab initio; 

(x) provide that (A) the Servicer or any Subservicer consents to the 

immediate termination of the Servicer or Subservicer, as applicable, upon the 

occurrence of a termination event under the Servicing or Subservicing 

Agreement, as applicable, and upon the occurrence of any Insolvency Event with 

respect to the Servicer or Subservicer or any oftheir respective Related Parties, as 

applicable, and (B) the occurrence of any Restricted Servicer Change of Control 

with respect to the Servicer or of any Insolvency Event with respect to the 

Servicer or any Subservicer or any Related Party thereof constitutes a default 

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under the Servicing Agreement or Subservicing Agreement, as applicable; 

provided, however, that, in the case ofthe Servicing Agreement, the occurrence of 

an Insolvency Event with respect to a Subservicer or Related Party thereof (which 

is not an Related Party of the Servicer) may, at the election of the Manager, be 

subject to a cure period of not more than thirty (30) days for replacement of the 

affected Subservicer (in a manner that will permit the Manager to comply with its 

obligations hereunder); 

(xi) provide that there shall be no right of setoff on the part of the 

Servicer or any Subservicer against the Loan Proceeds (or the Company); 

(xii) provide for such other matters as are necessary or appropriate to 

ensure that the Servicer or any Subservicer is obligated to comply with the 

Servicing Obligations ofthe Manager hereunder; 

(xiii) provide a full release and discharge of the Initial Member, the 

Company, the Existing Servicers, the FDIC, in relation to any particular Loan, 

SFG, the Failed Bank and any predecessor-in-interest thereof, any Ownership 

Entities existing as of the applicable Servicing Transfer Date, and all of their 

respective officers, directors, employees, agents, attorneys, contractors and 

representatives, and all of their respective successors, assigns and Affiliates (but 

excluding, in all cases, the Manager (in its individual capacity)) (any such Person, 

a "Prior Servicer" and collectively, the "Prior Servicers"), from any and all 

claims (including any counterclaim or defensive claim), demands, causes of 

action, judgments or legal proceedings and remedies of whatever kind or nature 

that the Servicer had, has or might have in the future, whether known or 

unknown, which are related in any manner whatsoever to the servicing of the 

Loans by the Prior Servicers prior to the applicable Servicing Transfer Date (other 

than due to gross negligence, violation of law or willful misconduct of such Prior 

Servicer); 

(xiv) provide that all Loans registered on the MERS® System shall 

remain registered unless default, foreclosure or similar legal or MERS 

requirements dictate otherwise; 

(xv) provide that the Servicer or any Subservicer shall immediately 

notifY the Manager and the Initial Member upon becoming aware of any 

Subservicer or any Affiliate ofthe Servicer or of any Subservicer at any time, {A) 

being or becoming a partner or joint venturer with any Borrower or Obligor, (B) 

being or becoming an agent of any Borrower or Obligor, or allowing any 

Borrower or Obligor to be an agent of such Servicer or any Subservicer or of any 

Affiliate ofthe Servicer or any Subservicer, or (C) having any interest whatsoever 

in any Borrower or Obligor; 

(xvi) provide that the Servicer shall immediately notifY the Manager and 

the Initial Member ofthe occurrence of any Change ofControl with respect to the 

Servicer; and 

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(xvii) not conflict with the Servicing Standard or any other terms or 

provisions ofthis Agreement, the Custodial and Paying Agency Agreement or any 

ofthe other Ancillary Documents insofar as such other terms or provisions hereof 

or thereof are required to be imposed by the Manager (in its individual capacity) 

on the Servicer (or any Subservicers) in the Servicing Agreement (or 

Subservicing Agreements). Nothing contained in any Servicing Agreement or 

any Subservicing Agreement shall alter any obligation ofthe Manager under this 

Agreement and, in the event of any inconsistency between the Servicing 

Agreement (or any Subservicing Agreement) and the terms of this Agreement, 

among the Parties to this Agreement the terms ofthis Agreement shall control. 

12.2 Servicing Standard. The Manager shall perform the Servicing Obligations: (i) in 

the best interests and for the benefit of the Initial Member and the Company, (ii) in accordance 

with the terms ofthe Loans (and related Loan Documents), (iii) in accordance with the terms of 

this Agreement and the other Ancillary Documents, (iv) in accordance with all applicable Law, 

and (v) to the extent consistent with the foregoing terms, in the same manner in which a prudent 

servicer would service and administer similar loans and in which a prudent servicer would 

manage and administer similar properties for its own portfolio or for other Persons, whichever 

standard is higher, but using no less care and diligence than would be customarily employed by a 

prudent servicer following customary and usual standards of practice of prudent mortgage 

lenders, loan servicers and asset managers servicing, managing and administering similar loans 

and properties on an arms' length basis; provided, however, that, with respect to each Loan and 

related Underlying Collateral, in the absence of a customary and usual standard of practice, the 

Company shall comply with standards and guidelines with respect to similar loans and properties 

in similar situations. The Manager shall cause its Servicing Obligations with respect to the 

Loans and the Underlying Collateral to be performed without regard to (w) any relationship that 

the Company, the Manager, or any Servicer or Subservicer, or any oftheir respective Affiliates 

may have to any Borrower, Obligor or other obligor, or any of their respective Affiliates, 

including any other banking or lending relationship, (x) the Company's, the Manager's, or any 

Servicer's or Subservicer's, obligation to make disbursements and advances with respect to the 

Loans and Underlying Collateral, (y) any relationship that the Servicer or any Subservicer may 

have to each other or to the Company, the Manager or any of their respective Affiliates, or any 

relationship that any oftheir respective Affiliates may have to the Company, the Manager or any 

oftheir respective Affiliates (other than the contractual relationship evidenced by this Agreement 

or the Servicing Agreement or any Subservicing Agreement), and (z) the Manager's, or any 

Servicer's or Subservicer's, right to receive compensation (including the Management Fee and 

any Interim Management Fee) for its services under this Agreement, the Servicing Agreement or 

any Subservicing Agreement. Without limiting the generality of the foregoing, the Manager's 

Servicing Obligations hereunder shall include the following: 

(a) discharging in a timely manner each and every obligation which the Loan 

Documents provide is to be performed by the lender thereunder, on its own behalf and on behalf 

of the Company and the Initial Member and in the case of REO Property, which the Loan 

Documents that were applicable to the Underlying Collateral before it became REO Property 

provided were to be performed by the borrower thereunder in respect of such Underlying 

Collateral (not including payment of debt service under the applicable Loan Documents), together 

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with such additional obligations as are required of the Company under this Agreement, the 

Revolver or the Servicing Agreement in respect ofsuch REO Property; 

(b) incurring costs (including Servicing Expenses and Pre-Approved Charges) 

in accordance with the provisions of the Loan Documents, and in the case of REO Property, in 

accordance with the Loan Documents that were applicable to the REO Property before it became 

REO Property (not including payment of debt service under the applicable Loan Documents) and 

otherwise in accordance with the terms and conditions of the Revolver and the Reimbursement, 

Security and Guaranty Agreement; 

(c) causing insurance to be maintained on the Underlying Collateral 

(including any Acquired Property) with respect to each Loan with respect to which an Ownership 

Entity or the Borrower has failed to maintain required insurance with extended coverage as is 

customary in the area in which the Underlying Collateral is located and in such amounts and with 

such deductibles as the Manager may, in the exercise of its reasonable discretion, determine are 

prudent and as required under this Agreement, the Revolver Documents and the Reimbursement, 

Security and Guaranty Agreement; 

(d) ensuring compliance with the terms and conditions of each insurer under 

any hazard policy and preparing and presenting claims under any policy in a timely fashion in 

accordance with the terms ofthe policy; 

(e) supervising and coordinating the construction, ownership, management, 

leasing and preservation of the Acquired Property as well as all other matters involved in the 

administration, preservation and ultimate disposition ofthe Acquired Property as would be taken 

by a prudent asset manager managing properties similar to the Acquired Property and as required 

ofthe Company under this Agreement, the Revolver Documents and the Reimbursement, Security 

and Guaranty Agreement; 

(f) administering the making of advances to Borrowers under Loans plirsuant 

to and in accordance with the provisions herein and in the Custodial and Paying Agency 

Agreement governing the making ofFunding Draws; 

(g) to the extent consistent with the foregoing, seeking to maximize the timely 

and complete recovery of principal and interest on the Loans and otherwise to maximize the value 

ofthe Loans and the Underlying Collateral; 

(h) except as otherwise set forth in this Agreement, making decisions under, 

and enforcing and performing in accordance with, the Loan Documents all loan administration, 

inspections, review of financial data and other matters involved in the servicing, administration 

and management ofthe Loans and the Underlying Collateral; 

(i) ensuring that all filings required to maintain perfection in any Underlying 

Collateral remain up to date and in force, including Uniform Commercial Code financing 

statements; 

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G) ensuring that each Borrower (or in the case of REO Property, the 

applicable Ownership Entity) is diligently performing all applicable construction work using all 

commercially reasonable efforts in accordance with the requirements of the applicable Loan 

Documents (in the case ofREO Property), the Revolver Documents and ofthis Agreement; and 

(k) providing the Servicers and any Subservicers with copies of such 

Ancillary Documents (or portions thereof) as are necessary for the Servicers or any Subservicers 

to be familiar with in order to perform their respective obligations provided for in this Agreement, 

the Servicing Agreements or the Subservicing Agreements, as applicable. 

12.3 Servicing of Loans. 

(a) Appointment of Servicers. The Manager (in its individual capacity) has 

entered into one or more Servicing Agreements dated the date hereof to provide for the servicing 

and administration and management of the Loans and Underlying Collateral by one or more 

Qualified Servicers named therein (each, together with other Qualified Servicers, a "Servicer"). 

Each Servicer, at all times during which it acts as Servicer, shall continue to satisfy the definition 

of Qualified Servicer. Subject, with respect to the Interim Servicing Period, to the provisions of 

Section 3.3 of the Contribution Agreement, each Loan shall at all times be serviced (and any 

Underlying Collateral managed) by or through at least one (1) Servicer (including any 

subservicers engaged by the Servicer ("Subservicers") as permitted hereunder) and the 

performance of all day-to-day Servicing Obligations of the Manager shall be conducted by or 

through one (1) or more Servicers (including any Subservicers permitted hereunder). Subject to 

the other terms and conditions of this Agreement, any Servicer may be an Affiliate ofthe Private 

Owner or of the Manager. Each Servicer may engage or retain one (1) or more Subservicers, 

including Affiliates ofthe Private Owner or ofthe Manager, to perform certain of its duties under 

the Servicing Agreement, as it may deem necessary and appropriate, by entering into a 

subservicing agreement with each such Subservicer ("Subservicing Agreement"), provided that 

any Subservicer meets (and at all times continues to meet) the requirements set forth in the 

definition of Qualified Servicer and the terms ofthe applicable Subservicing Agreement comply 

with the terms ofthis Agreement and the applicable Servicing Agreement. The costs and fees of 

the Servicers (and any Subservicers) shall be borne exclusively by the Manager in its individual 

capacity without any right of reimbursement from the Company or the Initial Member (it being 

understood that the Manager will receive the Interim Management Fee and Management Fee in 

accordance with Section 12.5 hereof). Under no circumstances shall the Manager transfer, or 

permit to be transferred, to any Servicer or any other Person any ownership interest in the 

servicing rights with respect to the Loans or any right to transfer or sell the servicing rights with 

respect to the Loans (other than in connection with the sale of any Loan), and no Servicer shall be 

permitted to assign, pledge or otherwise transfer to any Subservicer or other Person or purport to 

assign, pledge or otherwise transfer any interest in the servicing rights with respect to the Loans 

(other than in connection with the sale of any Loan), and any purported assignment, pledge or 

other transfer in violation ofthis provision shall be void ab initio and ofno effect. 

(b) Manager Liable for Servicer and Subservicers. Notwithstanding anything 

to the contrary contained herein, the use of any Servicer (or any Subservicer) shall not release the 

Manager from any of its Servicing Obligations or other obligations under this Agreement, and the 

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Manager shall remain responsible and liable for all acts and omissions of each Servicer (and each 

Subservicer of each Servicer) as fully as if such acts and omissions were those of the Manager. 

All actions of each Servicer (or any Subservicer) performed pursuant to the Servicing Agreement 

(or any Subservicing Agreement) shall be performed as an agent ofthe Manager (or, in the case of 

Subservicers, the Servicer). 

(c) Copies of Servicing and Subservicing Agreements. Copies of all fully 

executed Servicing Agreements and Subservicing Agreements, including all supplements and 

amendments thereto, shall be provided to the Initial Member, the Revolver Lender and the 

Purchase Money Notes Guarantor. 

(d) Reffillation AB Reguirements. The Manager shall use commercially 

reasonable efforts to confirm, where applicable, that each Servicer (and any Subservicer) has in 

place policies and procedures to (i) comply with the relevant servicing criteria provisions of 

Section 1122(d)(l) of Regulation AB that are applicable and relate to the servicing being 

conducted under this Agreement, and (ii) provide to the Manager, at the Servicer's (and any 

Subservicer's) expense the annual reports (including the independent accountant report) required 

pursuant to Section 7.4(d) above; provided, however, that the following Regulation AB criteria 

shall not be deemed relevant to the servicing being conducted under this Agreement (or the 

Servicing Agreement): Section 1122(d)(1)(iii) regarding backup servicer requirements; Sections 

1122(d)(3)(i-iv) regarding paying agent requirements; and Section 1122(d)(4)(xv) regarding 

external credit enhancement. 

