Multibank Structured Transaction 2010-1 CRE

EXECUTION COPY

AMENDED AND RESTATED
 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT
 

2010-1 CRE VENTURE, LLC
 

DATED AS OF JULY 2, 2010
 

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TABLE OF CONTENTS
 

Page

ARTICLE I	 CERTAIN DEFINITIONS .............................................................................. 2
 

1.1
 Definitions........................................................................................................ 2
 

1.2
 Construction................................................................................................... 11
 

ARTICLE II ORGANIZATION OF THE COMPANY ..................................................... 12
 

2.1 Formation; Continuation and Admission of Members .................................. 12
 

2.2 Name .............................................................................................................. 13
 

2.3 Organizational Contributions and Related Actions ....................................... 13
 

2.4 Registered Office; Chief Executive Office .................................................... 13
 

2.5 Purpose; Duration .......................................................................................... 14
 

2.6 Single Purpose Entity; Limitations on Company’s Activities....................... 14
 

2.7 Ratification of Certain Actions...................................................................... 16
 

ARTICLE III MANAGEMENT AND OPERATIONS OF THE COMPANY ................... 17
 

3.1 Management of the Company’s Affairs......................................................... 17
 

3.2 Removal of Manager...................................................................................... 19
 

3.3 Employees and Services ................................................................................ 19
 

3.4 Restrictions on Manager and Private Owner ................................................. 19
 

3.5 Related Party Agreements.............................................................................. 21
 

3.6 Real Property ................................................................................................. 21
 

3.7 Custodian and Paying Agent.......................................................................... 21
 

3.8 Relationships with Borrowers, etc ................................................................. 22
 

3.9 No Conflicting Obligations............................................................................ 22
 

3.10 Compliance with Law.................................................................................... 22
 

3.11 No Bankruptcy Filing .................................................................................... 22
 

3.12 No Liens......................................................................................................... 23
 

3.13 Remedies Upon an Event of Default; Security Interest................................. 23
 

3.14 Purchase Right of Initial Member.................................................................. 27
 

3.15 No ERISA Plan Assets................................................................................... 29
 

ARTICLE IV	 MEMBERSHIP INTERESTS; RIGHTS AND DUTIES OF, AND
 

RESTRICTIONS ON, MEMBERS............................................................... 29
 

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(continued)

Page

4.1
 General........................................................................................................... 29
 

4.2
 LLC Interests ................................................................................................. 29
 

4.3
 Filings; Duty of Members to Cooperate ........................................................ 30
 

4.4 Certain Restrictions and Requirements.......................................................... 30
 

4.5 Liability of Initial Member ............................................................................ 31
 

4.6 Indemnification.............................................................................................. 31
 

ARTICLE V	 CAPITAL CONTRIBUTIONS; DISCRETIONARY FUNDING
 

ADVANCE; EXCESS WORKING CAPITAL ADVANCE ........................ 35
 

5.1 Capital Contributions..................................................................................... 35
 

5.2 Working Capital Reserve............................................................................... 36
 

5.3 Discretionary Funding Advance .................................................................... 36
 

5.4 Excess Working Capital Advances................................................................ 37
 

ARTICLE VI	 CAPITAL ACCOUNTS; ALLOCATIONS; PRIORITY OF
 

PAYMENTS; DISTRIBUTIONS.................................................................. 37
 

6.1 Capital Accounts............................................................................................ 37
 

6.2 Allocations to Capital Accounts .................................................................... 38
 

6.3 Tax Allocations.............................................................................................. 40
 

6.4 Determinations by Tax Matters Member....................................................... 40
 

6.5 Priority of Payments ...................................................................................... 41
 

6.6 Distributions................................................................................................... 41
 

ARTICLE VII ACCOUNTING, REPORTING AND TAXATION ..................................... 43
 

7.1 Fiscal Year ..................................................................................................... 43
 

7.2 Maintenance of Books and Records .............................................................. 43
 

7.3 Financial Statements...................................................................................... 44
 

7.4
 Additional Reporting and Notice Requirements............................................ 45
 

7.5
 Designation of Tax Matters Member............................................................. 47
 

7.6
 Tax Information ............................................................................................. 48
 

7.7
 Business Plans................................................................................................ 49
 

ARTICLE VIII RESTRICTIONS ON DISPOSITION OF LLC INTERESTS...................... 50
 

8.1
 Limitations on Disposition of LLC Interests................................................. 50
 

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(continued)

Page

8.2
 Change of Control.......................................................................................... 51
 

8.3
 Additional Provisions Relating to Permitted Dispositions............................ 51
 

8.4
 Effect of Permitted Dispositions.................................................................... 51
 

8.5 Effect of Prohibited Dispositions................................................................... 52
 

8.6 Distributions After Disposition...................................................................... 53
 

8.7 Transfers By Initial Member.......................................................................... 53
 

8.8 Resignation; Dissolution................................................................................ 53
 

8.9 Applicable Law Withdrawal.......................................................................... 53
 

ARTICLE IX DISSOLUTION AND WINDING-UP OF THE COMPANY...................... 54
 

9.1 Dissolution ..................................................................................................... 54
 

9.2 Winding-Up Procedures................................................................................. 54
 

9.3 Termination of the Company......................................................................... 56
 

ARTICLE X QUALIFIED TRANSFEREES...................................................................... 56
 

10.1 Qualified Transferees..................................................................................... 56
 

ARTICLE XI MANAGER LIABILITY............................................................................... 59
 

11.1 Liability of Manager ...................................................................................... 59
 

ARTICLE XII SERVICING OF LOANS.............................................................................. 60
 

12.1 Servicing ........................................................................................................ 60
 

12.2 Servicing Standard......................................................................................... 64
 

12.3 Servicing of Loans......................................................................................... 66
 

12.4 Removal of Servicer ...................................................................................... 69
 

12.5 Interim Management Fee and Interim Servicing Fee; Management Fee....... 73
 

12.6 Servicing Expenses........................................................................................ 73
 

12.7 Use of Loan Proceeds .................................................................................... 74
 

12.8 Collection Account ........................................................................................ 75
 

12.9 Distribution Account...................................................................................... 76
 

12.10 Defeasance Account....................................................................................... 76
 

12.11 Working Capital Reserve Account ................................................................ 76
 

12.12 Certain Servicing and Loan Administration Decisions ................................. 77
 

12.13 Management and Disposition of Collateral ................................................... 77
 

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(continued)

Page

12.14 Acquisition of Collateral................................................................................ 77
 

12.15 Administration of REO Properties................................................................. 78
 

12.16 Releases of Collateral .................................................................................... 80
 

12.17 Clean-Up Call Rights..................................................................................... 80
 

12.18 Certain Transfer Obligations.......................................................................... 81
 

ARTICLE XIII MISCELLANEOUS ...................................................................................... 81
 

13.1 Waiver of Rights of Partition and Dissolution............................................... 81
 

13.2 Entire Agreement; Other Agreements ........................................................... 81
 

13.3 Third Party Beneficiaries............................................................................... 82
 

13.4 Expenses ........................................................................................................ 82
 

13.5 Waivers and Amendments............................................................................. 83
 

13.6 Notices ........................................................................................................... 84
 

13.7 Counterparts; Facsimile Signatures ............................................................... 86
 

13.8 Successors and Assigns.................................................................................. 86
 

13.9 Compliance With Law; Severability.............................................................. 86
 

13.10 Power of Attorney.......................................................................................... 87
 

13.11 Governing Law .............................................................................................. 87
 

13.12 Jurisdiction; Venue and Service..................................................................... 87
 

13.13 Waiver of Jury Trial....................................................................................... 89
 

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2010-1 CRE 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 of the 2nd day of July, 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”), ColFin Axle Funding, LLC, a Delaware limited liability company (the

“Private Owner”), and 2010-1 CRE Venture, LLC, a Delaware limited liability company (the

“Company”).

WHEREAS, the FDIC has separately been appointed receiver (in such separate capacities

as receiver for the separate receiverships, the “Receiver”) for each of the various failed financial

institutions listed on Schedule I hereto (collectively, the “Failed Banks” and each individually, a

“Failed Bank”); and

WHEREAS, on June 28, 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 (100%) limited liability company interest), and the Initial Member and the

Company have entered into that certain Limited Liability Company Operating Agreement dated

as of June 28, 2010 (the “Original LLC Operating Agreement”) as the initial “limited liability

company agreement” (as such term is defined in the Act) of the Company;

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

and Sale Agreement dated as of the date hereof (the “Contribution Agreement”) pursuant to

which (i) the Initial Member has sold in part and (as the sole member of the Company at the

time) contributed in part to the Company, and the Company purchased 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 executed and

delivered to the Initial Member those certain Purchase Money Notes for the benefit of the Initial

Member and dated as of the date hereof (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 as

of 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

Collateral under the Reimbursement, Security and Guaranty Agreement;

WHEREAS, the Manager has agreed to cause the Company to establish the Working

Capital Reserve Account to provide the Company with capital to fund Working Capital Expenses

and, the Manager and the Initial Member have agreed to initially fund the Working Capital

Reserve Account;

WHEREAS, following closing of the transactions contemplated by the Contribution

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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 as of the date hereof (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 of the Closing Date the Initial Member and Private Owner will own

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

WHEREAS, upon the occurrence of the 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;

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

Agreement in its entirety in order to reflect the admission of 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 of which 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 defined in the Act) of the Company. For purposes of this

Agreement, the following terms shall have the meanings and definitions set forth below. Any

other defined terms used herein but not defined herein shall have the meanings set forth in the

Agreement of Common Definitions, dated as of July 2, 2010, between the Initial Member, the

Company, the Private Owner, the Bank, the Collateral Agent and the Purchase Money Notes

Guarantor.

“Accountants” shall mean the independent certified public accountants of the Company.

“Act” shall mean the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et

seq.

“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)(1) and 1.704-2(i)(5); and

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

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

foregoing definition of Adjusted Capital Account Deficit is intended to be read with the

provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted

consistently therewith.

“Agreement” shall have the meaning given in the preamble.

“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 1.704-1(b)(2)(iv)(f) of the Treasury Regulations, except as

otherwise provided herein, immediately prior to: (a) the date of the 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 of the actual liquidation

of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the 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 of such date.

“Business” shall mean the acquisition of the Loans pursuant to the Contribution

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

Loans.

“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).

“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 of Net 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 2.1(a).

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“Clean-up Call” shall have the meaning set forth in Section 12.17.

“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.

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

“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 of the foregoing.

“Debt” of any Person shall mean (i) all indebtedness of such Person for borrowed money,

(ii) all obligations of such Person for the deferred purchase price of property or services

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

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

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

Transaction 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 of such 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 financial institutions where such Person maintains

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

(i) through (v) above in respect of which such Person has entered into or issued any Guarantee.

