ArnTrust Bank CAOC Loan and REO Structured Transaction 

Execution Copy 

LIMITED LIABILITY COMPANY INTEREST 


SALE AND ASSIGNMENT AGREEMENT 


by and among 


PMO LOAN ACQUISITION VENTURE, LLC, 


FEDERAL DEPOSIT INSURANCE CORPORATION, 

AS RECEIVER FOR AMTRUST BANK 


and 


AMTRUST CADC VENTURE, LLC 

Dated as ofJuly 2 L 20 I 0 

:\mTrust Bank CI\DC Loan ~nu REO StniCtur~d Transaction 

Tmns f~rrcu L LC Interes t Sale A g mt 

(> IIJ-19883_ 8 
LIMITED LIABILITY COMPANY INTEREST 


SALE AND ASSIGNMENT AGREEMENT 


THIS UMITED LIABILITY COMPANY INTEREST SALE AND ASS IGNMENT 

AGREEMENT (this '"Agreement") is made as of.July 21, 20 10. by and among PMO 

Loan Acqu isition Venture. LLC. a limited liability company organized and existing under 

the laws of Delaware (the .. Private Owner ..). and the Federal Deposit Insurance 

Corporation (in any capaci ty. the ..FDIC''), in its capacity as receiver fo r Am Trust Bank 

(including its successors and assigns thereto. the ··In itial Member..). and AmTrust 

CADC Venture. LLC. a limited liability company organ ized and existing under the laws 

of Delaware (the ··C ompany"). Capitalized terms used and not defined in th is 

Agreement shall have the respective meanings set forth in the Agreement ofCommon 

Detinitions (as hereinafter defined). 

RECJTALS 

W HEREAS, the FDIC has been appointed receiver t-or AmTrust Bank (the 

·'Failed Bank''); and 

WHEREAS. the Initial Member tormed the Company by causing the Certificate 

ofFonnation ofthe Company to be filed with the Secretary ofState ofthe State of 

De laware on July 16, 20 I 0. holds the sole limited liability company interest in the 

Company, and has entered into the Origina l LLC Operating Agreement; and 

WHEREAS. the parties to this Agreement, together with certain add itio na l 

parties. have entered into the Agreement ofCommon Definitions- AmT rust Bank CADC 

Loan and REO Structured Transaction dated as ofthe date hereof(the ··Agreement of 

Common Definitions ..) ; 

WH EREAS. pursuant to the Contribution Agreement the Initial Mem ber has 

contributed in part and sold in part to the Company all ofthe Initial Member's right, title 

and interest in and to the Assets; and 

WHEREAS. after conducting a sealed bid sale tor a forty percent (40%) LLC 

Interest (the ..Transferred LLC Interest''), the FDIC selected PMO Loan Acqu isitio n 

Venture, LLC (the ..Sponsor'') as the successfu l bidder pursuant to th e bid form 

submitted by it (the ..Bid Form'') and, in accordance with the instructions governing the 

sealed bid sale. the Sponsor has deposited $ 13,708,778.80 (the ··Ea rnest Monev 

Deposit'') with the FDIC; and 

WHEREAS. following its selection as the successful bidder. the Sponsor tormed 

the Private Owner as a Qualified Transferee; and 

WHEREAS. the Initial Member desires to transfer the T ransferred LLC Interest to 

the Private Owner (upon wh ich the Initial Member w ill retain a sixty percent (60%) LLC 

Interest) and enter into the LLC Operating Agreement in the form attached hereto as 

AmTrust Bank CADC Loan and REO Struo;tured Transaction 

Transferred LLC Interest Sale A gmt 

6 1049883_8 
Exhibit A. and the Private Owner des ires to acquire the Transferred LLC Interest and 

enter into the LLC Operating Agreement; and 

WH E REAS. the Initia l Member and the Private Owner desire. as capital 

contributions to the Company pro rata in acco rdance th eir proporti o nate LLC Interests 

(after giving dfect to the transfer of th e T ransferred LLC Interest). to fund the Working 

Capital Reser ve wi th an aggregate amount of$5 .000.000.00 (s uch s um. the '"WCR 

Account Deposit"): 

WHEREAS. the Initial Member's pro rata s hare ofs uch WCR Account Depos it is 

$3 .000.000.00 (the "Initial Member WCR Account Deposit") and Private Owner's pro 

rata share ofsuch WCR Account Deposit is $2.000.000.00 (the ..Private Owner WCR 

Account Deposit'"); 

WH E REAS. the Initial Member desires to fund th e Initial Member Devel opment 

Funding Account with an aggregate amount o f $34.271.94 7.00 (such s um, the ..l nitial 

Member Development Funding Account Derosif"). for the purposes and uses as forth 

in the LLC Operating Agreement: 

NOW. THEREFORE. in consideration of the fo regoing and the mutual promises 

and agreements hereinafter contained. and fo r oth er good and valuable consideration the 

receipt and s ufficiency of which are hereby acknowledged. the Initial Member, the 

Private Owner and the Company hereby agree as follows: 

I. Sale and Assignment; Purchase Price; Funding of Working Capital 

Reserve; Closing. 

(a) Sale and Assignment. Subj ect to the terms and cond itio ns of this 

Agreement, the Initial Member hereby sells to the Private Owner, and the Private Owner 

hereby purchases from the Initial Member. all ofthe Initial Member's right, title and 

interest in and to the Transferred LLC Interest tor a purchase price of$13 7,087,788.00 

(the '·Transferred LLC Interest Sale Price"). On the date hereot: in satisfaction of its 

obligation to pay the T ransferred LLC Interest Sale Price. the Private Owner s hall (i) 

remit to the Initia l Member, by wire transfer of immediately available funds. to s uch 

account as the Initial Member may direct in writing, an am ount (the "Purchase Price 

Pavment'") equal to the positive difference (if any) between (x) the Transferred L LC 

Interest Sale Price and (y) the sum of(A) the Earnest Money Deposit. (8) the Initial 

Member WCR Account Deposit. and (C) the Initial Member Development Funding 

Accoun t Deposit and (ii) (x) remit, on behalfofthe Initial Member. by wire transfer of 

immediately available funds. (A) an amount equal to the Initial Member WCR Account 

Deposit to the Paying Age nt for credit to the Working Capital Reserve Acco unt and (B) 

an amount equal to the Initial Member Development Funding Account Deposit to the 

Paying Agent for credit to the Initial Member Development Funding Account. and (y) 

remit. on its own behalf. by w ire transfer o f immediately available funds, an amount 

equal to the Private Owner WCR Account Deposit to the Paying Agent to r credit to the 

Working Capital Reserve Account. 

1\mTrust Bank CADC Luan a nd REO Str tur ~d Tr:msacuon 

Transferred LLC lnter~st Salt! Agmt 

61049883_8 
(b) C losing Procedure. Upon {i) the receipt by the Initial Member o f 

(x) the Purchase Price Payment. (y) evidence o f the establishment o f the Working Capita l 

Reserve Account in accordance with the provisions of Sectio n 3.6 ofthe C us todial and 

Paying Agency Agreement and the Initia l Member Development Funding Account in 

accordance with Section 3.4 ofthe C ustodian and Paying Agency Agreem ent. and (z) 

contirmation o f receipt by the Pay ing Agent o f each ofthe In itial Member WC R Account 

Deposit. the Pri vate Owner WCR Account Deposit and the In itial Member Development 

Funding Account Deposit, (ii) the de live ry o f the executed L LC Operating Agreement by 

the parties thereto (as required by Section 2), (iii) the de livery o f the Additional Security 

(as required by Section 3). (iv) the deli very ofthe compl eted Asset Va lue Schedule. in 

the torm attached hereto as Exhibit B allocating the T ransferred L LC Interest Sale Price 

among the Assets (the " Asset Value Schedule' '), which shal l be appended to the 

Contribution Agreement as the Asset Value Schedule thereunder. (v) the de livery ofthc 

executed Transferee Acknowledgment and Certi ficati o n, in the form attached hereto as 

Exhi bit C. and (vi) the delivery ofthe executed Jo inder and Consent Agreement. in the 

fo rm attached hereto as Exhibit D. the sale and assignment o f the Trans ferred LLC 

Interest to the Private Owner and the closing of the other transactions contemplated 

hereby (collective ly, the "Closing'') s hall be effective. 

' LLC Operating Agreement. Contemporaneously wi th the execution and 

delivery ofthis Agreement. the Private Owner s ha ll execute and deliver to the Company 

and the Tn itial Member the LLC Operating Agreeme nt. 

3. Addition~•! Seeuritv. CorHemporaneousl y wi th the executi on ofthis 

Agreement and the LLC Operating Agreement. the Private Owner shall, pursuant to the 

applicable provisions in the LLC Operating Agreement and the C ustodial and Paying 

Agency Agreement, establish the Private Owner Pledged Account and de liver (or cause 

to be delivered) to the Paying Agent (for deposit into the Private Owner Pledged 

Account), the Add itional Security, in th e form of Qua lifying Cash Collateral. in an 

amount not less than $6,500,000. 

4 . Representations and Warranties of Private Owner. T he Private Owner 

hereby represents and warrants separate ly to each o f the In itial Member and the Company 

as fo ll ows: 

(a) The Private Owner is a ·' Qua lified Transferee:· as such term is 

defined in the LLC Operating Agreement, and as s uch, represents and warrants that each 

item included in such definition is true and correct in all respects as of the date hereof as 

if set forth herein . 

(b) All information and documents provided to the Initial Member or 

its agents by or on behalfo f the Pri vate Owner or any Affiliate thereof(includ ing the 

Sponsor) in connection w ith this Agreement and the transactions contemplated hereby, 

including, but no! limited to, the Purc haser Eligibility Certification. the Bid Certification, 

the Structured T ransaction Qualitication Request, the Bidder Qualif·icatio n Request and 

the Confidentiality Agreement, are true and correct in a ll respects as o f the date hereof 

and do not fail to state any fact necessary to make the information contained therein not 

1\ m Trust Bank CADC Loan ~nd REO Structured Tmnsactu>n 

rranstl:rred LLC fnt.:rcst Sale /\gmt 

1> 10.19883_8 
misleading. 

5. Exclusivity of Rep resentations. THE TRANSFERRED LLC 

INTEREST IS SOLD "AS IS .. AND ·'WITH ALL FAULTS:' WITHOUT ANY 

REPRESENTATION. WARRANTY. GUARANTY OR RECOURSE WHATSOEVER, 

INCLUDING AS TO ITS VALUE (OR THE VALUE. COLLECTABILITY OR 

CONDITION OF THE LOANS HELD BY THE COMPANY OR ANY OF THE 

COLLATERAL FOR SUCH LOANS). FITNESS FOR ANY PARTICULAR 

PURPOSE. MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR ANY 

OTHER MATTER. WHETHER EXPRESS OR IMPLIED OR BY OPERATION OF 

LAW OR OTHERWISE. AND THE INITIAL MEMBE R SPECIFICALLY 

DISCLAJMS ANY WARRANTY. GUARANTY OR REPRESENTATION. ORAL OR 

WRITTEN. PAST OR PRESENT, EXPRESS OR IMPLIED. CONCERNING THE 

TRANSFERRED LLC INTEREST. THE LOANS. OR THE COLLATERAL 

SECURING THE LOANS. 

6. Assignmen t. This Agreement and all of the provisions hereof shall be 

binding upon and inure to the benetit of the parties hereto and their respective heirs (in 

the case of any individual). successors and permitted assigns; provided. however, that the 

Private Owner may not assign this Agreement or any of its rights. interests or obi igations 

hereunder. Any purported assignment or delegation in violation ofthis Agreement shall 

be null and void ab initio. 

7. Beneficiaries. This Agreement shall inure to the benefit of. and may be 

enforced by. the Initial Member, the Private Owner and the Company and their respective 

successors and assigns. Except for the FDIC (in its corporate capacity). which shall be 

considered a third party beneficiary to this Agreement, there shall be no o ther third party 

beneficiaries hereunder. 

8. Waivers and Am endments. No amendment or waiver of any provision 

ofthis Agreement shall be effective unless the same shall be in writing and executed by 

the Initial Member. the Private Owner. the Company and the FDIC (in its corporate 

capacity). 

9. Failure to Consummate T ra nsaction . If for any reason, without fault of 

the Initial Member. the Private Owner fai Is to consummate the purchase ofthe 

Transferred LLC Interest, upon the terms and conditions set forth in this Agreement. the 

Initia l Member's liquidated damages. and sole and exclusive remedy. shall be to retain 

the Earnest Money Deposit. The Private Owner and the Initial Member agree that the 

failure or refusal of the Initial Member to alter or modity, in any way. the terms or 

con diti ons of this Agreement. the LLC Operating Agreement or any Transaction 

Document shall not constitute fault on the pmt of the Initial Member. The Private Owner 

shall not be liable for any ofthe foregoing damages if the Private Owner is forced to 

withdraw its bid made pursuant to the Bid Form after award as the result of a supervisory 

directive given by the FDIC or any other federal or state financial regulatory agency, 

provided that the Initial Member shall be satisfied that such supervisory directive is 

legally effective. In such event, the l11itial Member s hall refund the Earnest Money 

AmTrust B:~nk CADC Loa n and REO Structured Tmnsaction 

Transferred LLC lnt.:rest Sal<: Agmt 

6104\1883_8 
Deposit. 

10. Governing Law. EAC H PART Y TO TI-llS AGREEMENT AGREES 

AND ELECTS THAT. IN ACCORDANCE WITH SECTION 5-1401 OF THE 

GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK. THJS 

AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE 

WITH THE LAWS OF THE STATE OF NEW YORK. EXCLUDING ANY CONFLICT 

OF LAWS RU LE OR PRINCIPLE THAT M IGHT REFER THE GOVERNANCE OR 

THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER 

.JURISD ICTION. AND EAC H PARTY TO THIS AGREEMENT 

UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT 

THAT THE LAWS OF ANY OTHER .JURISDICTION GOVERN THIS 

AGREEMENT. Nothing in this Agreement shall require any unlawful action or inaction 

by any party hereto. 

II. J urisdiction; Venu e and Service. 

(a) Each of the Private Owner and the Company, in each case on 

behalf of itself and its Affiliates, hereby irrev ocab ly and unconditionally: 

(i) consents to the jurisdiction ofthe United States District 

Court for the Southern District of New York and to lhe jurisdiction of the United States 

District Court for the District of Columbia for any s uit. action or proceeding against it or 

any of its Affiliates commenced by the Initial Member arising out of. relating to. or in 

connection with this Agreement or any T ran saction Document, and waives any right to: 

(A) remove or transfer such suit. action or proceeding to 

any court or dispute-resolution forum (other than the court in which the Initial Member 

files the action. s uit or proceeding) without the consent of the Initial Member: 

(B) assert that venue is improper in either the United 

States District Co urt tor the Southern District ofNew York or the United States District 

Court for the District of Columbia; o r 

(C) assert that the United States District Court tor the 

Southern District ofNew York or the United States District Co urt for the District of 

Columbia is an inconvenient forum: 

(ii) consents to the jurisdiction ofthe Supreme Court ofthe 

State ofNew York. Cou nty of New York. tor any suit. action or proceed ing against it 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 (other than the LLC 

Operating Agreement), 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); 

AmTrust B<mk CADC l.onn and REO Structured Tmnsaction 

Transferred LLC ltH<lresl Sal~ Agml 

61049883_8 
(B) ass~ rt that venue is improper in the Supremt: Court 

oftht: State ofNew York. Co unty ofNew York; or 

(C) nsse rt that the Supreme Court of the Stat~:: of New 

York. Count y ofNew York is an inconvenient torum: 

(iii) agrees to bring any s uit. action or proceed ing by it or any o f 

its Affiliates agai nst the Initi al Member ar ising out o [ rela t ing to. or in connection with 

thi s Agreem~nt or any Transactio n Document (ot her than the LLC Operatin g Agreem ent) 

in onl y the United States District Court tor the Southern District ofNew York or the 

United States District Co Utt for the District of Co lumbia. and waives any righ t to remove 

or transfer suc h su it. act ion or proceeding to any other court or d isp ute-resolut ion forum 

withou t the conse nt of the Init ial Member. and ag rees to co nsent thereafter to tran sfer of 

the suit. action o r proceedin g to either the Un ited States District Cou rt tor the So uthern 

District nfNew York or the Un ited States District Co urt for t he District of Co lum bia at 

the op tion ofthe Initia l Member: and 

(iv) agrees. if the United States District Cou rt tor the Southe rn 

Dis tri ct ofNew York an d the United States District Co urt for the District of Co lumbi a 

both lack jurisdiction to hear a s uit. act ion or proceedin g ta iling with in Sec tion l I (a)( iii). 

to bring that suit, action o r proceeding in only the Supreme Co urt of the State ofNew 

York. Co unty ofNew York. and wai ves any rig ht to remove or trans fer such su it. action 

or proceeding to any other court or dispute-resolution forum without the conse nt of the 

Initial Member. 

(b) Each of the Private Owner and the Compa ny. in eac h case on 

behalfofitselfand its Afnl iates. hereby irrevocab ly and unconditionally agrees that any 

tina! judgment entered against it in any su it, ac tion or proceeding falling within Sec ti on 

ll (a) may be enforced in any co urt ofcompe tent jurisdiction. 

(c) Subj ect to the provisions of Section ll (d), eac h ofthe Private 

Owner and the Com pany , in eac h case on behalf of itself and its Affi liates, and the In itial 

Member. hereby irrevocab ly and unconditionally ag rees that service ofall writs . process 

and s umm onses in any s uit, action or proceeding pursuant to Section I I (a) or Sect io n 

ll(b) may be eftected by the mailing of copies thereofby registered or certitied ma il, 

postage prepaid , to it at its address tor notices pursuant to Secti on I I (w ith cop ies to s uch 

other Persons as specitied the rein); provided. however, that nothin g contai ned in th is 

Sect ion I I (c) shall affect the right ofany party to serve process in any other manner 

permitted by Law. 

(d) Nothing in this Sect ion II s ha ll co nstitute conse nt to jurisdict ion in 

any court by the FDIC, other than as express ly provided in Sect io n II (a)(i ii) and Sect ion 

II (a)(iv), or in any way limi t the FDJC's right to rem ove. transfer. seek to di smiss, or 

otherwi se respond to any suit. action. or proceeding aga inst the FDIC in any fo rum . 

12. Waiver of Jurv Trial. EACH OF T HE PRIVATE OWNER AND THE 

COM PANY , FOR ITSELF AND ITS AFF ILIATES. AND THE INIT IAL MEM BER. 

Am frust Bank C ADC Loa n :md IU:O Struc tured Transaction 

Transt<: rred l.LC Interest Sale /\g mt 

6 1049883_ 8 
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT 

MAY HAVE TO A T RI AL BY JURY OF ANY DISPUTE A RIS ING OUT OF OR 

RELATING TO T HIS AG REEMENT AND AGREES THAT ANY SUCH DISPUTE 

SHALL BE TRIED BEFORE A JUDGE S ITT ING WITHOUT A J URY . 