(e) Servicer and Subservicer Fees. No Servicer or Subservicer shall be paid 

any fees or indemnified out of any Loan Proceeds (or funds in the Collection Account or any 

proceeds disbursed or accounts established, under the Revolver Documents, or any other 

Company account), it being understood that all fees and related costs ofliabilities ofthe Servicers 

and Subservicers shall be the sole responsibility of the Manager (without any right of 

reimbursement from the Company or the Initial Member). 

(f) Fidelity Bond; E&O Insurance. The Servicer and each Subservicer shall 

maintain each ofthe following types ofinsurance coverage having such limits as described below: 

(i) Errors & Omissions Liability with limits of not less than 

$10,000,000 per claim and $10,000,000 in the aggregate. The Manager shall be 

notified immediately upon the reduction of or potential reduction of fifty percent 

(50%) of the limits. The Manager may require that the Servicer and each 

Subservicer purchase additional limits to provide back to the required limits as 

stated above. "Potential reduction of fifty percent (50%)" shall mean any 

knowledge by the Servicer or Subservicer, as applicable, that a claim or the sum 

of all claims, current or initiated after the effective date of policy which would 

reduce the limits by fifty percent (50%). 

(ii) Directors & Officers Liability with limits of not less than 

$10,000,000 each claim and $10,000,000 in the aggregate. 

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(iii) Crime Insurance or a Fidelity Bond in an amount of not less than 

$10,000,000 covering employee theft, forgery & alteration, wire/funds transfer, 

computer fraud, client coverage. Such coverage shall insure all employees or any 

other Persons authorized by the Servicer or any Subservicer to handle any funds, 

money, documents and papers relating to any Loan, and shall protect the Servicer 

or Subservicer, as applicable, against losses arising out of theft, embezzlement, 

fraud, misplacement, and other similar causes. The Manager and the Company 

shall each be named as a loss payee with respect to claims arising out of assets 

handled under this Agreement or any applicable Servicing Agreement or 

Subservicing Agreement. 

(iv) General Liability with limits of not less than $1,000,000 each 

occurrence, $2,000,000 in the aggregate, including coverage for 

products/completed operations, advertising and personal injury. The Manager 

and the Company shall each be named as additional insured. The policy shall 

include a Waiver of Subrogation in favor ofthe Manager and the Company. 

(v) Auto Liability with a combined single limit of not less than 

$1,000,000 to provide coverage for any owned, hired, or non-owned vehicles. 

(vi) Workers Compensation in such amount as required by the states in 

which the Servicer or Subservicer, as applicable, operates, including coverage for 

Employer's Liability in an amount not less than, $1,000,000. The policy shall 

include a Waiver of Subrogation in favor ofthe Manager and the Company. 

(vii) Umbrella Liability in an amount of not less than $10,000,000 each 

occurrence and in the aggregate. 

All such policies shall be written with carriers having a minimum insurer rating of A- VIII 

from A.M. Best and A from Standard & Poor's. All such policies shall have a minimum 

notice of cancellation ofthirty (30) days, except for non-payment of premium whereby a ten 

(10) day notice of cancellation is acceptable. Certificates shall show each of the Manager 

and the Company as certificate holder, or as otherwise designated by the language in clauses 

(i)-(vii) above. 

The Manager shall provide (or shall cause each Servicer and Subservicer to provide) the 

Purchase Money Notes Guarantor, Initial Member and the Revolver Lender with certificates 

evidencing all such policies on the Closing Date (and, with respect to each Loan, on or before 

the applicable Servicing Transfer Date with respect thereto) and each anniversary of the 

Closing Date thereafter, and otherwise upon request ofthe Purchase Money Notes Guarantor, 

Initial Member or the Revolver Lender. Copies of fidelity bonds and insurance policies 

required to be maintained pursuant to this Section 12.3(f) shall be made available to the 

Purchase Money Notes Guarantor, the Initial Member and the Revolver Lender or their 

respective representatives on the Closing Date (and, with respect to each Loan, on or before 

the applicable Servicing Transfer Date with respect thereto), and shall otherwise be made 

available to any of the Purchase Money Notes Guarantor, the Initial Member, the Revolver 

Lender and their respective representatives upon request. 

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(g) MERS Requirements. In the event that any of the Loans are (or are 

required by the terms hereof to be) registered on the MERS® System, (i) the Manager shall, and 

shall cause the Company and each applicable Servicer to, become a member of MERS on or 

before the initial Servicing Transfer Date, and maintain itself as a MERS member in good 

standing (including paying all dues and other fees required to maintain its membership and 

complying with MERS policies and procedures), and (ii) the Servicer shall maintain (or register, 

as applicable) such Loan on the MERS® System and execute and deliver on behalf of the 

Company any and all instruments of assignment and other comparable instruments with respect to 

such assignment or re-recording of a mortgage securing a Loan in the name of MERS®, solely as 

nominee for the Company and its successors and assigns. The Manager shall be designated as the 

"servicer" and the "investor" with respect to the Loans that are registered on the MERS® System, 

and the Servicer shall be designated as the "subservicer" with respect to such Loans. No other 

Person shall be identified on the MERS® System as having any interest in any ofthe Loans unless 

otherwise consented to by the Initial Member. All Loans registered on the MERS® System shall 

remain registered on the MERS® System unless default, foreclosure or similar legal or MERS 

requirements dictate otherwise. The Servicer shall provide the Manager and the Initial Member 

with such reports from the MERS® System as the Manager or the Initial Member, from time to 

time, may request, including to allow the Manager and the Initial Member to verify the Persons 

identified on the MERS® System as having any interest in any ofthe Loans and to confirm that 

the Loans required to be registered on the MERS® System are so registered. The Servicer shall 

also execute and deliver to the Company and the Initial Member the Electronic Tracking 

Agreement in the form of Exhibit B to the Servicing Agreement. Without limiting the foregoing, 

upon the request ofthe Manager or the Initial Member, the Servicer shall cause MERS® to run a 

query with respect to any and all specified fields on the MERS® System with respect to any or all 

of the Loans registered on the MERS® System and provide the results to the Manager and the 

Initial Member and, if requested by the Manager or the Initial Member, shall cause MERS® to 

change the information in such fields, to the extent MERS® will do so in accordance with its 

policies and procedures, to reflect its instructions. 

12.4 Removal ofServicer. 

(a) Removal of Servicer. Upon the occurrence of an Event of Default, in 

addition to any other rights it may have pursuant to this Agreement, any Ancillary Document or 

applicable Law (including the Uniform Commercial Code), whether at law or in equity and 

whether pursuant to statute or regulation or otherwise, the Initial Member shall have the right to 

take, at the Initial Member's option and the Manager's expense, one or more of the following 

actions: (i) upon notice in writing to the Manager (effective at such time as is specified in such 

notice), to act on behalf of the Manager (in its individual capacity) to terminate the existing 

Servicer (and any Subservicers) and to cause the Manager (in its individual capacity) to enter into 

a new Servicing Agreement with a servicer (a "successor Servicer") selected by the Initial 

Member (in its sole and absolute discretion), and (ii) upon notice in writing to the Manager 

(effective at such time as is specified in such notice), to remove the Private Owner as the Manager 

and appoint a successor Manager (which successor Manager may be the Initial Member) in the 

sole discretion of the Initial Member, whereupon (without limitation of Section 13.5), such 

successor Manager shall immediately succeed to all, or such portion as the Initial Member and 

successor Manager agree, ofthe rights and obligations ofthe Private Owner as the Manager ofthe 

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Company, and, in such case, the Initial Member shall further have the right (A) to terminate the 

Servicer (in its sole and absolute discretion), and cause or permit the successor Manager selected 

by the Initial Member (and/or the Company directly, as determined by the Initial Member in its 

sole discretion) to enter into a Servicing Agreement with a successor Servicer, such Servicing 

Agreement to be between the applicable successor Manager (and/or the Company) and the 

successor Servicer chosen by the Initial Member, or (B) to retain the existing Servicer and cause 

or permit the successor Manager (and/or the Company directly, as determined by the Initial 

Member in its sole discretion) to enter into a new Servicing Agreement between such successor 

Manager (and/or the Company) and the Servicer (or to effect an assignment of the existing 

Servicing Agreement from the existing Manager (in its individual capacity) to such successor 

Manager (and/or the Company). None of the Initial Member, any successor Manager or the 

Company shall have any obligation to assume any obligations or liabilities of the removed 

Manager (in its individual capacity) under or in connection with any Servicing Agreement. 

Notwithstanding the foregoing, the Initial Member shall not exercise its right to terminate a 

Servicer that is not an Affiliate of the Manager or of the Private Owner in the absence of (1) an 

Event of Default attributable in whole or in part to the failure by the Servicer or any of its 

Subservicers to perform any material obligation under its applicable Servicing Agreement or 

Subservicing Agreement, (2) an Event of Default as described in clause (b) or clause (g) of the 

definition thereof with respect to the Servicer or any Related Party thereof or any of its 

Subservicers or any Related Party thereof, (3) an Event of Default resulting from the failure ofthe 

Servicer or any of its Subservicers at any time to meet the cnteria of a Qualified Servicer, ( 4) an 

Event of Default as described in clause (e) ofthe definition thereof, to the extent relating to such 

Servicer or any of its Subservicers, or (5) any other Event of Default that consists of a breach of a 

servicing obligation under this Agreement. Subject to the foregoing, the Manager hereby consents 

to the immediate termination ofthe Servicer upon the occurrence of any Event ofDefault. For the 

avoidance of doubt, the rights ofthe Initial Member in this Section 12.4 are in addition to, and can 

be exercised independently ofthe rights ofthe Initial Member in Sections 3.2, 3.13, and 3.14; and 

in any event all rights and remedies ofthe Initial Member under this Agreement with respect to or 

following an Event ofDefault shall be cumulative, and any or all thereofmay be exercised instead 

of or in addition to each other or any other remedies available to the Initial Member, whether 

under this Agreement, any Ancillary Document or otherwise. 

(b) Awointment of Successor Servicer. If the Initial Member exercises its 

right to act on behalf of the Manager (in its individual capacity) to appoint a successor Servicer, 

the costs and expenses associated with such successor Servicer (including any servicing fees) shall 

be borne by the Manager (and not the Company or the Initial Member), and no termination or 

other fee shall be due to the Manager or the Servicer or any Subservicer in connection with or as a 

result ofany such action; provided, however, that, ifthe Initial Member has also exercised its right 

to remove the Manager (such that such removed Manager no longer has rights to the Management 

Fee), then, with respect to servicing fees ofsuch successor Servicer (but not costs and expenses in 

connection with the replacement of the Servicer with such successor Servicer) such removed 

Manager shall be responsible only for the portion of such fees that, as of any particular 

Distribution Date, are in excess ofthe Management Fee payable to the successor Manager on such 

Distribution Date. 

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(c) Removal of Manager; Management Fee. If the Initial Member exercises 

its right pursuant to this Section 12.4 to remove the Private Owner as the Manager and appoint a 

successor Manager, (i) the successor Manager selected by the Initial Member shall immediately 

succeed to all, or such portion as the Initial Member and successor Manager agree, of the rights 

and obligations of the Private Owner as the Manager of the Company, and all references in this 

Agreement to the Private Owner, in its capacity as Manager of the Company, shall be deemed to 

be references to the successor Manager so appointed by the Initial Member, (ii) without limitation 

of Section 13.5, the Initial Member shall have the right to determine, in its sole discretion, the 

extent, terms and conditions of the appointment of any such successor Manager, including as to 

compensation (whether from the Initial Member or the Company), indemnification by the 

Company, term of appointment and removal rights, in each case without the necessity for any 

consent from the Private Owner or any other Person, and (iii) the successor Manager appointed by 

the Initial Member shall be entitled to be paid the Interim Management Fee and Management Fee 

(or, in each case, such portion thereof as the Initial Member and the successor Manager agree) in 

accordance with the terms of this Agreement and the Custodial and Paying Agency Agreement. 

The removal ofthe Private Owner as the Manager shall not relieve the Private Owner of(x) any of 

the liabilities and/or obligations ofthe Private Owner as Manager to the extent required under the 

terms of this Agreement to have been paid and/or performed prior to such removal or (y) any 

liability the Private Owner may have arising out of any act or omission by the Private Owner as 

Manager. No successor to the Private Owner as Manager shall have any liability or obligation for 

any of the matters described in clause (x) or (y) of the preceding sentence, except as may be 

otherwise specified pursuant to any modification to this Agreement pursuant to Section 13.5. In 

connection with any such removal ofthe Manager, the Initial Member and any successor Manager 

selected by the Initial Member are each hereby authorized and empowered, as attorney-in-fact or 

otherwise, to execute and deliver, on behalf of and at the expense ofthe removed Manager (in its 

individual capacity), any and all documents and other instruments and to do or take any and all 

acts necessary or appropriate to effect the termination and replacement of such Manager and the 

Servicer and, in the event the Initial Member decides to retain a new Servicer, to enter into a new 

Servicing Agreement between the successor Manager (and/or the Company) and the Servicer or to 

effect an assignment of the existing Servicing Agreement from the removed Manager (in its 

individual capacity) to the successor Manager (and/or the Company). 