“Direct Owner” shall mean, with respect to any Person, any other Person who has any

direct ownership interest in such Person.

“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 of the

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 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

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purpose of determining a particular amount:

Each Member shall submit to the other, within five 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. If the higher of the two

proposals is not greater than 110% of the lower proposal, then the amount shall be the average of

such two proposals. If the higher of such two proposals is greater than 110% of the lower

amount then the Members shall, within seven days of their submission of such proposals, jointly

select a nationally recognized investment banking firm which shall, within 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

the Agreement, and the proposal thus selected shall be considered the amount for purposes of the

Agreement. If the Members fail to agree on such investment banking firm within such seven-day

period, then each Member shall nominate, within such seven-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 nominated firms promptly after the

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

an investment banking firm within such seven-day period, such determination shall be made by

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

investment-banking firm shall be paid in the manner provided in the 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 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 of

such entity. For the avoidance of doubt, it is understood and agreed that a statutory conversion

of a Person into another form of Person does not constitute a “Dissolution Event.”

“Distributable Cash” shall have the meaning given in Section 6.5.

“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 of law.

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“Events 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):

(a) the receipt by the Company of notice from the Collateral Agent

that an Event of Default under and as defined in the Reimbursement, Security and Guaranty

Agreement has occurred (unless such an Event of Default 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 of Insolvency Event) (i) with respect to any of

(x) the Company, or (y) 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 of Default 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 of any 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 of this Agreement, which failure 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 Company; or

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

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

respect with the provisions of this Agreement, 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 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 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 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 an Event of Default under the Reimbursement,

Security and Guaranty Agreement as a result of the Servicer’s acts or omissions or 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 due thereunder) which, in either case, remains

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

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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

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

there shall occur a Change of Control 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 of such Restricted Servicer Change of Control; 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 of the 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

(j) any failure, for any reason, in the amount of the Additional

Security being equal to or in excess of Seven Million Five Hundred Thousand Dollars

($7,500,000), which includes any failure by an Issuing Bank to comply with any terms,

agreements or conditions of any Qualifying Letter of Credit or any failure by the Specified

Parent to comply with any terms, agreements or conditions of any Satisfactory Equity

Commitment Letter.

“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 of the 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 of the Members as of the Closing

Date.

“Fiscal Year” shall have the meaning given in Section 7.1.

“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

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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.

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

“Incentive Threshold Base Amount” shall have the meaning given in Section 6.6(b).

“Incentive Threshold Event” shall have the meaning given in Section 6.6(b)(iii).

“Indemnified Parties” shall have the meaning give in Section 4.6(a).

“Initial Member Capital Contribution” shall have the meaning given in

Section 2.3(a)(i).

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

applicable issuing bank.

“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 of

such Qualifying Letter of Credit to be automatically renewed (for an additional year) at least

sixty (60) days prior to the then-scheduled expiry of such Qualifying Letter of Credit, 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 of Credit.

“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 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

three months.

“LLC Interest” shall mean, with respect to any particular Member, (i) the entire limited

liability company interest in the Company of such Member, including such Member’s rights to

OHS East:160711158.11 8
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 such 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 such Member 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.

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

“Maturity Date Report” shall have the meaning given in Section 7.4(b).

“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.

“Monthly Adjusted Annualized Yield” shall mean, for purposes of the Incentive

Threshold Event, 1.8769 percent (1.8769%), derived as follows: (1 + Annualized Yield

Threshold)1/12 – 1 or (1 + 0.25)1/12 – 1, where the Annualized Yield Threshold is 25%.

“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 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

OHS East:160711158.11 9
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.

“Original LLC Operating Agreement” shall have the meaning given in the recitals.

“Paying Agent” shall mean have the meaning set forth in Section 3.7.

“Permitted Disposition” shall have the meaning given in Section 8.1.

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

“Previously Approved Matters” shall have the meaning given in Section 2.7.

“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.

“Purchaser Eligibility Certification” shall mean, (i) with respect to the Private Owner,

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 of Purchaser Eligibility Certification as

maintained by the FDIC.

“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, DC. where

presentation and drawings on such letters of credit can be duly made.

“Qualified Transferee” shall have the meaning given in Section 10.1.

“Qualifying Letter of Credit” shall mean an irrevocable standby letter of credit, duly

issued by an Issuing Bank that is, as of the date of issuance thereof, a Qualified Issuer and

deliver to the Initial Member, drawable at such Issuing Bank’s offices in New York City, New

York or Washington, D.C., and having an initial term of one (1) year with automatic renewals

thereafter (without amendment except for extension of the 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.

“Related Party Agreement” shall have the meaning given in Section 3.5.

“Satisfactory Equity Commitment Letter” shall mean an equity commitment letter

between Colony Distressed Credit Fund, L.P. and the Private Owner, (i) in the form delivered to

and accepted by Initial Member and the Purchase Money Notes Guarantor on the Closing Date

OHS East:160711158.11 10
or (ii) otherwise in form and substance satisfactory to the Initial Member and (prior to the

Purchase Money Notes Defeasance Date) the Purchase Money Notes Guarantor (including that

the Initial Member and (prior to the Purchase Money Notes Defeasance Date) the Purchase

Money Notes Guarantor shall be an express third-party beneficiary thereof with the several right

to enforce such letter).

“Secured Assets” shall have the meaning given in Section 3.13.

“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 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 Transaction 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 Allocation Report” shall have the meaning given in Section 7.6(b).

“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 shall be equal to the product

of (a) the Incentive Threshold as of the preceding Distribution Date (or, in the case of the first

Distribution Date, the Closing Date) and (b) the applicable Monthly Adjusted Annualized Yield.

“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

references to sections of the Treasury Regulations shall include any corresponding provision or

provisions of succeeding, substitute, proposed or final Treasury Regulations.

“Unreimbursable Expense” shall have the meaning given in Section 4.6(e).

1.2 Construction.

(a) 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.

OHS East:160711158.11 11
(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 “Affiliates” or “Subsidiaries,” as the case may be, of such 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 of itself, 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 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 of this 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 of time shall be construed to mean commencing at the beginning of such

period and continuing until the end of such period.

ARTICLE II
 

Organization of the Company
 

2.1 Formation; Continuation and Admission of Members.

(a) On June 28, 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 of the Company.

OHS East:160711158.11 12
(b) The Company shall continue as a limited liability company under the Act

and in accordance with the further terms and provisions of this Agreement.

(c) The Initial Member previously was, and the Private Owner hereby agrees

to be, and is, admitted as a member of the Company such that, as of the Closing Date, the Initial

Member and the Private Owner are the sole members of the Company. Until the Company is

dissolved pursuant to Section 9.1, and subject to the rights of Initial Member under Section 13.5,

the Company shall at all times have two, and only two, members.

2.2 Name.

(a) The name of the Company shall be 2010-1 CRE Venture, LLC.

(b) The Business shall be conducted only under the name of the 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:

(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

from Initial Member, Loans (other than that portion of the Loans comprising the

Initial Member Capital Contribution) and assumed the Obligations (as defined 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 a forty percent (40%) equity interest 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 Incentive Threshold Event as described

in Section 6.6(b)(iii), the Private Owner shall own forty percent (40%) of the issued and

outstanding LLC Interests and the Initial Member shall own sixty percent (60%) of such LLC

Interests. Following the occurrence of the 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 such

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

OHS East:160711158.11 13
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 of the Company shall be located at 2450

Broadway, 6th Floor, Santa Monica, CA 90404, or such other place as shall be determined by

the Manager from time to time.

2.5 Purpose; 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

the Manager deems necessary, desirable or convenient, to accomplish the purposes of the

Company or consistent with the furtherance thereof.

(b) Subject to Section 9.1, the Company shall continue in existence

perpetually.

2.6 Single Purpose Entity; Limitations on Company’s Activities. Except to the extent

expressly permitted by this Agreement or the Transaction 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 financial statements of its parent or ultimate parent in accordance

with GAAP;

(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 Transaction 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;

OHS East:160711158.11 14
(vi) pay its own liabilities only out of its 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 of its contemplated business operations;

(ix) allocate, fairly and reasonably, shared expenses, including any

overhead for shared office space;

(x) use separate stationery, invoices and checks;

(xi) correct any known misunderstanding regarding its separate

identity; and

(xii) maintain adequate capital in light of its contemplated business

purpose, transactions and liabilities, if any.

(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 of the Initial Member, cause or

permit the Company or any of its Subsidiaries to:

(i) except as contemplated hereby or by the Transaction 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 itself with respect to,

the Debts of any other Person, including any Affiliate;

(ii) except as contemplated hereby or by the Transaction Documents

(including 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 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

OHS East:160711158.11 15
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 Excess Working Capital Advance or as otherwise expressly

permitted hereby or by the Transaction 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 Transaction Documents and may make any advance required or expressly

permitted to be made pursuant to any provisions of Article XII or the Transaction

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);

(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 of the 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 Transaction 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 of holding Loans for the benefit of the Company; or

(x) breach or violate any representation, warranties, covenants or

agreements contained in any of the Transaction Documents.

(c) The failure of the Company, any Member and/or the Manager to comply

with any of the foregoing covenants or any other covenants contained in this Agreement shall not

affect the status of the Company as a separate legal entity or the limited liability of the Members.

2.7 Ratification of Certain Actions. Prior to the Closing Date, the Company

previously approved (a) each of the Transaction Documents, (b) the issuance of the 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

OHS East:160711158.11 16
Transaction 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 of the Company
 

3.1 Management of the Company’s Affairs.

(a) Subject to the terms and conditions of this Agreement, the management of

the Company shall be vested exclusively in the Person appointed from time to time hereunder as

the “Manager” of the Company (the “Manager”), which Manager may, but is not required to be,

a Member. Effective as of the Closing Date, the Private Owner is hereby appointed as the

Manager. Subject to the terms and conditions of this Agreement, the Manager shall have full and

exclusive power and discretion to, and shall, manage the business and affairs of the Company in

accordance with this Agreement. The Private Owner may not resign as Manager, may not

Dispose of or delegate, in whole or in part, its rights, responsibilities or duties as 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 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. Private Owner (and any Successor to 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

be 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 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 of the Manager shall

be identical to the authority, duties (including fiduciary duties) and functions of the 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 of any express term of this

OHS East:160711158.11 17
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 of the 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 of the Company;

(iii) the identity of Persons who are authorized to execute and deliver

any instrument or document of or on behalf of the 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 on

behalf of 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 Transaction 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 of the Company by the Manager

and/or its Affiliates on behalf of or for the benefit of the 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, 8.1,

8.2, 8.8(a), 9.1, 12.3(g), 12.7(b), 12.12, 12.15, 13.5 and 13.12. 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.