13. Notices. All notices. requests. demands and other communications 

required or permitted to be given or deli vered under or by reason of the provisions ofthi s 

Ag reement s hal l be in writin g and sha ll be given by certified or registered mail, postage 

prepaid. by delivery by hand or by nationally recogn ized courier service. or by e lectroni c 

mail, in each case mailed or delivered to the applicable address or e lectroni c mail address 

s pecified in. or in the manner prov ided in. th is Section 13 below. All such notices. 

requests. demands and other commun ications s hall be deemed to be given o r made upon 

the earlier to occur of(i) actual receipt (or refusa l thereof) by th e re levant party hereto 

and (i i) (A) if delive red by hand or by nationa ll y recognized courie r service. w hen signed 

for (or refused) by or o n behalf of the relevant patty hereto: (B) if delivered by maiL 

when delivered (or refused). and (C) if de livered by electronic mail (whi ch form or 

delivery is subject to the provisions of thi s paragra ph), when delivered and capable of 

be ing accessed ·li·om the recipient ·s office computer, provided that any notice, request 

demand or other communication that is rece ived other than during regu lar business hours 

ofthe reci pie nt s hall be deemed to have been given at the open ing of business on the next 

busi ness day ofthe recipient. Jn no event s ha ll 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 ii1 this ScctiOil 13. 

lf to the Initial Member, to : 

Ma nager. National Sales - Resolutions and Receiverships 

Federal Deposit Insurance Corpo ratio n 

550 17111 Street, NW (Room F-7014) 

Washington. D.C. 20429-0002 

Attentio n: Ra lph Malam i 

Emai l Addre ss: RMalami@ fdic.gov 

with a copy to: 

Senio r Coun se l 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlingto n. Virginia 22226 

Attenti on: David Gearin 

Emai l Address: DGearin@ taic.gov 

AmTrust Bank CADC Loan and REO Structured Tnmsacuon 

Tt; msferred LLC Jnt.:r.:sr Sale Agml 

6 10-19883_& 
If to the Private Owner or to the Company, to: 

Milestone Asset Resolution Company. LLC 

1775 I Street. NW. 8th floor 

Washington. D.C. 20006 

Attention: R. Patterson Jackson 

E-mail Address: 

with copies to: 

PMO Loan Acquisition Venture. LLC 

333 South Grand A venue. 28th Floor 

Los Angeles. California 90071 

Attention: Cary 

E-mail Address: 

Paul, Hastings, Janofsky & Walker LLP 

515 South Flower Street. 25th Floor 

Los Angeles. California 9007 I 

Attention: Derek E. Smith 

E-mail Address: 

14. Counter pa rts; Facsim ile S ignatures. 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. This Agreement and any 

amendments hereto. to the extent signed and delivered by facsimile or other electronic 

means. s hall 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 ofa 

t~tcsimile 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. 

15. Head ings. Paragraph titles or captions contained in this Agreement are 

inserted only as a matter ofconvenience and fbr reference and in no way define, limit. 

extend or describe the scope ofthis Agreement or the intent ofany provisions hereof. All 

Section and paragraph references contained herein shall refer to Sections and paragraphs 

in th is Agreement unless otherwise specified. 

16. Compliance with Law; Rules of Construction . Except as otherwise 

s pecifically provided herein, each party to this Agreement shall. at its own cost and 

expense. obey and comply with all Laws. as they may pertain to such party's 

perJbrmance of its obligations hereunder. Section 1.2 of the Contribution Agreement 

(Construction) is hereby incorporated by reference into this Agreement. 

i\mTrust Bank C.'\DC Loan and REO Structured Transaction 

frans1 1Ted LLC lntc:r~st Sale A gmt 

C> IIWJ883_8 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 


i\mTrust Bank Ci\DC Loan and REO Structured Transactton 

l'ransferrcd LLC lnt rest Sale Agmt 

6 1049883_8 
IN WITNESS WH ER EOF, th e parties have caused thi s Agreement to be duly 

executed as o f the date first written above. 

PIUVATE OWNER: 

PMO LOAN ACQUISITION VENTURE, 

LLC, as Private Owner 

By: 	 PMO Investor, L. P., its Managing 

Member 

ame: C~ :inm~ 

Tit le: ;\uthorized Signatory 

INITIAL MEMBER: 

FEDERAL DEPOSIT INS URANCE 

CORPORATION, IN ITS CAPACITY 

AS RECEIVER FOR AMTRUST BANK 

By:_____________ 

Name: 


Title: Attorney-in-Fact 


COMPANY: 

AMTRUST CADC VENTURE, LLC 

By: Federal Deposit Insurance Corpo ration, 

in its capaci ty as rece iver for A mTrust Bank 

By:______________ 

Name: 


Title: Attorney-in-Fact 


{Signature Page to LLC Interest Sale and Assignmcm Agreement] 

AmTrust Bank CADC Loan and REO Structured Transaetion 

61049883 
IN WITNESS WHE REOF, the parties have caused this Agreement to be dul y 

execu ted as of th e date fi rst written above. 

PRIVATE OWNER: 

PMO LOAN ACQUISITION VENT URE , 

LLC, as Pri vate Owner 

By: 	 PMO Investor, L.P., its Managing 

Member 

By:___________ 


Name: 


Title : Authorized Signato ry 


By:___________ 


Nam e: 


T itle: Authori zed Signatory 


INITIAL MEMBER: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS CAPACITY 

AS RECEIVER FOR AMTRUST BANK 

COMPANY: 

AMTRUST CADC VENTURE, LLC 

By: Federal Deposit Insurance Corporation, 

in its capacity as receiver for AmTrust Bank 

Title: 	 Attorney-in-Fact 

(Signature Page to LLC Interest Sale and Assignment Agreement) 

AmTrustl3ank CAOC Loan and REO Structured Transaction 

6 1049883 
Exhibi t A 

Form of LLC Operating Agreement 

i\mTrust Bank CADC Lnan and REO Structured Tra nsaction 

l'rans ti:rrcd LLC Interest Sale Ae.mt 

(>10-19883_8 ­
 

 

FORM OF AMTRUST CADC 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 21st day of July, 2010, 

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”), 

PMO Loan Acquisition Venture, LLC, a Delaware limited liability company (the “Private 

Owner”), and AmTrust CADC Venture, LLC, a Delaware limited liability company (the 

“Company”). 

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

AmTrust Bank (the “Failed Bank ”); and 

WHEREAS, on July 16, 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 interests), and the Initial Member and the 

Company entered into the Original LLC Operating Agreement; 

WHEREAS, (i) pursuant to the Contribution Agreement (as more particularly identified 

in the Agreement of Common Definitions defined below), the Initial Member has sold in part 

and (as the sole member of the Company at the time) contributed in part, in each case to the 

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

all of the Initial Member’s right, title and interest in and to the Assets, and assumed the 

Obligations, (ii) the Company has executed and delivered to the Initial Member (as the sole 

member of the Company at such time) those certain Purchase Money Notes (as more particularly 

identified in the Agreement of Common Definitions) for the benefit of the Initial Member; 

(iii) the FDIC, in its corporate capacity (as the Purchase Money Notes Guarantor) guaranteed 

payment of principal on the Guaranteed Purchase Money Notes pursuant to the terms of the 

Purchase Money Notes Guaranty (as more particularly identified in the Agreement of Common 

Definitions), and (iv) pursuant to the Reimbursement, Security and Guaranty Agreement (as 

more particularly identified in the Agreement of Common Definitions), the Company has 

granted to the Collateral Agent, for the benefit of the Purchase Money Notes Guarantor, the 

Advance Lender and the holders of the Purchase Money Notes, a security interest in the Assets 

and Collateral; 

WHEREAS, following closing of the transactions contemplated by the Contribution 

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

agreed, pursuant to the terms of the Transferred LLC Interest Sale Agreement (as more 

particularly identified in the Agreement of Common Definitions), 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; 

A-1 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
 

 

 

 

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

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

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

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

will own an LLC Interest representing a thirty percent (30%) equity interest in the Company and 

the Initial Member will own an LLC Interest representing a seventy percent (70%) equity interest 

in the Company; 

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 Permitted Vertical Completion Expenses, and the Private Owner and the Initial Member 

have agreed to initially fund the Working Capital Reserve Account; 

WHEREAS, the Receiver has agreed to provide additional financing to the Company 

through the Advance Facility (as more particularly identified in the Agreement of Common 

Definitions) to enable the Company to fund Working Capital Expenses (including through 

replenishment of the Working Capital Reserve) and Permitted Vertical Completion Expenses, 

which funding shall be provided pursuant to, and in accordance with, the terms of the Advance 

Facility Agreement (as more particularly identified in the Agreement of Common Definitions) 

between the Initial Member, as Advance Lender, and the Company, as borrower, with the 

repayment obligations under the Advance Facility being secured by the assets of the Company 

pursuant to the Advance Facility Agreement, Reimbursement, Security and Guaranty Agreement 

and the other Advance Facility Documents (as more particularly identified in the Agreement of 

Common Definitions); 

WHEREAS, the Initial Member and the Private Owner may, pursuant to the terms and 

conditions set forth herein, from time to time on a pro rata basis make Development 

Contributions as additional capital contributions to the Company to fund Permitted Horizontal 

Development of specific Acquired REO Property; and for purposes of the Initial Member’s share 

of such Development Contributions the Initial Member has agreed to set aside funds in the Initial 

Member Development Funding Account; and 

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

Agreement in its entirety in order to reflect the admission of the 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 

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Agreement, (a) terms used herein, to the extent the same are defined in the Agreement of 

Common Definitions and not otherwise defined herein, shall have the respective meanings and 

definitions given in such Agreement of Common Definitions, and (b) the following terms shall 

have the meanings and definitions hereinafter respectively set forth. 

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

Company. 

“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 

(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 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. 

“Agreement of Common Definitions” shall mean the Agreement of Common 

Definitions - AmTrust Bank CADC Loan and REO Structured Transaction, dated as of the date 

hereof, by and among the Initial Member, the Company, the Private Owner, the Purchase Money 

Notes Guarantor, the NGPMN Agent the Collateral Agent, the Advance Lender, the 

Custodian/Paying Agent and the Servicer. 

“Asset Level Business Plan” shall have the meaning given in Section 7.7. 

“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 

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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 Plan” shall have the meaning given in Section 7.7. 

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

“Buy-Out Closing Date” shall have the meaning given in Section 3.14(b)(i). 

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

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

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

Member’s outstanding LLC Interests, as adjusted to account for allocations 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). 

“Clean-up Call” shall have the meaning given in Section 12.20. 

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

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

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

“Development Contribution Request” shall have the meaning given in Section 

5.3(b). 

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

has any direct ownership interest in such Person. 

“Discretionary Funding Advance” shall have the meaning given in Section 5.4. 

“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.” 

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“Dispute Resolution Procedure ” shall mean the following procedure solely for 

the purpose of determining a particular amount: 

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

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

such time period, then the amount shall be the single proposal provided. If the higher of the two 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

other specified entity, the termination 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 

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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. 

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

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

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

or regulation of any administrative or governmental body): 

(a) the receipt by the Company of notice from the Advance Lender (or 

any agent under the Advance Facility) that an Event of Default under and as defined in the 

Advance Facility has occurred, or from the Collateral Agent that an Event of Default under and 

as defined in the Reimbursement, Security and Guaranty Agreement has occurred (in each case, 

unless such an Event 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 or in clause (ii)) (i) with 

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

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

Insolvency Event under clause (i) hereof) shall not be an Event 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 Working Capital 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 the 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 (x) an Event of Default under the 

Reimbursement, Security and Guaranty Agreement as a result of the Servicer’s acts or omissions 

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

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

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

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

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

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

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

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

remains unremedied for a period 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 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 Manager or the Private Owner, or 

there shall occur a Change of Control with respect to the Manager or 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 be an event of 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 

Asset 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 Asset 

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

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

Security to be equal to or to exceed Six Million Five Hundred Thousand Dollars ($6,500,000), or 

any failure by an Issuing Bank to comply with any terms, agreements or conditions of any 

Qualifying Letter of Credit. 

“Excess Working Capital Advance” shall have the meaning given in 

Section 5.5. 

“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. 

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“FDIC” shall have the meaning given in the recitals. 

“ground lease” shall have the meaning given in Section 12.18(g). 

“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 given in Section 4.6(a). 

“Initial Member ” shall have the meaning given in the preamble. 

“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. 

“Manager” shall have the meaning given in Section 3.1(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. 

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“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 ” is equal to 2.21045 percent. The 

Monthly Adjusted Annualized Yield is derived as follows: (1 + Annualized Yield Threshold)1/12 

– 1 or (1 + 0.30)1/12 – 1, where the Annualized Yield Threshold is 30%. 

“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 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. 

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

“Permitted Horizontal Development” shall have the meaning given in Section 

5.3(a) 

“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. 

“Private Owner ” shall have the meaning given in the preamble. 

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

Owner, any Purchaser Eligibility Certification delivered by the Private Owner or any of its 

Affiliates to the Receiver in connection with the transactions contemplated in this Agreement 

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and the other Transaction Documents, including the Purchaser Eligibility Certification delivered 

by the Private Owner to the Receiver on or about the Closing Date, and, (ii) with respect to any 

Permitted Disposition (and the applicable transferee in connection therewith), a Purchaser 

Eligibility Certification in substantially the form of the Purchaser Eligibility Certification 

referenced in item (i), with such changes as the Initial Member may require based on changes to 

such form 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, D.C. 

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, 

substantially in the form of Exhibit D hereto (or in such other form as may be acceptable to, and 

approved in writing by, the Initial Member), duly issued by an Issuing Bank that is, as of the date 

of issuance thereof, a Qualified Issuer and delivered to the Initial Member, drawable at such 

Issuing Bank’s offices in New York City, NY or Washington, D.C., and having an initial term of 

one (1) year with automatic renewals thereafter (without amendment except for extension 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. 

“Receiver ” shall have the meaning given in the recitals. 

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

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

“Servicing Obligations” shall have the meaning given in Section 12.1(a). 

“Servicing Standard” shall have the meaning given in Section 12.1(a). 

“Successor ” shall mean, (i) with respect to a Member, any future Member which 

is a direct or indirect transferee (whether by Permitted Disposition, merger, consolidation or 

otherwise) of the LLC Interest of such Member; (ii) with respect to any former Member, the 

current Member which is the direct or indirect transferee (whether by Permitted Disposition, 

merger, consolidation or otherwise) of the LLC Interest of such former Member and (iii) with 

respect to the Initial Member, any Person that is a direct or indirect transferee (whether by 

Disposition, merger, consolidation or otherwise) of any of the Initial Member’s rights or interests 

under this Agreement or any other Transaction Document. 

“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. 

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“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 applicable Incentive Threshold as of the preceding Distribution Date (or, in the 

case of the first Distribution Date, the Closing Date) and (b) the 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). 

“$” shall mean lawful currency of the United States of America. 

1.2 Construction.Captions. Paragraph titles or captions contained in this Agreement 

are inserted only as a matter of convenience and for reference and in no way define, limit, extend 

or describe the scope of this Agreement or the intent of any provisions hereof. All Section and 

paragraph references contained herein shall refer to this Agreement unless otherwise specified. 

(b) References to Persons Exclusive. References to “Affiliates” or 

“Subsidiaries” of a specified Person refer to, and include, only other Persons which from time to 

time constitute “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. 

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(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 July 16, 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. 

(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 only members of the Company. Until the Company is 

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

13.5, the Company shall at all times have two, and only two (2), members. 

2.2 Name. 

(a) The name of the Company shall be AmTrust CADC 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 

Assets (the “Initial Member Capital Contribution”); and 

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(ii) sold and assigned to the Company, and the Company purchased 

and accepted such assignment from the Initial Member, Assets (other than that portion of the 

Assets comprising the Initial Member Capital Contribution) and assumed the Obligations 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 a forty percent (40%) limited liability company interest in the Company for the 

Transferred LLC Interest Sale Price in accordance with the terms thereof. 

(c) Upon the consummation of the limited liability company 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 a forty percent (40%) 

limited liability company interest in the Company and the Initial Member shall own a sixty 

percent (60%) limited liability interest in the Company. Following the occurrence of the Incentive 

Threshold Event, the Private Owner shall own a thirty percent (30%) limited liability company 

interest in the Company and the Initial Member shall own a seventy percent (70%) limited 

liability company interest in the Company. 

2.4 Registered Office; Chief Executive Office. The Company shall maintain a 

registered office and registered agent in Delaware to the extent required by the Act, which office 

and agent shall be as determined by the Manager from time to time and which shall be set forth 

in the Certificate. Initially (and until otherwise determined by the Manager), the registered office 

in Delaware shall be, and the name and address of the Company’s registered agent in Delaware 

shall be, as specified in the Certificate as originally filed, which may be amended by the 

Manager from time to time as necessary to correctly reflect the name and address of the 

Company’s registered agent. The chief executive office of the Company shall be located at 333 

S. Grand Ave., 28th Floor, Los Angeles, CA 90071, 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, in each case to accomplish the purposes of 

the Company or consistent with the furtherance thereof. 

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

perpetually. 

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

expressly permitted by this Agreement or the other 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 other 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; 

(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 the contemplated operation of the Business; 

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

overhead for shared office space; 

(x) use separate stationery, invoices and checks; 

identity; and 

(xi) correct any known misunderstanding regarding its separate 

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

purpose, transactions and liabilities, if any. 

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(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 other 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 other Transaction 

Documents (including the Advance Facility Documents and the Purchase Money Notes (and any 

promissory note reissued in respect thereof pursuant to Section 2.8 of the Custodial and Paying 

Agency Agreement), the Purchase Money Notes Guaranty, and the Reimbursement, Security and 

Guaranty Agreement), pledge its assets for the benefit of any other Person, make any loans or 

advances to any other Person, or encumber or permit any Lien to be placed on the Assets, the 

Collateral, or the proceeds therefrom; provided that, the Company may (x) invest its funds in 

interest bearing accounts held by any bank that is not its Affiliate and otherwise in accordance 

with the terms of this Agreement and the Custodial and Paying Agency Agreement and (y) make 

advances in accordance with Article XII; 

(iii) own any assets, or engage in any business, unrelated to the 

Business; 

(iv) incur, create or assume any Debt other than the Purchase Money 

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

Custodial and Paying Agency Agreement), any Discretionary Funding Advance, any advances 

under the Advance Facility, any Excess Working Capital Advance or as otherwise expressly 

permitted hereby or by the other 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 

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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 other 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 Assets 

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 other 

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. 

AR TIC LE 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 the Manager, may not Dispose of or 

delegate, in whole or in part, its rights, responsibilities or duties as the Manager to any other 

Person, and shall serve as Manager until such time as (i) the Private Owner LLC Interest is 

Disposed of in accordance with the terms of this Agreement and the transferee is admitted as a 

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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. The Private Owner (and any Successor to the Private Owner) hereby expressly 

acknowledges that (x) as it relates to its role as the Manager, this Agreement constitutes a personal 

services contract between the Private Owner and the Company, and (y) except as may otherwise 

be expressly specified herein, it shall not be entitled to any salary, fees, reimbursement of costs or 

expenses, or other compensation with respect to its service as the Manager hereunder (including 

with respect to the Manager’s Asset 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 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. 