(d) Cooperation To Facilitate Transfer. In the event any of the Manager, a 

Servicer or a Subservicer is terminated pursuant to the provisions ofthis Article XII, the Manager 

(in its individual capacity) shall, and shall cause any Servicer (and any Subservicer) to, provide 

the Initial Member and any successor Manager or Servicer in a timely manner with all documents, 

records and data (including electronic documents, records and data) requested by the Initial 

Member or any successor Manager or Servicer to enable such Person to assume the 

responsibilities as Manager under this Agreement and any applicable Servicing Agreement, and to 

cooperate with the Initial Member in effecting the termination of any Servicer (or Subservicer) or 

the Manager's rights as "Manager" under this Agreement, including, in each case subject to 

applicable requirements in the Custodial and Paying Agency Agreement, the Revolver Documents 

and the Reimbursement, Security and Guaranty Agreement, (x) the transfer within one 

(1) Business Day to such account as the Initial Member may specify of all cash amounts which, at 

the time, shall be or should have been credited to the Collection Account or are thereafter received 

with respect to any Loans or Acquired Property, and (y) the transfer of alllockbox accounts with 

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respect to which payments or other amounts with respect to the Loans are directed or the 

redirection of all such payments and other amounts to such account as the Initial Member may 

specify, and (z) the assignment to the Initial Member (or the applicable successor Manager or 

Servicer as indicated by the Initial Member) of the right to access all such lockbox accounts, the 

Collection Account, any Defeasance Account, any accounts established under the Revolver 

Documents and any other account into which Loan Proceeds or Borrower escrow payments are 

deposited or held. The Manager (in its individual capacity) shall be liable for all costs and 

expenses incurred by the Initial Member or the Company (x) associated with the complete transfer 

of the servicing data, (y) associated with the completion, correction or manipulation of servicing 

data as may be required to correct errors or insufficiencies in the servicing data to enable the 

Initial Member and any successor Manager and successor Servicer (and Subservicers) to service 

the Loans and Acquired Property properly and effectively, and (z) to retain and maintain the 

services of a successor Manager and/or successor Servicer (and any Subservicers), it being 

understood that, as to the compensation to be paid to the successor Manager (and servicing fees 

due and payable to any Servicer or Subservicer engaged by or through such successor Manager), 

the removed Manager shall be responsible only for the portion ofsuch compensation and fees that, 

as of any particular Distribution Date, are in excess of the Management Fee payable to the 

successor Manager on such Distribution Date. Within a reasonable time after receipt of a written 

request of the Manager (in its individual capacity) for the same, the Initial Member shall provide 

reasonable documentation evidencing such costs and expenses, but the Initial Member's right to 

reimbursement of such costs and expenses (and to exercise offset rights under Section 4.6(h) on 

account thereof) shall not be subject to or contingent upon the provision ofsuch documentation. 

(e) Power of Attorney. The Company hereby irrevocably constitutes and 

appoints the Initial Member and any officer or agent thereof, with full power ofsubstitution, as its 

true and lawful attorney-in-fact for the purposes of this Agreement and allowing the Initial 

Member to perfect, preserve the validity, perfection and priority of, and enforce any Lien granted 

by this Agreement and, after the occurrence and during the continuance of any Event of Default, 

to exercise its rights, remedies and powers and privileges under this Agreement. This appointment 

as attorney-in-fact is irrevocable and coupled with an interest until this Agreement is terminated 

and the security interests created hereby are released. Without limiting the generality of the 

foregoing, but subject at all times to the rights of a secured party under the Revolver Documents 

and the Reimbursement, Security and Guaranty Agreement, the Initial Member shall be entitled 

under this Section 12.4(e) to do any of the following if an Event of Default has occurred and is 

continuing: (i) ask, demand, collect, sue for, recover, receive and give receipt and discharge for 

amounts due and to become due under and in respect of any or all ofthe Loans; (ii) file any claims 

or take any action or proceeding in any court of law or equity that the Initial Member may 

reasonably deem necessary or advisable for the collection or other enforcement of all or any part 

of the Loans, defend any suit, action or proceeding brought against the Company with respect to 

any Loan, and settle, compromise or adjust any such suit, action or proceeding; (iii) execute, in 

connection with any sale or disposition ofthe Loans, any endorsements, assignments, bills of sale 

or other instruments of conveyance or transfer with respect to all or any part of the Loans; 

(iv) enforce the rights of the Company under any provision of any Servicing Agreement to the 

extent permitted thereunder and under the terms of this Agreement; (v) pay or discharge Taxes 

and Liens levied or placed on the Loans; (vi) generally, sell, transfer, pledge and make any 

agreement with respect to or otherwise deal with any of the Loans as fully and completely as 

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though the Initial Member were the absolute owner thereof for all purposes; and (vii) do, at the 

Initial Member's option and the Company's expense, at any time and from time to time, all acts 

and things that the Initial Member reasonably deems necessary to protect, preserve, or realize 

upon the Loans and the Initial Member's security interests in any Secured Assets and to effect the 

intent ofthis Agreement, all as fully and effectively as the Company might do. Anything in this 

Section 12.4(e) to the contrary notwithstanding, the Initial Member agrees that it shall not exercise 

any right under the power of attorney provided for in this Section 12.4(e) unless an Event of 

Default shall have occurred and be continuing. 

12.5 Interim Management Fee and Interim Servicing Fee; Management Fee. For each 

Due Period commencing on or after the Cut-Off Date, (a) ifthe Servicing Transfer Date has not 

occurred as ofthe first day ofsuch Due Period, the Company shall pay the Interim Management 

Fee to the Manager and the Interim Servicing Fee to the Initial Member, and (b) ifthe Servicing 

Transfer Date has occurred as of (or occurs on) the first day of such Due Period, the Company 

shall pay the Management Fee to the Manager. Each such payment of any Interim Servicing 

Fee, Interim Management Fee and Management Fee shall be made in the manner described in the 

Custodial and Paying Agency Agreement (and, as applicable, on the Distribution Date with 

respect to the applicable Due Period). In the event the Manager is removed and replaced by the 

Initial Member in accordance with Section 12.4 above, the Management Fee and Interim 

Management Fee shall thereafter be payable to the Initial Member or successor Manager, as 

determined by the Initial Member pursuant to such Section 12.4. 

12.6 Servicing Expenses. Subject to Section 3.3 of the Contribution Agreement (with 

respect to the Interim Servicing Period), from and after the Servicing Transfer Date, the Manager 

shall cause the Company to pay, from available Company funds (in the Collection Account, or 

any other applicable Company account the funds of which may be used for such purpose or 

otherwise through Excess Working Capital Advances funded by the Manager) all amounts due as 

Servicing Expenses (or, as applicable, Pre-Approved Charges) in a timely manner, and in each 

case in accordance with applicable requirements set forth in the Custodial and Paying Agency 

Agreement (and, as applicable, the Contribution Agreement); provided, however, that anything 

to the contrary herein or in any Ancillary Document notwithstanding, the Manager shall not have 

an obligation to fund Excess Working Capital Advances for purposes of the payment by the 

Company of (i) any Pre-Approved Charges, or (ii) any specific Servicing Expense relating to a 

Loan to the extent that the Manager has reasonably determined in accordance with the Servicing 

Standard that such Servicing Expense, ifso paid, when combined with all unreirnbursed previous 

Servicing Expenses, Funding Draws and Pre-Approved Charges with respect to such Loan (and 

any remaining amounts owing to the Initial Member with respect to its servicing of such Loans 

during the Interim Servicing Period pursuant to Sections 2.3, 2.4 and 3.1 of the Contribution 

Agreement), would not ultimately be recoverable from the Loan Proceeds for such Loan. All 

Servicing Expenses (and Excess Working Capital Advances for the funding ofthe same) shall be 

reimbursed in accordance with the Custodial and Paying Agency Agreement. 

12.7 Use ofLoan Proceeds. 

(a) Permitted Pavrnents. Subject to Section 12.7(ii), each month the Loan 

Proceeds shall be utilized and distributed in the manner set forth in the Custodial and Paying 

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Agency Agreement following receipt by the Paying Agent from the Manager of the Distribution 

Date Report required to be provided under Section 7 .4(b). 

(b) Costs That Are Not Reimbursable. Notwithstanding anything else to the 

contrary contained herein or in any Ancillary Document, without the prior written consent of the 

Initial Member (which may be withheld, conditioned or delayed in the Initial Member's sole and 

absolute discretion), in no event may the Manager deduct from the Loan Proceeds, or otherwise 

use Loan Proceeds to reimburse itself or any Servicer or Subservicer or pay for, any of the 

following (all of which shall be borne by the Manager in its individual capacity) (collectively, the 

"Excluded Expenses"): 

(i) any expenses or costs that are in excess of the relevant amounts 

that are permitted to be incurred by the Company or the Manager (or any Servicer 

or Subservicer thereof) under the Revolver; 

(ii) any expenses or costs that are not incurred in accordance with the 

Servicing Standard; 

(iii) any expenses or costs that are paid to any Affiliate ofthe Manager 

or the Company, or any Affiliate of any Servicer or any Subservicer; provided, 

however, that Excluded Expenses under this clause (iii) do not include amounts 

payable to the Servicer pursuant to the Servicing Agreement or to any Subservicer 

pursuant to any Subservicing Agreement that would be deemed Excluded 

Expenses under this clause (iii) solely as a result of such Servicer or Subservicer 

being an Mfiliate of the Manager or the Company, so long as such amounts 

would otherwise constitute Servicing Expenses but for application of this clause 

(iii); 

(iv) any fees or other compensation to or expenses of financial 

advisers, except to the extent the same are incurred as brokerage fees or sales 

commissions incurred (x) to market or sell the Loans or any Acquired Property in 

a Bulk Sale, the terms of which Bulk Sale (including the financial adviser's or 

broker's fees) are approved in advance by the Initial Member); and (y) in 

connection with the marketing or sale of any Acquired Property (including any 

REO Property) or any portion thereofon an individual basis; 

(v) any fine, Tax or other penalty, late fee, service charge, interest or 

similar charge, costs to release Liens or any other costs or expenses (including 

legal fees and expenses) incurred by or on behalf ofthe Company or the Manager 

(in its capacity as such or in its individual capacity) as a result ofthe Company's 

or the Manager's or the Servicer's or any Subservicer's failure to service any 

Loan or Underlying Collateral properly in accordance with the applicable Loan 

Documents, this Agreement, the Servicing Agreement, any Subservicing 

Agreement or otherwise, or failure to make a payment in a timely manner, or 

failure otherwise to act in a timely manner; 

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(vi) any interest on any amounts paid by any Person with respect to any 

Servicing Expenses or Pre-Approved Charges; 

(vii) any overhead or administrative costs (whether or not attributable to 

the servicing or management ofany Loan) incurred by the Company, the Manager 

or any other Person (including any travel expenses and any expenses incurred by 

the Manager, the Company or any Servicer or Subservicer to comply with 

Section 4.3, Section 7.2, Section 7.3, Section 7.4 and Section 7.7), in each case 

other than Reimbursable Company Administrative Expenses; 

(viii) any servicing, management or similar fees paid to the Servicer, any 

Subservicer or any other Person (other than property management fees approved 

in writing by the Initial Member); 

(ix) any expenses (other than Reimbursable Company Administrative 

Expenses with respect to the Company and the Ownership Entities) incurred by 

the Manager or any other Person to become a MERS member or to maintain the 

Company, the Manager or such other Person as a MERS member in good 

standing; or 

(x) any amounts subject to the indemnity obligations of the Private 

Owner under Section 4.6 of this Agreement or of the Servicer under Section 8.2 

ofthe Servicing Agreement. 

12.8 Collection Account. On the Closing Date, the Manager shall cause the Company 

to establish and maintain the Collection Account with the Paying Agent in accordance with the 

Custodial and Paying Agency Agreement. The Collection Account (and all fimds therein) shall 

be subject to the security interest granted under the Reimbursement, Security and Guaranty 

Agreement and to the Account Control Agreement under the Custodial and Paying Agency 

Agreement. 

12.9 Distribution Account. On the Closing Date, the Manager shall cause the 

Company to establish the Distribution Account with the Paying Agent in accordance with the 

Custodial and Paying Agency Agreement. The Distribution Account (and all fimds therein) shall 

be subject to the security interest granted under the Reimbursement, Security and Guaranty 

Agreement and to the Account Control Agreement under the Custodial and Paying Agency 

Agreement. 

12.10 Defeasance Account. On the Closing Date, the Manager shall cause the Company 

to establish the Defeasance Account with the Paying Agent in accordance with the Custodial and 

Paying Agency Agreement. The Defeasance Account (and all fimds therein) shall be subject to 

the security interest granted under the Reimbursement, Security and Guaranty Agreement. 