OHS East:160711158.11 18
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 of the 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

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

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 of the 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 such 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 of the 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 Transaction Documents to be an expense of the 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 of the following actions on behalf of, or with

respect to, the Company, or otherwise cause the Company to take any of the following actions, in

the case of all of the foregoing without the prior written approval of the Initial Member 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 and the

Purchase Money Notes Guarantor’s sole and absolute discretion:

(i) admitting additional or substitute members of the 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

OHS East:160711158.11 19
other than a partnership for federal tax purposes;

(iv) taking any action that would make it impossible to carry on the

ordinary business of the Company;

(v) conducting Bulk Sales during the first 24-month period after the

Closing Date (unless the Purchase Money Notes Defeasance Date has occurred),

in an aggregate amount (for such 24-month period) in excess of ten percent (10%)

of the aggregate Unpaid Principal Balance of all Loans as of the Cut-Off Date as

indicated on the Loan Schedule; provided, that, for purposes of the foregoing (A)

the amount of any Bulk Sale shall be determined (1) for Loans, or any Bulk Sale

of all or substantially all of the remaining Collateral (including any REO Property

or other Acquired Property) with respect to any Loan, based on the aggregate

Unpaid Principal Balance 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

Collateral (including any REO Property or other Acquired Property) with respect

to such Loan, based on the value thereof as of the time of such sale or disposition,

including, where available, based on the Appraised Value Net of Estimated Cost

to Sell, 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 of the

Acquired Property (including any REO Property) held directly or indirectly by

such Ownership Entity;

(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 Transaction 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, 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, Collateral or

Acquired Property (or any portion thereof);

(xi) selling any Loan, 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 of the Loan Proceeds allocable to the Initial

Member;

(xii) disbursing funds from the Collection Account, the Working

OHS East:160711158.11 20
Capital Reserve Account or other accounts created under this Agreement, the

Custodial and Paying Agency Agreement or any Servicing Agreement other than

in accordance with (and without violation of any requirement contained in) the

provisions of this Agreement, the Custodial and Paying Agency Agreement, 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 Loan to the Acquired Property, permitted under

the applicable Loan Documents;

(xiv) reimbursing the Manager for any expense or cost (other than

Servicing Expenses and Pre-Approved Charges) incurred (or paid) to any Affiliate

of any of the Company, the Private Owner, 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 Transaction Document (for avoidance of doubt,

nothing in this clause (xv) shall require Private Owner or Manager to make any

capital contribution or advances which are not otherwise required of it under the

express terms of this Agreement or any Transaction Document); or

(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.

3.5 Related Party Agreements. Neither the Company nor any of its 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 Transaction 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 of the 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 Custodian, and

such Custodian shall at all times have custody and possession of the Notes and other Custodial

OHS East:160711158.11 21
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, 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 of its 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 Custodian or one 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 shall be terminable by the Company upon no more than thirty (30) days notice

provided by either, without cause under the Custodial and Paying Agency Agreement. For

purposes of clarification, the parties acknowledge that, as of the Closing Date, the Custodial and

Paying Agency Agreement delivered on the Closing Date is acceptable to Initial Member,

including as to the fees and expenses expressly set forth therein. 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 of the 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 of the Manager (who, along

with the relevant Servicer(s), shall be responsible for safeguarding such Notes and Custodial

Documents), 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 modified or restructured

Notes and other Custodial Documents removed in connection therewith shall be returned to the

Custodian as soon as possible following the completion of the 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 under the Custodial and Paying Agency Agreement at the time that such

notice or other communication is given 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 of the 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 of the Collateral.

3.9 No Conflicting Obligations. The Manager shall cause the Company to comply

with the Transaction 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 of this 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.

3.11 No Bankruptcy Filing. Neither the Manager nor the Private Owner may cause or

OHS East:160711158.11 22
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 Collateral, the Loan Documents, or the

Loan Proceeds, except, in the case of 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 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 Collateral and the Loan Proceeds.

3.13 Remedies Upon an Event of Default; Security Interest.

(a) Upon the occurrence of an Event of Default, in addition to all other

remedies available hereunder or under the Transaction Documents upon such an Event of Default,

the Initial Member shall be entitled to (i) remove the Private Owner as the Manager pursuant to

Sections 3.2 and 12.4, (ii) remove the Private Owner as a Member in connection with the exercise

by the Initial Member of its remedial rights under (and subject to the terms and conditions of) this

Section 3.13(a), (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 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 or Satisfactory Equity Commitment Letter, 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 of the Initial Member); (B) to draw upon any or all Qualifying Letters of Credit or

Satisfactory Equity Commitment Letters, 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 or Satisfactory Equity

Commitment Letter, 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 of the

Private Owner as Member pursuant to this Section 3.13 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, any Qualifying Letter of Credit or

OHS East:160711158.11 23
any Satisfactory Equity Commitment Letter, it shall have the absolute right to deduct from the

proceeds of such exercise of remedies (including proceeds of any foreclosure sale with respect to

the LLC Interests, any drawing on a Qualifying Letter of Credit, any drawing on a Satisfactory

Equity Commitment Letter and any receipt of funds 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 Initial Member in connection with enforcing its rights and remedies

hereunder and under the Transaction 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 of the 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 of the 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 of the same; and, in the event that, for any

reason any such proceeds of the 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 of the proceeds of the 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 Initial Member’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, any Qualifying Letter of Credit or any Satisfactory Equity

Commitment Letter) 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 of the Private

Owner Obligations.

(c) This Agreement shall constitute a security agreement under applicable

Law for the benefit of the 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) and for the benefit of the

Company and the Indemnified Parties, a valid and continuing first priority lien on and security

interest in all of the 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 of the proceeds of the foregoing, as security for the payment and performance

(when due) by Private Owner (including in its roles as Manager and Tax Matters Member) of the

OHS East:160711158.11 24
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 Transaction Documents, the

Private Owner, in any capacity, is required to pay (or advance applicable funds to pay) or

otherwise bear such obligations (an 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 of the 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 of this 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 Private Owner and all other

rights of the Private Owner (in any capacity) under this Agreement and the Transaction

Documents (including rights to any distributions or payments on account of any Excess Working

Capital Advances or Discretionary Funding Advances made by or on behalf of the Private

Owner), and (z) all proceeds of any of the 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 of the 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

Seven Million Five Hundred Thousand Dollars ($7,500,000) (“Qualifying Cash Collateral”), (ii)

undrawn (and available) amounts under one or more Qualifying Letters of Credit in an aggregate

amount at least equal to Seven Million Five Hundred Thousand Dollars ($7,500,000) or (iii) a

Satisfactory Equity Commitment Letter in an aggregate amount at least equal to Seven Million

Five Hundred Thousand Dollars ($7,500,000). 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

or Satisfactory Equity Commitment Letter, the Private Owner shall cause the issuance and

delivery to the Initial Member, on the Closing Date, of a single Qualifying Letter of Credit or

Satisfactory Equity Commitment Letter 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 or

Satisfactory Equity Commitment Letter 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, confirmation 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 of the 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 or Satisfactory Equity Commitment Letter unless there shall have

occurred an Event of Default (whether or not relating to any Qualifying Letter of Credit or

Satisfactory Equity Commitment Letter) 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 of the Qualifying Cash Collateral from the Private Owner Pledged Account unless

there shall have occurred an Event of Default.

OHS East:160711158.11 25
(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

Qualifying Letter of Credit or Satisfactory Equity Commitment Letter 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

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, 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 of Credit) shall be in an amount not less than Seven Million Five Hundred

Thousand Dollars ($7,500,000), 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 Initial Member and its

assignees of such financing or continuation statements in such jurisdictions as 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 of the LLC Interest held by the Private Owner at any time if an Event of

Default occurs and is continuing. The Initial Member’s election to exercise any remedy under this

Section 3.13 shall in no way limit the Initial Member’s rights under any Transaction Document.

(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 Private Owner, release any then outstanding Qualifying Letter

of Credit or Satisfactory Equity Commitment Letter and consent to the termination of the Private

OHS East:160711158.11 26
Owner Pledged Account Control Agreement.

(i) The Initial Member’s rights and remedies under this Agreement, any

Transaction 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 Initial Member to exercise any other right or remedy shall 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 Transaction Document. Under no circumstances shall Initial Member be

deemed or construed to have waived its right to draw upon any Qualifying Letter of Credit or

Satisfactory Equity Commitment Letter, 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 of

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 of the Initial

Member to foreclose on the LLC Interest of the Private Owner in accordance with Section 13.3:

(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’s LLC Interest

for an amount, payable in cash, equal to (x) the fair market value of such 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 Buy-Out 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 months after the Buy-Out Notice was

delivered to the Private Owner or at such other place or on such other date as the

parties 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’s 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

OHS East:160711158.11 27
(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 LLC Interest of the Private Owner, free and clear of all Liens other than

those created by this Agreement.

(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 of the Private Owner’s 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 of the Private Owner’s LLC

Interest as of the Buy-Out Valuation Date. If the Members are unable to agree on

such value within 15 days after the date of delivery of the 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 of the 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 a Buy-Out Purchase Price

potentially (or having actually been) determined pursuant to this Section.

(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 of 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’s 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 of Default by the Private Owner.

OHS East:160711158.11 28
(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.

(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) of ERISA 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, 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

of notice of any change of name 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 of the 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, LLC

Interests are owned by the Initial Member and the Private Owner, as set forth in the Annex I

(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 thereof for retirement and shall not be convertible into any other class of limited

OHS East:160711158.11 29
liability company interests.

(d) Voting Rights. Except to the extent otherwise required by the Act or

expressly provided in this Agreement, the holders of LLC Interests shall be entitled to vote on all

matters upon which 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 of the 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 of the Company pursuant to the

terms of this 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,

if the failure to so obtain such licenses would reasonably be expected to result in the imposition

of fines, penalties or other liabilities on the Company, claims and defenses being asserted against

the Company (including counterclaims and defenses asserted by borrowers under the Loans), or

materially adversely affect the Company or the Company’s ability to foreclose on the 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 of the 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.