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(d) Notwithstanding anything to the contrary contained in this Agreement, the 

parties hereto acknowledge and agree that: 

(i) nothing contained in this Agreement creates any fiduciary duty or 

similar obligation owed by the Initial Member; 

(ii) the Private Owner and the Company each hereby expressly waives 

any fiduciary duties that may otherwise be deemed to be owed by the Initial Member to the 

Private Owner or the Company; and 

(iii) the Initial Member shall be entitled to act and exercise any right of 

approval or consent that it has under this Agreement in its interest, in its sole and absolute 

discretion, without regard to and against the interests of the Private Owner or the Company. 

(e) Unless and to the extent reimbursement is due under an express provision 

hereof or pursuant to a Related Party Agreement or any 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, 5.3, 

5.4, 8.1, 8.2, 8.8(a), 9.1, 12.3(g), 12.7(b), 12.12, 12.13, 12.14, 12.15, 12.18, 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. 

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 the 

Manager and for the day-to-day operation of the Business, including the Manager’s employees, 

facilities and support services. If necessary to meet the foregoing requirements, the Manager 

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 Assets 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 

Asset Documents by a Custodian under contract with the Company in accordance with the 

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provisions of Section 3.7 below. Notwithstanding anything to the contrary contained in this 

Section 3.3, (a) the Company shall not have any employees, (b) no employees of the Manager or 

any third party (including any Affiliate) shall be deemed to be employees of the Company, (c) 

any contractual relationships entered into by the Manager to provide employees, facilities or 

support services to the Company shall be relationships between the third parties (or Affiliates) 

and the Manager (and not the Company) and shall not relieve the Manager of its obligations or 

any liability hereunder, and (d) no expenses incurred to secure or maintain employees (or 

independent contractors performing relevant services for the day-to-day operation of the 

Company in lieu of performance of the same by such 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 other 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 Required Consenting 

Parties, which approval may be withheld or conditioned in the sole and absolute discretion of 

each such Required Consenting Party: 

(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 

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) during any of the first two successive 12-month periods after the 

Closing Date, (1) selling or otherwise transferring an Asset for proceeds in excess of 

$30,000,000 or (2) conducting Bulk Sales in an aggregate amount (for such 12-month period) in 

excess of ten percent (10%) of the aggregate Unpaid Principal Balance of all Assets as at the 

beginning of such 12-month period (or, for such first 12-month period, as at the Cut-Off Date as 

indicated on the Asset Schedule), it being understood that for purposes of the foregoing 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 Acquired REO 

Property) held directly or indirectly by such Ownership Entity; 

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(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 other 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 Asset, 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 Asset, Collateral or 

Acquired Property (or any portion thereof); 

(xi) selling any Asset, 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 Asset Proceeds allocable to the Initial Member; 

(xii) disbursing, or causing the disbursement of, funds from the 

Collection Account, the Distribution Account, the Working Capital Reserve Account, the 

Company Development Account or other accounts created under this Agreement, the Custodial 

and Paying Agency Agreement, the Advance Facility 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 Advance Facility Documents, the 

applicable Servicing Agreement and the Reimbursement, Security and Guaranty Agreement; 

(xiii) advancing additional funds that would increase the Unpaid 

Principal Balance of any Asset other than (A) Required Funding Draws, (B) Permitted Vertical 

Completion Expenses, (C) Permitted Horizontal Development Expenses, or (D) Servicing 

Expenses to the extent that capitalizing such Servicing Expenses is or, with respect to Acquired 

Property would have been prior to the conversion of the Loan to Acquired Property, permitted 

under the applicable Asset Documents; 

(xiv) reimbursing the Manager for any expense or cost incurred by (or 

paid by) any Affiliate of any of the Company, the Private Owner or the Manager, the Servicer or 

any Subservicer; 

(xv) taking any action or omitting to take any action that causes the 

Company to breach any representation, warranty, covenant or other agreement contained herein 

or in any other Transaction Document (for avoidance of doubt, nothing in this clause (xv) shall 

require the Private Owner or the Manager to make any capital contribution or advances which 

are not otherwise required of it under the express terms of this Agreement or any other 

Transaction Document); or 

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(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 other 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 Acquired 

REO Property, and any acquisition or ownership of any such Acquired REO Property shall be 

subject to Sections 12.17 and 12.18 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 a written custodial agreement with a Custodian (as 

selected by the Company in accordance herewith), and such Custodian shall at all times have 

custody and possession of the Notes and other Custodial Documents (subject to the applicable 

provisions herein and in such custodial agreement with respect to release thereof). 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 (as selected by the Company in accordance 

herewith), which Paying Agent shall receive and distribute Asset Proceeds in accordance with 

such paying agency agreement. Such Custodian and Paying Agent shall be (and remain) a 

Qualified Custodian and Paying Agent acceptable and approved by the Initial Member, such 

approval not to be unreasonably withheld, delayed or conditioned. 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 the Custodial and Paying Agency 

Agreement (which shall be in a form acceptable to the Initial Member). At no time shall the 

Company have more than one (1) Custodian or one (1) Paying Agent, who may be the same 

Person. The fees and expenses paid to the Custodian and Paying Agent shall be no more than 

market rates and the Custodian and Paying Agent may be terminated by the Company upon no 

more than thirty (30) days notice provided to either, without cause under the Custodial and 

Paying Agency Agreement. In the event that the Manager removes, or causes the Company (or 

any Servicer) to remove, any Notes or other Custodial Documents from the possession 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 when not 

in possession of the Custodian), and (ii) such Notes shall be returned to the Custodian within the 

time provided under the applicable Uniform Commercial Code to maintain the perfection of the 

secured party’s security interest therein by possession. If any Notes or other Custodial 

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Documents are removed in connection with the modification, restructuring or foreclosure 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, modification or foreclosure (and, in any event, in accordance with clause (ii) of the 

immediately preceding sentence). Notwithstanding the foregoing if any Notes or other Custodial 

Documents are retained by the applicable court, such Notes and other Custodial Documents shall 

be returned to the Custodian as soon as possible after they are released by such court. The 

Manager shall ensure that the Initial Member receives a copy of each demand, notice or other 

communication given by the Manager under the Custodial and Paying Agency Agreement at the 

time that such notice or other communication is given by the Manager thereunder. 

3.8 Relationships with Borrowers, etc. Except as otherwise consented to by the Initial 

Member, none of the Private Owner, the Manager or any Affiliate of either 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 Assets and its right to hold 

Acquired Property, have any interest whatsoever in any Borrower, Obligor or other obligor with 

respect to any Asset 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 

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 permit 

(voluntarily or involuntarily) to be placed, any Lien on any of the Assets, the Collateral, the 

Asset Documents, or the Asset Proceeds, except, in the case of Collateral, such Liens caused or 

permitted by the Manager (i) as permitted under the Asset Documents where the applicable 

Borrower is not in default thereunder and (ii) as permitted by the terms of the Advance Facility 

or the Reimbursement, Security and Guaranty Agreement; and the Manager shall not take any 

action to interfere with the Collateral Agent’s rights as a secured party with respect to Assets, the 

Collateral and the Asset Proceeds. 

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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 other Transaction Documents upon such an Event of 

Default, the Initial Member shall be entitled to: 

(i) remove the Private Owner as the Manager or Servicer pursuant to 

Sections 3.2 and 12.4; 

(ii) remove the Private Owner as a Member; 

(iii) purchase (or cause a designee to purchase) the LLC Interest of the 

Private Owner pursuant to Section 3.14; 

(iv) designate itself or any applicable transferee Member as the 

Manager hereunder, and/or 

(v) with or without notice to or demand upon the Private Owner 

(except as may be required by Law), exercise any or all rights and remedies with respect to the 

Secured Assets and any Qualifying Letter of Credit, specifically including the right (A) to 

foreclose on the LLC Interest held by the Private Owner and transfer such LLC Interest to a third 

party (it being agreed that none of the Private Owner, the Manager or any of their Affiliates shall 

participate in any sale of the Private Owner LLC Interest without the written consent of the 

Initial Member); (B) to draw upon any or all Qualifying Letters of Credit, by presenting to the 

applicable Issuing Bank one or more drafts or demands and any other necessary documents, and 

to receive (in a lump sum or in several sums from time to time at the sole discretion of the Initial 

Member) any or all amounts available for drawing under each such Qualifying Letter of Credit, 

and/or (C) to exercise any rights under the Private Owner Pledged Account Control Agreement 

(or otherwise) with respect to the Private Owner Pledged Account, including the right to assume 

exclusive control over the Private Owner Pledged Account and to cause the funds therein to be 

remitted (in a lump sum or in several sums from time to time at the sole discretion of the Initial 

Member) to or at the direction of the Initial Member. 

The removal of the Private Owner as Member shall be subject to Section 8.4. 

(b) For the avoidance of doubt, in the event that the Initial Member 

determines to exercise its remedies against any Secured Assets or any Qualifying Letter of Credit, 

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 and any receipt of funds from the Private Owner Pledged Account), any Losses 

arising out of or resulting from such Event of Default incurred by the Indemnified Parties, 

together with all costs and expenses (including, without limitation, attorneys' fees and 

disbursements) incurred by the Initial Member in connection with enforcing its rights and 

remedies hereunder and under the other 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 

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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 Private Owner’s own funds, 

without any need to pay interest or income thereon. Upon indefeasible payment and performance 

in full all of the Private Owner Obligations (following the dissolution of the Company), any 

remaining unapplied proceeds (from an exercise of remedies by the Initial Member against the 

rights of the Private Owner to the Secured Assets or any Qualifying Letter of Credit) so held by 

the Initial Member, shall be released to the Private Owner (or such other Person as may have 

applicable rights therein in accordance with applicable Law). In any event, the Private Owner 

shall remain liable for any deficiency in payment 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), 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 the Private Owner (including in its roles as the Manager and the 

Tax Matters Member) the Private Owner Obligations. For the avoidance of doubt, the parties 

acknowledge that the Secured Assets are not, pursuant to the foregoing, collateral for the separate 

payment obligations of the Company except to the extent that, pursuant to this Agreement or the 

other Transaction Documents, the Private Owner, in any capacity, is required to pay (or advance 

applicable funds to pay) or otherwise bear such obligations (and in such case, such Secured Assets 

secure such obligations of the Private Owner to the Company and, if applicable, the Initial 

Member and the Indemnified Parties only, and not any such separate obligations 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 the Private 

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

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other 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, the Additional Security. In the event that the 

Private Owner determines to fulfill its obligation to provide the Additional Security by issuance of 

a Qualifying Letter of Credit, the Private Owner shall cause the issuance and delivery to the Initial 

Member, on the Closing Date, of a single Qualifying Letter of Credit in the full amount of such 

Additional Security. The Initial Member shall have the unilateral right to draw on any such 

Qualifying Letter of Credit and to provide instructions to the Paying Agent for the disposition of 

the Qualifying Cash Collateral in the Private Owner Pledged Account, in each case without any 

requirement for any further consent, 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 unless there shall have occurred an Event of Default (whether or not 

relating to any Qualifying Letter of Credit) 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. 

(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 at any time deposited in the Private Owner Pledged Account in 

accordance herewith). The Private Owner Pledged Account (and all funds and financial assets 

therein) shall be subject to the security interest granted herein for the benefit of the Initial Member 

pursuant to the terms of this Agreement, the Custodial and Paying Agency Agreement and the 

Private Owner Pledged Account Control Agreement. Funds in the Private Owner Pledged 

Account may be invested at the direction of the Private Owner from time to time in Permitted 

Investments in accordance with the Custodial and Paying Agency Agreement; provided, however 

that all such Permitted Investments shall remain in the Private Owner Pledged Account as 

Qualifying Cash Collateral, and in no event shall the Private Owner have any right or authority to 

withdraw any funds from such Private Owner Pledged Account. 

(f) Upon the occurrence of any LC Reissuance/Extension Failure, the Initial 

Member shall have the right (but not the obligation) to draw on all or any part of the undrawn 

amount of any Qualifying Letter of Credit subject to such LC Reissuance/Extension Failure; and 

in such case the funds received by the Initial Member as a result of any such draw shall be 

deposited in the Private Owner Pledged Account (as Qualifying Cash Collateral) and such LC 

Reissuance/Extension Failure shall not be deemed an Event of Default hereunder, in each case 

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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 Six Million Five Hundred 

Thousand Dollars ($6,500,000), 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 the Initial Member and 

its assignees of such financing or continuation statements in such jurisdictions as the Initial 

Member or its assignees deem appropriate (in their sole and absolute discretion) to perfect and 

continue their first priority Lien and security interest with respect to the Secured Assets. The 

Private Owner shall deliver to the Initial Member an assignment and assumption agreement with 

respect to the LLC Interest held by it, in the form attached hereto as Exhibit C, endorsed in blank, 

and executed by the Private Owner. The Initial Member may use the assignment and assumption 

agreement to effect the assignment of the LLC Interest held by the Private Owner at any time if an 

Event of Default occurs and is continuing. 

(h) After all of the obligations secured by the Secured Assets have been 

indefeasibly paid and performed in full (following the dissolution of the Company), the Initial 

Member shall, upon the request of the Private Owner, release any then outstanding Qualifying 

Letters of Credit and consent to the termination of the Private Owner Pledged Account Control 

Agreement. 

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

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 the 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 other Transaction Document. Under no circumstances shall the Initial 

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

Credit, to proceed against the Private Owner Pledged Account, to foreclose upon the LLC Interest 

of the Private Owner or to exercise any of its other rights or remedies unless such waiver is in 

writing and executed by a duly authorized representative of the 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. 

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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 3.13: 

(a) Upon the occurrence and during the continuance of an Event of Default, 

the Initial Member may at any time, by notice (a “Buy-Out Notice”) to the Private Owner, 

elect to purchase (or cause one or more designees to purchase) the Private Owner LLC Interest for 

an amount, payable in cash, equal to (x) the fair market value 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 BuyOut Closing. 

(b) If the Private Owner receives a Buy-Out Notice, the Buy-Out Closing 

shall be consummated as follows: 

(i) The Buy-Out Closing shall be held at the principal offices of the 

Company on a day selected by the Initial Member, which day shall, subject to Section 

3.14(b)(iv), be no later than six months after the Buy-Out Notice was delivered to the Private 

Owner or at such other place or on such other date as the Members may agree (the “Buy-Out 

Closing Date”). 

(ii) The Initial Member shall purchase (and/or cause one or more 

designees to purchase in the aggregate) all but not less than all of the of the Private Owner LLC 

Interest for the consideration set forth in Section 3.14(a), and against delivery of such 

consideration, the Private Owner shall deliver all such documents and instruments as are 

necessary to transfer to the Initial Member (and/or its designee(s)), and in any event shall be 

deemed to have transferred, and to have represented and warranted to the Initial Member (and/or 

its designee(s)) that it has transferred, to the Initial Member (and/or its designee(s)), good title to 

(and, in any event, all right, title and interest of the Private Owner in and to) the entire Private 

Owner LLC Interest, free and clear of all Liens other than those created by this Agreement and 

the Transaction Documents. 

(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 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 LLC Interest as of the BuyOut Valuation Date. If the Members are unable to agree on such value within fifteen (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 

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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 LLC Interest pursuant to Section 3.13 and/or exercise 

of relevant rights under the Uniform Commercial Code or otherwise, and the Private Owner 

acknowledges and agrees that any foreclosure and sale pursuant to Section 3.13 and relevant 

rights under the Uniform Commercial Code or otherwise may result in a sale price for the LLC 

Interest that is significantly lower than the fair market value of the Private Owner LLC Interest 

potentially (or having actually been) determined pursuant to this Section or other price set out in 

any Buy-Out Notice. 

(v) All out-of-pocket costs and expenses incurred by the Initial 

Member in connection with the exercise of its rights under this Section 3.14 and the sale of the 

LLC Interest by the Private Owner (including fees of any investment banking firm retained in 

connection with the Dispute Resolution Procedure and legal fees and expenses incurred in 

connection with obtaining any necessary consents, approvals or waivers (including expiration or 

termination of a specified waiting period) of Governmental Authorities) shall be borne by the 

Private Owner and may be deducted from the purchase price otherwise payable by the Initial 

Member (or its designee(s)) for the Private Owner LLC Interest. 

(c) The failure of the Initial Member to exercise its rights under this Section 

3.14 in connection with any Event of Default shall in no way affect or limit the exercise of such 

rights in connection with any other Event of Default by the Private Owner. 

(d) At any time prior to the Buy-Out Closing, the Initial Member may elect 

not to proceed with the Buy-Out Closing (without any liability or further obligation with respect 

thereto), and the Private Owner shall remain responsible for amounts owed under Section 

3.14(b)(v) notwithstanding any such election by the Initial Member. 

(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. 

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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 Annex I (the Member Schedule), and such substituted Members as may be 

admitted to the Company pursuant to Article VIII. The Manager shall cause Annex I (the 

Member Schedule) to be amended from time to time to reflect the admission of any additional 

Members, additional Capital Contributions of the Members, the issuance of additional limited 

liability company interests, transfers of LLC Interests, repurchases, redemptions or cancellations 

of LLC Interests, the cessation or withdrawal of a Member for any reason or the receipt by the 

Company 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, the LLC 

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

Member Schedule). Other than as set forth in this Agreement, each LLC Interest shall be identical 

in all respects to each other outstanding LLC Interest. 

(b) Distributions. Subject to Sections 6.6, distributions to the holders of LLC 

Interests shall be made as provided in Section 6.6(b) and Section 9.2. 

(c) No Retirement Fund or Conversion. The LLC Interests shall not be 

subject to the operation of a retirement or sinking fund to be applied to the purchase or redemption 

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

interests. 

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

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

all matters upon which the Members have the right to vote as set forth in this Agreement or 

provided in the Act. Except as expressly set forth elsewhere in this Agreement (including 

Section 3.1 and Section 3.4), the voting rights of each holder of LLC Interests shall be based on 

such holder’s Percentage Interest. 

4.3 Filings; Duty of Members to Cooperate. The Manager shall promptly cause to be 

executed, delivered, filed, recorded or published, as appropriate, and the Private Owner will, as 

requested by the Manager from time to time, execute and deliver, (a) all certificates, documents 

and other instruments that the Manager deems necessary or appropriate to form, qualify or 

continue the existence or qualification 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 

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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 

Assets, 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 any Borrower 

under the Assets), or materially adversely affect the Company or the Company’s ability to 

foreclose on the Collateral securing any Asset or otherwise realize the full value of any Asset 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. 

4.5 Liability of Initial Member. Neither the Initial Member nor any other Initial 

Member Related Person 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 this Agreement or 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 Initial Member Related 

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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 Initial 

Member 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 Initial 

Member 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 Initial Member Related Person realizes a profit or has an 

interest; 

except, in each case, that this sentence does not apply to Damages resulting from acts or 

omissions of such Initial Member Related Person which were taken or omitted which constituted 

fraud, gross negligence, willful misconduct, or an intentional material breach of this Agreement 

or any other 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 arising out of or resulting from (i) any breach after the Closing Date, 

by (x) the Company (during any period when the Private Owner is the Manager, and subject to 

the clarification set forth below in this Section 4.6(a)), the Private Owner (in any capacity, 

including as the Manager) or any of their respective Affiliates or (y) any of the respective officers, 

directors, employees, partners, principals, agents or contractors of any Person described in subclause (x), of the obligations of the Company or the Private Owner (in any capacity, including as 

the Manager) under, or any other covenants, agreements or other terms and conditions contained 

in, this Agreement or any other 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 Sectionsand 3.1

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 subA-31 

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clause (i)(x) or (i)(y); or (iii) any Losses with respect to which the Initial Member was released, or 

with respect to which the Company should have obtained a release from the applicable Borrowers 

or other Obligors, in accordance with Section 4.17(b) of the Contribution Agreement. Such 

indemnity shall survive the termination of this Agreement. Each Indemnified Party shall deliver 

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

“Third Party Claim”) to the Private Owner promptly after receipt by such Indemnified Party of 

written notice of the Third Party Claim, describing in reasonable detail the facts giving rise to any 

claim for indemnification hereunder, the amount 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 Assets and management of the Company by the Manager (and, as applicable, 

the Servicer and any Subservicers) in accordance with this Agreement and the other 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 other Transaction Document) by the Private Owner (in 

any capacity, including as Manager) or any of its Affiliates (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 other 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 the 

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

of such Losses. 