12.11 Intentionally Omitted. 

12.12 Certain Servicing and Loan Administration Decisions. The Manager shall have 

full power and authority, acting alone or through any Servicer or any Subservicer, to cause to be 

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done any and all things in connection with the servicing and administration ofthe Loans that the 

Manager may deem necessary or desirable, and cause to be made all servicing decisions in its 

reasonable discretion, subject to its obligation to comply with the Servicing Standard and other 

applicable provisions herein and in the Ancillary Documents. Upon the occurrence of an event 

of default under any ofthe Loan Documents, but subject to the other terms and conditions ofthis 

Agreement (including the Servicing Standard), the Manager shall cause to be determined the 

response to such default and course of action with respect to such default, including (i) the 

selection of attorneys to be used in connection with any action, whether judicial or otherwise, to 

protect the interests of the Company in the Loan and the Underlying Collateral, (ii) the 

declaration and recording of a notice of such default and the acceleration ofthe maturity ofthe 

Loan, (iii) the institution of proceedings to foreclose under the Loan Documents securing the 

Loan pursuant to the power of sale contained therein or through a judicial action, (iv) the 

institution ofproceedings against any Obligor, (v) the acceptance of a deed in lieu offoreclosure, 

(vi) the purchase ofthe real property Underlying Collateral at a foreclosure sale or trustee's sale 

or the purchase of the personal property Underlying Collateral at a Uniform Commercial Code 

sale, and (vii) the institution or continuation of proceedings to obtain a deficiency judgment 

against such Borrower or any Obligor. Notwithstanding any provision to the contrary herein, the 

Manag~r shall not, and shall not cause any Servicer or any Subservicer to, take any action that is 

inconsistent with or prohibited by the terms of the Reimbursement, Security and Guaranty 

Agreement, the Custodial and Paying Agency Agreement or the Revolver, in each case without 

the prior written consent ofthe Initial Member. 

12.13 Management and Disposition ofUnderlying Collateral. Subject to the other terms 

and conditions of this Agreement (including the Servicing Standard), the Reimbursement, 

Security and Guaranty Agreement and the Revolver Documents, the Manager shall have full 

power and authority, acting alone or through any Servicer and any Subservicer, to cause to be 

done any and all things in connection with the Manager's management of any Underlying 

Collateral or Acquired Property, that the Manager may deem necessary or desirable, and cause to 

be made all asset management decisions in its reasonable discretion. 

12.14 Acquisition ofUnderlying Collateral. 

(a) If title to any Underlying Collateral that constitutes real property is to be 

acquired by foreclosure, by deed in lieu offoreclosure, by power ofsale or by sale pursuant to the 

Uniform Commercial Code, or otherwise, title to such REO Property shall be taken and held in the 

name of an Ownership Entity; provided, however, that for any REO Property with respect to 

which there exists any Environmental Hazard, the Ownership Entity that holds such REO Property 

may hold title only to the relevant REO Property with respect to which the Environmental Hazard 

exists. 

(b) Nothing in this Article XII or anything else in this Agreement shall be 

deemed to affirmatively require the Manager to cause the Company to acquire all or any portion 

of any REO Property with respect to which there exists any Environmental Hazard. Prior to 

acquisition of title to any REO Property (whether by foreclosure, deed in lieu of foreclosure, by 

power of sale or by sale pursuant to the Uniform Commercial Code, or otherwise), the Manager 

shall cause to be commissioned with respect to such REO Property either (i) a Transaction Screen 

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Process consistent with ASTM Standard E 1528-06, by an environmental professional or (ii) such 

other site inspections and assessments by a Person who regularly conducts environmental audits 

using customary industry standards as would customarily be undertaken or obtained by a prudent 

lender in order to ascertain whether there are any actual or threatened Environmental Hazards (a 

"Site Assessment"), and the cost of such Site Assessment shall be deemed to be a Servicing 

Expense as long as the costs for such Site Assessment were not paid to any Affiliate of the 

Manager, or any Affiliate ofthe Servicer or any Subservicer. 

(c) The Company shall be the sole member of any Ownership Entity. The 

purposes of each Ownership Entity shall be to hold the REO Property pending sale, to complete 

construction of such Underlying Collateral and to operate the Underlying Collateral as efficiently 

as possible in order to minimize financial loss to the Company, and the Purchase Money Notes 

Guarantor and to sell the REO Property as promptly as practicable in a way designed to minimize 

financial loss to the Company, and the Purchase Money Notes Guarantor. 

12.15 Administration ofREO Properties. The following terms and conditions shall be 

binding on the Company and the Ownership Entities (and on the Manager's performance of its 

obligations hereunder) with respect to any REO Properties, in addition to any other terms and 

conditions concerning the same subject matter set forth in this Agreement and any of the other 

Ancillary Documents: 

(a) Insurance. With respect to each REO Property, the Manager shall cause 

the applicable Ownership Entity to maintain, with fmancially sound and reputable insurers, 

insurance (including, as applicable, public liability insurance, property insurance, flood 

insurance, boiler and machinery insurance, business interruption or rent insurance and other 

insurance), in such amounts, with such deductibles, covering such risks and otherwise on such 

terms and conditions, in each case as are customarily maintained by property owners for other 

real property and buildings similar to such REO Property in the area in which such REO 

Property is located, all as determined by the Manager in accordance with the Servicing Standard 

and the provisions ofthis Agreement and the Ancillary Documents. All insurance policies shall 

name the Collateral Agent, the Manager, the Revolver Lender and the Company as an additional 

insured, loss payee or mortgagee thereunder, as applicable, as its interest may appear. Each 

policy shall provide that such policy may not be cancelled or materially changed except upon 

thirty (30) days' prior written notice to the Company ,the Collateral Agent, and the Revolver 

Lender, and shall further provide that no act or thing done by the applicable Ownership Entity 

shall invalidate any policy as against the Collateral Agent. 

(b) Leasing Covenants. With respect to each REO Property, the Manager 

shall cause the applicable Ownership Entity to (i) perform the obligations that such Ownership 

Entity is required to perform under the leases to which it is a party in all material respects and (ii) 

enforce, in accordance with commercially reasonable practices for properties similar to the 

applicable REO Property, the material obligations to be performed by the tenants under such 

leases. 

(c) Zoning. The Manager shall not permit any Ownership Entity to initiate or 

consent to any zoning reclassification ofany portion ofthe REO Property owned by such 

Ownership Entity, or use or permit the use of any portion of an REO Property in any manner that 

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could result in such use (taking into account any applicable variance obtained in accordance with 

the Servicing Standard) becoming a non-conforming use under any zoning ordinance or any 

other applicable land use Law, rule or regulation, without the prior consent ofthe Initial 

Member, the Collateral Agent and the Revolver Lender. 

(d) No Joint Assessment. The Manager shall not permit any Ownership 

Entity to suffer, permit or initiate the joint assessment ofREO Property (i) with any other real 

property constituting a Tax lot separate from such REO Property, and (ii) with any portion ofa 

REO Property which may be deemed to constitute personal property, or any other procedure 

whereby the Lien of any Taxes which may be levied against such personal property shall be 

assessed or levied or charged to such REO Property. 

(e) Maintenance, Repairs and Alterations. From and after the completion of 

any buildings or other improvements at an REO Property, the Manager shall cause the applicable 

Ownership Entity to maintain such REO Property in a good and safe condition and repair 

(subject to such alterations as the Manager may from time to time determine to be appropriate in 

accordance with the Servicing Standard and applicable requirements herein and in the Ancillary 

Documents) and in accordance with applicable Law. 

(f) Property Management. All property managers with respect to any REO 

Property shall, in their respective property management agreements or by separate agreement, 

subordinate their rights under such agreements (including their right to receive management fees) 

to the rights and interest ofthe Collateral Agent under the applicable REO Mortgage (as defined 

in the Reimbursement, Security and Guaranty Agreement). 

(g) Ground Leases. With respect to any REO Property that is leased under a 

ground or other lease (in each case, a "ground lease"), the Manager shall cause the applicable 

Ownership Entity to (i) pay all rents and other sums required to be paid by the tenant under and 

pursuant to the provisions ofthe applicable ground lease as and when such rent or other charge is 

payable, and (ii) diligently and timely perform and observe all ofthe terms, covenants and 

conditions binding on the tenant under the ground lease. The Manager shall not permit the 

applicable Ownership Entity to subordinate or consent to the subordination of any ground lease 

to any mortgage, lease or other interest on or in the ground lessor's interest in the applicable 

REO Property without the prior consent ofthe Collateral Agent unless such subordination is 

required under the provisions ofsuch ground lease. 

(h) Additional Construction Covenants. In the event the Manager elects to 

fund the construction ofthe REO Property (pursuant to Funding Draws for such purpose), then 

the Manager shall cause each Ownership Entity to pursue with diligence the construction ofthe 

REO Property owned by such Ownership Entity (i) in accordance with the construction, 

construction management (if any) and all other material contracts relating to such construction, 

and all requirements ofLaw, all restrictions, covenants and easements affecting such REO 

Property, and all applicable governmental approvals, (ii) in substantial compliance with the plans 

and specifications therefor as in existence on the Closing Date and as thereafter modified by the 

Manager in its business judgment exercised in accordance with the Servicing Standard and 

applicable provisions in this Agreement and the Ancillary Documents, (iii) in a good and 

workmanlike manner and free of defects, (iv) in a manner such that such REO Property remains 

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free from any Liens, claims or assessments (actual or contingent) for any material, labor or other 

item furnished in connection therewith and (v) in conformance with the requirements for 

Funding Draws. 

(i) REO Property Generally. Notwithstanding any other provision ofthis 

Section 12.15 to the contrary, (i) in operating, managing, leasing or disposing of any REO 

Property, the Manager shall act in the best interests ofthe Company, and the Members and 

creditors ofthe Company (including the FDIC in its various capacities) and in accordance with 

the Servicing Standard, and (ii) without relieving the Manager of any obligation elsewhere in this 

Agreement or any Ancillary Document, the Manager shall not be required to act in accordance 

with a specific provision ofthis Section 12.15 ifsuch action is (A) not in the best interests of 

Company and the Members and creditors ofthe Company (including the FDIC in its various 

capacities), as determined by the Manager in the exercise ofits reasonable discretion, (B) not in 

accordance with the Servicing Standard, or (C) the Manager lacks the funds to do so and is not 

expressly required to fund such expenses pursuant to the terms hereof. 

G) Reports. The Manager shall furnish to the Initial Member , the Collateral 

Agent and the Revolver Lender such reports regarding the construction, leasing and sales efforts 

of or relating to the REO Property as the Initial Member, the Collateral Agent or the Revolver 

Lender shall reasonably request. 

12.16 Releases of Underlying Collateral. The Manager is authorized to cause the 

release or assignment of any Lien granted to or held by the Company on any Underlying 

Collateral upon payment of any Loan in full and satisfaction in full of all of the secured 

obligations with respect to a Loan, upon receipt of a discounted payoff as payment in full of a 

Loan, or upon a sale of the Loan to any Person, in each case as and to the extent permitted 

hereunder, under the Reimbursement, Security and Guaranty Agreement or under the Revolver 

Documents. 

12.17 Clean-Up Call Rights. 

(a) If, and only if, all amounts owing under the Revolver and the Purchase 

Money Notes have paid in full, and all reimbursement and other obligations to the FDIC under the 

Reimbursement, Security and Guaranty Agreement have been satisfied in full, the Initial Member 

shall have the right, exercisable in its sole and absolute discretion, to require the liquidation and 

sale, for cash consideration, of any remaining Loans and Acquired Property held by the Company 

or any Ownership Entity (the "Clean-Up Call") at any time after the earlier to occur of (i) the 

seventh (7th) anniversary ofthe Closing Date and (ii) the date on which the then Unpaid Principal 

Balance is ten percent (10%) or less ofthe Unpaid Principal Balance as ofthe Cut-Off Date as set 

forth on the Loan Schedule. 

(b) In order to exercise its rights under this Section 12.17, the Initial Member 

shall give notice in writing to the Manager, setting forth the date by which the remaining Loans 

and Acquired Property are to be liquidated by the Company, which date shall be no less than one 

hundred fifty (150) calendar days after the date ofsuch notice. 

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(c) The Manager shall proceed expeditiously to cause to be commenced the 

liquidation ofthe remaining Loans and Acquired Property by means of sealed bid sales to Persons 

other than the Servicer or any Subservicer, Affiliates ofthe Company, or Affiliates ofthe Servicer 

or any Subservicer; provided, however, that the Manager shall not, under any circumstances, 

whether directly or indirectly, sell any Participated Loan to a Borrower or a Related Party without 

the prior written consent of the other participants in the Loan and of the Initial Member. The 

selection of any fmancial adviser or other Person, broker or sales agent retained for the liquidation 

of the remaining Loans and Acquired Property pursuant to this Section 12.17 shall be subject to 

the prior approval ofthe Initial Member, such approval not to be unreasonably withheld, delayed 

or conditioned as long as the fees to be charged by such financial adviser or other Person, broker 

or sales agent are reasonable and such Person is not an Affiliate ofthe Manager or any Servicer or 

Subservicer. In the event the remaining Loans and Acquired Property are not liquidated by the 

date specified in the notice provided by the Initial Member pursuant to Section 12.17(b), the 

Initial Member shall be entitled to liquidate the remaining Loans and Acquired Property in its 

discretion and the Manager shall, and shall cause the Company to, cooperate and assist with such 

liquidation to the extent reasonably requested by the Initial Member. In the event the Manager or 

any Affiliate thereof desires to bid to acquire the remaining Loans and Acquired Property, then the 

Initial Member shall be entitled to liquidate the remaining Loans and Acquired Property in its 

discretion. In the event the Initial Member undertakes to liquidate the remaining Loans and 

Acquired Property pursuant to this Section 12.17(c), all costs and expenses incurred by it shall be 

deducted from the Loan Proceeds and retained by the Initial Member and the remaining Loan 

Proceeds shall be distributed in accordance with Section 9 .2. 