OHS East:160711158.11 30
4.5 Liability of Initial Member. None of 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 of the foregoing) arising out of, relating to or in connection

with any act or failure to act pursuant to this Agreement or otherwise with respect to:

(a) the management or conduct of the business and affairs of the 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 of such Person);

(b) the offer and sale of limited liability company interests in the Company

(including the LLC Interests) or the issuance of Purchase 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 of the Business, and

(ii) activities in the conduct of other business engaged in by any

Related Person which might involve a conflict of interest vis-à-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 of this Agreement or any Transaction 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 fines (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 Manager) or any

of their respective Affiliates or (y) any of the respective officers, directors, employees, partners,

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

OHS East:160711158.11 31
other covenants, agreements or other terms and conditions contained in, this Agreement or any

Transaction 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 Section 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 of rights 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 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) of the Contribution Agreement. Such indemnity

shall survive the termination of this Agreement. In order for an Indemnified Party to be entitled

to any indemnification provided for under this Agreement in respect of, arising out of or

involving a Loss or a claim or demand made by any Person against the Indemnified Party (a

“Third Party Claim”), such Indemnified Party shall deliver notice thereof 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 of such 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 of the 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 of the Loans and management of the Company by the Manager

(and, as applicable, the Servicer and any Subservicers) in accordance with this Agreement and

the Transaction 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 of the Servicing Standard or any provision of this Agreement or any Transaction

Document) by the Private Owner (in any capacity, including as Manager) or any of its Affiliates

OHS East:160711158.11 32
(other than the Company), or by any of the 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 of this Agreement or any

Transaction 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

any Servicer or Subservicer), on the other hand, in connection with the matters that are the

subject of such 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 own expense and by the Private Owner’s own counsel, 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

OHS East:160711158.11 33
or implicates any issue relating to any power, right or obligation of the 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 of the 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 the Working Capital

Reserve or Excess Working Capital Advances to pay costs or expenses of the type referred to in

clause (v) or (vi) of the definition of Servicing Expenses and it is subsequently determined that

the Company was not entitled to reimbursement for (or to use the Working Capital Reserve 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) of the 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 Manager to collect or

receive the same). Any such reimbursement by the Manager pursuant to the foregoing shall be

as follows: within ten (10) Business Days after written demand therefor from either Member, the

Manager shall pay each Member by wire transfer of immediately 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, of the

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 of this Agreement or any Transaction 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 of

the Private Owner (in any capacity, including as the Manager), (x) any claim or demand by any

Servicer or Subservicer (or, for the avoidance of doubt, any Losses arising out of or related to

OHS East:160711158.11 34
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 Transaction 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 of action (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 of Default (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 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 Manager, in each case that is not an Affiliate of the Private Owner). For the avoidance of

doubt, the effects of any of this Section 4.6(h) and Section 4.6(g) above shall be disregarded for

purposes of calculations with respect to the Incentive Threshold Event.

ARTICLE V

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,

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

OHS East:160711158.11 35
referenced in Section 5.2 below), the respective Capital Accounts of the Initial Member and the

Private Owner as of the 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 Working Capital Reserve. On the Closing Date, the Initial Member and the

Private Owner shall fund, as Capital Contributions to the Company, the Working Capital

Reserve Account in accordance with the provisions of Section 12.11 hereof and Section 1 of the

Transferred LLC Interest Sale Agreement, which funds shall be used for payment of Working

Capital Expenses in accordance with the provisions in such Section 12.11 and as otherwise

permitted pursuant to the Custodial and Paying Agency Agreement.

5.3 Discretionary Funding Advance.

(a) In the event there are insufficient funds in the Collection Account and also

insufficient funds in the Working Capital Reserve Account to make Funding Draws 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”), 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 90-day LIBOR Rate in effect from time

to time, plus 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

OHS East:160711158.11 36
Initial Member, and until the Purchase Money Notes Defeasance Date, the Purchase Money

Notes Guarantor.

5.4 Excess Working Capital Advances. In the event there are insufficient funds in the

Collection Account and also insufficient available funds in the Working Capital Reserve

Account (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 (i) Funding Draws or (ii) the Management Fee, Interim

Management Fee or Interim Servicing Fee, 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 of its 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 of

which is permitted to be made using such Excess Working Capital Advance) are outstanding,

any funding or use by the Manager of Excess Working Capital Advances for payment of all or

any of the same shall follow the relevant priorities as set forth in the Priority of Payments and in

Section 3.1 of the 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 of the 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 Company Property and such Member’s

allocable share of Net Loss (and items thereof). As to the Private Owner, the initial Capital

Account shall correspond to that portion of the Capital Account of the Initial Member that is

attributable to the Transferred LLC Interest (as defined in the Transferred LLC Interest Sale

Agreement) acquired by the Private Owner pursuant to the Transferred LLC Interest Sale

OHS East:160711158.11 37
Agreement. 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.

6.2 Allocations to Capital Accounts. Allocation of Net 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 nonrecourse 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 nonrecourse 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

of this Article VI, if there 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(f) 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 nonrecourse debt (as it corresponds to

the definition of “partnership nonrecourse 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

OHS East:160711158.11 38
Member’s nonrecourse 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 of the Treasury

Regulations and shall be interpreted consistently therewith.

(iii) Qualified Income Offset. In the event any Member, for any reason,

whether expected or not, has an Adjusted Capital Account Deficit, items of

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 1.704-1(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 bears the economic risk

of loss 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 of Net 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 of Net Loss (or any item thereof), less than all Members would have an

Adjusted Capital Account Deficit as a result of such 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

OHS East:160711158.11 39
and expense with respect to a transferred LLC Interest. A transferee of an LLC Interest in the

Company shall succeed to the Capital Account of the transferor Member to the extent it relates to

the transferred LLC Interest.

6.3 Tax Allocations.

(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 Company Property

pursuant to the definition of Book Value, subsequent allocations of income, gains, losses or

deductions with respect to such Company Property shall take account of any variation between

the Book Value and Fair Market Value of such Company 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.

(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 of Net Income (or

items thereof) or Net Loss (or items thereof).

(d) Tax Allocations Binding. The Members acknowledge that they are aware

of the tax consequences of the 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 by Tax Matters Member. All matters concerning the computation

of 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

OHS East:160711158.11 40
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

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 if such recharacterization had not occurred.

6.5 Priority of Payments. 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 of the 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 Incentive

Threshold Event occurs; and

(B) thereafter, sixty-five percent (65%) to the Initial Member

and thirty-five percent (35%) to the Private Owner.

For the avoidance of doubt, distributions to the Members occurring on the

Distribution Date on which the Incentive Threshold Event occurs shall, (x) with

respect to all distributions up to the amount required for reaching the Incentive

Threshold Event, be allocated without regard to the occurrence of the Incentive

OHS East:160711158.11 41
Threshold Event, and (y) with respect to all remaining distributions on such

Distribution Date, be allocated taking into account the occurrence of the Incentive

Threshold Event.

(iii) Incentive Threshold Event. The “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 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 sum of (x) Transferred LLC Interest Sale Price and (y) the

amount funded by the Private Owner into the Working Capital Reserve

Account pursuant to Section 12.11(b) (the “Incentive Threshold Base

Amount”); and

(B) as of any Distribution Date, the Incentive Threshold (as

determined separately with respect to the 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 aggregate distributions made to the

Private Owner pursuant to Section 6.6(b)(ii) as of such Distribution Date;

provided, that, if, as of any Distribution Date, the amount referred to in

clause (B)(2) of Section 6.6(b)(iv) is greater than the amount referred to in

clause (B)(1) of Section 6.6(b)(iv), then the applicable Incentive

Threshold shall be deemed to be zero for such Distribution Date and all

subsequent Distribution Dates.

(c) Restrictions on Distributions. The foregoing provisions of this 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 of this 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

OHS East:160711158.11 42
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 Company 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 of record of LLC Interests on the date determined by

the Manager as of which the Members are entitled to any such distribution.

(f) Final Distribution. 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 of the Company shall commence on January 1 and end on December 31

(the “Fiscal Year”).

7.2 Maintenance of Books 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 Receiver to the Company in

connection with its conveyance of the 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 Collateral, and

the Company’s and the relevant secured parties’ interests in the Loans and the Collateral,

including records relating to the Collection Account, the Escrow Accounts, the Working Capital

Reserve Account, 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 of

records shall encompass all files in the Manager’s or Company’s custody, possession or control

pertaining to the Loans and the 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 Collateral, all documentation relating to items of

income and expense pertaining to the Loans and the Collateral, and all of the Manager’s (and

each Servicer’s and Subservicer’s) internal memoranda pertaining to the Loans and the

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 of the

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.

OHS East:160711158.11 43
(b) Retention of Books and Records. The Manager shall cause all such books

and records to be maintained and retained until the date that is the later of ten (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 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 of the 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 Collateral. Any expense incurred by Initial Member

or the FDIC and any reasonable out-of-pocket expense incurred by the Company in connection

with the exercise by 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 its Subservicers) having been engaged by the Initial Member, the

Company or the applicable replacement Manager following such removal of the Private Owner

as Manager, in each case that is not an Affiliate of the 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 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 forty-five (45) days immediately after, the end of each quarter of each Fiscal Year

(other than the last quarter of such Fiscal Year, and commencing with the calendar quarter

OHS East:160711158.11 44
ending on or about June 30, 2010), the Manager shall prepare and deliver to 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 (and, for the first such report,

also 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; Delivery 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 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 Collateral, the Company, the Servicers and any Subservicers as Initial Member or the

Purchase Money Notes Guarantor may reasonably request from time to time and, in any case,

shall ensure that Initial Member 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 Collateral, the Collection Account, the Escrow Accounts, the Working

Capital Reserve Account, the Defeasance Account, or any Borrower or Obligor that materially

and adversely affects the interests of Initial Member hereunder 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 Initial Member information indicating any

possible Environmental Hazards with respect to any 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 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 day which is five (5) Business Days

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 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 Paying Agent, and the Purchase Money Notes Guarantor the Monthly Report (including the

Distribution Date Report) on behalf of the Company for all Due Periods ending on the last day of

the month in which the final Servicing Transfer Date occurs, unless otherwise agreed between

the parties. 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 of the Custodial and Paying Agency Agreement. For the Distribution Date

immediately preceding the Maturity Date for each Class of Purchase Money Notes, the Manager

OHS East:160711158.11 45
shall also deliver to the Paying Agent, the Initial Member and the Purchase Money Notes

Guarantor an additional report (the “Maturity Date Report”), which report shall include the

amount on deposit in the Defeasance Account to pay such Class of Purchase Money Notes as of

the Maturity Date. Each Monthly Report (including the Distribution Date Report and Maturity

Date Report, as applicable) prepared and delivered by the Manager shall be certified by the chief

financial officer (or an equivalent officer) of the Manager. Each Monthly Report prepared and

delivered by the Manager shall also include a certification of the 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 Subservicer to, deliver to Initial Member 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

calendar 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 of its

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, if there 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, with respect to any Loan, shall cover the period commencing on the

Closing Date (and with respect to each Loan, including 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 calendar 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 calendar year),

such party shall provide an officer’s certificate pursuant to this Section 7.4(c) with respect to

such portion of the year (or other applicable period).

(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 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 for each Loan, covering the period from the applicable Servicing Transfer Date) and

continuing through the end of the 2010 Fiscal Year.