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(c) If the Private Owner confirms in writing to the Indemnified Party within 

fifteen (15) days after receipt of a Third Party Claim the Private Owner’s responsibility to 

indemnify and hold harmless the Indemnified Party therefor, the Private Owner may elect to 

assume control over the compromise or defense of such Third Party Claim at the Private Owner’s 

sole expense and with counsel selected by the Private Owner, which counsel must be reasonably 

satisfactory to the Indemnified Party, provided that (i) the Indemnified Party may, if such 

Indemnified Party so desires, employ counsel at such Indemnified Party’s own expense to assist in 

the handling (but not control the defense) of any Third Party Claim; (ii) the Private Owner shall 

keep the Indemnified Party advised of all material events with respect to any Third Party Claim; 

(iii) the Private Owner shall obtain the prior written approval of the Indemnified Party before 

ceasing to defend against any Third Party Claim or entering into any settlement, adjustment or 

compromise of such Third Party Claim involving injunctive or similar equitable relief being 

imposed upon the Indemnified Party or any of its Affiliates; and (iv) the Private Owner will not, 

without the prior written consent of the Indemnified Party, settle or compromise or consent to the 

entry of any judgment in any pending or threatened action in respect of which indemnification 

may be sought hereunder (whether or not any such Indemnified Party is a party to such action), 

unless such settlement, compromise or consent by its terms obligates the Private Owner to satisfy 

the full amount of the liability in connection with such Third Party Claim and includes an 

unconditional release of such Indemnified Party from all liability arising out of such Third Party 

Claim. 

(d) Notwithstanding anything contained herein to the contrary, the Private 

Owner shall not be entitled to control (and if the Indemnified Party so desires, it shall have sole 

control over) the defense, settlement, adjustment or compromise of (but the Private Owner shall 

nevertheless be required to pay all Losses incurred by the Indemnified Party in connection with 

such defense, settlement or compromise): (i) any Third Party Claim that seeks an order, injunction 

or other equitable relief against the Indemnified Party or any of its Affiliates; (ii) any action in 

which both the Private Owner (in any capacity, including as the Manager) or any Affiliate of the 

Private Owner, on one hand, and the Indemnified Party, on the other hand, are named as parties 

and either the Private Owner (or such Affiliate) or the Indemnified Party determines with advice 

of counsel that there may be one or more legal defenses available to it that are different from or 

additional to those available to the other party or that a conflict of interest between such parties 

may exist in respect of such action; and (iii) any matter that raises or implicates any issue relating 

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. 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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(e) In the event the Company is reimbursed for or uses the Working Capital 

Reserve, funds drawn under the Advance Facility 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, Advance Facility funds or Excess Working Capital 

Advances to pay) all or any portion of such costs and expenses because the Company did not 

satisfy the requirements of Section 4.6(c) or clause (v) 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 the 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 other 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 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 other 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 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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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 any 

of its Subservicers) having been engaged by the Initial Member, the Company or the applicable 

replacement Manager following such removal of the Private Owner as the Manager, in each case 

that is not an Affiliate 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; Development Contributions; 
 

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 

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 Annex I (the Member Schedule). 

(b) From and after the Closing Date (and except as provided in Sections 5.2 

and 5.3 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 

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AmTrust Bank CADC Loan and REO Structured Transaction 

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

Capital Expenses and Permitted Vertical Completion 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 Development Contributions. 

(a) On the Closing Date, the Initial Member shall deposit into the Initial 

Member Development Funding Account the Initial Member Development Funding Account 

Deposit in accordance with the provisions of Section 12.12 hereof and Section 1 of the 

Transferred LLC Interest Sale Agreement, which funds shall be used for the funding, as Capital 

Contributions, of Initial Member Development Contributions in accordance with the provisions 

hereof, to be used by the Company, together with the applicable Private Owner Development 

Contributions, to fund, on an Acquired REO Property-by-Acquired REO Property basis, 

Horizontal Development (and related expenses) in accordance with, and to the extent expressly set 

forth in, an Asset Development Plan approved by the Initial Member in accordance herewith (such 

approved Horizontal Development pursuant to such Asset Development Plan, “Permitted 

Horizontal Development ”). Each Development Contribution will be subject to approval, on an 

Acquired REO Property-by-Acquired REO Property basis, by each Required Consenting Party 

pursuant to approval of the related Asset Development Plan. 

(b) So long as funds remain in the Initial Member Development Funding 

Account, the Company may, based on determinations of the Manager and with the consent of the 

Private Owner, from time to time request that the Members make Development Contributions for 

purposes of Horizontal Development of specific Acquired REO Property. Any such request (a 

“Development Contribution Request ”), must be in writing signed by each of the Manager and 

the Private Owner delivered to the Initial Member specifying in reasonable detail, for such 

Acquired REO Property, the proposed Horizontal Development, including attached thereto the 

applicable Asset Development Plan for such Horizontal Development. Within forty-five (45) 

Business Days after receipt of a Development Contribution Request and related Asset 

Development Plan, the Initial Member, subject to the consent of each Required Consenting Party, 

shall (a) approve the submitted Asset Development Plan, (b) provide the Manager and Private 

Owner with a description of the changes required to obtain such approval, or (c) indicate to the 

Manager and the Private Owner that the plan will not be approved (and a failure of the Initial 

Member to provide one of the foregoing responses within forty-five (45) Business Days after 

receipt of the applicable Asset Development Plan shall be deemed as such indication that the 

Asset Development Plan will not be approved). In connection with its review of any such Asset 

Development Plan, the Initial Member may, at the Company’s expense, engage the Verification 

Contractor to review such Asset Development Plan and provide to the Initial Member 

recommendations with respect thereto (it being understood that no such recommendation shall be 

binding on the Initial Member). 

(c) Once an Asset Development Plan has been approved, the Initial Member 

and the Private Owner will fund, as Development Contributions, the Company Development 

Account in accordance with the provisions of Section 12.13 hereof, for exclusive use by the 

Company to fund the applicable Permitted Horizontal Development. Thereafter, the Company 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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will be permitted to incur expenses and hire subcontractors as necessary up to the approved 

amount and based on the approved schedule in such Asset Development Plan. No Asset 

Development Plan may be modified without the approval of the Initial Member (which approval 

shall be subject to the consent of each Required Consenting Party). 

(d) No further Development Contributions may be requested or made after the 

release of remaining funds in the Initial Member Development Funding Account pursuant to 

Section 12.12 hereof (and applicable provisions in the Custodial and Paying Agency Agreement), 

or otherwise to the extent that the Initial Member Development Contribution in respect thereof, if 

made, would exceed the remaining amount of funds in the Initial Member Development Funding 

Account. 

(e) Development Contributions shall be regarded as additional Capital 

Contributions (rather than reimbursable expenses) made by the Private Owner and the Initial 

Member, such that returns, if any, with respect thereto, shall be exclusively through the 

distributions to the Members pursuant to Section 6.6 hereof (including special distributions with 

respect to remaining allocated amounts in the Company Development Account after completion of 

the applicable Permitted Horizontal Development pursuant to Section 6.6(c) hereof). 

5.4 Discretionary Funding Advance. 

(a) In the event there are insufficient funds in the Collection Account, no 

funds in the Working Capital Reserve in excess of the Working Capital Reserve Floor, and 

insufficient funds available for drawing under the Advance Facility (after use of all available 

funds from each such source) to fund Permitted Vertical Completion Expenses with respect to 

specific Assets, the Manager may, in its discretion, make an advance to the Company (a 

“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 Permitted Vertical Completion Expenses for such specified Assets. In no event 

may Discretionary Funding Advances be used for payment of any Working Capital Expenses. 

The proceeds of Discretionary Funding Advances shall be deposited into the Collection Account 

for disbursement therefrom for the payment of the applicable Permitted Vertical Completion 

Expenses. 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 Assets for which such Discretionary Funding 

Advance was made, shall be reflected in the Monthly Report with respect to the calendar month 

during which the relevant Discretionary Funding Advance was made. 

(b) Discretionary Funding Advances shall bear interest on the outstanding 

principal amount thereof at a rate per annum equal to the LIBOR Rate in effect from time to time, 

plus 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 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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Agency Agreement, only out of the Asset Proceeds from the Asset in respect of which such 

Discretionary Funding Advance was made, 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 

Asset, 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 each 

Required Consenting Party. 

5.5 Excess Working Capital Advances. In the event that (a) there are insufficient 

funds in the Collection Account, insufficient funds available for drawing under the Advance 

Facility, and 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 pay any Working Capital 

Expenses, or (b) there are insufficient funds in the Collection Account and also insufficient funds 

in the Working Capital Reserve Account (with such sufficiency of the Working Capital Reserve 

Account funds measured for purposes of this clause (b), but not for the foregoing clause (a), 

based on funds therein in excess of the Working Capital Reserve Floor, and including, as 

applicable, by a permitted release of such excess funds to the Collection Account or as otherwise 

permitted in the Custodial and Paying Agency Agreement) to fund the Defeasance Account by 

such amount as may be required to cure a Purchase Money Notes Trigger Event, or to repay the 

outstanding Advance Loans (and other obligations under the Advance Facility) on the Advance 

Facility Maturity Date, 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 or repayment of remaining obligations 

under the Advance Facility (any such advance to the Company pursuant to the foregoing, an 

“Excess Working Capital Advance”). In no event may Excess Working Capital Advances be 

made or used for the payment of Permitted Vertical Completion Expenses or the Management 

Fee (or Interim Management Fee). 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. The proceeds of any Excess 

Working Capital Advance for an applicable repayment of Advance Loans (and other obligations 

under the Advance Facility) upon the Advance Facility Maturity Date shall be deposited into 

(and the Manager shall remit such proceeds to the Paying Agent for such deposit into) the 

Distribution Account (with applicable corresponding instructions to the Paying Agent for 

application of such funds to such payment of the Advance Facility on the applicable Distribution 

Date) or as otherwise instructed by the Advance Facility Lender. To the extent multiple 

Working Capital Expenses (payment of which is permitted to be made using such Excess 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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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 (or, as applicable, the Distribution Date for 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 each Required Consenting Party. 

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 acquired by the Private Owner pursuant to the 

Transferred LLC Interest Sale Agreement, together with the Private Owner WCR Account 

Deposit made pursuant to the Transferred LLC Interest Sale 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 basis 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. 

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AmTrust Bank CADC Loan and REO Structured Transaction 


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(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 

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 Section6.2 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 

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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 

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 Company’s adjusted basis of such property, with respect to 

each member of 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. 

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AmTrust Bank CADC Loan and REO Structured Transaction 

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(c) Section 707(b) of the Code. Any losses realized by the Initial Member 

with respect to any property (other than cash) sold or deemed sold to the Company at Closing 

pursuant to the Contribution Agreement and that are deferred pursuant to Section 707(b)(1) or 

Section 267(a) of the Code may be allocated and used by the Company in accordance with 

applicable tax rules upon its subsequent disposition of such property. 

(d) 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). 

(e) 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 the Capital Accounts, the allocation of items of Company income, gain, loss, deduction and 

expense and the adoption of any accounting procedures not expressly provided for by the terms 

of this Agreement shall be determined by the Tax Matters Member in good faith, following 

consultation with the Initial Member. Following such consultation, such determinations shall be 

final and conclusive as to all the Members. Without in any way limiting the scope of the 

foregoing, if and to the extent that, for income tax purposes, any contribution to or distribution 

by the Company or any payment by any Member or by the Company is recharacterized, the Tax 

Matters Member may, in good faith following consultation with the Initial Member, specially 

allocate items of Company income, gain, loss, deduction or expense and/or make correlative 

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. 

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(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, seventy percent (70%) to the Initial Member and 

thirty percent (30%) 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 such Incentive Threshold Event, be allocated 

without regard to the occurrence of such Incentive Threshold Event, and (y) with respect to all 

remaining distributions on such Distribution Date, be allocated taking into account the 

occurrence of such 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 sum of 

(x) two (2.0) times the Transferred LLC Interest Sale Price, plus (y) the amount of the Private 

Owner WCR Account Deposit, and (B) the Incentive Threshold as of such Distribution Date 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 of 

the Private Owner WCR Account Deposit (the “ Incentive Threshold Base 

Amount ”); and 

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

be an amount equal to (1) the sum of (i) the Incentive Threshold as of the 

preceding Distribution Date (or, in the case of the first Distribution Date, the 

Closing Date), and (ii) the Threshold Increase Amount, minus (2) the monthly 

distribution made to the Private Owner pursuant to Section 6.6(b)(ii) on such 

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Distribution Date (excluding any distributions pursuant to Section 6.6(c) below), 

plus (3) the amount of any Private Owner Development Contributions deemed 

made (as set forth in below) during the preceding calendar month (or other 

applicable calculation period with respect to such Distribution Date); provided, 

that, if, as of any Distribution Date, the amount referred to in clause (B)(2) of this 

Section 6.6(b)(iv) is greater than the amount referred to in clause (B)(1) of this 

Section 6.6(b)(iv), then the Incentive Threshold shall be deemed to be zero for 

such Distribution Date and all subsequent Distribution Dates. Notwithstanding 

that each Private Owner Development Contribution and related Initial Member 

Development Contribution are actually made to the Company (and become 

Company property) upon the making thereof pursuant to Section 5.3 hereof (by 

the deposit of the applicable funds in the Company Development Account), for 

purposes of this Section 6.6(b)(iv) and all calculations with respect to the 

occurrence or non-occurrence of the Incentive Threshold, each such Private 

Owner Development Contribution shall be deemed made only upon the permitted 

use of the applicable funds in the Company Development Account on account of 

such Private Owner Development Contribution and the related Initial Member 

Development Contribution (and, for any such permitted use of funds in the 

Company Development Account, the Private Owner will, for purposes of this 

Section 6.6(b)(iv), be deemed to have made, as of the applicable date of the 

disbursement of such funds from the Company Development Account, a Private 

Owner Development Contribution in a pro rata portion determined based on the 

allocation having been used for the making of such actual Private Owner 

Development Contribution and related Initial Member Development 

Contribution). 

(c) Special Distributions of Remaining Development Funds. With respect to 

any applicable Permitted Horizontal Development (and related Initial Member Development 

Contribution(s) and Private Owner Development Contribution(s) having been made with respect 

thereto), distributions to the Members of any remaining funds in the Company Development 

Account with respect to such Permitted Horizontal Development (including any such remaining 

funds allocable to interest or other return on Permitted Investments with respect to the applicable 

Development Contributions while so held in the Company Development Account) pursuant to 

Section 12.13 hereof and applicable provisions of the Custodial and Paying Agency Agreement 

(or otherwise upon the dissolution of the Company) shall, on the applicable Distribution Date for 

such distributions, be made by the Paying Agent to the Members on a pro rata basis based on the 

relative percentages of the applicable Initial Member Development Contribution and Private 

Owner Development Contribution last having been made with respect to such Permitted 

Horizontal Development; provided, that, so long as the funds in the Initial Member Development 

Funding Account have not yet been released (or required to be released) to the Initial Member 

(pursuant to Section 12.12 hereof and applicable provisions in the Custodial and Paying Agency 

Agreement), such distribution to the Initial Member shall be made instead to the Initial Member 

Development Funding Account. 

(d) Restrictions on Distributions. The foregoing provisions of this Article VI 

to the contrary notwithstanding, no distribution shall be made if such distribution would violate 

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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. 

(e) 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 

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. 

(f) 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. 

(g) Final Distribution. The Final Distribution shall be made in accordance 

with the provisions of Section 9.2. 

ARTICLE VI I 

Accounting, Reporting, Taxation, Business Plans and Verification 

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. 

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 the Initial Member and any 

predecessors-in-interest (including the Failed Bank) to the Company in connection with its 

conveyance of the Assets 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 Assets and the Collateral, and the Company’s and the relevant 

secured parties’ interests in the Assets and the Collateral, including records relating to the 

Collection Account, the Escrow Accounts, the Working Capital Reserve Account, the Company 

Development Account, any account(s) created under the Advance Facility, any liquidity reserve 

account (if permitted), the Defeasance Account, and the disbursement of all Asset Proceeds. This 

obligation to maintain a complete and accurate set of records shall encompass all files in the 

Manager’s or the Company’s custody, possession or control pertaining to the Assets and the 

Collateral, including (except as required to be held by the Custodian pursuant to the Custodial and 

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Paying Agency Agreement) all original and other documentation pertaining to the Assets and the 

Collateral, all documentation relating to items of income and expense pertaining to the Assets and 

the Collateral, and all of the Manager’s (and the Servicer’s and any Subservicer’s) internal 

memoranda pertaining to the Assets 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. 

(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 the 

Initial Member or the FDIC, the Manager shall promptly send copies (the number of copies of 

which shall be reasonable) of such books and records to such requesting Person or its designee. 

The Manager shall provide the Initial Member and the FDIC with reasonable advance notice of 

the Manager’s intention to destroy or dispose of any documents or files relating to the Assets 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 the 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 any of its Subservicers) having been engaged by the Initial Member, the 

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

the Manager, in each case that is not an Affiliate of the Private Owner). 

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7.3 Financial Statements. 

(a) Annual Financial Statements. As soon as practicable following, but no 

later than ninety (90) days immediately after, the end of each Fiscal Year (commencing with 

respect to the 2010 Fiscal Year), the Manager shall prepare and deliver to the Initial Member an 

audited consolidated balance sheet of the Company and the Ownership Entities as at the end of 

such Fiscal Year, and audited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such Fiscal Year, each prepared in accordance with 

GAAP and accompanied by the Accountants’ report thereon, which shall be certified in the 

customary manner by the Accountants. 

(b) Quarterly Financial Information. As soon as practicable following, but no 

later than thirty (30) days (or forty-five (45) days with respect to the calendar quarter ending on or 

about September 30, 2010) 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 ending on or 

about September 30, 2010), the Manager shall prepare and deliver to the Initial Member unaudited 

consolidated balance sheet of the Company and the Ownership Entities as at the end of such 

calendar quarter, and unaudited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such calendar quarter (for the first such report, covering 

the period from the Closing Date through the end of such calendar quarter), each prepared in 

accordance with GAAP. 