12.18 Certain Transfer Obligations. Without limitation of other obligations of the 

Manager with respect to the Contribution Agreement, the Manager agrees to cause the Company 

to comply with its obligations under the Contribution Agreement with respect to preparing, 

furnishing, executing and recording transfer documents with respect to the Loans (including 

special warranty deeds to convey the real property subject to any contract for deed and any 

Acquired Property to the Company). Any title curative work with respect to such real property, 

ifrequired, shall be at the Manager's sole cost and expense. 

ARTICLE XIII 


Miscellaneous 


13.1 Waiver of Rights of Partition and Dissolution. Each Member (other than the 

Initial Member) hereby irrevocably waives all rights it may have at any time to maintain any 

action for division or sale of the Company Property as now or hereafter permitted under any 

applicable Law. Each Member (other than the Initial Member) hereby waives and renounces its 

rights to seek a court decree of dissolution or to seek the appointment of a court receiver for the 

Company as now or hereafter permitted under any applicable Law. 

13.2 Entire Agreement: Other Agreements. 

(a) This Agreement, together with the Annexes and Exhibits hereto and the 

Ancillary Documents (and any other agreements expressly contemplated hereby or thereby), 

constitute the entire agreement and understanding, and supersede all other prior agreements and 

understandings, both written and oral, between the Members or their respective Affiliates or any 

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of them and the Company with respect to the subject matter hereof; provided, however that any 

Confidentiality Agreement between the FDIC and the Private Owner or any Affiliates of the 

Private Owner (including by way ofjoinder) with respect to the transaction that is the subject of 

this Agreement and the Ancillary Documents shall remain in full force and effect to the extent 

provided therein, except that the Company's rights under Article VI of the Contribution 

Agreement shall not be deemed a repurchase option for purposes of Section 2 of any such 

Confidentiality Agreement. The Members acknowledge that certain agreements or other 

instruments are being (or were) executed by the Company, the Members and/or Affiliates of the 

Members simultaneously or otherwise in connection with the execution of this Agreement and 

that notwithstanding anything to the contrary contained in the foregoing sentence of this 

Section 13.2, such agreements shall be effective and binding on the parties thereto in accordance 

with the terms thereof. 

(b) By executing this Agreement, the Manager agrees to be bound by the 

terms of the Ancillary Documents pursuant to which the Manager is expressly required to take or 

omit from taking certain actions, in each case with the same effect as ifthe Manager were a party 

to such Ancillary Document. 

13.3 Third Party Beneficiaries. Each of the FDIC, the Revolver Lender and the 

Purchase Money Notes Guarantor, is hereby constituted an express third party beneficiary ofthis 

Agreement with respect to those provisions of this Agreement which expressly grant rights to 

such Person, and, as such, each is entitled to enforce such provisions ofthis Agreement as ifsuch 

Person were a party hereto; provided that, upon occurrence of the Purchase Money Notes 

Defeasance Date (and subject to any rights ofthe Purchase Money Notes Guarantor that, by their 

terms or nature, survive such date), the Purchase Money Notes Guarantor shall cease to have any 

of the specified rights set forth herein with respect to consents/approvals, the exercise of 

remedies following an Event ofDefault and receipt ofreports and other information with respect 

to the continued operation of the Business, in each case (i) to the extent relating exclusively to 

the period following such Purchase Money Notes Defeasance Date, and (ii) except as to any 

rights or remedies relating to (or the exercise or non-exercise of which rights or remedies would 

affect) the Defeasance Account or the repayment of the Purchase Money Notes in accordance 

with the terms hereof and of the Ancillary Documents, as determined by the Purchase Money 

Notes Guarantor in its sole discretion. Each Person ceasing to constitute the "Initial Member" 

under this Agreement (as a result of a Disposition ofits LLC Interest) shall remain a third-party 

beneficiary of this Agreement with respect to Section 4.6 and, as such is entitled to enforce 

Section 4.6 as ifsuch Person remained a party hereto. For the avoidance of doubt, in furtherance 

and without limitation of the preceding sentence, each Person comprising the "Initial Member'' 

pursuant to the last sentence of Section 4.6(a) may enforce the provisions of Section 4.6 with 

respect to itself and/or any other Indemnified Party(ies) in relation to itself (in its own name 

and/or in the name of and/or otherwise on behalf of such other Indemnified Party(ies)). Subject 

to Section 11.1 and to the preceding provisions ofthis Section 13.13, (i) this Agreement is for the 

benefit solely of, and shall inure solely to the benefit of, the Members and the Company, and 

(ii) this Agreement is not enforceable by any Person (including any creditor of the Company or 

of any Member) other than the Members and the Company. 

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13.4 Expenses. Except as may otherwise be expressly provided herein or in any 

Ancillary Document, each Member shall pay its own expenses (including legal, accounting 

investment banker, broker or finder's fees) incident to the negotiation and execution of this 

Agreement and the Ancillary Documents, the consummation ofthe transactions contemplated by 

Section 2.3 hereof and the performance ofits obligations hereunder. 

13.5 Waivers and Amendments. 

(a) This Agreement may be amended or modified, and the terms hereof may 

be waived, only by a written instrument signed by all Members; provided, however that, following 

an Event of Default, from time to time this Agreement may be amended or modified and/or the 

terms hereof may be waived, in each case, by a written instrument signed only by the Initial 

Member as long as such amendment, modification or waiver would not (i) adversely affect the 

Private Owner's or the Company's limited liability status; (ii) adversely affect the Private 

Owner's share ofthe Company's distributions, income, gains or losses; (iii) impose on the Private 

Owner any additional obligations or (iv) amend Section 3.13 or this Section 13.5; provided 

further, that in no event shall any amendment, modification or waiver limit or otherwise adversely 

affect the rights expressly granted in this Agreement to (x) any Person comprising the "Initial 

Member" pursuant to the last sentence of Section 4.6(a) (and/or any other Indemnified Party(ies) 

in relation to such Person) without the express written consent of such Person so comprising the 

"Initial Member" or (y) a third party beneficiary ofthis Agreement (to the extent such third party 

beneficiary is, and remains, a third party beneficiary pursuant to Section 13.3 above) without the 

express written consent of such third party beneficiary. Except where a specific period for action 

or inaction is provided herein, no failure on the part of a Member to exercise, and no delay on the 

part of a Member in exercising, any right, power or privilege hereunder shall operate as a waiver 

thereof; nor shall any waiver on the part ofsuch Member of any such right, power or privilege, or 

any single or partial exercise of any such right, power or privilege, preclude any other or further 

exercise thereof or the exercise of any other right, power or privilege. 

(b) Notwithstanding anything to contrary contained elsewhere in this 

Agreement (including without limitation the foregoing Section 13.5(a)) or in any Ancillary 

Document, but subject to the restrictions in Section 8.4 of the Contribution Agreement and 

Section 2.8 of the Custodial and Paying Agency Agreement, as applicable), in order to facilitate 

any restructuring or sale ofthe Purchase Money Notes (or any reissuance, restructuring or sale of 

any such Purchase Money Notes to be issued pursuant to Section 2.8 ofthe Custodial and Paying 

Agency Agreement), the FDIC, without the consent ofthe Private Owner or the Company, may at 

any time that the FDIC is the holder of one hundred percent (100%) of any Purchase Money Note 

or beneficial interest therein cause the Company to replace or reissue such Purchase Money Note 

(or any promissory note reissued in respect thereof) and make related changes, modifications or 

amendments to this Agreement and the Ancillary Documents, in each case subject to the 

applicable limitations set forth in Section 8.4 of the Contribution Agreement and Section 2.8 of 

the Custodial and Paying Agency Agreement, as the case may be; provided, however, no such 

change, amendment or modification shall adversely affect in any material respect (i) the amount 

or timing of any payments or distributions to the Private Owner or any permitted successor or 

assign pursuant to the Priority of Payments (or its share ofthe Company's distributions, income, 

gains or losses in accordance herewith), or (ii) any other rights or obligations of, or the need for 

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any advances, contributions or payments from, the Private Owner or its Affiliates or any permitted 

successor or assign pursuant to this Agreement or any Ancillary Document or otherwise. Prior to 

effecting any such changes, amendments or modifications, the FDIC shall notify each of the 

Private Owner and the Company of any such contemplated changes, amendments or 

modifications, and each of the Private Owner and the Company agrees that it will cooperate in 

good faith with the FDIC in effecting all such changes, amendments or modifications. 

(c) Notwithstanding anything to contrary contained elsewhere in this 

Agreement (including without limitation the foregoing Section 13.5(a)) or in any Ancillary 

Document), this Agreement may be amended or modified by a written instrument signed only by 

the Initial Member to the extent determined by the Initial Member in good faith to be necessary or 

desirable in order to facilitate any Disposition by the Initial Member of only a portion ofthe Initial 

Member LLC Interest, or a Disposition by the Initial Member of the entire Initial Member LLC 

Interest to more than one (1) Person, including to provide for more than two (2) Persons being 

members of the Company, provided that no such amendment or modification shall (i) adversely 

affect the Private Owner's or the Company's limited liability status; (ii) adversely affect the 

Private Owner's share ofthe Company's distributions, income, gains or losses; (iii) impose on the 

Private Owner any additional obligations or (iv) amend Section 3.13 (other than to the extent that 

such amendment or modification amends or modifies which member or members ofthe Company 

shall constitute the "Initial Member" hereunder) or this Section 13.5. 

13.6 Notices. All notices, requests, demands and other communications required or 

permitted to be given or delivered under or by reason of the provisions ofthis Agreement shall 

be in writing and shall be given by certified or registered mail, postage prepaid, by delivery by 

hand or by nationally recognized courier service, or by electronic mail (followed up by a hard 

copy delivered through an alternate manner permitted under this Section 13.6), in each case 

mailed or delivered to the applicable address or electronic mail address specified in, or in the 

manner provided in, this Section 13.6. All such notices, requests, demands and other 

communications shall be deemed to be given or made upon the earlier to occur of (i) actual 

receipt (or refusal thereof) by the relevant party hereto and (ii) (A) if delivered by hand or by 

nationally recognized courier service, when signed for (or refused) by or on behalf of the 

relevant party hereto, and (B) if delivered by electronic mail (which form of delivery is subject to 

the provisions of this paragraph), when delivered and capable of being accessed from the 

recipient's office computer, provided, however, that any notice, request, demand or other 

communication that is received other than during regular business hours ofthe recipient shall be 

deemed to have been given at the opening of business on the next Business Day. In no event 

shall a voice mail message be effective as a notice, communication or confirmation hereunder. 

From time to time, any party may designate a new address for purposes of notice to it hereunder 

by notice to such effect to the other parties hereto in the manner set forth in this Section 13.6. 

Ifto the Company, to: 

2010-1 SFG Venture LLC 


c/o Square Mile Capital Management LLC 


450 Park Avenue 


New York, New York 10022 


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Attention: Joseph D'Angelo 

Email Address: jdangelo@squaremilecapital.com 

with a copy to: 

Greenberg Traurig 

MetLife Building 

200 Park A venue 

New York, New York 10166 

Attention: Gary S. Kleinman 

Email Address: kleinrnang@gtlaw.com 

Ifto the Initial Member or the FDIC, to: 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malarni 

Email Address: RMalarni@fdic.gov 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, Virginia 22226 

Attention: David Gearin 

Email Address: DGearin@fdic.gov 

and: 

Thomas Raburn 

Federal Deposit Insurance Corporation 

TRaburn@fdic.gov 

Ifto the Private Owner (including in its role as the Manager and/or the Tax Matter 

Member), to: 

Square Mile Lodging Recovery LLC 

c/o Square Mile Capital Management LLC 

450 Park A venue 

New York, New York 10022 

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Attention: Joseph D'Angelo 

Email Address: jdangelo@squaremilecapital.com 

with a copy to: 

Greenberg Traurig 


MetLife Building 


200 Park A venue 


New York, New York 10166 


Attention: Gary S. Kleinman 


Email Address: kleinmang@gtlaw.com 


13.7 Counterparts; Facsimile Signatures. 

(a) This Agreement may be executed in any number of counterparts, each of 

which shall be an original and all ofwhich shall together constitute one and the same instrument. 

It shall not be necessary for any counterpart to bear the signature of all parties hereto. 

(b) This Agreement and any amendments hereto, to the extent signed and 

~delivered by facsimile or other electronic means, shall be treated in all manner and respects as an 

original agreement and shall be considered to have the same binding legal effect as if it were the 

original signed version thereof delivered in person. No signatory to this Agreement shall raise the 

use of a facsimile machine or other electronic means to deliver a signature or the fact that any 

signature or agreement was transmitted or communicated through the use of a facsimile machine 

or other electronic means as a defense to the formation or enforceability of a contract and each 

such Person forever waives any such defense. 