OHS East:160711158.11 46
(e) Audits. Until the later of the date that is ten (10) 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 Subservicer to, (i) provide any representative of 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

Collateral, the Servicing Obligations, the Collection Account, the Escrow Accounts, the Working

Capital Reserve Account, any account created under the Servicing Agreement, the Defeasance

Account, 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 Transaction Documents; (ii) permit such representatives to make copies of and

extracts from the same, (iii) allow Initial Member to cause such books to be audited by

accountants selected by Initial Member, and (iv) allow Initial Member’s representatives to

discuss the Company’s, Manager’s and any Servicer’s and any Subservicer’s affairs, finances

and accounts, as they relate to the Loans, the Collateral, the Servicing Obligations, the Collection

Account, the Escrow Accounts, the Working Capital Reserve Account, the Defeasance Account,

or any other matters relating to this Agreement, the Transaction Documents, or the rights or

obligations hereunder and thereunder, with its officers, directors, employees, accountants (and by

this provision the Company and Manager hereby authorizes such accountants to discuss such

affairs, finances and accounts with such representatives), Servicers and Subservicers, and

attorneys. Any expense incurred by Initial Member and any reasonable out-of-pocket expense

incurred by the Company in connection with the exercise by 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 Initial Member of its 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 Manager, in each case that is not an Affiliate of the Private Owner).

(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 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 of the Members under Section 18-305(a) of the Act.

Section 18-305(c) of the Act shall not apply in relation to the Initial Member.

7.5 Designation of Tax 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

OHS East:160711158.11 47
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 of the 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)(1)(B), each Member consents to the Company’s electing to be treated as a

partnership to which the provisions of Code Section 6221 et. seq. apply (thereby electing to have

Code Section 6231(a)(1)(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 Transaction Document arising, relating to, occurring, or

required to have been paid or performed by, the Private Owner as Tax Matters Member in its

capacity as such.

7.6 Tax Information.

(a) 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 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):

(i) United States federal, state and local income tax returns or

information returns, if any, filed by the Company; and

(ii) 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.

(b) For each Due Period, no later than three (3) Business Days prior to the

Distribution Date, the Company shall prepare and deliver or cause the Manager to prepare and

deliver to the Initial Member a report which shall specify the information with respect to each

Mortgage Loan that is sold or otherwise disposed of by the Company so as to enable the

OHS East:160711158.11 48
Company (and each Member) to comply with allocation provisions of Section 704(c) of the

Code, as determined as of the close of business on the applicable Determination Date and

certified by an Authorized Representative (who shall be the chief financial officer (or an

equivalent officer)) of the Company (the “Tax Allocation Report”).

7.7 Business Plans. As promptly as possible, but in no event later than December 15,

2010 (and, as applicable, with current information as of November 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 each of the twenty (20) largest

Loans based on their Unpaid Principal Balance as of the Cut-Off Date (as set forth on the Loan

Schedule); provided, that the Manager shall not be required to provide an individual Business

Plan for any Loan having an Unpaid Principal Balance less than $5 million, 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 of its 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 twenty (20) largest Loans based on their

Unpaid Principal Balance as of the time of such update) and Consolidated Business Plan to the

Initial Member, in January (current as of October 31 of the immediately preceding year) and July

(current of April 30 of such year) of each year, commencing in January 2011, with each such

periodic update to be delivered as part of the 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 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 of the 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 of the following: (i) the pay-off of Loans at a discount; (ii) modifications of the 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

Collateral (or acquisition thereof by deed in lieu of foreclosure) and subsequent sale thereof; (iv)

assumptions of Loans by new borrowers; (v) repairs to and, if applicable, completion of

construction of the related Collateral, with a view towards selling such 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

OHS East:160711158.11 49
Standard and other general duties of the 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 of the following: (i) the sale or leasing of the 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 of the

Acquired Property.

(c) Each Business Plan or Consolidated Business Plan shall contain the

Company’s estimate of the present value of the 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 of such 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 of June 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, projected Excess

Working Capital Advances and/or Discretionary Funding Advances, projected outflows of

Servicing Expenses, projected Funding Draws, projected Working Capital Reserve levels,

projected net monthly cash available for deposit into the Defeasance Account, and the amount

and allocation of any projected distributions to Initial Member and Private Owner.

(d) Each Business Plan or Consolidated Business Plan shall include

descriptions and explanation for the largest variances to the previously reported Business Plan or

Consolidated Business Plan. Variance explanations shall include changes in capital expenditures

for Acquired Property, protective advances, internal rates of return, strategy for the disposition of

the Loans, actual principal and interest income and other collection proceeds, cash flows, and

projected distributions to the equityholders.

ARTICLE VIII
 

Restrictions on Disposition of LLC Interests
 

8.1 Limitations on Disposition of LLC Interests. Except as otherwise provided in this

Article VIII, the Private Owner shall not, directly or indirectly, Dispose of or permit to be

Disposed of, all 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,

OHS East:160711158.11 50
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 of the Initial Member pursuant to

Sections 3.13 or 3.14. The Private Owner may not under any circumstances Dispose of less than

all of its 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 of the

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 of the

occurrence of any Change of Control with respect to the Private Owner. Notwithstanding

anything to the contrary in this Agreement, transfers of direct or indirect interests in the Private

Owner shall be permitted so long as such transfers do not result in (x) a Change of Control or (y)

the Private Owner no longer constituting a Qualified Transferee.

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 of the

generality of the foregoing, agree to be bound by the other terms of Section 8.4 hereof,

(ii) assume and agree to perform when due all of the obligations of the Private Owner and the

Manager (if the 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.

8.4 Effect of Permitted 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

OHS East:160711158.11 51
transferor Member, prior to such transfer, also was the Manager, such transferee

shall be appointed as the Manager (in the place of the 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 of the foregoing, any outstanding

breach, misrepresentation, violation or default (with respect to this Agreement or

any Transaction 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; and

(iii) subject to Section 8.4(b) and the 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 Section 8.4(b) or the 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 of the 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 of the transferor Member, in any capacity, under this Agreement or any

Transaction 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

of its Affiliates) of, or otherwise affect, any of the obligations or liabilities of the

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 of the

LLC Interest of the Private Owner (or any portion thereof) not strictly in accordance with the

terms of 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 of the LLC

Interest of the Private Owner (or any portion thereof) not strictly in accordance with the terms of

this 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

OHS East:160711158.11 52
that all such omitted Company distributions shall (subject to Section 8.6) be made to the Private

Owner (without interest) forthwith after the end of the 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 of the 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 of the LLC Interest held by it, 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, that, the Initial Member may not assign the consent and

voting rights associated with its LLC Interest in the Company to more than one 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 its LLC

Interest in the Company) and provided, further, that in the event the Initial Member determines

to sell the LLC Interest held by it 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 LLC Interest of the

Initial Member 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 of the 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 of the Initial Member).

8.8 Resignation; Dissolution.

(a) 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

of this Article VIII or (ii) with the prior written consent of the 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 of the Act shall not apply to the Company. Nothing in this

Section 8.8(c) shall limit the terms of Section 9.1 hereof.

(d) Except as is otherwise expressly provided in this Agreement, no Member

shall be entitled to receive any payment pursuant to Section 18-604 of the 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

OHS East:160711158.11 53
Law would require the Company to register as an investment company under the Investment

Company Act, then the Manager and the Member shall use their respective commercially

reasonable efforts to avoid a violation of any such applicable Law by a 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 of the Member’s LLC Interest to a

third party upon terms reasonably satisfactory to the Member in a transaction that complies with

Articles VIII and 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 of its LLC

Interest at the time of withdrawal, 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 of any such withdrawal must be mutually agreeable to the Member and the

Manager taking proper account of the effective date of the applicable Law or registration

requirement that is the basis for the withdrawal or other remedy provided herein and the need of

the Manager for a reasonable period of time 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 of the Company
 

9.1 Dissolution. A dissolution of the Company shall take place upon the first to occur

of the following:

(a) the agreement by all Members to dissolve the Company (it being

understood and agreed that neither Member, acting along, 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

(d) exercise of the Clean-Up Call and liquidation of all remaining Loans and

Acquired Property of the Company in accordance with Section 12.17.

9.2 Winding-Up Procedures. If a dissolution of the Company pursuant to Section 9.1

occurs, subject to the Company’s compliance with its obligation under the other agreements to

OHS East:160711158.11 54
which it is a party, the other terms and conditions of this Agreement or the Transaction

Documents, the Manager shall proceed as promptly as practicable to wind up the affairs of the

Company in an orderly and businesslike manner. A final accounting shall be made by the

Manager. As part of the winding up of the affairs of the Company, the following steps will be

taken:

(a) The assets of the Company shall be sold except to the extent that some or

all of the 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) of the 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 Members who are creditors (other

than 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 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 Members and former Members under

Section 18-601 of the Act;

(iii) third, to Members and former Members in satisfaction of liabilities

(if any) for distributions under Section 18-601 of the Act; and

(iv) finally, to the Members in the manner set forth in Section 6.6(b).

(d) Upon dissolution, the Manager, may, with the consent of all 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 Company assets to satisfy in cash the debts and liabilities described in Section 9.2. If a

Member 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.

OHS East:160711158.11 55
9.3 Termination of the 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 of the 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

of this Agreement and the consummation of the 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 of the provisions of any Law binding on such Member or its properties, (ii) the

constituent documents of such Member, or (iii) any of the 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 Approvals. 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

agency that are necessary in connection with the execution and delivery by such Member of this

Agreement and the consummation of the 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

OHS East:160711158.11 56
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 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 residential and 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 LLC Interest acquired by it 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

of the LLC Interest acquired by it 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 LLC Interest and, indirectly, the Loans for an indefinite period of time.

(j) 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 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 regarding the Company, the LLC Interest or the Loans or

the value of any Collateral.

(k) Due Diligence. Such Member acknowledges and agrees that, whether or

not information is available with respect to the LLC Interest or the Loans and whether or not it

chooses to review any information that is or was made available to it regarding the LLC Interest

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 of the LLC

Interest and the Loans and the economic, credit or other risks involved in an acquisition of the

LLC Interest and, indirectly, the Loans. Except as is otherwise expressly provided in this

OHS East:160711158.11 57
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.

(l) No Securities. Such Member acknowledges and agrees that (i) neither the

offer nor the sale of the 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 Interest 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 Interest 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 LLC Interest (and, indirectly, the

Loans) for its own account and not with a view toward resale in a distribution within the

meaning of the Securities Act.