7.4 Additional Reporting and Notice Requirements. 

(a) Manager’s Duty to Initial Member and Secured Parties; 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 each 

Required Consenting Party such information as is specified in Exhibit B (in addition to the 

Monthly Report) and such other information relating to the Assets, the Collateral, the Company, 

the Servicers and any Subservicers as such Required Consenting Party may reasonably request 

from time to time and, in any case, shall ensure that each Required Consenting Party is promptly 

advised, in writing, of any matter of which the Manager, any Servicer or any Subservicer becomes 

aware relating to the Assets, the Collateral, the Collection Account, the Escrow Accounts, the 

Working Capital Reserve Account, the Company Development Account, any accounts created 

under the Advance Facility, the Defeasance Account, or any Borrower or Obligor that materially 

and adversely affects the interests of such Required Consenting Party under any Transaction 

Document. Without limiting the generality of the foregoing, the Manager shall cause to be 

delivered to the Initial Member information indicating any possible Environmental Hazards with 

respect to any Collateral. To the extent that the Initial Member requests information which is 

dependent upon obtaining such information from a Borrower, Obligor or other third party, the 

Manager shall cause to be made commercially reasonable efforts to obtain such information but it 

shall not be a breach by the Manager of this Agreement if the Manager fails to cause such 

information to be provided to the Initial Member because a Borrower, Obligor or other Person has 

failed to provide such information after such efforts have been made. 

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(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 and to each Required Consenting Party the Monthly 

Report (in the form set forth in Exhibit B hereto) 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 each other Required Consenting Party and to the Paying Agent each such Monthly 

Report (including a Distribution Date Report) on behalf of the Company for all Due Periods 

ending on or before the last occurring Servicing Transfer Date. Following receipt by the Paying 

Agent of the Monthly Report (including the Distribution Date Report) with respect to a given Due 

Period, the Paying Agent shall prepare and deliver the Custodian and Paying Agent Report with 

respect to such Due Period in accordance with the terms 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 shall also deliver to the Paying Agent, the Initial Member, 

the Purchase Money Notes Guarantor and, if applicable (for the Maturity Date for the NonGuaranteed Purchase Money Notes), the NGPMN Agent, 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 the 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 the 

Servicer and any Subservicer to, deliver to each Required Consenting Party, on or before March 

15 of each year, commencing in the year 2011, an officer’s certificate stating, as to the signer 

thereof, that (i) a review of such party’s (in the case of the Manager, for the avoidance of doubt, in 

any capacity under this Agreement) activities during the preceding Fiscal Year (or other 

applicable period as set forth below in this Section 7.4(c)) and of its performance under this 

Agreement (or, as applicable, the Servicing Agreement or any Subservicing Agreement) has been 

made under such officer’s supervision, and (ii) to the best of such officer’s knowledge and belief, 

based on such review, such party (in the case of the Manager, for the avoidance of doubt, in any 

capacity under this Agreement) has fulfilled all 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 cover the period 

commencing on the Closing Date (and with respect to each Asset, shall include relevant 

information with respect thereto for the period commencing on the Servicing Transfer Date for 

such Asset) and continuing through the end of the 2010 Fiscal Year. In the event a Servicer or 

any Subservicer was terminated, resigned or otherwise performed in such capacity for only part of 

a year (or other applicable period, as the case may be, with respect to the period commencing, 

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with respect to any Asset, on the applicable Servicing Transfer Date through the end of the 2010 

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

respect to such portion 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 and each Required Consenting Party the annual reports (including the 

independent accountant report) for the prior Fiscal Year (or other applicable period as set forth 

below) required under Section 1122 of Regulation AB (regardless of whether any such 

requirements apply, by their terms, only to companies registered or required to file reports with 

the Securities and Exchange Commission) with respect to the relevant servicing criteria provisions 

of Section 1122(d)(1) of Regulation AB that are applicable to the servicing being conducted under 

this Agreement (and the Servicing Agreement) pursuant to Section 12.3(d) below. The first such 

reports shall cover the period commencing on the Closing Date (and with respect to each Asset, 

shall include the relevant information with respect thereto for the period from the applicable 

Servicing Transfer Date) and continuing through the end of the 2010 Fiscal Year. 

(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 the Initial Member 

(including any Governmental Authority), during normal business hours and on reasonable notice, 

with access to all of the books of account, reports and records relating to the Assets or any 

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

Capital Reserve Account, the Company Development Account, any account created under the 

Servicing Agreement, the Defeasance Account, the Advance Facility Documents or accounts 

created thereunder, disbursements under the Custodial and Paying Agency Agreement, 

distributions hereunder or any other matters relating to this Agreement or the rights or obligations 

hereunder or under the other Transaction Documents; (ii) permit such representatives to make 

copies of and extracts from the same, (iii) allow the Initial Member to cause such books to be 

audited by accountants selected by the Initial Member, and (iv) allow the Initial Member’s 

representatives to discuss the Company’s, the Manager’s and any Servicer’s and any 

Subservicer’s affairs, finances and accounts, as they relate to the Assets, the Collateral, the 

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

Reserve Account, the Company Development Account, any accounts created under the Advance 

Facility, the Defeasance Account, or any other matters relating to this Agreement, the other 

Transaction Documents, or the rights or obligations hereunder and thereunder, with the 

Company’s, the Manager’s, the Servicer’s and any Subservicer’s officers, directors, employees, 

attorneys and accountants (and by this provision the Company and the Manager hereby authorize 

the Company’s, the Manager’s, the Servicer’s and any Subservicer’s accountants to discuss such 

affairs, finances and accounts with such representatives). Any expense incurred by the Initial 

Member and any reasonable out-of-pocket expense incurred by the Company in connection with 

the exercise by the Initial Member of its rights in this Section 7.4(e) shall be borne by the Initial 

Member; provided, however, that any expense incident to the exercise by the Initial Member 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 

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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 Advance Facility 

Documents or pursuant to the Reimbursement, Security and Guaranty Agreement, or 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 

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 other Transaction Document arising, relating to, 

occurring, or required to have been paid or performed by, the Private Owner as the Tax Matters 

Member in its capacity as such. 

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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 

Asset that is sold or otherwise disposed of by the Company so as to enable the 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 the time 

periods set forth herein (and, as applicable, with current information as of the month most 

recently ended prior to delivery thereof) the Manager shall deliver to the Initial Member written 

plans (each, together with any updates thereto, a “Business Plan”) detailing the strategy to be 

used by it in managing and disposing of the Assets of the Company (and the Ownership Entities) 

in respect of all of the Assets 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 Assets, which shall include (i) individual Business 

Plans (each, an “Asset Level Business Plan”) for each of the fifteen (15) largest Assets based on 

their Unpaid Principal Balance as of the Cut-Off Date (as set forth on the Asset Schedule), and 

(ii) a consolidated Business Plan covering all Assets (a “Consolidated Business Plan”). Such 

initial Asset Level Business Plans shall be delivered not more than sixty (60) days after the 

Closing Date, and such initial Consolidated Business Plan (including updated Asset Level 

Business Plans) shall be delivered not more than one hundred twenty (120) days after the 

Closing Date. With respect to the first such Asset Level 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, or such later date as requested by the Initial Member, to review 

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and discuss such Asset Level 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 

Asset Level 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 as the 

circumstances may require, and in any event provide periodic updates to such Business Plans 

(and for each such update to the Asset Level Business Plans, the same shall cover the fifteen (15) 

largest Assets based on their Unpaid Principal Balance as of the time of such update) to the 

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

July (current as of June 30 of such year) of each year, commencing in January of 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). With respect to each such Business Plan (including any update thereto), upon 

reasonable notice by the Initial Member, the Company shall make its personnel who are familiar 

with such Business Plans available during normal business hours for the purposes of discussing 

such Business Plans with representatives of the Initial Member and responding to questions 

therefrom (and, as applicable, revising the same to reflect such changes as the Manager considers 

to be appropriate in light of such discussions with the Initial Member). 

(a) Each Business Plan (including any update thereto) will set forth a strategy 

for the disposition of the Assets addressed thereby which strategy may consist of one or more of 

the following: (i) the pay-off of Assets 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 

Assets 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 Asset secured thereby; (vi) 

sale of an Asset, either singly or in pools, before or after restructuring; and (vii) any other method 

of work-out, rehabilitation and disposition consistent with the Servicing Standard and other 

general duties of the Company specified in this Agreement. 

(b) Each Business Plan (including any update thereto) 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 an Ownership Entity; and (v) 

maintenance, landscaping and general upkeep of the Acquired Property. To the extent any such 

Business Plan (and related strategy) includes any permitted Vertical Development or Horizontal 

Development to be funded by the Company (other than pursuant to Required Funding Draws), 

such Business Plan (and any update thereto) shall include a description of such Vertical 

Development or Horizontal Development in reasonable detail (including the related budget and 

timeline). For avoidance of doubt, in no event shall delivery of any information pursuant to a 

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Business Plan (or any update thereto) be deemed to constitute delivery or approval with respect to 

any Asset Development Plan. 

(c) Each Business Plan (including any update thereto) shall contain the 

Company's estimate (or determination, as applicable) of (i) the present value of the net amount 

that is recoverable with respect to each related Asset (including, with respect to all related 

Acquired Property, the Net Fair Value thereof), (ii) with respect to all Acquired Property and 

Mortgaged Property included in any Asset covered by such Business Plan, in the event such 

Acquired Property or Mortgaged Property includes more than one parcel of real property (or 

would otherwise potentially be sold by the Company in severable parts), the applicable Release 

Price for each such parcel (or other severable part) of such Acquired Property and Mortgaged 

Property, and (iii) projected Working Capital Expenses, Permitted Vertical Completion Expenses, 

Permitted Horizontal Development Expenses and any other permitted expenditures with respect to 

each such Asset (including any Acquired Property), and, in each case including in reasonable 

detail the manner of calculation of each of the foregoing. The Consolidated Business Plan 

(including any update thereto) shall include projected financials including statements of income, 

assets, and cash flows for the Company (and, for purposes of clarification, the information 

required pursuant to the immediately preceding sentence with respect to all Assets). Such cash 

flow projections shall, for the Consolidated Business Plan and each update thereto, include an 

Excel model of projected cash flows, 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 the period through the Final Purchase Money Notes Maturity Date, on a monthly basis 

for the upcoming twenty-four (24) months and not less than a quarterly basis thereafter, including 

projected cash inflows (including projected Asset Proceeds, Excess Working Capital Advances, 

Discretionary Funding Advances, Advance Loans and/or Development Contributions (and related 

deposits into the Company Development Account)), projected cash outflows (including projected 

Servicing Expenses, Required Funding Draws and other Working Capital Expenses, Permitted 

Vertical Development Funding Draws and other Permitted Vertical Completion Expenses and 

Permitted Horizontal Development Expenses (and related drawings from the Company 

Development Account)), projected Working Capital Reserve levels, projected payments under the 

Advance Facility, projected net monthly cash available for deposit into the Defeasance Account, 

and the amount and allocation of any projected distributions to the Initial Member and the Private 

Owner. 

(d) Each update to a Business Plan shall include descriptions and explanation 

for the largest variances to the previously reported corresponding 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 Assets, actual principal and 

interest income and other collection proceeds, cash flows, projected distributions to the Members, 

and other changes in strategy or other relevant matters as compared to the previously reported 

corresponding Business Plan. 

7.8 Verification Contractor. The Initial Member and the Advance Lender shall have 

the right, in their sole discretion, to retain, and at any or all times be a party to a written 

agreement with, a Verification Contractor (as selected by the Initial Member and the Advance 

Lender in their sole discretion), for the performance by such Verification Contractor of the 

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services set forth with respect thereto in the Transaction Documents (and such related services as 

the Initial Member may request from time to time), including (i) as so retained by the Advance 

Lender for purposes of the Advance Facility, verifying that the documents submitted as a 

condition precedent to funding under Sections 2.11 and 2.12 of the Advance Facility Agreement 

are satisfactory, and (ii) as so retained by the Initial Member, (A) assisting the Initial Member in 

review of Business Plans (including any updates thereto) and provision of recommendations to 

the Company with respect thereto, and (B) with respect to Development Contributions, (1) 

assisting the Initial Member in its review of any Development Contribution Requests, including 

the Asset Development Plan attached thereto, and recommending whether such Development 

Contribution Request and related Asset Development Plan should be approved, (2) assisting the 

Initial Member and/or the Company, as applicable, in connection with administration of the 

Initial Member Development Funding Account and the Company Development Account, and (3) 

verifying that all funds released from the Company Development Account are used exclusively 

for the purposes described in the relevant approved Asset Development Plan, pursuant to 

Sections 5.3(b) and 12.3(c) of this Agreement and applicable provisions of the Custodial and 

Paying Agency Agreement (which verification may, as determined by the Initial Member and/or 

such Verification Contractor, require physical inspections to confirm completion of applicable 

items in accordance with such approved Asset Development Plan). The Verification Contractor 

Amounts shall be borne by the Company, and be paid (or, as applicable, reimbursed to the Initial 

Member) on each Distribution Date out of the applicable funds in the Distribution Account in 

accordance with the Priority of Payments. 

AR TIC LE 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 (including its rights to any distributions or other payments), except only that the 

Private Owner may make a direct, outright transfer of its entire (but not less than its entire) LLC 

Interest if, and only if, (a) (i) the transferee is a single Person that is a Qualified Transferee, (ii) 

such transferee delivers to the Initial Member a Purchaser Eligibility Certification and the 

representations and warranties made by such transferee therein shall be true and correct both 

before and after giving effect to such transfer of the LLC Interest, and (iii) the Private Owner 

first obtains the prior written consent of each Required Consenting Party 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 Owner 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 each 

Required Consenting Party, 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. 

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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 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 other 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). 

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(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 other 

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 

Private Owner LLC Interest (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 Private Owner LLC 

Interest (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 that all such omitted 

Company distributions (i) shall (subject to Section 8.6) be made to the Private Owner (without 

interest) forthwith after the end of the relevant suspension period, and (ii) shall, for purposes of 

all calculations with respect to the occurrence (or non-occurrence) of the Incentive Threshold, be 

deemed to have been made to the Private Owner at such time as the same would have otherwise 

been made without giving effect to any such suspension or prohibition on account of such 

attempted or purported Disposition. 

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 Initial Member LLC Interest, directly or indirectly, to 

any Person and the Private Owner shall have no right to purchase or right-of-first-refusal in 

connection with any such sale; provided, however, that, the Initial Member may not assign the 

consent and voting rights associated with the Initial Member LLC Interest to more than one (1) 

Person (for the avoidance of doubt, except as expressly provided above, the foregoing restriction 

shall not otherwise limit the Initial Member’s right to Dispose of any interest associated with the 

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

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determines to sell the Initial Member LLC Interest through an auction process, the Private Owner 

shall be entitled to participate in such auction on the same terms that apply generally to other 

participants in the auction. At the election of the Person then constituting the “Initial Member” 

under this Agreement, the transferee in any direct Disposition of any portion of the Initial 

Member LLC Interest shall, upon delivery to the Company, with a copy to the Private Owner, of 

an agreement by which such transferee shall agree to become a party to and be bound by this 

Agreement as the “Initial Member,” be admitted as a member 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) The Private Owner may not withdraw or resign from the Company, except 

(i) in connection with a Permitted Disposition made in accordance with the applicable provisions 

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 

Law would require the Company to register as an investment company under the Investment 

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

reasonable efforts to avoid a violation of any such applicable Law by such Member or the need 

for the Company to register as an investment company. These steps may include, depending on 

the provisions of such applicable Law, (i) arranging for the sale 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 

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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 alone, shall have the right unilaterally to 

dissolve the Company); 

(b) the sale of all or substantially all of the Company Property (other than 

cash and cash equivalent instruments), including as an entirety or substantially as an entirety; or 

(c) notice to such effect to the Private Owner from the Initial Member at any 

time after the occurrence of a Dissolution Event or an Insolvency Event with respect to the Private 

Owner or any Person that Controls the Private Owner; or 

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

Acquired Property of the Company in accordance with Section 12.20. 

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 

which it is a party, the other terms and conditions of this Agreement or the other 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: 

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(i) first, to creditors, but excluding the Members who are creditors 

(other than the Advance Lender (to the extent amounts are owing on the Advance Facility) and 

the Initial Member (to the extent it continues to hold the Purchase Money Notes)), to the extent 

otherwise permitted by Law (and, to the extent permitted, in accordance with the Priority of 

Payments), in satisfaction of liabilities of the Company (whether by payment or the making of 

reasonable provision for payment thereof); 

(ii) second, to the Members or former Members who are creditors, to 

the extent otherwise permitted by Law, in satisfaction of liabilities of the Company (whether by 

payment or the making of reasonable provision for payment thereof) other than liabilities for 

which reasonable provision for payment has been made and liabilities for distributions to the 

Members and former Members under Section 18-601 of the Act; 

(iii) third, to the 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) or, 

to the extent of any funds in the Company Development Account, in accordance with Section 

6.6(c) hereof, it being agreed that, for purposes of such Distributions to the Members under this 

Section 9.2(c)(iv) all of the foregoing Distributions under this Section 9.2(c) shall be deemed to 

have been satisfied first from available funds from all sources other than the Company 

Development Account prior to use of the funds in the Company Development Account for 

purposes of the same. 

(d) Upon dissolution, the Manager, may, with the consent of all the Members, 

(i) liquidate all or a portion of the Company assets and apply the proceeds of such liquidation in 

the manner set forth in Section 9.2(c) and/or (ii) hire independent appraisers to appraise the value 

of Company assets not sold or otherwise disposed of or determine the Fair Market Value of such 

assets, and allocate any unrealized gain or loss determined by such appraisal to the Members’ 

respective Capital Accounts as though the properties in question had been sold on the date of 

distribution and, after giving effect to any such adjustment, distribute said assets in the manner set 

forth in Section 9.2(c), provided that the Manager shall in good faith attempt to liquidate sufficient 

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. 

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. 

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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 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 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. 

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(e) No Violation of Orders, Decrees, etc. Such Member is not in default with 

respect to any order or decree of any Governmental Authority or in violation of any Law. 

(f) Third Party Consents. No consents, approvals, waivers or notifications of 

stockholders, creditors, lessors or other nongovernmental persons are required to be obtained by 

such Member in connection with the execution and delivery of this Agreement and the 

consummation of all the transactions herein contemplated and the performance of its obligations 

hereunder. 

(g) Owners Accredited Investors. All of the equity owners of such Member 

are “accredited investors,” as that term is defined in Rule 501 under the Securities Act. 

(h) Knowledge and Experience. Such Member, either by itself or through its 

advisers and principals, has such knowledge and experience in the origination, servicing, sale 

and/or purchase of performing and non-performing or distressed loans, including construction 

loans and loans secured by 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 Assets to evaluate the merits and risks of a 

purchase of the Private Owner LLC Interest and, indirectly, the Assets, 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 Private Owner LLC Interest and, indirectly, the Assets, including the risk of a total loss of 

its investment in the Company and, indirectly, the Assets and/or the risk that it may be required to 

hold the Private Owner LLC Interest and, indirectly, the Assets 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 Interests or the Assets 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 Interests or the Assets and whether or not it 

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

or the Assets, 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 Interests 

and the Assets and the economic, credit or other risks involved in an acquisition of the Private 

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

Agreement, none of the Initial Member or the FDIC or any Affiliate of either, or any of their 

respective officers, directors, employees, agents or contractors, makes or has made any 

representation or warranty as to the completeness or accuracy of any information provided. 