13.8 Successors and Assigns. Except as otherwise specifically provided in this 

Agreement (including in Article VIII), this Agreement shall be binding upon and inure to. the 

benefit ofthe Members and the Company and their respective Successors and assigns. Without 

limitation of Section 8.4, this Agreement, as in effect on the date that any particular Person shall 

cease to be a Member, shall continue to bind such Person in relation to the period during which it 

was a Member. 

13.9 Compliance With Law; Severability. 

(a) Compliance With Law. Except as otherwise specifically provided herein, 

each party to this Agreement shall obey and comply with all applicable Laws, as they may pertain 

to such party's performance ofits obligations hereunder. 

(b) Severability. Any provision of this Agreement which is prohibited or 

unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as 

follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a 

particular Person or Persons and/or under any particular circumstance or circumstances, such 

provision shall be ineffective, but only in such jurisdiction and only with respect to such particular 

Person or Persons and/or under such particular circumstance or circumstances, as the case may be; 

(ii) without limitation of clause (i), such provision shall in any event be ineffective only as to such 

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jurisdiction and only to the extent of such prohibition or unenforceability, and such prohibition or 

unenforceability in such jurisdiction shall not invalidate or render unenforceable such provision in 

any other jurisdiction; and (iii) without limitation of clauses (i) or (ii), such ineffectiveness shall 

not invalidate any of the remaining provisions of this Agreement. Without limitation of the 

preceding sentence, it is the intent of the parties to this Agreement that in the event that in any 

court proceeding, such court determines that any provision of this Agreement is prohibited or 

unenforceable in any jurisdiction (because of the duration or scope (geographic or otherwise) of 

such provision, or for any other reason) such court shall have the power to, and shall, (x) modify 

such provision (including without limitation, to the extent applicable, by limiting the duration or 

scope of such provision and/or the Persons against whom, and/or the circumstances under which, 

such provision shall be effective in such jurisdiction) for purposes of such proceeding to the 

minimum extent necessary so that such provision, as so modified, may then be enforced in such 

proceeding and (y) enforce such provision, as so modified pursuant to clause (x), in such 

proceeding. Nothing in this Section 13.9(b) is intended to, or shall, limit (1) the ability of any 

party to this Agreement to appeal any court ruling or the effect of any favorable ruling on appeal 

or (2) the intended effect of Section 13.11. 

13.10 Power ofAttorney. 

(a) The Private Owner does hereby constitute and appoint the Manager as its 

true and lawful representative and attorney-in-fact, in its name, place and stead to make, execute, 

sign, acknowledge, deliver or file any certificate, document or other instrument that the Private 

Owner is required to execute and deliver pursuant to clause (a), (b), (c) or (d) of Section 4.3 

hereof. The foregoing notwithstanding, the Manager shall not have any right, power or authority 

to amend or modify this Agreement. The power of attorney granted hereby is coupled with an 

interest and shall (i) survive and not be affected by the subsequent death, incapacity, disability, 

dissolution, termination or bankruptcy ofthe Private Owner granting the same or the transfer of all 

or any portion of the Private Owner LLC Interest and (ii) extend to the Private Owner's 

Successors, assigns and legal representatives. 

(b) The Company hereby grants to the Manager a limited power of attorney to 

execute all documents on its behalf in accordance with the Servicing Standard set forth above and 

as may be necessary to effectuate the Manager's obligations under Article XII until such time as 

the Company revokes said limited power of attorney. Revocation ofthe limited power of attorney 

shall take effect upon (i) the receipt by the Manager of written notice thereof from the Initial 

Member, or (ii) removal of the Manager in accordance with the terms of this Agreement; 

provided, however, in the event of such removal, the power of attorney granted hereunder shall 

thereafter automatically be vested in the successor or replacement Manager appointed in 

accordance with this Agreement. 

13.11 Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE 

CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, 

EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER 

THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW 

OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions ofthis 

Agreement and any mandatory, non-waivable provision of the Act, such provision of the Act 

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shall control to the extent necessary to eliminate such direct conflict. Nothing in this Agreement 

shall require any unlawful action or inaction by any Person. 

13.12 Jurisdiction: Venue and Service. 

(a) Each of the Private Owner (for the avoidance of doubt, in any capacity, 

including as a Member and/or as the Manager) and the Company, in each case on behalf ofitself 

and its Affiliates, hereby irrevocably and unconditionally: 

(i) consents to the jurisdiction of the United States District Court for 

the Southern District of New York and to the jurisdiction of the United States 

District Court for the District of Columbia for any suit, action or proceeding 

against it (in the case ofthe Private Owner and for the avoidance of doubt, in any 

capacity, including as a Member and/or as the Manager) or any of its Mfiliates 

commenced by the Initial Member arising out of, relating to, or in connection 

with this Agreement or any Ancillary Document, and waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

other court or dispute-resolution forum (other than the court in which the 

Initial Member files the action, suit or proceeding) without the consent of 

the Initial Member; 

(B) assert that venue is improper in either the United States 

District Court for the Southern District of New York or the United States 

District Court for the District ofColumbia; or 

(C) assert that the United States District Court for the Southern 

District ofNew York or the United States District Court for the District of 

Columbia is an inconvenient forum. 

(ii) consents to the jurisdiction of the Chancery Court of the State of 

Delaware for any suit, action or proceeding against it (in the case of the Private 

Owner and for the avoidance of doubt, in any capacity, including as a Member 

and/or as the Manager) or any of its Affiliates commenced by the Initial Member 

arising out of, relating to, or in connection with this Agreement or any Ancillary 

Document, and waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

other court or dispute-resolution forum without the consent of the Initial 

Member); 

(B) assert that venue is improper in the Chancery Court of the 

State ofDelaware; or 

(C) assert that the Chancery Court of the State of Delaware is 

an inconvenient forum. 

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(iii) agrees to bring any suit, action or proceeding by it (in the case of 

the Private Owner and for the avoidance of doubt, in any capacity, including as a 

Member and/or as the Manager) or any ofits Affiliates against the Initial Member 

arising out of, relating to, or in connection with this Agreement or any Ancillary 

Document in only the United States District Court for the Southern District of 

New York or the United States District Court for the District of Columbia, and 

waives any right to remove or transfer such suit, action or proceeding to any other 

court or dispute-resolution forum without the consent of the Initial Member, and 

agrees to consent thereafter to transfer of the suit, action or proceeding to either 

the United States District Court for the Southern District of New York or the 

United States District Court for the District ofColumbia at the option ofthe Initial 

Member; and 

(iv) agrees, ifthe United States District Court for the Southern District 

of New York and the United States District Court for the District of Columbia 

both lack jurisdiction to hear a suit, action or proceeding falling within 

Section 13.12(a)Ciii), to bring that suit, action or proceeding in only the Chancery 

Court of the State of Delaware, and waives any right to remove or transfer such 

suit, action or proceeding to any other court or dispute-resolution forum without 

the consent ofthe Initial Member. 

(b) Each ofthe Private Owner (in any capacity, including as a Member and/or 

as the Manager) and the Company, in each case on behalf of itself and its Affiliates, hereby 

irrevocably and unconditionally agrees that any final judgment entered against it in any suit, 

action or proceeding falling within Section 13.12(a) may be enforced in any court of competent 

jurisdiction; 

(c) Subject to the provisions of Section 13.12(d), each of the Private Owner 

(in any capacity, including as a Member and/or as the Manager) and the Company, in each case on 

behalf of itself and its Affiliates, and the Initial Member, hereby irrevocably and unconditionally 

agrees that service of all writs, process and summonses in any suit, action or proceeding pursuant 

to Section 13.12(a) or Section 13.12(b) may be effected by the mailing of copies thereof by 

registered or certified mail, postage prepaid, to it at its address for notices pursuant to Section 13.6 

(with copies to such other Persons as specified therein); provided, however, that nothing contained 

in this Section 13.12(c) shall affect the right of any party to serve process in any other manner 

permitted by Law; 

(d) Nothing in this Section 13.12 shall constitute consent to jurisdiction in any 

court by the FDIC (in any capacity, including as the Initial Member), other than as expressly 

provided in Section 13.12(a)(iii) and Section 13.12(a)Civ), or in any way limit the FDIC's (in any 

capacity, including as the Initial Member) right to remove, transfer, seek to dismiss, or otherwise 

respond to any suit, action, or proceeding against it (in any capacity, including as the Initial 

Member) in any forum. 

13.13 Waiver of Jury Trial. EACH OF THE PRIVATE OWNER AND THE 

COMPANY, FOR ITSELF AND ITS AFFILIATES, AND THE INITIAL MEMBER, HEREBY 

IRREVOCABLY AND UNCONDITIONALLY WAlVES ANY RIGHT IT MAY HAVE TO A 

106 

Structured Transaction Commercial2010-I SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS 

AGREEMENT OR THE ANCILLARY DOCUMENTS AND AGREES THAT ANY SUCH 

DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

107 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
IN WI1NESS WHEREOF, the parties have caused this Agreement to be executed by 

their respective officers or agents thereunto duly authorized on the date first above written. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS CAPACITY AS 

RECEIVER WITH RESPECT TO THE 

RECEIVERSHIP FOR SILVERTON BANK, 

N.A. 

. Mangano 

Title: Spe ial Programs, Manager 

2010-1 SFG VENTURE LLC 

By: 	 Federal Deposit Insurance Corporation, in 

its sepa ate capacity with respect to the 

hip r Silverton Bank, N .A . 

. Mangano 

Title: Special Programs, Manager 

SQUARE MILE LODGING RECOVERY LLC 

By: ______________________________ 

Name: 

Title: 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by 

their respective officers or agents thereunto duly authorized on the date first above written. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS CAPACITY AS 

RECEIVER WITH RESPECT TO THE 

RECEIVERSHIP FOR SILVERTON BANK, 

N.A. 

By:________________ 

Name: Philip G. Mangano 

Title: Special Programs, Manager 

2010-1 SFG VENTURE LLC 

By: 	 Federal Deposit Insurance Corporation, in 

its separate capacity with respect to the 

receivership for Silverton Bank, N.A. 

By:______________ 

Name: Philip G. Mangano 

Title: Special Programs, Manager 

'c:ralfa H. Solomon 

Authorized Signatory 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 
Annex I 

Member Schedule 

Member Percentage Interests 

Initial Member 60% 

Private Owner 40% 

I-1 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
EXHIBIT A 

FORM OF 

CERTIFICATE OF FORMATION 


OF 


2010-1 SFG VENTURE LLC 


Pursuant to and in accordance with the provisions of Section 18-201 of the 

Delaware Limited Liability Company Act, the undersigned hereby certifies that: 

FIRST, the name ofthe limited liability company is 2010-1 SFG VENTURE LLC 

(the "Comoany"). 

SECOND, the address of the registered office of the Company in the State of 

Delaware is Corporation Trust Center, 1209 Orange Street, in the City ofWilmington, County of 

New Castle. The name of the registered agent at such address is The Corporation Trust 

Company. 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of 

Formation ofthe Company on this _day ofApril, 2010. 

By: 	_________________________________ 

Name: [ ] 

Title: Authorized Person 

A-1 


Structured Transaction Commercial 2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
EXHIBITB 


INFORMATION; FORM OF MONTHLY REPORT 


[ See Attached] 

B-1 

Structured Transaction Commercial2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
EXHIBIT B - FORM OF MONTHLY REPORT 

DISTRIBUTION DATE REPORT 

[insert date] 

(+) 

(+) 

(+) 

(+) 

(+} 

(+) 

(+) 

(+) 

(+) 

COLLECTIONS 

Principal collections 

Interest collections 

Loan sale proceeds, including short sales 

Mortgage insurance claim proceeds 

REO liquidation proceeds 

Servicing Expenses Recovered 

Other Loan Proceeds (including late fees and penalties) 

Any indemnity payments made under Section 13.1(c) of Custodial and 

Paying Agency Agreement ("Custodial Agreement") 

Interest and earnings from Collection Account 

GROSS COLLECTIONS 

TOTAL 

-

-

-

-

-

-

-

-

-

-

(+) 

{+) 

Other de12osits to Collection Account 

Excess Working Capital Advances made by Manager 

Discretionary Funding Advances made by Manager 

-

-

- GROSS FUNDS AVAILABLE -

(-) 

(-) 

(-) 

(-) 

Less authorized disbursements from Collection Account 

Repayment of Discretionary Funding Advances made by Manager 

Servicing Expenses paid 

Pre-Approved Charges 

Funding Draws 

-

-

-

-

(1) 

TOTAL FUNDS AVAILABLE- TO DISTRIBUTION ACCOUNT -

-

Distributions pursuant to Priority ofPayments in the Custodial 

5.1(b) Agreement 

(i). Custodian and Paying Agent Fees and Expenses (and any indemnity 

payments under Section 13.1 of Custodial Agreement) 

(ii) 

Verification Contractor Amounts payable to the Verification Contractor 

and indemnification payments pursuant to the Revolver Documents 

(iii)(A)(1} Interim Servicing Fee to Initial Member 

(iii}(A)(2) Interim Management Fee to Manager 

(iii)(B) Management Fee to Manager 

(iv) Repayment of Excess Working Capital Advances to Manager 

(v) Principal and interest due to Revolver Lender 

(vi) Reimbursements due under Reimbursement, Security and Guaranty 

Agreement for prior payments under Purchase Money Note Guaranty 

(vii) Deposit to Defeasance Account (until Purchase Money Notes 

Defeasance Date 

TOTAL DISTRIBUTIONS DUE 

-

-

-

-

-

-

-

-

-

-

(2) 

(2) 

(3) 

(viii) NET DISTRIBUTABLE CASH TO MEMBERS $ -

DISTRIBUTION TO MEMBERS 

Distribution to Initial Member (at proportionate LLC interest) 

Distribution to Private Owner (at proportionate LLC interest) 

TOTAL DISTRIBUTIONS TO MEMBERS 

$ 

$ 

-

-

-
Calculation ofamounts e.a~ab/e for items in Section 5.1 (bl{jii~ ­

Custodial and Pavinq Aaencv Aareement 

INTERIM SERVICING FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has not occurred as of first date in Due 

Period) 

MANAGEMENT FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has occurred as of first day in Due 

Period) 

Times Management Fee rate 

Times number of days in Due Period/360 

Management Fee due to Manager 

$ 

$ 

-

0.50% 

-

-

Times interim servicing fee rate 0.25% 

Times number of days in Due Period/360 

Interim Servicing Fee due to Initial Member $ 

-

-

INTERIM MANAGEMENT FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has not occurred as of first day in Due 

Period) 

Times Management Fee rate 

Times number of days in Due Period/360 

Interim Management Fee due to Manager 

$ 

I 

$ 

-

0.25% 

-

-

(1} Repayment only to the extent of Loan Proceeds from the Loan with respect to which the Advance was made. 