(n) Resales in Compliance with Law. Such Member will not (i) offer, pledge,

sell or otherwise dispose of the 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 of the 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 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 of the 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 so act, nor will it authorize any person or entity to so act, in any manner with respect

to the 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

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 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

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 LLC Interest and the nature, validity,

enforceability, collectability and value of the Loans and all other facts material to their

ownership, including to the legal matters and risks relating to the collection and enforcement,

and the performance of any obligations under any of the Loans in any jurisdiction. Such

Member further acknowledges that no officer, director, employee, agent, representative or

OHS East:160711158.11 58
contractor of the 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

Transaction 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 of its 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. For purposes of the foregoing

certifications, representations and warranties, such 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 of 1940, as amended) 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 of such 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 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.

(t) Qualified Purchaser. Such Member is a “qualified purchaser” within the

meaning of Section 3(c)(7) of the Investment Company Act.

ARTICLE XI
 

Manager Liability
 

11.1 Liability of Manager.

(a) Except as otherwise specifically provided in this Agreement (including in

the other subsections of this Section 11.1), the duties (including fiduciary duties) and obligations

owed to the Company and Initial Member by the Manager shall be as provided in Section 3.1(b)

OHS East:160711158.11 59
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 of such 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 of this 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 of the 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

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 the Initial Member pursuant to Section 3.3 of the Contribution Agreement, the

Manager shall, with respect to each Loan or Group of Loans, from and after the Servicing

Transfer Date with respect thereto, be responsible for (and hereby assumes responsibility for)

servicing, administering, managing and disposing of the Loans and the 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 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 of Servicer as a result of an Event of Default, the Loans shall be

OHS East:160711158.11 60
serviced by the 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 of the Contribution Agreement and this Article XII.

(b) Servicing and Subservicing Agreement Requirements. Except as is

otherwise agreed in writing by 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

Collateral by the Servicer (or Subservicer) in accordance with the Servicing

Standard and the other terms of this 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

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 of the Company, the Purchase Money Notes

Guarantor, 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 of such 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 of the rights of the Manager thereunder and

cause the termination or assignment of the same 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 Manager under such Servicing Agreement and

OHS East:160711158.11 61
cause the termination or assignment of the same 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 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 Purchase Money

Notes Guarantor and the Company (and each of their 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 Initial Member’s, the Manager’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 Collateral, the Collection Account or any other accounts established or

maintained pursuant to this Agreement, 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 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 any Subservicer or any of their 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

under the Servicing Agreement or Subservicing Agreement, as applicable;

provided, that, in the case of the 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

OHS East:160711158.11 62
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 Subservicer is obligated to comply with the Servicing

Obligations of the 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, the

relevant 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 of the 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 of the 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 of the occurrence of any Change of Control with respect to the

Servicer; and

(xvii) not conflict with the Servicing Standard or any other terms or

provisions of this Agreement, the Custodial and Paying Agency Agreement or any

of the other Transaction Documents insofar as such other terms or provisions

OHS East:160711158.11 63
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 of the 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 of this 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 of the Loans (and related Loan Documents), (iii) in accordance with the terms of

this Agreement and the other Transaction 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 that, with respect to each Loan

and related Collateral, in the absence of a customary and usual standard of practice, the

Company shall comply with the applicable Fannie Mae Guidelines, if any, with respect to similar

loans and properties in similar situations. The Manager shall cause its Servicing Obligations

with respect to the Loans and the Collateral to be performed without regard to (w) any

relationship that the Company, the Manager, or any Servicer or Subservicer, or any of their

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 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 of their respective Affiliates may have to the Company, the Manager or

any of their 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 Collateral before it became REO Property provided were

to be performed by the borrower thereunder in respect of such Collateral (not including payment

of debt service under the applicable Loan Documents), together with such additional obligations

as are required of the Company under this Agreement or the Servicing Agreement in respect of

such REO Property;

(b) incurring costs (including Servicing Expenses and Pre-Approved

OHS East:160711158.11 64
Changes) 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 and REO Property (not including payment of debt service under the applicable

Loan Documents) and otherwise in accordance with the Reimbursement, Security and Guaranty

Agreement;

(c) causing insurance to be maintained for the 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 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 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 of the 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 of the Acquired Property as would be taken

by a prudent asset manager managing properties similar to the Acquired Property and as required

of the Company under this Agreement, and the Reimbursement, Security and Guaranty

Agreement;

(f) administering the making of advances to Borrowers under Loans pursuant

to and in accordance with the provisions herein and in the Custodial and Paying Agency

Agreement governing the making of Funding 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 of the Loans and the 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 of the Loans and the Collateral;

(i) ensuring that all filings required to maintain perfection in any Collateral

remain up to date and in force, including Uniform Commercial Code financing statements; and

(j) 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 of REO Property) and herein; and

(k) providing the Servicers and any Subservicers with copies of such

Transaction 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

OHS East:160711158.11 65
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 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

Collateral managed) by or through at least one Servicer (including any Subservicers engaged by

the Servicer as permitted hereunder) and the performance of all day-to-day Servicing Obligations

of the Manager shall be conducted by or through one or more Servicers (including any

Subservicers permitted hereunder). Subject to the other terms and conditions of this Agreement,

any Servicer may be an Affiliate of the Private Owner or of the Manager. Each Servicer may

engage or retain one or more Subservicers, including Affiliates of the Private Owner or of the

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, 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 of the applicable

Subservicing Agreement comply with the terms of this 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 to the Loans or any right to transfer or sell

the servicing 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 to the Loans (other

than in connection with the sale of any Loan), and any purported assignment, pledge or other

transfer in violation of this provision shall be void ab initio and of no 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 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 of the 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 and the Purchase Money Notes

Guarantor.

OHS East:160711158.11 66
(d) Regulation AB Requirements. 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)(1) 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 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, the

Working Capital Reserve Account or any other Company account), it being understood that all

fees and related costs of liabilities of the 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 of the following types of insurance 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 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 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 effective

date of policy which would reduce the limits by 50%.

(ii) Directors & Officers Liability with limits of not less than

$10,000,000 each claim and $10,000,000 in the aggregate.

(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 Servicer or Subservicer to handle any funds, money,

documents and papers relating to any Loan, and shall protect the Servicer or any

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

OHS East:160711158.11 67
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. Policy shall include

a Waiver of Subrogation in favor of the 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 of the 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 of thirty (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, and the Initial Member 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 of the Purchase Money Notes Guarantor, or the Initial

Member. 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, and the

Initial Member or their respective representative 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, and the Initial

Member and their respective representative upon request.

(g) MERS® Requirements. In the event that any of the Loans are registered

on the MERS® System, and unless and until no Loan so remains registered on the MERS®

System in accordance herewith, (i) the Manager shall cause each applicable Servicer to be (or

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 (including, as applicable, on behalf of the Manager, in turn

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. With

respect to each Loan that is registered on the MERS® System, (x) the Servicer shall be

OHS East:160711158.11 68
designated as the “servicer” and the “investor” with respect to such Loan, and, if applicable, the

Manager may cause or permit an applicable Subservicer to be designated as the “subservicer”

with respect to such Loan (provided, that the Manager may, as determined in accordance with

the Servicing Standard and so long as each applicable designee is and remains a MERS member

in good standing, (1) designate the Company as the “investor” with respect to any such Loan,

and (2) designate the Manager as the “servicer” with respect to any such Loan, in which case the

Servicer shall be designated as the “subservicer” with respect thereto), and (y) no other Person

shall be identified on the MERS® System as having any interest in such Loan unless otherwise

consented to by the Initial Member (or required pursuant to the Electronic Tracking Agreement).

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; provided,

however, that if the Manager determines, in accordance with the Servicing Standard and other

applicable provisions herein and in the Transaction Documents, to remove any or all such Loans

so registered with MERS® from the MERS® System, the Manager shall have the right to cause

such removal so long as, with respect to any such Loan to be so removed, (A) the applicable

mortgage (or other Collateral Document) and rights to Collateral for such Loan that are so

registered in the name of MERS® are duly transferred and assigned to the Company (with all

applicable recordings or filings with respect thereto being duly made) so as to cause the

Company to have the full benefit of its applicable security (or other) interest in all such

Collateral, and (B) for any such removal occurring on or before the applicable Servicing Transfer

Date, the same is accomplished in accordance with the applicable requirements (and delivery of

the applicable notice) in Section 3.1(c) of the Contribution Agreement, and (C) for any such

removal prior to the Purchase Money Notes Defeasance Date, the Company shall have duly

delivered to the Collateral Agent such documents and otherwise taken such actions (including

execution and recordation of applicable assignments in accordance with the Reimbursement,

Security and Guaranty Agreement), in each case so as to cause all such Collateral to be and

remain subject to the first priority security interest granted under the Reimbursement, Security

and Guaranty Agreement. 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 of the Loans and to confirm that

the Loans required to be registered on the MERS® System are so registered. For so long as any

Loans remain registered with MERS®, the same shall be subject to an Electronic Tracking

Agreement in the form of Exhibit B to the Servicing Agreement, and, to the extent any such

Loans are so registered with MERS® as of the Closing Date, the Servicer, the Manager, the

Collateral Agent and the Initial Member shall execute such Electronic Tracking Agreement on

the Closing Date and deliver the same to MERS®. Without limiting the foregoing, upon the

request of the 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 (and subject to any applicable

provisions of the Electronic Tracking Agreement), 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 of Servicer.

OHS East:160711158.11 69
(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 Transaction 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 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, of the rights and obligations of the Private Owner

as the Manager of the 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 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 of

the Servicer or any of its Subservicers at any time to meet the criteria of a Qualified Servicer, (4)

an Event of Default as described in clause (e) of the 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 of the Servicer upon the occurrence of any Event

of Default. For the avoidance of doubt, the rights of the Initial Member in this Section 12.4 are

in addition to, and can be exercised independently of the rights of the Initial Member in

Sections 3.2, 3.2, 3.13, and 3.14; and in any event all rights and remedies of the Initial Member

under this Agreement with respect to or following an Event of Default shall be cumulative, and

any or all thereof may be exercised instead of or in addition to each other or any other remedies

available to the Initial Member, whether under this Agreement, any Transaction Document or

OHS East:160711158.11 70
otherwise.

(b) Appointment of Successor Servicer. If 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 of any such action; provided, that, if the 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 of such 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 of the Management Fee payable to the successor Manager on

such Distribution Date.

(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 of the Private Owner as the Manager shall not relieve

the Private Owner of (x) any of the liabilities and/or obligations of the 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 of the 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 of the 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).

OHS East:160711158.11 71
(d) Cooperation To Facilitate Transfer. In the event any of the Manager, a

Servicer or a Subservicer is terminated pursuant to the provisions of this 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 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 all lockbox accounts with 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, 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

of such 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 of such documentation.