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

offer nor the sale of the Private Owner LLC Interest (and, indirectly, the Assets) is intended to 

constitute an offer or sale of a “security” within the meaning of the Securities Act or any 

applicable federal or state securities Laws, (ii) no inference that any of the LLC Interests or the 

Assets is a “security” under such federal or state securities Laws shall be drawn from any of the 

certifications, representations or warranties made by any Person in this Agreement, (iii) it is not 

contemplated that any filing will be made with the Securities and Exchange Commission or 

pursuant to the “blue sky” or securities Laws of any jurisdiction, and (iv) if any of the LLC 

Interests or the Assets is a security, such may not be resold or otherwise transferred by such 

Member except in accordance with any and all applicable securities and blue sky Laws. 

(m) Resales. Such Member is acquiring the Private Owner LLC Interest (and, 

indirectly, the Assets) 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 Private Owner LLC Interest (or any interest therein) or any Asset 

(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 Private Owner LLC Interest (or any interest therein) or any 

Asset (or any interest therein or evidence thereof) from, or (iii) otherwise approach or negotiate 

with respect to the Private Owner LLC Interest (or any interest therein) or any Asset (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 Private Owner LLC Interest or any interest in any Asset a violation of any Law relating to the 

issuance, regulation, registration or disposition of securities, nor will it authorize any person or 

entity to so act, in any manner with respect to the Private Owner LLC Interest (or any interest 

therein) or any Asset (or interest therein or evidence thereof). 

(o) Acquisition in Compliance with Law. Such Member’s acquisition of the 

Private Owner LLC Interest and the resulting investment in the Assets will comply with all 

applicable Laws, including any and all Laws and/or restrictions imposed on resale of the Private 

Owner LLC Interest and the Assets 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 Assets and related Asset files and/or any 

electronic data made available to it pertaining to the Assets 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 Private Owner LLC Interest and the nature, 

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

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

performance of any obligations under any of the Assets in any jurisdiction. Such Member further 

acknowledges that no officer, director, employee, agent, representative or 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. 

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(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 

other 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. The foregoing certifications, 

representations and warranties shall be based upon a due inquiry and investigation; provided, 

however, that for purposes of determining whether any of the same with respect to indirect 

ownership are true, the undersigned shall not be required to make an investigation into the 

ownership of publicly-traded securities (including securities of open-end investment companies 

registered under the Investment Company Act) or the ownership of assets by a collective 

investment fund that holds assets for employee benefit plans or retirement arrangements. 

(r) ERISA Plan Asset. The assets 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 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 in excess of nine and nine tenths percent (9.9%) 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 the Initial Member by the Manager shall be as provided in 

Section 3.1(b) hereof. 

(b) The Manager may rely, and shall be protected in acting or refraining from 

acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, 

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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 XI I 

Servicing of Assets 

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 Assets 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 or on behalf of the Initial Member pursuant to Section 3.3 of the Contribution Agreement, the 

Manager shall, with respect to each Asset or Group of Assets, from and after the Closing Date, be 

responsible for (and hereby assumes responsibility for) servicing, administering, managing and 

disposing of the Assets 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 Assets (including, for all purposes under 

this Article XII, the related Collateral) to be serviced as follows: (a) such Asset shall, from and 

after the applicable Servicing Transfer Date, and except as provided in the immediately following 

subsection (b) or as otherwise expressly permitted by the Initial Member (with respect to 

performance of applicable services by the Manager itself), be serviced by the Servicer(s) 

appointed in accordance with Section 12.3 below, and (b) following the replacement of the 

Servicer as a result of an Event of Default, the Assets shall be serviced by the Servicer appointed 

by the Initial Member in accordance with Section 12.4 below. All servicing of Assets following 

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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 the Initial Member, each Servicing Agreement (and any 

Subservicing Agreement with any Subservicer) shall, among other things, 

(i) provide for the servicing of the Assets and management of the 

Collateral by the Servicer (or any 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 Advance Lender, the 

Purchase Money Notes Guarantor, the NGPMN Agent 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 from the Private Owner as the Manager to any other Person, without 

penalty or payment of any fee, and (B) upon the occurrence of any default under the Servicing 

Agreement, the Initial Member (and any successor Manager) may exercise all of the rights of (1) 

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

same from the Private Owner as the Manager to any other Person, without penalty or payment of 

any fee, and (2) the Servicer under the Subservicing Agreement and cause the termination or 

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assignment of the Subservicing Agreement from the Private Owner as the Manager to any other 

Person, without penalty or payment of any fee (it being understood that the Initial Member shall 

only exercise the foregoing rights as contemplated or permitted in this Agreement); 

(vii) provide that the Initial Member, the Manager, the Advance Lender 

, the Purchase Money Notes Guarantor, the NGPMN Agent 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 the Initial Member’s, the Manager’s, the Advance Lender’s , the Purchase 

Money Notes Guarantor’s, the NGPMN Agent’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 Assets, the Collateral, the 

Collection Account or any other accounts established or maintained pursuant to this Agreement, 

the Advance Facility Documents, the Custodial and Paying Agency Agreement, the Servicing 

Agreement or any Subservicing Agreement, or any matters relating to the Servicing Agreement 

or any Subservicing Agreement or the rights or obligations thereunder; 

(viii) provide that all Asset 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 Asset Proceeds and interest and 

earnings thereon and the proceeds of Advance Loans, 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, however, 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 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 Asset Proceeds (or the Company); 

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(xii) provide for such other matters as are necessary or appropriate to 

ensure that the Servicer or any Subservicer is obligated to comply with the Servicing Obligations 

of the Manager hereunder; 

(xiii) provide a full release and discharge of each Prior Servicer 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 Assets 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, to the extent required under Section 12.3(g) hereof, 

all Assets registered on the MERS® System shall remain registered unless default, foreclosure or 

similar legal or MERS requirements dictate otherwise; 

(xv) provide that none of the Servicer, any Subservicer or any Affiliate 

of the Servicer or any Subservicer may at any time, (A) be or become a partner or joint venturer 

with any Borrower or Obligor, (B) be or become an agent of any Borrower or Obligor, or allow 

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) have 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 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 (or cause the performance of) 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 Assets (and related Asset 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, however, that, 

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with respect to each Asset 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 Assets 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 Assets 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 Asset 

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 Acquired REO Property, which the 

Asset Documents that were applicable to the Collateral before it became Acquired 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 Asset Documents), together with such 

additional obligations as are required of the Company under this Agreement, the Advance Facility 

or the Servicing Agreement in respect of such Acquired REO Property; 

(b) incurring costs (including Servicing Expenses (or Interim Servicing 

Expenses) and Pre-Approved Charges) in accordance with the provisions of the Asset Documents, 

and in the case of Acquired REO Property, in accordance with the Asset Documents that were 

applicable to the Acquired REO Property before it became and Acquired REO Property (not 

including payment of debt service under the applicable Asset Documents) and otherwise in 

accordance with the terms and conditions of the Advance Facility Documents and the 

Reimbursement, Security and Guaranty Agreement; 

(c) causing insurance to be maintained on the Collateral (including any 

Acquired Property) with respect to each Asset 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, the Advance Facility Documents and the Reimbursement, Security and 

Guaranty Agreement; 

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(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, the Advance Facility Documents, and/or 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 Permitted Vertical Development Funding Draws and 

Required Funding Draws; 

(g) to the extent consistent with the foregoing, seeking to maximize the timely 

and complete recovery of principal and interest on the Assets and otherwise to maximize the value 

of the Assets and the Collateral; 

(h) except as otherwise set forth in this Agreement, making decisions under, 

and enforcing and performing in accordance with, the Asset Documents all loan administration, 

inspections, review of financial data and other matters involved in the servicing, administration 

and management of the Assets 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; 

(j) ensuring that each Borrower (or in the case of Acquired REO Property, the 

applicable Ownership Entity) is diligently performing all applicable construction work (including 

all applicable Permitted Horizontal Development and Substantially Complete Vertical 

Development) using all commercially reasonable efforts in accordance with the requirements of 

the applicable Asset Documents, of the Advance Facility Documents and of this Agreement; 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 

this Agreement, the Servicing Agreements or the Subservicing Agreements, as applicable. 

12.3 Servicing of Assets. 

(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 Assets and Collateral by the Servicer named therein. 

Each Servicer, at all times during which it acts as Servicer, shall satisfy (and must 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 Asset shall at all times be 

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serviced (and any Collateral managed) by or through at least one (1) Servicer (including any 

Subservicers engaged by the Servicer as permitted hereunder) and the performance of all day-today Servicing Obligations of the Manager shall be conducted by or through one (1) or more 

Servicers (including any Subservicers permitted hereunder). Subject to the other terms and 

conditions of this Agreement, any Servicer may be an Affiliate of the Private Owner or of the 

Manager. Each Servicer may engage or retain one (1) 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 rights with respect to the Assets or any right to 

transfer or sell the servicing rights with respect to the Assets (other than in connection with the 

sale of any Asset), and no Servicer shall be permitted to assign, pledge or otherwise transfer to 

any Subservicer or other Person or purport to assign, pledge or otherwise transfer any interest in 

the servicing rights with respect to the Assets (other than in connection with the sale of any 

Asset), 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 each Required Consenting Party. 

(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, however, that the following Regulation AB criteria 

shall not be deemed relevant to the servicing being conducted under this Agreement (or the 

Servicing Agreement): Section 1122(d)(1)(iii) regarding backup servicer requirements; Sections 

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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 Asset Proceeds (or funds in the Collection Account, the 

Working Capital Reserve Account, the Company Development Account, any proceeds disbursed 

or accounts established under the Advance Facility Documents, 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 fifty percent (50%) of the limits. 

The Manager may require that the Servicer and each Subservicer purchase additional limits to 

provide back to the required limits as stated above. “Potential reduction of fifty percent (50%)” 

shall mean any knowledge by the Servicer or Subservicer, as applicable, that a claim or the sum 

of all claims, current or initiated after effective date of policy which would reduce the limits by 

fifty percent (50%). 

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

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

(iii) Crime Insurance or a Fidelity Bond in an amount of not less than 

$10,000,000 per claim and $10,000,000 in the aggregate, covering employee theft, forgery & 

alteration, wire/funds transfer, computer fraud, client coverage. Such coverage shall insure all 

employees or any other Persons authorized by the Servicer or any Subservicer to handle any 

funds, money, documents and papers relating to any Asset, and shall protect the Servicer or 

Subservicer, as applicable, against losses arising out of theft, embezzlement, fraud, 

misplacement, and other similar causes. The Manager and the Company shall each be named as 

a loss payee with respect to claims arising out of assets handled under this Agreement or any 

applicable Servicing Agreement or Subservicing Agreement. 

(iv) General Liability with limits of not less than $1,000,000 each 

occurrence, $2,000,000 in the aggregate, including coverage for products/completed operations, 

advertising and personal injury. The Manager and the Company shall each be named as 

additional insured. The policy shall include a waiver of subrogation in favor 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 

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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) each 

Required Consenting Party with certificates evidencing all such policies on the Closing Date 

(and, with respect to each Asset, on or before the applicable Servicing Transfer Date with respect 

thereto) and each anniversary of the Closing Date thereafter, and otherwise upon request of such 

Required Consenting Party. Copies of fidelity bonds and insurance policies required to be 

maintained pursuant to this Section 12.3(f) shall be made available to the Required Consenting 

Parties or their respective representatives on the Closing Date (and, with respect to each Asset, 

on or before the applicable Servicing Transfer Date with respect thereto), and shall otherwise be 

made available to any of the Required Consenting Parties and their respective representative 

upon request. 

(g) MERS Requirements. In the event that any of the Assets are (or are 

required by the terms hereof to be) registered on the MERS® System, and unless and until no 

Asset so remains registered on the MERS® System in accordance herewith, (i) the Manager shall 

cause the 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 Asset 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 Asset in the name of MERS, solely as nominee for the Company and its successors and 

assigns. With respect to each Asset that is registered on the MERS® System, (x) the Servicer 

shall be designated as the “servicer” and the “investor” with respect to such Asset, and, if 

applicable, the Manager may cause or permit an applicable Subservicer to be designated as the 

“subservicer” with respect to such Asset (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 Asset, and (2) designate the Manager as the “servicer” with respect to any such Asset, 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 Asset unless 

otherwise consented to by the Initial Member (or required pursuant to the Electronic Tracking 

Agreement). All Assets registered on the MERS® System shall remain registered on the MERS® 

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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 other Transaction Documents, to remove any or all 

such Assets 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 Asset to be so removed, (A) the 

applicable mortgage (or other Collateral Document) and rights to Collateral for such Asset 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, (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 

repayment in full of the Advance Facility (and termination of the commitments thereunder) or 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 Assets and to confirm that the Assets required to be 

registered on the MERS® System are so registered. For so long as any Assets 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 Assets 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 Assets 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. 

(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 other 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 the 

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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 the Initial Member, or (B) to retain the existing Servicer and cause 

or permit the successor Manager (and/or the Company directly, as determined by the Initial 

Member in its sole discretion) to enter into a new Servicing Agreement between such successor 

Manager (and/or the Company) and the Servicer (or to effect an assignment of the existing 

Servicing Agreement from the existing Manager (in its individual capacity) to such successor 

Manager (and/or the Company). None of the Initial Member, any successor Manager or the 

Company shall have any obligation to assume any obligations or liabilities of the removed 

Manager (in its individual capacity) under or in connection with any Servicing Agreement. 

Notwithstanding the foregoing, the Initial Member shall not exercise its right to terminate a 

Servicer that is not an Affiliate of the Manager or of the Private Owner in the absence of (1) an 

Event of Default attributable in whole or in part to the failure by the Servicer or any of its 

Subservicers to perform any material obligation under its applicable Servicing Agreement or 

Subservicing Agreement, (2) an Event of Default as described in clause (b) or clause (g) of the 

definition thereof with respect to the Servicer or any Related Party thereof or any of its 

Subservicers or any Related Party thereof, (3) an Event of Default resulting from the failure 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, 3.13, 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 other Transaction Document or otherwise. 

(b) Appointment of Successor Servicer. If the Initial Member exercises its 

right to act on behalf of the Manager (in its individual capacity) to appoint a successor Servicer, 

the costs and expenses associated with such successor Servicer (including any servicing fees) shall 

be borne by the Manager (and not the Company or the Initial Member), and no termination or 

other fee shall be due to the Manager or the Servicer or any Subservicer in connection with or as a 

result of any such action; provided, however, 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 

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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 or 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). 

(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 

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applicable requirements in the Custodial and Paying Agency Agreement, the Advance Facility 

Documents and the Reimbursement, Security and Guaranty Agreement, (x) the transfer within one 

(1) Business Day to such account as the Initial Member may specify of all cash amounts which, at 

the time, shall be or should have been credited to the Collection Account or are thereafter received 

with respect to any Assets or Acquired Property, and (y) the transfer of all lockbox accounts with 

respect to which payments or other amounts with respect to the Assets are directed or the 

redirection of all such payments and other amounts to such account as the Initial Member may 

specify, and (z) the assignment to the Initial Member (or the applicable successor Manager or 

Servicer as indicated by the Initial Member) of the right to access all such lockbox accounts, the 

Collection Account, any Defeasance Account, any accounts established under the Advance 

Facility Documents and any other account into which Asset 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 Assets 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 Advance Facility 

Documents and the Reimbursement, Security and Guaranty Agreement, the Initial Member shall 

be entitled under this Section 12.4(e) to do any of the following if an Event of Default has 

occurred and is continuing: (i) ask, demand, collect, sue for, recover, receive and give receipt and 

discharge for amounts due and to become due under and in respect of any or all of the Assets; 

(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 Assets, defend any suit, action or proceeding brought against the Company 

with respect to any Asset, and settle, compromise or adjust any such suit, action or proceeding; 

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(iii) execute, in connection with any sale or disposition of the Assets, any endorsements, 

assignments, bills of sale or other instruments of conveyance or transfer with respect to all or any 

part of the Assets; (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 Assets; (vi) generally, sell, transfer, pledge and 

make any agreement with respect to or otherwise deal with any of the Assets 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 Assets 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 (and as determined separately for each Group of Assets), (a) with respect to any 

Group of Assets 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 Assets 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. 

12.6 Working Capital Expenses. Subject to Section 3.3 of the Contribution Agreement 

(with respect to the Interim Servicing Period, including as to any Interim Servicing Expenses), 

from and after the Closing Date (and, with respect to each Asset, 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, through Advance 

Loans under the Advance Facility or otherwise through Excess Working Capital Advances 

funded by the Manager) all amounts due as Servicing Expenses (or, as applicable, Pre-Approved 

Charges), Required Funding Draws and other Working Capital Expenses in a timely manner, and 

in each case in accordance with applicable requirements set forth in the Custodial and Paying 

Agency Agreement (and, as applicable, the Contribution Agreement); provided, however, that 

anything to the contrary herein or in any other Transaction Document notwithstanding, the 

Manager shall not have an obligation to fund Excess Working Capital Advances for purposes of 

the payment by the Company of (i) any Pre-Approved Charges, or (ii) any specific Servicing 

Expense relating to an Asset 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, Permitted Vertical Completion Expenses, 

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Permitted Horizontal Development Expenses and Pre-Approved Charges with respect to such 

Asset (and any remaining Interim Servicing Expenses or other amounts owing to the Initial 

Member with respect to its servicing of such Assets during the Interim Servicing Period pursuant 

to Sections 2.3, 2.4, 3.1 and 3.3 of the Contribution Agreement), would not ultimately be 

recoverable from the Asset Proceeds for such Asset. All Working Capital 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 Asset Proceeds. 

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

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 other Transaction Document, without the prior written consent 

of the Initial Member (which may be withheld, conditioned or delayed in the Initial Member’s 

sole and absolute discretion), in no event may the Manager deduct, from the Asset Proceeds, or 

otherwise use Asset Proceeds to reimburse itself or any Servicer or Subservicer or pay for, any 

Excluded Expenses (all of which shall be borne by the Manager in its individual capacity). 

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. 

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 the 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 the Working Capital Reserve to cover Working 

Capital Expenses to the same extent, and in the same order of priority, as are applicable to Asset 

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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 shall fund the Working Capital Reserve in an initial principal 

amount of the WCR Account Deposit as follows: the Initial Member shall deposit cash in the 

amount of the Initial Member WCR Account Deposit, and the Private Owner shall deposit cash in 

the amount of the Private Owner WCR Account Deposit, which deposits shall be made in 

accordance with the applicable provisions of the Transferred LLC Interest Sale Agreement. The 

Company may fund the Working Capital Reserve Account with Asset 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 Floor, the Working Capital Reserve Target 

and Working Capital Reserve Replenishment Cap 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 and Permitted Vertical 

Completion 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 Asset, 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 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 Initial Member Development Funding Account. 

(a) Establishment of Initial Member Company Development Account. On the 

Closing Date, (i) the Manager shall cause the Company to establish the Initial Member 

Development Funding Account with the Paying Agent for the exclusive purpose of holding the 

Initial Member Development Contribution in accordance with the terms hereof and the Custodial 

and Paying Agency Agreement. All funds in the Initial Member Development Account, until such 

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time as they are used for making applicable Initial Member Development Contributions (and 

transferred from the Initial Member Development Account to the Company Development Account 

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

of the Initial Member. 