(2} Applicable only to the Interim Servicing Period with respect to a Group of Loans. 

{:3) Applicable to Due Periods following the Interim Servicing Period with respect to a Group of Loans. 
Loan & REO '"'" '"'' nailu 

~·da:tf3}_ 

Oil. I~ 

[Ur >a ·h"'"",.."' finsert datel 

(regular and 

loans 

hart sale 

PB, to F~EO 

+) 

:+) 

_(:)_ 

_l-Jrl_paid 

(-) 

<-: 

~0 

on loan 

funded 

.,_ 

h"'""""' [insert date] 

I,.;UMMII Ml::f\11 ;::» (LIP) 

balance, [insert date] 

. funded 

on loan payoffs 

,, h::.l,nrA in.. ., 

UP13 

(+ 

(+ 

RE 0 

IPE on Rl:o 

10/1/09 

in 

costs 

{­ let 

(+/-) ·-~ ·~ C:iain n<><"''"'' 

UPB of REO IV/-J /Vv 

#ASSETS 

-

-

-

-$ 


For the Per od from [insert date] 

cmgss u~e 

$ ­

I ­

-

-

-

-

-

-

-

#A;::»;::il::l;:) 

-

-


#ASSETS 

-


-

-

I!J.MOIII\JT 

$ ­

- $ ­

AMOIINT 

$ ­

-

-

-

- $ ­

I""At( I\..I I""A IIUJ'II 

SOLD U~B 

$ ­

-

-

-

-

-

-


-


-
 $ ­

NET II UPB 

$ -

-

-

-

-

-

-


-


-


:t ­
Servicing Expenses 

Monthly Roll Forward 

[insert date] 

(+) 

(-) 

(1) 

(2) 


Balance, [insert date] 

Payments/Advances 

Advance Recoveries 

Balance, [insert date] 

Escrow 

Advances 

$ ­

-


-


-
 $ ­

(2} 


Other 

Servicing 

Exuenses 

$ ­

-


-


-


$ ­

(2} 


(1} 

Total 

Servicing 

Exuenses 

$ ­

-


-


-
 $ ­

Servicing Expenses, as defined in the LLC Operating Agreement, are authorized to be paid by 

withdrawal of funds from the Collection Account. For reporting purposes, Servicing Expenses 

may be broken out into additional and/or different fields at the discretion of the Manager, sufficient 

to determine the appropriateness of the payments under the definition of Servicing Expenses. 

Loan servicing system should include fields to capture and report balances in each category, 

and the category totals should agree to asset-level detail tapes provided by the Manager 

as of each month-end. I 
Revolver Account 

Monthly Roll Forward 

[insert date] 

Balance, beginning of Due Period $ - (1) 

Transfers in: 

(+) Proceeds from Revolving Credit Loan Borrowings 

(+) Investment Income 

Transfers to Collection Account: 

(-) For payment of Advances - (-) For payment of Working Capital Expenses -

Balance, end of Due Period $ -

Revolver Loan Rollforward 

Monthly Roll Forward 

[insert date] 

Total- Borrowing Allocated b}! Asset 

Working Capital 

All Borrowings Advance Loans Loans 

Balance, beginning of Due Period $ - $ - $ -

(+) Principal amount of Loan Borrowing - - -

{+) Interest Due (30-day UBOR + 3.00%, actual/360) - - -

( -) Repayments of principal and interest from cash 

waterfall ( 1 ) - - -

Balance, end of Due Period $ - $ - $ -

Additional Information b}! Borrowing 

Advance Loan or Working Capital Loan Borrowing? 

Date of Borrowing 

Asset loan number associated with Borrowing 

Costs and expenses to be paid out of proceeds 

(1) The Borrower may voluntarily prepay the Loans in whole or in part without penalty. 

Repayment is mandatory to the extent of Loan Repayments or Proceeds from the 

Loan with respect to which the Borrowing was made. 

All repayments must be applied in accordance with the priority of payments in 

the Custodial Agreement. 
Excess Working Capital Advances 

Monthly Roll Forward 

[insert date] 

(+) 

(+) 

(+) 

(+) 

(+) 

(+) 

(-) 

Balance, beginning of Due Period 

Advanced by Manager to Collection Account for 

payments of Working Capital Expenses other than 

Funding Draws : 

Servicing Expenses 

Pre-Approved Charges 

Management Fees 

Interim Servicing Fees 

Custodian and Paying Agent Fees 

Advanced by Manager to Defeasance Account for 

payments: 

As required to cure a Purchase Money Notes 

Trigger Event 

Reimbursements from Cash Flow 

Balance, end of Due Period 

Discretionary Funding Advances 

Monthly Roll Forward 

[insert date] 

(+) 

(+) 

(-) 

(1) 

Balance, beginning of Due Period 

Funding Draws Advanced by Manager to Collection 

Account 

Interest Due (30-day LIBOR + 3.00%, actual/360) 

Reimbursements from Cash Flow (1) 

Balance, end of Due Period 

Repayment only to the extent of Loan Proceeds from the Loan with respect to which 

the Advance was made. 

Funding Draws 

Monthly Report 

[insert date] 

Loan Number I PurQose of Funding Draw 

Total Funding Draws, [insert date} 

$ ­

-


-

-


-


$ ­

TotalAll Advances 

$ ­

-


-


-


Detail Advances by: Loan Number 

Loan A 

$ ­

-


-

-
 l 

$ ­ $ ­

Amount of 

Funding Draw 

Current 

UPB 

$ -

-

-

-

$ -

Loan B 

$ ­

-

-

- I 

$ ­

Amount funded 

Unfunded by Discretionary 

Commitment 

Date of 

Draw Funding Advance 
Purchase Money Notes and Defeasance Account 

Monthly Roll Forward 

[insert date] 

(+) 

(+) 

(·) 

+ 

+ 

+ 

(-} 

(+) 

(+) 

(-) 

Purchase Monev Notes Monthlv Roll 

Original Aggregate Principal Amount 

Guaranty Fee 

Payment from Defeasance Account 

Purchase Money Notes balance, end of Due Period 

Defeasance Account Monthlv Roll 


Balance, beginning of Due Period 


Additions from Cash Flow 


Investment Income 


Release to Purchase Money Note 


Defeasance Account balance, end of Due Period 

Note Guarantor Pavments 


Balance, beginning of Due Period 


Draws, current month 


Repayments, current month 


Balance, end of Due Period 

-

Purchase Monev Note Triaaer Event 

TotalAll Purchase Monev Notes 

$ . 

-


-

$ .

$ ­

-


-


-


$ .

$ ­

-
 $ ­

TermA-1 

Purchase Monev Note 

$ . 

-


-


$- . 


A Purchase Money Note Trigger Event will be deemed to have occurred if, as of any of the dates defined below, 

(a) the total amount then on deposit in the Defeasance Account, plus the sum of the aggregate amount from 

the Defeasance Account previously paid by the Company to all Holders to repay any Purchase Money 

Note and the aggregate reimbursements to the Purchase Money Notes Guarantor, divided by 

(b) the original aggregate principal amount of the Purchase Money Notes as of the Closing Date, is less than: 

- 3 Years from the Closing Date: 

4 Years from the Closing Date: 

- 5 Years from the Closing Date: 

- 6 Years from the Closing Date: 

- 7 Years frorn_the Closing Date: 

25% 

40% 

50% 

75% 

100% 

TermA-2 

Purchase Monev Note 

$ . 

-


-


$ .

TermA-3 


Purchase Monev Note 


$ ­

-

-

$ .

I 
Incentive Threshold Tracking Report 

[insert date] 

Aggregate Cash Distributions to Private Owner, as of preceding Distribution Date 


(+) Current month distribution to Private Owner in respect of its LLC Interest 


Aggregate Cash Distributions to Private Owner, as of the current Distribution Date 

Incentive Threshold Base Amount 

Transferred LLC Interest Sale Price 

FIRST INCENTIVE THRESHOLD EVENT 

Occurs as of a Distribution Date if: 

(a) the aggregate distributions made to the Private Owner in respect ofits LLC interest 

are equal to or greater than 2 times the Incentive Threshold Base Amount and 

(b) the Incentive Threshold (for First Incentive Threshold Event) is equal to zero. 

1Aggregate cash distributions to Private Owner 


Incentive Threshold Base Amount* 2 


Distributions Remaining to First Incentive Threshold Event 

Incentive Threshold (for First Incentive Threshold Event), as of the preceding 

Distribution Date 

(+) Threshold Increase Amount (1.8769% per month) 


(-) 
 Current month distribution to Private Owner in respect of its LLC Interest 

Incentive Threshold (for First Incentive Threshold Event), as of the current 

Distribution Date 

First Incentive Threshold Event met? 

SECOND INCENTIVE THRESHOLD EVENT 

Occurs as of a Distribution Date if: 

(a) the aggregate distributions made to the Private Owner in respect of its LLC interest 

are equal to or greater than 2. 5 times the Incentive Threshold Base Amount and 

(b) the Incentive Threshold (for Second Incentive Threshold Event) is equal to zero. 

Aggregate cash distributions to Private Owner 

Incentive Threshold Base Amount * 2.5 

Distributions Remaining to Second Incentive Threshold Event 

Incentive Threshold (for Second Incentive Threshold Event), as of the preceding 

Distribution Date 

(+) Threshold Increase Amount (2.5324% per month) 


(-) 
 Current month distribution to Private Owner in respect of its LLC Interest 

Incentive Threshold (for Second Incentive Threshold Event), as of the current 

Distribution Date 

Second Incentive Threshold Event met? 

Excludes Management Fees and repayments of Discretionary Funding Advances 

and Excess Working Capital Advances. 

(1) 

(2) The Return Threshold can never be less than zero. 

$ 

$ 

-

-

-

( 1) 

$ -

$ -

-

$ -

$ 

$ 

Y/N 

-

-

-

- (2) 

$ 

$ 

-

-

-

I 

I 

$ 

$ 

-

-

-

- I(2) 

Y/N 
Additional Security Report 

[insert date] 

Amount of Additional Security (in each case as of the end of the Due Period) 

Undrawn Amount under Qualifying Letters of Credit: 
 $____

[and/or] 


Balance $____ in Private Owner Pledged Account: 

Additional Security amount equal to or in excess of $5,000,000? Y/N 

In the event of any Additional Security consisting of a Qualifying Letter of 


Credit, for each such Qualifying Letter of Credit: 


A. Capital category of Issuing Bank as of the end of the Due Period pursuant 

to the standards in 12 U.S.C. § 1831o (b)(1), or applicable replacement 

legislation: 

B. Is such Issuing Bank a Qualified Issuer? Y/N 
Other Reports 

Withdrawals from Collection Account 

Manager hereby certifies that all withdrawals by the Manager from the Collection Account during the 

relevant Due Period were made in accordance with the terms ofthe Amended and Restated Limited 

Liability Company Operating Agreement and the Custodial Agreement: Y I N 

Delinquency Report 

#and$ by delinquency classification: Current,< 30, 30-60 days, 61-90 days,> 90 days, in foreclosure, in 

bankruptcy, REO 

Breakout of> 60 day delinquencies by collateral type,# and$ 

Breakout of> 60 day delinquencies by state, # and $ 

REO Report 

Listing ofREO properties held to include original loan number, date of ownership, description, collateral 

type, address, UPB (ofthe loan prior to foreclosure), net book value, listing date, estimated sale date, 

appraisal amount, original list price, current list price, cumulative Servicing Expenses allocable, broker 

name, and comments 

Modification Report 

Listing ofloans modified, to include borrower name, loan balance and terms before modification, loan 

balance and terms after modification. Show amounts ofprincipal forgiven, if any, and principal 

forbearance amounts, if any. 