(e) Power of Attorney. The Company hereby irrevocably constitutes and

appoints the Initial Member and any officer or agent thereof, with full power of substitution, 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

Reimbursement, Security and Guaranty Agreement, the Initial Member shall be entitled under

OHS East:160711158.11 72
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 of the 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 of the 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

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 of this 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 (and as determined separately for each

Group of Loans), (a) with respect to any Group of Loans for which the Servicing Transfer Date

has not occurred as of the first day of such Due Period, the Company shall pay the Interim

Management Fee to the Manager and the Interim Servicing Fee to the Initial Member, and (b) for

each Group of Loans for which the 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. The Manager may not assign its right to receive the Management Fee without the

prior written consent of the Initial Member, which consent may be withheld in the sole discretion

of the Initial Member.

12.6 Servicing Expenses. Subject to Section 3.3 of the Contribution Agreement (with

respect to the Interim Servicing Period), from and after the Closing Date (and, with respect to

each Loan, from and after the Servicing Transfer Date with respect thereto), the Manager shall

cause the Company to pay, from available Company funds (in the Collection Account, the

Working Capital Reserve 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

OHS East:160711158.11 73
Custodial and Paying Agency Agreement (and, as applicable, the Contribution Agreement);

provided, however, that anything to the contrary herein or in any Transaction Agreement

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, if so paid,

when combined with all unreimbursed previous Servicing Expenses, Funding Draws and PreApproved 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 of the same) shall be reimbursed in accordance with the Custodial and

Paying Agency Agreement.

12.7 Use of Loan Proceeds.

(a) Permitted Payments. Subject to Section 12.7(b), each month the Loan

Proceeds shall be utilized and distributed in the manner set forth in the Custodial and Paying

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 Transaction Document, without the prior written consent of

the Initial Member (which may be withheld 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 not incurred in accordance with the

Servicing Standard or, to the extent applicable, the Fannie Mae Guidelines;

(ii) any expenses or costs that are paid to any Affiliate of the Manager

or the Company, or any Affiliate of any Servicer or any Subservicer; provided,

Excluded Expenses under this clause (ii) do not include amounts reimbursable to

the Servicer, any Subservicer, the Private Owner or the Manager that are

reimbursable pursuant to any Transaction Document that would be deemed

Excluded Expenses under this clause (ii) solely as a result of such Servicer,

Subservicer, Private Owner or Manager being an Affiliate of the Manager or the

Company, so long as such amounts would otherwise constitute Servicing

Expenses or Pre-Approved Charges but for application of this clause (ii);

(iii) 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

OHS East:160711158.11 74
REO Property) or any portion thereof on an individual basis;

(iv) 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 of the Company or any Manager

(in its capacity as such or in its individual capacity) as a result of the Company’s

or any Manager’s or the Servicer’s or any Subservicer’s failure to service any

Loan or 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;

(v) any interest on any amounts paid by any Person with respect to any

Servicing Expenses or Pre-Approved Charges;

(vi) any overhead or administrative costs (whether or not attributable to

the servicing or management of any Loan) incurred by the Company, any

Manager or any other Person (including any travel expenses and any expenses

incurred by any 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;

(vii) any servicing, management or similar fees paid to the Servicer, any

Subservicer or any other Person; provided, that; for the avoidance of doubt,

property management fees that are otherwise reimbursable as Servicing Expenses

are not included in this clause (vii);

(viii) any expenses (other than Reimbursable Company Administrative

Expenses with respect to the Company and the Ownership Entities) incurred by

the Company, the Manager or any other Person (x) to become a MERS member

or to maintain the Company, the Manager or such other Person as a MERS

member in good standing, or (y) to remove any Loan from the MERS® System in

connection with any voluntary removal by or at the direction of the Manager (as

permitted in Section 12.3(g) hereof), it being understood that any such removal

dictated by default, foreclosure or similar legal or MERS requirements shall not

be considered a voluntary removal for purposes of this clause; or

(ix) 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

of the 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 funds 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.

OHS East:160711158.11 75
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 funds 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 Defeasance Account with the Paying Agent in accordance with the Custodial and

Paying Agency Agreement. The Defeasance Account (and all funds therein) shall be subject to

the security interest granted under the Reimbursement, Security and Guaranty Agreement.

12.11 Working Capital Reserve Account.

(a) Establishment of Working Capital Reserve Account. On the Closing Date,

the Manager shall cause the Company to establish the Working Capital Reserve Account with

the Paying Agent for the exclusive purpose of holding a reserve (the “Working Capital

Reserve”) to cover Working Capital Expenses to the same extent, and in the same order of

priority, as are applicable to Loan Proceeds in accordance with the terms hereof and the

Custodial and Paying Agency Agreement (and, as of any date of determination, the amount of

the Working Capital Reserve shall be deemed to be the amount of the funds in such Working

Capital Reserve Account). The Working Capital Reserve Account (and all funds 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.

(b) Funding Working Capital Reserve. On the Closing Date, the Initial

Member and the Private Owner make the WCR Account Deposit in an amount equal to the

Initial Member WCR Account Deposit and the Private Owner WCR Account Deposit,

respectively. The Company may fund the Working Capital Reserve Account with Loan

Proceeds in accordance with the terms of the Custodial and Paying Agency Agreement and must

maintain certain deposit amounts to comply with the Working Capital Reserve Replenishment

Cap and Working Capital Reserve Floor established under the Custodial and Paying Agency

Agreement.

(c) Use of Working Capital Reserve. The Manager or (in relation to its

interim servicing obligations) the Initial Member may direct the Company to withdraw funds

from the Working Capital Reserve Account (including, as applicable, through release of such

funds into the Collection Account) only to cover Working Capital Expenses in accordance with

Section 3.6 of the Custodial and Paying Agency Agreement. The Manager shall not permit

withdrawals from the Working Capital Reserve Account for any other purpose; provided, that, to

the extent expressly permitted in the Custodial and Paying Agency Agreement, the Manager may

cause the release of funds from the Working Capital Reserve Account (including for purposes of

distributions to the Members) in accordance with, and subject to, the terms of the Custodial and

Paying Agency Agreement. With respect to any Loan, on the Servicing Transfer Date, the Initial

Member shall be reimbursed from the Working Capital Reserve Account for an amount equal to

all Working Capital Expenses (and any advance of the Initial Member that is reimbursable

OHS East:160711158.11 76
pursuant to the Contribution Agreement) paid by it at any time after the Cut-Off Date and on or

before such Servicing Transfer Date (to the extent the same have not been otherwise reimbursed

pursuant to the Contribution Agreement or Custodial and Paying Agency Agreement).

(d) Permitted Investments. The Working Capital Reserve shall be invested in

Permitted Investments in accordance with the Custodial and Paying Agency Agreement.

12.12 Certain Servicing and Loan Administration Decisions. The Manager shall have

full power and authority, acting alone or through any Servicer or Subservicer, to cause to be done

any and all things in connection with the servicing and administration of the 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 Transaction Documents. Upon the occurrence of an

event of default under any of the Loan Documents, but subject to the other terms and conditions

of this 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 Collateral, (ii) the declaration and

recording of a notice of such default and the acceleration of the maturity of the Loan, (iii) the

institution of proceedings to foreclose the Loan Documents securing the Loan pursuant to the

power of sale contained therein or through a judicial action, (iv) the institution of proceedings

against any Obligor, (v) the acceptance of a deed in lieu of foreclosure, (vi) the purchase of the

real property Collateral at a foreclosure sale or trustee’s sale or the purchase of the personal

property 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 Manager shall not, and shall not cause

any Servicer or Subservicer to, take any action that is inconsistent with or prohibited by the

terms of the Reimbursement, Security and Guaranty Agreement or the Custodial and Paying

Agency Agreement without the prior written consent of the Initial Member.

12.13 Management and Disposition of Collateral. Subject to the other terms and

conditions of this Agreement (including the Servicing Standard), and the Reimbursement,

Security and Guaranty Agreement, 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 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 of Collateral.

(a) If title to any Collateral that constitutes real property is to be acquired by

foreclosure, by deed in lieu of foreclosure, by power of sale 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.

OHS East:160711158.11 77
(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 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 of the 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 Collateral and to operate the 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 of REO 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

Transaction Documents:

(a) Insurance. With respect to each REO Property, the Manager shall cause

the applicable Ownership Entity to maintain, with financially 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 of this Agreement and the Transaction Documents. All insurance policies

shall name the Collateral Agent, the Manager 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 and to the Collateral Agent, 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

OHS East:160711158.11 78
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 of any portion of the REO Property owned by such

Ownership Entity, or use or permit the use of any portion of an REO Property in any manner that

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 of the Initial Member

and the Collateral Agent.

(d) No Joint Assessment. The Manager shall not permit any Ownership

Entity to suffer, permit or initiate the joint assessment of REO Property (i) with any other real

property constituting a tax lot separate from such REO Property, and (ii) with any portion of an

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

Transaction 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 of the 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 of the applicable ground lease as and when such rent or other charge is

payable, and (ii) diligently and timely perform and observe all of the 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 of the Collateral Agent unless such subordination is

required under the provisions of such ground lease.

(h) Additional Construction Covenants. In the event the Manager elects to

fund the construction of the REO Property (pursuant to Funding Draws for such purpose), then

the Manager shall cause each Ownership Entity to pursue with diligence the construction of the

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,

OHS East:160711158.11 79
and all requirements of Law, 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 Transaction Documents, (iii) in a good and

workmanlike manner and free of defects, (iv) in a manner such that such REO Property remains

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 of this

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 of the Company, and the Members and

creditors of the 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 Transaction Document, the Manager shall not be required to act in accordance

with a specific provision of this Section 12.15 if such action is (A) not in the best interests of

Company and the Members and creditors of the Company (including the FDIC in its various

capacities), as determined by the Manager in the exercise of its reasonable discretion, or (B) not

in accordance with the Servicing Standard.

(j) Reports. The Manager shall furnish to the Initial Member and the

Collateral Agent such reports regarding the construction, leasing and sales efforts of or relating

to the REO Property as the Initial Member or the Collateral Agent shall reasonably request.

12.16 Releases of Collateral. Manager is authorized to cause the release or assignment

of any Lien granted to or held by the Company on any 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 and under the Reimbursement, Security and

Guaranty Agreement.

12.17 Clean-Up Call Rights.

(a) If, and only if, all amounts owing under 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 of the Closing Date and (ii) the date on which the then Unpaid Principal

Balance is ten percent (10%) or less of the Unpaid Principal Balance as of the Cut-Off Date as

set forth on the Loan Schedule.

(b) In order to exercise its rights under this Section 12.17, 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 150

OHS East:160711158.11 80
calendar days after the date of such notice.