(b) Funding of Initial Member Development Account. On the Closing Date, 

the Initial Member shall deposit the Initial Member Development Funding Account Deposit into 

the Initial Member Development Funding Account from the proceeds of the sale of the Private 

Owner Interest pursuant to the Transferred LLC Interest Sale Agreement. 

(c) Use and Release of Funds in Initial Member Development Account. 

Funds in the Initial Member Development Funding Account will be used to fund Initial Member 

Development Contributions to supplement Private Owner Development Contributions, in 

accordance with Section 12.13 hereof. On the earlier to occur of (i) the Purchase Money Notes 

Defeasance Date, (ii) three (3) years from the Closing Date and (iii) any earlier date at the option 

of the Manager, any remaining funds in the Initial Member Development Funding Account will be 

released to the Initial Member and no additional Private Owner Development Contributions will 

be approved (it being understood that, pursuant to the Priority of Payments and the Custodial and 

Paying Agency Agreement, no cash flows will be distributed to the Members (out of Distributable 

Cash) until amounts on deposit in the Initial Member Development Funding Account have been 

fully utilized for funding Initial Member Development Contributions or otherwise released to the 

Initial Member in accordance with the foregoing). With the exception of such release in full of 

the remaining funds in the Initial Member Development Funding Account to the Initial Member, 

in no event shall the Manager have any authority to direct disposition of funds in the Initial 

Member Development Funding Account. 

(d) Permitted Investments. Funds in the Initial Member Development 

Funding Account may, at the sole discretion of the Initial Member, be invested in Permitted 

Investments in accordance with the Custodial and Paying Agency Agreement. 

12.13 Company Development Account. 

(a) Establishment of Company Development Account. On the Closing Date, 

the Manager shall cause the Company to establish the Company Development Account with the 

Paying Agent for the exclusive purpose of holding the Development Contributions to cover 

Permitted Horizontal Development Expenses in accordance with the terms hereof and the 

Custodial and Paying Agency Agreement. The Company Development 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 of Development Contributions. Once the Initial Member (with 

the applicable consent of the Required Consenting Parties) approves an Asset Development Plan 

pursuant to Section 5.3 hereof, the Initial Member and the Private Owner shall fund the Company 

Development Account in an aggregate amount equal to the full approved amount of the 

Development Contribution pursuant for such Asset Development Plan as follows: the Private 

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Owner shall deposit cash from its own funds in the amount equal to the applicable Private Owner 

Development Contribution, and the Initial Member shall direct the Paying Agent to transfer cash 

from the Initial Member Development Funding Account in an amount equal to the applicable 

Initial Member Development Contribution (with such transfer to be made by the Custodian 

pursuant to Section 3.4 of the Custodial and Paying Agency Agreement following the foregoing 

deposit by the Private Owner). 

(c) Use and Release of Funds in the Company Development Account. Funds 

in the Company Development Account shall be used to fund Permitted Horizontal Development 

in accordance with Section 5.3 hereof and Section 3.5 of the Custodial and Paying Agency 

Agreement. Disbursement of funds from the Company Development Account to pay the 

applicable Permitted Horizontal Development Expenses shall be made by the Paying Agent, upon 

the direction of the Manager on a monthly basis (with one collective disbursement of funds from 

the Company Development Account each month with respect to each Asset Development Plan), 

subject to and following submission of invoices and other relevant evidence (including evidence 

of completion of applicable work) to the Verification Contractor and applicable authorization by 

the Verification Contractor for release (by the Paying Agent) of applicable funds from the 

Company Development Account following the Verification Contractor’s review and verification 

with respect to such invoices (and other evidence) and applicable compliance with the Asset 

Development Plan. Upon completion of any applicable Permitted Horizontal Development, at the 

election (or request) of the Initial Member or the Private Owner, and otherwise upon any 

dissolution of the Company, any remaining funds in the Company Development Account with 

respect to such Permitted Horizontal Development (including any such remaining funds allocable 

to interest or other return on Permitted Investments with respect to the applicable Development 

Contributions while so held in the Company Development Account) shall be released to the 

Members as direct distributions on equity (subject to the provisions of Section 6.6(c) hereof, 

including with respect to potential remittance of applicable distributions to the Initial Member 

directly to the Initial Member Development Funding Account) on the first occurring Distribution 

Date after such date. In connection with, and to effect, such distribution to the Members, the 

Manager shall, prior to the applicable Distribution Date, deposit such remaining amounts in the 

Distribution Account and provide applicable instructions to the Paying Agent with respect thereto 

for distribution thereof in accordance with the foregoing and other applicable provisions in the 

Custodial and Paying Agency Agreement. Except as expressly permitted pursuant to the 

foregoing (and applicable provisions in the Custodial and Paying Agency Agreement), the 

Manager shall not request or permit withdrawals from the Company Development Account. 

12.14 Other Uses of Company Funds. Subject to the terms and conditions herein and in 

the other Transaction Documents, the Company shall use Asset Proceeds, Advance Loans, 

Excess Working Capital Advances, Discretionary Funding Advances, Development 

Contributions (and funds in the Company Development Account) and funds in the Working 

Capital Reserve Account, the Collection Account or any other Company account solely for such 

purposes as are expressly permitted herein, in the Custodial and Paying Agency Agreement and 

in the other applicable Transaction Documents. Accordingly, except as may be required in 

connection with Required Funding Draws, (a) Horizontal Development of or with respect to an 

Asset (including by the Company or by any Borrower under a Loan) with use of Company funds 

shall be limited to Permitted Horizontal Development (of Acquired REO Property) funded from 

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Development Contributions pursuant to Sections 5.3 and 12.13 hereof (and applicable provisions 

in the Custodial and Paying Agency Agreement and the other Transaction Documents), and (b) 

Vertical Development of or with respect to an Asset (including by the Company or by any 

Borrower under a Loan) with use of Company funds shall be limited to Substantially Complete 

Vertical Development (and related Permitted Vertical Completion Expenses) funded from the 

Collection Account, the Working Capital Reserve Account, Advance Loans, and, if applicable, 

Discretionary Funding Advances pursuant to the applicable provisions herein and in the 

Custodial and Paying Agency Agreement and the other Transaction Documents. The foregoing 

notwithstanding, at the request of the Manager and the Private Owner, and subject to the specific 

written approval of the Initial Member (which approval may be granted or withheld in the sole 

discretion of the Initial Member, and shall require the consent of each other Required Consenting 

Party to the extent amounts with respect thereto are to be funded under the Advance Facility 

(with respect to any such required consent of the Advance Lender), or repaid with priority over 

amounts payable to such Required Consenting Party), the Company may, on an Asset-by-Asset 

basis, fund or incur additional expenses with respect to an Asset (not otherwise expressly 

permitted to be funded by the Company), including for purposes of the completion (by the 

applicable Borrower under a Loan or by the Company with respect to Acquired REO Property) 

of Vertical Development that is not Substantially Complete (to the extent the Company is not 

otherwise required to fund the same pursuant to Required Funding Advances). Any such request 

by the Manager and the Private Owner to the Initial Member shall specify in reasonable detail 

the applicable requested expenses (including an applicable budget and timeline with respect 

thereto) and requested sources (including any applicable use of funds in the Collection Account, 

the Working Capital Reserve, Advance Loans, and any right or obligation to make Excess 

Working Capital Advances or Discretionary Funding Advances with respect thereto or to 

otherwise use Development Contributions (or funds in the Company Development Account)), 

and any such requested expenses and sources shall be permitted only to the extent expressly set 

forth in the applicable written approval, if any, by the Initial Member. 

12.15 Certain Servicing and Asset Administration Decisions. The Manager shall have 

full power and authority, acting alone or through any Servicer or any Subservicer, to cause to be 

done any and all things in connection with the servicing and administration of the Assets 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 other Transaction Documents. Upon the occurrence of an 

event of default under any of the Asset 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 Asset and the Collateral, (ii) the declaration and 

recording of a notice of such default and the acceleration of the maturity of the Asset, (iii) the 

institution of proceedings to foreclose under the Asset Documents securing the Asset 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. 

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Notwithstanding any provision to the contrary herein, the Manager shall not, and shall not cause 

any Servicer or any Subservicer to, take any action that is inconsistent with or prohibited by the 

terms of the Advance Facility, the Reimbursement, Security and Guaranty Agreement or the 

Custodial and Paying Agency Agreement , in each case without the prior written consent of the 

Initial Member. 

12.16 Management and Disposition of Collateral. Subject to the other terms and 

conditions of this Agreement (including the Servicing Standard), the Advance Facility 

Documents 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. 

12.17 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 Acquired REO Property shall be taken and held in 

the name of an Ownership Entity; provided, however, that for any Acquired REO Property with 

respect to which there exists any Environmental Hazard, the Ownership Entity that holds such 

Acquired REO Property may hold title only to the relevant Acquired REO Property with respect 

to which the Environmental Hazard exists. 

(b) Nothing in this Article XII or anything else in this Agreement shall be 

deemed to affirmatively require the Manager to cause the Company to acquire all or any portion 

of any Acquired REO Property with respect to which there exists any Environmental Hazard. 

Prior to acquisition of title to any Acquired 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 Acquired REO Property either 

(i) a Transaction Screen Process consistent with ASTM Standard E 1528-06, by an environmental 

professional or (ii) such other Site Assessment, and the cost of such Site Assessment shall be 

deemed to be a Servicing Expense (or Interim 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 Acquired Property pending sale, to 

complete applicable permitted construction of any such Acquired Property and to operate the 

Acquired Property as efficiently as possible in order to minimize financial loss to the Company 

and the Required Consenting Parties, and to sell the Acquired REO Property as promptly as 

practicable in a way designed to minimize financial loss to the Company and the Required 

Consenting Parties. 

12.18 Administration of Acquired REO Properties. The following terms and conditions 

shall be binding on the Company and the Ownership Entities (and on the Manager’s performance 

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of its obligations hereunder) with respect to any Acquired 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 Acquired 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 Acquired REO Property in the area in which such Acquired 

REO Property is located, all as determined by the Manager in accordance with the Servicing 

Standard and the provisions of this Agreement and the other Transaction Documents. All 

insurance policies shall name the Collateral Agent, the Advance Lender, 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 Acquired REO Property, the 

Manager shall cause the applicable Ownership Entity to (i) perform the obligations that such 

Ownership Entity is required to perform under the leases to which it is a party in all material 

respects and (ii) enforce, in accordance with commercially reasonable practices for properties 

similar to the applicable Acquired 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 Acquired REO Property owned by 

such Ownership Entity, or use or permit the use of any portion of an Acquired 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 

Required Consenting Party. 

(d) No Joint Assessment. The Manager shall not permit any Ownership 

Entity to suffer, permit or initiate the joint assessment of Acquired REO Property (i) with any 

other real property constituting a Tax lot separate from such Acquired REO Property, and (ii) with 

any portion of a Acquired 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 Acquired REO Property. 

(e) Maintenance, Repairs and Alterations. From and after the completion of 

any buildings or other improvements at an Acquired REO Property, the Manager shall cause the 

applicable Ownership Entity to maintain such Acquired REO Property in a good and safe 

condition and repair (subject to such alterations as the Manager may from time to time determine 

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to be appropriate in accordance with the Servicing Standard and applicable requirements herein 

and in the other Transaction Documents) and in accordance with applicable Law. 

(f) Property Management. All property managers with respect to any 

Acquired 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. 

(g) Ground Leases. With respect to any Acquired 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 

Acquired 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 

cause the Company to fund any permitted construction with respect to Acquired REO Property, 

then the Manager shall cause each applicable Ownership Entity to pursue with diligence the 

construction of the Acquired REO Property owned by such Ownership Entity (i) in accordance 

with the construction, construction management (if any) and all other material contracts relating to 

such construction, and all requirements of Law, all restrictions, covenants and easements affecting 

such Acquired REO Property, and all applicable governmental approvals, (ii) in the case of any 

Substantially Complete Vertical Development, 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 other Transaction Documents, and, in the case of 

any Permitted Horizontal Development, in accordance with the applicable approved Asset 

Development Plan, (iii) in a good and workmanlike manner and free of defects, (iv) in a manner 

such that such Acquired 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 all other applicable requirements set forth herein and in the other 

Transaction Documents. 

(i) Acquired REO Property Generally. Notwithstanding any other provision 

of this Section 12.18 to the contrary, (i) in operating, managing, leasing or disposing of any 

Acquired 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 other Transaction Document, the Manager shall not be 

required to act in accordance with a specific provision of this Section 12.18 if such action is (A) 

not in the best interests of Company and the Members and creditors of the Company (including 

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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 Acquired REO Property as the Initial Member or the Collateral Agent shall reasonably 

request. Without limitation of the foregoing, the Monthly Reports shall include applicable 

reporting, in form and substance satisfactory to the Initial Member and the Collateral Agent, with 

respect to all permitted Vertical Development and Horizontal Development, including, as 

applicable, a tracking of progress of construction and use of funds with a comparison thereof to 

the approved Asset Development Plan (in the case of Permitted Horizontal Development) and any 

applicable Business Plan (in the case of any other permitted Vertical Development or Horizontal 

Development). 

12.19 Releases of Collateral. The 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 and the Advance Facility Documents. 

12.20 Clean-Up Call Rights. 

(a) If, and only if, all amounts owing under the Advance Facility and the 

Purchase Money Notes have paid in full, and all reimbursement and other obligations to the FDIC 

under the Reimbursement, Security and Guaranty Agreement have been satisfied in full, or with 

the consent of the Required Consenting Parties, 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 Assets held by the Company or any Ownership Entity 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 Asset Schedule (such right to cause such 

liquidation and sale at such time, the “Clean-Up Call”). 

(b) In order to exercise its rights under this Section 12.20, the Initial Member 

shall give notice in writing to the Manager, setting forth the date by which the remaining Assets 

are to be liquidated by the Company, which date shall be no less than one hundred and fifty (150) 

calendar days after the date of such notice. 

(c) The Manager shall proceed expeditiously to cause to be commenced the 

liquidation of the remaining Assets 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 Assets pursuant to this Section 12.20 shall be subject to the prior 

approval of the 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 

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sales agent are reasonable and such Person is not an Affiliate of the Manager or any Servicer or 

Subservicer. In the event the remaining Assets and are not liquidated by the date specified in the 

notice provided by the Initial Member pursuant to Section 12.20(b), the Initial Member shall be 

entitled to liquidate the remaining Assets in its discretion and the Manager shall, and shall cause 

the Company to, cooperate and assist with such liquidation to the extent reasonably requested by 

the Initial Member. In the event the Manager or any Affiliate thereof desires to bid to acquire the 

remaining Assets, then the Initial Member shall be entitled to liquidate the remaining Assets in its 

discretion. In the event the Initial Member undertakes to liquidate the remaining Assets pursuant 

to this Section 12.20(c), all costs and expenses incurred by it shall be deducted from the Asset 

Proceeds and retained by the Initial Member and the remaining Asset Proceeds shall be distributed 

in accordance with Section 9.2. 

12.21 Certain Transfer Obligations. Without limitation of other obligations of the 

Manager with respect to the Contribution Agreement, the Manager agrees to cause the Company 

to comply with its obligations under the Contribution Agreement with respect to preparing, 

furnishing, executing and recording transfer documents with respect to the Assets (including 

special warranty deeds to convey the real property subject to any contract for deed and any 

Acquired Property to the Company). 

AR TIC LE 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 

other 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 any of them and the Company with respect to the subject matter hereof; provided, 

however, that the Confidentiality Agreement with respect to the transaction that is the subject of 

this Agreement and the other 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 the 

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. 

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(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, the Advance Lender the Purchase 

Money Notes Guarantor and the NGPMN Agent, 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, with respect to each Person 

(other than the Initial Member) that is Required Consenting Party, at such time when such Person 

ceases to be a Required Consenting Party (and subject to any rights of such Required Consenting 

Party that, by their terms or nature, survive such date), such Person shall cease to have any of the 

specified rights set forth herein with respect to consents/approvals, the exercise of 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 date on which such Person so ceases to be a Required Consenting Party, 

and (ii) with respect to the Purchase Money Notes Guarantor and the NGPMN Agent, 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 Guaranteed Purchase Money 

Notes (in the case of the Purchase Money Notes Guarantor) or the Non-Guaranteed Purchase 

Money Notes (in the case of the NGPMN Agent) in accordance with the terms hereof and of the 

other Transaction Documents, as determined by the Purchase Money Notes Guarantor and, as 

applicable, the NGPMN Agent, in each case 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 preceding provisions of this Section 

13.3, (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 other 

Transaction Document, each Member shall pay its own expenses (including legal, accounting 

investment banker, broker or finder’s fees) incident to the negotiation and execution of this 

Agreement and the other 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, however, that, 

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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 Section13.5; 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 the contrary contained elsewhere in this 

Agreement (including without limitation the foregoing Section 13.5(a)) or in any other 

Transaction Document, and in addition to any reissuance 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 and Section 2.8 of the Custodial and Paying Agency Agreement, as 

applicable, in order to facilitate any restructuring or sale of the Purchase Money Notes (or any 

reissuance, restructuring or sale of any such Purchase Money Notes to be issued pursuant to 

Section 2.8 of the Custodial and Paying Agency Agreement), 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 other Transaction Documents, in each 

case subject to the applicable limitations set forth in Section 8.4 of the Contribution Agreement 

and Section 2.8 of the Custodial and Paying Agency Agreement, as the case may be; provided, 

however, no such change, amendment or modification shall adversely affect in any material 

respect (i) the amount or timing of any payments or distributions to the Private Owner or any 

permitted successor or assign pursuant to the Priority of Payments, or (ii) any other direct rights or 

obligations of, or the need for any direct advances, contributions or payments from, the Private 

Owner or its Affiliates or any permitted successor or assign pursuant to this Agreement or any 

other Transaction Document or otherwise; and provided, further that such changes, amendments 

or modifications shall not (x) in the determination of the Purchase Money Notes Guarantor and, as 

to the Nonguaranteed Purchase Money Notes, the NGPMN Agent, 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, and (y) in the determination of the Advance Lender, adversely affect 

in any material respect the rights or interests of the Advance Lender under the Transaction 

Documents. 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, 

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amendments or modifications. 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 such legal opinions as may 

reasonably be requested or required in connection with such replacement or reissuance and sale of 

the Purchase Money Notes. For avoidance of doubt, (A) any applicable fees of the Custodian in 

connection with additional reporting required by Initial Member or the Purchase Money Notes 

Guarantor in connection with or as a result of such replacement, reissuance or sale shall be 

considered as part of fees of the Custodial to be paid by the Company pursuant to this Agreement 

and the other Transaction Documents, and (B) 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 other 

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 the Initial Member LLC Interest, or a Disposition by the Initial Member of the entire 

Initial Member LLC Interest to more than one (1) Person, including to provide for more than two 

(2) Persons being members of the Company, provided that no such amendment or modification 

shall (i) adversely affect the Private Owner’s or the Company’s limited liability status; (ii) 

adversely affect the Private Owner’s share 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. 