Liquidation Report 

Listing of loans and REO properties liquidated, to include borrower name, UPB, net liquidation proceeds, 

cumulative Servicing Expenses, realized loss amount 

Short Sale Report 

Listing ofloans for which short sales were accepted, to include borrower name, UPB, payoff accepted, 

realized loss amount 

Judgment Report 

Listing ofJudgments obtained, to include borrower name, Judgment amount, current month and 

cumulative payments received, remaining balance 
Significant Litigation Report 

Company and/or Servicer with respect to assets subject to this Agreement, the actions taken to defend 

such claim, and an estimate ofthe projected exposure for: a) any claim in which the Company or Servicer 

expects to incur more than $10,000 in Servicing Expenses to defend such claim, b) any claim in which 

multiple plaintiffs have joined in filing an action against the Company and/or Servicer or the same law 

firm has filed individual claims on behalfofmore than one plaintiff, and c) any claim(s) regardless ofthe 

dollar amount naming: (i) any Failed Bank, or (ii) FDIC (in any capacity) as defendant(s). Activity 

should be updated quarterly. 

Environmental Exposure Report 

Provide a report identifYing any assets in which the Site Assessment identified an Environmental Hazard 

together with information on the nature ofthe hazard, additional tests performed, and the cost of 

correcting the hazard identified in the Site Assessment. 

MONTHLY LOAN-LEVEL DETAIL REPORTS 

Monthly Loan Trial Balance andActivity Report 

PROVIDE A MONTHLY LOAN-LEVEL REPORT 

IN EXCEL WITH THE FOLLOWING FIELDS: 

Current Loan Number 

Prior Servicer Loan Number 

P&l Constant 

Note Rate 

Principal collections - regular 

Principal collections - payoffs 

Principal proceeds - loan sales 

Principal Write-Off Amount 

Other Non-Cash Principal Adjustment 

Transfer to REO 

Escrow balance 

Other Advances Balance 

Interest collections - regular 

Interest collections- payoffs 

Interest collections -loan sales 

Non-Cash Interest Adjustment 

Late Charges 

Pre-Payment Penalty Paid 

Other Fee Income 

Servicing Svstem Data Download- To Initial Member 
Provide a monthly loan-level data download in Excel format with every field populated in the Servicer's 

loan servicing system. This requirement may be modified in the future by the Initial Member to include 

only certain specified fields. 

SEMIANNUAL REPORT- TO INITIAL MEMBER (in January and July ofeach year, commencing 

July 2010) 

Business Plan 

Updated Consolidated Business Plan and individual Business Plans for 10 largest Loans, as required 

pursuant to Section 7.7 ofthe Amended and Restated Limited Liability Company Agreement. 

Projected Cash Flows 

Excel model ofprojected cash flows by month, as ofJune 30 and December 31 of each year, as required 

pursuant to Section 7.7(c) ofthe Amended and Restated Limited Liability Company Agreement. 

ASAVAILABLE- TO INITIAL MEMBER 

Custodial Report or an updated Loan Schedule and Exception List (in each case as defined in the 

Custodial Agreement) from the Custodian/Paying Agent, as provided to the Company. 
EXHIBITC 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 

TIDS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is 

made and entered into as of 

("Transferor''), and L__], 

("Transferee"). 

, 20_ by and between L__], a L__] 

, a _________ 

RECITALS 

WHEREAS, the Transferor, is the owner of a limited liability company membership 

interest (the "LLC Interest") in 2010-1 SFG VENTURE LLC, a Delaware limited liability 

company (the "Company"); 

WHEREAS, the LLC Interest represents a forty percent ( 40%) "Percentage Interest" in 

the Company (as defined in that certain Amended and Restated Limited Liability Company · 

Operating Agreement, effective as of May _, 2010, by and among the Federal Deposit 

Insurance Corporation, in its capacity as receiver for the Failed Bank defined therein (the "Initial 

Member"), Transferor and the Company (the "LLC Operating Agreement")); 

WHEREAS, the ownership and other rights associated with the LLC Interest are set forth 

in the LLC Operating Agreement; 

WHEREAS, pursuant to Section 3.13 of the LLC Operating Agreement, Transferor 

granted the Initial Member a first priority security interest in the LLC Interest in order to secure 

certain obligations ofTransferor as more fully described in the LLC Operating Agreement; 

WHEREAS, an Event of Default (as defined in the LLC Operating Agreement) has 

occurred and is continuing, and the Initial Member has elected, pursuant to the LLC Operating 

Agreement, to foreclose on its security interest in the LLC Interest and effect the assignment 

contemplated hereby; 

NOW THEREFORE, in consideration ofthe mutual agreements contained herein and in 

the LLC Operating Agreement, and for other good and valuable consideration, the receipt and 

sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the 

parties hereto agree as follows: 

1. Assignment and Assumption. Transferor hereby assigns and transfers the LLC 

Interest to Transferee, and Transferee hereby accepts and assumes the LLC Interest and agrees to 

be bound by the LLC Operating Agreement, as amended from time to time, to the extent it 

relates to such LLC Interest. 

2. Counterparts. This Agreement may be executed in two or more counterparts, all 

ofwhich shall be considered one and the same agreement and shall become effective when one 

C-1 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC991841479-7.084080.0017 
---------------------

or more counterparts have been signed by each ofthe parties and delivered (including by 

telecopy) to the other party. 

3. No Third Party Beneficiaries. This Agreement shall inure to the benefit ofthe 

parties hereto and their respective successors and permitted assigns. This Agreement is not 

intended to confer upon any other person any rights or remedies hereunder. 

4. Governing Law. The laws ofthe State ofDelaware will govern the validity, 

performance and enforcement ofthis Agreement, without giving effect to the principles of 

conflict oflaws ofthe State ofDelaware or any other jurisdiction. 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement 

effective as ofthe date first above written. 

TRANSFEROR: 

[__J 

By: [__J 

Name: [__J 

Title: [__J 

TRANSFEREE: 

By: 

Name: 

Title: 

C-2 


Structured Transaction Commercial 2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1 &41479-7.084080.0017 
----

EXHIBITD 

FORM OF LETTER OF CREDIT 

(Bank Letterhead Stationary) 

Federal Deposit Insurance Corporation, in its capacity as Initial Member (as defined below) 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

Email Address: RMalami@FDIC.gov 

Tel: 

Fax: ------' 

RE: Irrevocable Transferable Letter ofCredit No. _____for 

U.S.$ , Dated _________ 

Gentlemen: 

We hereby issue our irrevocable transferable Letter of Credit No. ________ 

(this "Letter of Credit") in favor of Federal Deposit Insurance Corporation (in any capacity, the 

"FDIC"), as receiver for the Failed Bank identified in the LLC Operating Agreement defined 

below, as the Initial Member under such LLC Operating Agreement (including its successors, 

and its assigns as provided herein, the "Initial Member"), for the account of [ ] 

(the "Private Owner"). 

This Letter of Credit is issued pursuant to the Amended and Restated Limited Liability 

Company Operating Agreement dated as of May _, 2010 (as amended or otherwise modified 

from time to time, the "LLC Operating Agreement"), by and among 201 0-1 SFG VENTURE 

LLC (the "Company"), the Private Owner and the Initial Member. 

We undertake to honor from time to time your draft or drafts presented to us in accordance 

herewith not exceeding in the aggregate U.S. Dollars 

(U.S.$ . All drafts hereunder (i) must be marked "Drawn under irrevocable 

transferable Letter of Credit No. , dated ", (ii) must be 

accompanied by a typewritten statement signed by a purportedly authorized representative ofthe 

Initial Member stating that an "Event of Default" or "LC Reissuance/Extension Failure" has 

occurred under (and as defined in) the LLC Operating Agreement, and (iii) shall, unless payment 

is to be made at sight, include the wire transfer instructions for remittance by us ofthe amount of 

such draft. 

Structured Transaction Cornmercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WOC99 1841479-7.084080.0017 
Presentation of drafts drawn hereunder, together with the required statement and applicable 

wire transfer instructions, may be made at any time on or before the expiry date hereof (i) by 

physical presentation ofsuch draft at, or overnight delivery ofsuch draft to, our offices located at 

______________ [include address in New York City or Washington, D.C.], 

[or (ii) by telecopier (at telecopier number L_) , Attention: ,] without further 

need of documentation. Presentation having been so made at or before 12:00 noon (New York, 

New York time) on any day other than a Saturday, Sunday or other day on which all commercial 

banks in [New York, New York I Washington, D.C.] are authorized or required by law to be 

closed ("Banking Day") shall result in payment to Initial Member in accordance herewith on the 

same date. Drafts presented after 12:00 noon (New York, New York time) or on any day other 

than a Banking Day, shall result in payment to Initial Member in accordance herewith on the 

next Banking Day. 

This Letter of Credit shall expire at 5:00p.m. (New York, New York time) on the date that 

occurs one year after the date hereof; provided, however, that this Letter of Credit will be 

automatically extended without amendment for additional periods of one year each (in each case 

commencing from the expiry date hereof as then in effect), unless we elect not to renew this 

Letter of Credit and deliver to the Initial Member written notice of such election at least sixty 

(60) days prior to any such expiry date. Any such notice shall be in writing and shall be 

delivered in hand with receipt acknowledged, or by certified mail (return receipt requested), to 

the Initial Member at its address set forth above (or to such other address for any such notices 

which Initial Member may hereafter specify in a written notice delivered to the undersigned). 

Partial and multiple drafts are permitted, and the amount of this Letter of Credit will be 

reduced by each such draft honored. 

All our charges (including wire transfer fees in connection with any payments by us 

hereunder) are for the account of the Private Owner, and in no event shall any such charges 

reduce the amount of any draft or payment hereunder. 

We agree that we shall have no duty or right to inquire as to the basis upon which Initial 

Member has determined to present to us any draft under this Letter ofCredit. 

This Letter of Credit is transferable to any transferee who has succeeded you as the Initial 

Member under the LLC Operating Agreement, and may be successively transferred. Any transfer 

request must be effected by presenting to us the attached form of Attachment I signed by the 

transferor and the transferee together with the original Letter of Credit. Upon our endorsement 

ofsuch transfer, the transferee instead ofthe transferor shall, without necessity offurther action, 

be entitled to all the benefits of and rights under this Letter of Credit in the transferor's place; 

provided that, in such case, any drafts of the Initial Member to be provided hereunder shall be 

signed by one who states therein that he is a duly authorized officer ofthe transferee. 

Except as otherwise expressly stated herein, this Letter of Credit is subject to the 

International Standby Practices, International Chamber of Commerce Publication No. 590, 

including any amendments, modifications or revisions thereof (the "ISP 98"). As to matters not 

covered by the ISP 98, and to the extent not inconsistent with the ISP 98, this Letter of Credit 

D-2 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
------------------------

shall be governed by and construed in accordance with the laws of the State of New York, 

including without limitation the Uniform Commercial Code as in effect in the State of New 

York, without regard to principals of conflict oflaws. 

All ofthe terms and conditions ofthis Letter ofCredit are contained herein and shall not be 

altered except by reduction in the amount ofthis Letter ofCredit due to corresponding payments 

in like amount in compliance with the aforementioned terms. Except as otherwise expressly set 

forth herein, there are no conditions to this Letter ofCredit. 

Very truly yours, 

By:____________ 

Name: 

Title: 

D-3 

Structured Transaction Commercial2010-l SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017 
ATTACHMENT I TO LETTER OF CREDIT 


REQUEST FOR TRANSFER 


[Insert Bank Name and Address] 

RE: Irrevocable Transferable Letter ofCredit No. L[______,] for 

U.S.$[ ], Dated ..__________, 

Gentlemen: 

Reference is made to that certain irrevocable transferable Letter of Credit No. 

..__________,, dated (the "Letter of Credit"), issued by you in favor of 

[ ] (the "Transferor"), for the account of [ ] (the "Private Owner"). 

The Transferor has transferred and assigned (and hereby confirms to you said transfer and 

assignment) all of its rights in and under the Letter of Credit to [name of Transferee] (the 

"Transferee") and confirms that the Transferor no longer has any rights under or interest in the 

Letter ofCredit. 

The Letter of Credit is returned herewith and we request that you issue an irrevocable 

transferable letter of credit in the name of the Transferee and providing for notices to be sent to 

the Transferee at the address set forth below and in all other respects identical to the Letter of 

Credit. 

Transferee hereby certifies that it is a duly authorized transferee under the terms of the Letter of 

Credit and is accordingly entitled, upon presentation of the drafts (and applicable items) called 

for therein, to receive payment thereunder. 

Notices under the Letter of Credit should be sent to the Transferee as follows: [Name], 

[Address], [Attention: ], Email: [ ], Fax: [ ], Tel: [ ]. 

[NAME OF TRANSFEROR] 

By_____________________ 


[Name and Title ofAuthorized 


Representative ofTransferor] 


[NAME OF TRANSFEREE] 

By______________________ 


[Name and Title ofAuthorized 


Representative ofTransferee] 


D-4 

Structured Transaction Commercial 2010-1 SFG LLC 

Limited Liability Company Operating Agreement 

WDC99 1841479-7.084080.0017