(c) The Manager shall proceed expeditiously to cause to be commenced the

liquidation of the remaining Loans and Acquired Property by means of sealed bid sales to

Persons other than Affiliates of the Company, the Servicer or any Subservicer, or Affiliates of

the Servicer or any Subservicer. The selection of any financial 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 of 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 of the 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 Initial

Member pursuant to Section 12.17(b), Initial Member shall be entitled to liquidate the remaining

Loans and Acquired Property in its discretion and Manager shall, and shall cause the Company

to, cooperate and assist with such liquidation to the extent reasonably requested by Initial

Member. In the event the Manager or any Affiliate thereof desires to bid to acquire the

remaining Loans and Acquired Property, then Initial Member shall be entitled to liquidate the

remaining Loans and Acquired Property in its discretion. In the event 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

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 Manager

with respect to the Contribution Agreement, 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, if

required, shall be at the Company’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

Transaction Documents (and any other agreements expressly contemplated hereby or thereby),

constitutes the entire agreement and understanding, and supersedes all other prior agreements

and understandings, both written and oral, between the Members or their respective Affiliates or

OHS East:160711158.11 81
any of them and the Company with respect to the subject matter hereof; provided, that any

Confidentiality Agreement between the FDIC and the Private Owner or any Affiliates of the

Private Owner (including by way of joinder) with respect to the transaction that is the subject of

this Agreement and the Transaction 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 Transaction Documents pursuant to which the Manager is expressly required to take

or omit from taking certain actions, as in each case, with the same effect as if the Manager were

a party to such Transaction Document.

13.3 Third Party Beneficiaries. Each of the FDIC and the Purchase Money Notes

Guarantor, is hereby constituted an express third party beneficiary of this 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 of this Agreement as if such Person were a

party hereto; provided that, upon occurrence of the Purchase Money Notes Defeasance Date (and

subject to any rights of the 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, exercise remedies following an Event

of Default and receipt of reports 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 Transaction 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 of its 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 if such

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 immediately preceding sentence, (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.

13.4 Expenses. Except as may otherwise be expressly provided herein or in any

Transaction Document, each Member shall pay its own expenses (including legal, accounting

OHS East:160711158.11 82
investment banker, broker or finder’s fees) incident to the negotiation and execution of this

Agreement and the Transaction Documents, the consummation of the transactions contemplated

by Section 2.3 hereof and the performance of its 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, 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 of the 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 of this 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 of such 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 Transaction

Document, and in addition to any restructuring rights of the FDIC under Section 2.8 of the

Custodial and Paying Agency Agreement but subject to the restrictions in Section 8.4 of the

Contribution Agreement, in order to facilitate the possible restructuring and or sale of the

Purchase Money Notes, the FDIC, without the consent of the Private Owner or the Company,

may at any time that the FDIC is the holder of one hundred percent (100%) of any Class of

Purchase Money Notes or beneficial interest therein cause the Company to replace or reissue

such Purchase Money Notes and make related changes, modifications or amendments to this

Agreement and the Transaction Documents; provided, that such changes, amendments or

modifications shall not adversely affect in any material respect the rights or interests of any

Holder of any other Purchase Money Notes or any owner of any interest therein; provided,

further that no such change, amendment or modification shall adversely affect the amount or

timing of distributions on the LLC Interests to the Private Owner or the other rights or

obligations of the Private Owner. 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 modification. Each of the Private Owner and the

Company agrees that it will cooperate in good faith with the FDIC in effectuating all such

changes, amendments and modifications, and will cause legal counsel for the Company to issue

OHS East:160711158.11 83
such legal opinions as may reasonably be requested or required in connection with such

replacement or reissuance and sale of the Purchase Money Notes. Reasonable attorneys fees

actually incurred in connection with the preparation of such legal opinions, and for the review of

the amendments to documents requested or required by the Initial Member or the Purchase

Money Note Guarantor in connection with the replacement or reissuance and sale of the

Purchase Money Note(s) shall constitute Reimbursable Company Administrative Expenses. For

the avoidance of doubt, no legal fees or expenses associated with changes, clarifications or

amendments to documents requested by the Private Owner shall constitute Reimbursable

Company Administrative Expenses.

(c) Notwithstanding anything to contrary contained elsewhere in this

Agreement (including without limitation the foregoing Section 13.5(a)) or in any Transaction

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 of its

Interest, or a Disposition by the Initial Member of its entire Interest to more than one Person,

including to provide for more than two 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 of the

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 of the 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 of this 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 that any notice, request, demand or other communication

that is received other than during regular business hours of the recipient shall be deemed to have

been given at the opening of business on the next business day of the recipient. 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.

If to the Company, to:

2010-1 CRE Venture, LLC
 

2450 Broadway, 6th Floor
 

OHS East:160711158.11 84
Santa Monica, CA 90404

Attention: Paul Fuhrman

Email Address:

with a copy to:

Colony Capital, LLC

660 Madison Avenue

New York, NY 10065

Attention: Ron Sanders

Email Address:

If to the Initial Member, 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 Malami

Email Address: RMalami@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, VA 22226

Attention: David Gearin

Email Address: DGearin@FDIC.gov

If to the Private Owner (including in its role as Manager and/or Tax Matters

Member), to:

ColFin Axle Funding, LLC, a Delaware limited liability company

2450 Broadway, 6th Floor

Santa Monica, CA 90404

Attention: Paul Fuhrman

Email Address:

with a copy to:

Colony Capital, LLC

2450 Broadway, 6th Floor

OHS East:160711158.11 85
Santa Monica, CA 90404
 

Attention: Ron Sanders
 

Email Address:
 

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 of which 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 of the 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 Member, shall continue to bind such Person in relation to the period during which it

was 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 of its 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 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

OHS East:160711158.11 86
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 of Attorney.

(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 of the Private Owner granting the same or the transfer of

all or any portion of the Private Owner’s 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 of the 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 of this

Agreement and any mandatory, non-waivable provision of the Act, such provision of the Act

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 of itself

and its Affiliates, hereby irrevocably and unconditionally:

OHS East:160711158.11 87
(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 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 Transaction 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 of Columbia; or

(C) assert that the United States District Court for the Southern

District of New 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

Transaction 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 of Delaware; or

(C) assert that the Chancery Court of the State of Delaware is

an inconvenient forum.

(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 of its Affiliates against the Initial Member

arising out of, relating to, or in connection with this Agreement or any

Transaction 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

OHS East:160711158.11 88
of New York or the United States District Court for the District of Columbia at

the option of the Initial Member; and

(iv) agrees, if the 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)(iii), 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 of the Initial Member.

(b) 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, 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)(iv), 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 WAIVES ANY RIGHT IT MAY HAVE TO A

TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS

AGREEMENT OR THE TRANSACTION DOCUMENTS AND AGREES THAT ANY SUCH

DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

OHS East:160711158.11 89


Annex I

Member Schedule

Member Percentage Interests Capital

Contributions to

Working Capital

Reserve Account

Other Capital

Contributions1

Initial Member 60% $4,500,000.00 $327,305,250.00

Private Owner 40% $3,000,000.00 $218,203,500.00

1 The amounts listed in this column do not include capital contributions made to the Working Capital Reserve

Account.

OHS East:160711158.11 I-1
EXHIBIT A

FORM OF

CERTIFICATE OF FORMATION
 

OF
 

2010-1 CRE 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 of the limited liability company is 2010-1 CRE Venture, LLC (the

“Company”).

SECOND, the address of the registered office of the Company in the State of Delaware is

Corporation Service Company, 2711 Centerville, in the City of Wilmington, County of New

Castle. The name of the registered agent at such address is The Corporation Service Company.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of

the Company on this 28th day of June, 2010.

By:

Name: Ralph Malami

Title: Attorney-in-Fact

OHS East:160711158.11 A-1
EXHIBIT B

INFORMATION; FORM OF MONTHLY REPORT

[See Attached]

OHS East:160711158.11 B-1
EXHIBIT C
 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is

made and entered into as of ____________, 20__ by and between [___________] a Delaware

limited liability company (“Transferor”), and ______________________, a

___________________ (“Transferee”).

RECITALS

WHEREAS, the Transferor, is the owner of a limited liability company membership

interest (the “LLC Interest”) in 2010-1 CRE Venture, LLC, a Delaware limited liability

company (the “Company”);

WHEREAS, the LLC Interest represents a ___________ percent (___%) “Percentage

Interest” in the Company (as defined in that certain Amended and Restated Limited Liability

Company Operating Agreement, effective as of July 2, 2010, by and among the Federal Deposit

Insurance Corporation, in its capacity as receiver for Failed Banks 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 of Transferor under 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 of the 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

of which shall be considered one and the same agreement and shall become effective when one

or more counterparts have been signed by each of the parties and delivered (including by

telecopy) to the other party.

OHS East:160711158.11 C-1
____________________

3. No Third Party Beneficiaries. This Agreement shall inure to the benefit of the

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 of the State of Delaware will govern the validity,

performance and enforcement of this Agreement, without giving effect to the principles of

conflict of laws of the State of Delaware or any other jurisdiction.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement

effective as of the date first above written.

TRANSFEROR:
 

COLFIN AXLE FUNDING, LLC
 

By:

Name:

Title:

TRANSFEREE:

By:

Name:

Title:

OHS East:160711158.11 C-2
SCHEDULE I

List of Various Failed Financial Institutions

Bank Name City State Fund Closing Date

Silver State Bank Henderson NV 10013 September 5, 2008

First Georgia Community Bank Jackson GA 10025 December 5, 2008

Bank of Clark County Vancouver WA 10029 January 16, 2009

Ocala National Bank Ocala FL 10032 January 30, 2009

First City Bank Stockbridge GA 10047 March 20, 2009

Omni National Bank Atlanta GA 10048 March 27, 2009

New Frontier Bank Greeley CO 10050 April 10, 2009

American Southern Bank Kennesaw GA 10053 April 24, 2009

First Bank of Beverly Hills Calabasas CA 10054 April 24, 2009

First Bank of Idaho Ketchum ID 10055 April 24, 2009

Michigan Heritage Bank Farmington Hills MI 10056 April 24, 2009

America West Bank Layton UT 10057 May 1, 2009

Citizens Community Bank Ridgewood NJ 10058 May 1, 2009

Silverton Bank Atlanta GA 10059 May 1, 2009

Westsound Bank Bremerton WA 10060 May 8, 2009

Bank of Lincolnwood Lincolnwood IL 10064 June 5, 2009

Community Bank of West

Georgia Villa Rica GA 10068 June 26, 2009

Integrity Bank Jupiter FL 10095 July 31, 2009

Community Bank of Nevada Las Vegas NV 10100 August 14, 2009

Community Bank of Arizona Phoenix AZ 10101 August 14, 2009

Union Bank Chandler AZ 10102 August 14, 2009

Corus Bank Chicago IL 10117 September 11, 2009

OHS East:160711158.11