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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, however, 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. 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: 

AmTrust CADC Venture, LLC
 


c/o Milestone Asset Resolution Company, LLC
 


1775 I Street, NW, 8th Floor 
 

Washington, D.C. 20006 
 

Attention: R. Patterson Jackson
 


Facsimile: 
 

Email: 
 

with a copy to: 

PMO Loan Acquisition Venture, LLC
 


333 S. Grand Avenue, 28th Floor
 


Los Angeles, CA 90071
 


Attention: Cary Kleinman
 


Facsimile: 
 

Email:
 


Paul, Hastings, Janofsky & Walker LLP
 


515 South Flower St., 25th Floor
 


Los Angeles, CA 90071
 


Attention: Derek E. Smith
 


Facsimile: 
 

Email:
 


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If to the Initial Member, to: 

Manager, National Sales – Resolutions and Receiverships 

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 Matter 

Member), to: 

PMO Loan Acquisition Venture, LLC 

c/o Milestone Asset Resolution Company, LLC 

1775 I Street, NW, 8th Floor 

Washington, D.C. 20006 

Attention: R. Patterson Jackson 

Facsimile: 

Email: 

with a copy to: 

PMO Loan Acquisition Venture, LLC 
 

333 S. Grand Avenue, 28th Floor
 


Los Angeles, CA 90071
 


Attention: Cary Kleinman
 


Facsimile: 
 

Email: 
 

Paul, Hastings, Janofsky & Walker LLP
 


515 South Flower St., 25th Floor
 


Los Angeles, CA 90071
 


Attention: Derek E. Smith
 


Facsimile: 
 

Email:
 


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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 court shall have the power to, and shall, (x) modify 

such provision (including without limitation, to the extent applicable, by limiting the duration or 

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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 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, AND EACH PARTY TO THIS AGREEMENT 

UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT 

THE LAWS OF ANY OTHER JURISDICTION GOVERN THIS AGREEMENT. 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. 

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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: 

(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 other 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 other 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 other Transaction Document in only the United States 

District Court for the Southern District of New York or the United States District Court for the 

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District of Columbia, and waives any right to remove or transfer such suit, action or proceeding 

to any other court or dispute-resolution forum without the consent of the Initial Member, and 

agrees to consent thereafter to transfer of the suit, action or proceeding to either the United States 

District Court for the Southern District of New York or the United States District Court for the 

District 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 ANCILLARY DOCUMENTS AND AGREES THAT ANY SUCH 

DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by 

their respective officers or agents thereunto duly authorized on the date first above written. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS CAPACITY AS 

RECEIVER FOR AMTRUST BANK, as Initial 

Member 

By: 

Name: 

Title: Attorney-in-Fact 

AMTRUST CADC VENTURE, LLC 

By:	 Federal Deposit Insurance Corporation, in 

its capacity as receiver for AmTrust Bank 

By:	 ______________________________ 

Name: 

Title: Attorney-in-Fact 

PMO LOAN ACQUISITION VENTURE, LLC, 

as Private Owner 

By:	 PMO Investor, L.P., its Managing Member 

By:	 ______________________________ 

Name: 

Title: Authorized Signatory 

By:	 ______________________________ 

Name: 

Title: Authorized Signatory 

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Annex I
 


Member Schedule
 


Member Percentage Interests Capital 

Contributions to 

Working Capital 

Reserve Account 

Other Capital 

Contributions1 

Initial Member 60% $3,000,000.00 $205,631,682.00 

Private Owner 40% $2,000,000.00 $137,087,788.00 

1 The amounts listed in this column do not include capital contributions made to the Working Capital Reserve 

Account. 

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EXHIBIT A 

FORM OF 

CERTIFICATE OF FORMATION
 


OF



AMTRUST CADC 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 AmTrust CADC Venture, 

LLC (the “Company ”). 

SECOND, the address of the registered office of the Company in the State of 

Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of 

New Castle. The name of the registered agent at such address is The Corporation Trust 

Company. 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of 

Formation of the Company on this 16th day of July, 2010. 

By: 

Name: 
 

Title: Authorized Person
 


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EXHIBIT B



INFORMATION; FORM OF MONTHLY REPORT
 


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EXHIBIT B - FORM OF MONTHLY REPORT 

DISTRIBUTION DATE REPORT 

TOTAL 

COLLECTIONS 

(+) Principal collections -

(+) Interest collections -

(+) Asset sale proceeds, including short sales -

(+) Mortgage insurance claim proceeds -

(+) REO liquidation proceeds -

(+) Servicing Expenses and Interim Servicing Expenses Recovered -

(+) Other Asset Proceeds (including late fees and penalties) -

(+) Any indemnity payments made to the Company under Section 13.1(c) or (d) -

of Custodial and Paying Agency Agreement ("Custodial Agreement ") -

(+) Interest and earnings from Collection Account ___________­

GROSS COLLECTIONS ___________­

Other deposits to Collection Account 

(+) Transferred from Working Capital Reserve Account -

(+) Excess Working Capital Advances made by Manager -

(+) Advance Loans made by Advance Lender -

(+) Discretionary Funding Advances made by Manager -

(+) Release Holdback of distributions to Initial Member and Private Owner from 

prior Due Period(s) 

-

GROSS FUNDS AVAILABLE FROM COLLECTION ACCOUNT ___________­

Less authorized disbursements from Collection Account 

(-) Repayment of Discretionary Funding Advances made by Manager -

(-) Servicing Expenses paid -

(-) Pre-Approved Charges -

(-) Required Funding Draws -

(-) Permitted Vertical Completion Expenses paid ___________­

___________­

TOTAL FUNDS AVAILABLE FROM COLLECTION ACCOUNT -

Other deposits to Distribution Account 

(+) Release of Funds from Company Development Account (for special 

distributions) -

(+) Excess Working Capital Advances made by Manager for repayment of 

obligations under Advance Facility ___________­

TOTAL FUNDS AVAILABLE FOR DISTRIBUTION ___________­

A-101 

(1) 

(2) 

AmTrust Bank CADC Loan and REO Structured Transaction 

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Distributions (outside priority of payments in Section 5.1(b) of Custodial Agreement) 

Special Distributions from Company Development Account 

To Private Owner	 	 ­

To Initial Member (Initial Member Development Funding Account, if open)	 	 ­

5.1(b) Distributions pursuant to Priority of Payments in the Custodial Agreement 

(i)		 Custodian and Paying Agent Fees and Expenses (and any indemnity 


payments under Section 13.1(a) of Custodial Agreement) 
 -

(ii)		 Verification Contractor Amounts (and any indemnity payments under Advance 


Facility Documents) 
 -

(iii)(A)(1) Interim Servicing Fee to Initial Member 

- (3) 

(iii)(A)(2) Interim Management Fee to Manager 

- (3) 

(iii)(B) Management Fee to Manager 

- (4) 

(iv)	 	 Repayment of Excess Working Capital Advances to Manager 

-

(v)	 	 Replenishment of Working Capital Reserve 

-

(vi)	 	 Repayment of Protective Advances 

-

(vii)	 	 Interest accrued on Advance Loans 

-

(viii)	 	 Repayment of outstanding Advance Loans (except Protective Advances) 

-

(ix)	 	 Reimbursements due under Reimbursement, Security and Guaranty 


Agreement for prior payments under Purchase Money Note Guaranty 
 -

(x)	 	 Deposit Defeasance Account Required Deposit Amount into Defeasance 


Account 
 ___________­

TOTAL DISTRIBUTIONS DUE	 ___________­

(xi) NET DISTRIBUTABLE CASH TO MEMBERS BEFORE HOLDBACK $ ­

HOLDBACK - RETENTION IN COLLECTION ACCOUNT (if Distribution to (1) Members cannot be made due to restrictions) 	 $ ­

NET DISTRIBUTABLE CASH TO MEMBERS 	 $ ­

DISTRIBUTION TO MEMBERS 

Distribution to Initial Member (at proportionate LLC interest) $ ­

Distribution to Private Owner (at proportionate LLC interest) ___________­

TOTAL DISTRIBUTIONS TO MEMBERS $ ­

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Calculation of amounts payable for items in Section 5.1 (b)(iii) and (v) ­


Custodial and Paying Agency Agreement
 


INTERIM SERVICING FEE CALCULATION
 


Loans



UPB, beginning of Due Period (with respect to Loans in any Group of Assets 

for which Servicing Transfer Date has not occurred as of first day in Due 

Period) $ ­

Times interim servicing fee rate 0.25% 

Times number of days in Due Period/360 ___________­

Portion of interim servicing fee with respect to Loans $ ­

Acquired Property 

Net Fair Value, beginning of Due Period (with respect to Acquired Property in 

any Group of Assets for which Servicing Transfer Date has not occurred as of 

first day in Due Period) $ ­

Times interim servicing fee rate 0.25% 

Times number of days in Due Period/360 ___________­

Portion of interim servicing fee with respect to Acquired Property $ ­

Portion of interim management fee with respect to Loans $ ­

(+) Portion of interim management fee with respect to Acquired Property ___________­

TOTAL INTERIM SERVICING FEE DUE TO INITIAL MEMBER $ ­

INTERIM MANAGEMENT FEE CALCULATION 

AMOUNT EQUAL TO THE INTERIM SERVICING FEE $ ­

MANAGEMENT FEE CALCULATION
 


Loans



UPB, beginning of Due Period (with respect to Loans in any Group of Assets 


for which Servicing Transfer Date has occurred as of first day in Due Period) $ ­


Times Management Fee rate 0.50% 


Times number of days in Due Period/360 ___________­

Portion of management fee with respect to Loans $ ­

Acquired Property 

Net Fair Value, beginning of Due Period (with respect to Acquired Property in 


any Group of Assets for which Servicing Transfer Date has occurred as of first 


day in Due Period) $ ­


Times Management Fee rate 0.50% 


Times number of days in Due Period/360 ___________­

Portion of management fee with respect to Acquired Property $ - (5) 

Portion of management fee with respect to Loans $ ­

(+) Portion of management fee with respect to Acquired Property ___________­

TOTAL MANAGEMENT FEE DUE TO MANAGER $ ­

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WORKING CAPITAL RESERVE REPLENISHMENT RESTRICTIONS 

(-) 

Target Replenishment Amount, as of the Distribution Date 

Working Capital Reserve balance 

Working Capital Reserve Target 

Total 

$ ­

___________­

$ ­

(6) 

Release from Working Capital Reserve to Collection Account (total 

above, if positive) 

Replenishment of Working Capital Reserve (total above, if negative) 

$ 

$ 

­

­

Working Capital Reserve Floor 

Working Capital Reserve Replenishment Cap 

$5,000,000.00 

$20,000,000.00 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

In no event shall any distribution be made to the Initial Member and the Private Owner at any 

time (A) prior to the repayment in full of all payments due under the Advance Facility and the 

termination of the Advance Facility and (B) until the amounts on deposit in the Initial Member 

Development Funding Account have been returned to the Initial Member pursuant to Section 3.4 

of the Custodial Agreement and reduced to zero. 

Repayment only to the extent of Loan Proceeds from the Loan with respect to which the 

Discretionary Funding Advance was made. May be used to fund Substantially Complete Vertical 

Development only with respect to which such Discretionary Funding Advances relate. 

Applicable only to the Interim Servicing Period with respect to a Group of Loans. 

Applicable to Due Periods following the Interim Servicing Period with respect to a Group of 

Loans. 

The portion of the Management Fee calculated with respect to any Acquired Property is payable 

for a maximum of 3 years after the title to such Acquired Property is first transferred to the 

Company (or relevant Ownership Entity) or such longer period as the Initial Member may 

expressly approve in its sole discretion on a case-by-case basis based on the applicable 

disposition plan, if any, for such Acquired Property prepared by the Manager. 

Working Capital Reserve Target must be between $5 million and $20 million, as determined by 

Manager as of each Distribution Date. 

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Loan & REO Monthly Rollforward Report 

[Insert Month and Year] 

LOANS 

Unpaid principal balance, beg of Due Period

Payments received (regular and (-) curtailments)


(-) Paid-in-full loans


(-) Short sale proceeds 


(-) Mortgage insurance proceeds


(-) UPB, transfers to REO


(+) Balance capitalized on loan modifications 


(+) Commitments funded


(-) Principal charge-offs 

Unpaid principal balance, end of Due Period

UNFUNDED COMMITMENTS (LIP) 

Unfunded commitments balance, beg. of Due 

Period

(-) Commitments funded 


(-) Commitments released on loan payoffs 


Unfunded commitments balance, end of Due Period

REO 

Net Fair Value of REO, beg of Due Period

(+) UPB on REO transfers in

( - ) Adjustments to Net Fair Value 

(+) Capitalized post-acquisition costs

( - ) Net liquidation proceeds

(+/-) Realized Gain (Losses) 

Net Fair Value of REO, end of Due Period

For the Period from 

[Insert Date Range] 

# ASSETS AMOUNT 

- $ ­

­

- ­

- ­

­

- ­

­

­

­

- $ ­

# ASSETS AMOUNT 

- $ ­

­

- $ ­

# ASSETS AMOUNT 

- $ ­

- ­

­

- ­

­

- $ ­

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Recoverable Servicing Expenses (Advances) 

Monthly Roll Forward 

 [insert date] 

(1) 

Other Total 

Tax and Recoverable Recoverable 

Insurance Servicing Servicing 

Advances Advances Advances 

Balance, [insert date] $ - $ - $ ­

(+) Payments/Advances - - ­

(-) Advance Recoveries - - ­

- -	 ­

Balance, [insert date] $ - $ - $ ­

(2) (2) 

(1)	 	 Servicing Expenses and Interim Servicing Expenses, as defined in the Agreement 

of Common Definitions, are authorized to be paid from Asset Proceeds collected. 

For reporting purposes, Servicing Expenses may be broken out into additional 

and/or different fields at the discretion of the Manager, sufficient to determine the 

appropriateness of the payments under the definition of Servicing Expenses. 

(2)	 	 Loan servicing system should include fields to capture and report balances in each 

category, and the category totals should agree to asset-level detail tapes provided 

by the Manager as of each month-end. 

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Working Capital Reserve 

Monthly Roll Forward 

[insert date] 

Balance, beginning of Due Period	 	 $ - (1) 

(+)	 	 Transfers in from Cash Flow (Collection Account) 

(+)	 	 Transfers in from Advance Loan proceeds 

Transfers to Collection Account: 

(-)		 Payment of W orking Capital Expenses - (2) 

(-)		 Payment of Permitted Vertical Completion Expenses ­

Release at discretion of Manager pursuant to Section 3.6 (-) of 

the Custodial Agreement ­

Balance, end of Due Period	 	 $ ­

(1)	 	 The Initial Deposit in the Working Capital Reserve account will be made by the Initial Member 

and Private Owner in accordance with their proportionate LLC interests. 

(2)	 	 Working Capital Expenses means any Servicing Expenses, Interim Servicing 

Expenses, Pre-Approved Charges, Required Funding Draws, Interim Servicing 

Fees, Verification Contractor Amounts, and fees of the Custodian and Paying 

Agent. 

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)

 -

 - -

 -

 -

Advance Facility Monthly Roll Forward [insert date] 

Total Outstanding 

on Advance Protective 

Facility Advance Loans (1) Advances (2 

Loan Balance, beginning of Due Period	 	 $ - $ - $ 

Activity, current Due Period (+) 	 Cash Fundings - ­(+) 	 Accrued interest due but unpaid as of the prior 

Distribution Date 

(-)		 Principal payments - ­

Loan Balance, end of Due Period	 	 $ - $ - $ 

Advance Facility Commitment Amount	 	 $ ­

Available under Advance Facility, end of Due Period $ 	 ­Interest billing for Due Period	 	 $ - $ - $ 

(1)	 	 The proceeds of Advance Loans may only be used by the Company (a) to pay Working Capital Expenses, including 

Protective Advances, (b) to replenish the W orking Capital Reserve up to the W orking Capital Reserve Target, and/or (c) to pay Permitted Vertical Completion Expenses. 

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(2) Per Section 2.10 of the Advance Facility Agreement, the Advance Lender shall have the right to make Protective 

Advances on behalf of the Company. The Protective Advances are deemed to be Advance Loans except with respec to repayment of principal which shall occur prior to the repayment of principal of Advance Loans, pursuant to the Section 5.1 (b) of the Custodial and Paying Agency Agreement. 

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Company Development Account 

Monthly Roll Forward
 
[insert date]
 
AGGREGATE ACCOUNT ROLLFORWARD Balance, beginning of Due Period
 


Transfers in: 
 

Deposits from Private Owner 


 Transfers from Initial Member Development Funding Acct 

(+) Subtotal, transfers in 

(+) 	 Investment Income 

( - ) 	 Payment of Horizontal Dev. Expenses 


Return of Development Contributions (3)
 


To Initial Member To Private Owner 

( - ) Subtotal, Return of Development Contributions 


Balance, end of Due Period 
PROJECT LEVEL REPORTING (Complete for each Approved Project) 

[Insert ID No./name of relevant REO] APPROVED BALANCE FUNDED AT PROJECT INCEPTION 


From Initial Member 
From Private Owner 


Total 


AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 

A-110 


$ ­$ ­$ 	 ­

$ ­

$ ­

$ ­

$ ­$ 	 ­$ 	 ­

Actual Amount 

$ - (1) $ - (1) $ ­

61049883 
Available Balance, beginning of Due Period	 	 $ ­

Payment of Permitted Horizontal Development Expenses: (2)
 

(-) Remediation of an environmental condition ­(-) Zoning change ­

(-) Variance to zoning ­(-) Entitlements/permits ­

(-) Other design and planning cost ­(-) Infrastructure construction ­

(-) Demolition/site clearing ­

[Manager to insert other categories of Permitted Horizontal
 (-) Development Expenses]	 ­

­

Transfers for return of Development Contributions:	 (3) 

To Initial Member or Initial Member Development Funding Account	 ­To Private Owner (to account specified by PO)	 ­

­

Available Balance for [insert ID No./name of REO], end of Due Period $ 	 ­Note: 

Attach information for each Acquired REO Property listed above, tracking progress of construction with a comparison of cumulative costs-to-date vs. budget by line item as shown in Asset Development Plan. 

(1)	 	 Deposits into the Company Development Account will be made by the Initial Member and Private Owner in 

accordance with their proportionate LLC Interests, and shall be regarded as incremental equity contributions. 

(2)	 	 In no event shall any such costs and expenses include any Excluded Expenses. Disbursement shall be on 

monthly basis, with one collective disbursement of funds from the Account. 

A-111 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
(3) Returns of Development Contributions remaining in the Company Development Account after completion of 

the applicable Permitted Horizontal Development shall be exclusively through the distributions to the Members pursuant to Sections 6.6 and 12.13(c) of the LLC Operating Agreement. 

Initial Member Development Funding Account Monthly Roll Forward [insert date] 

Balance, beginning of Due Period	 	 $ - (1) 

Initial Member Development Contributions (transfers to 
 

(-) Company Development Account for approved Horizontal ­


Development)
 

(+) Returns to Initial Member Development Funding Account ­


(+) Investment Income ­


Release of funds to Initial Member pursuant to Section 3.4 of
 
 (-) the Custodial Agreement	 ­

Balance, end of Due Period	 	 $ ­

(1)	 	 The Initial Member shall establish the Initial Member Development Funding Account, to be used to fund the 

Initial Member Development Contributions to the Company Development Account. 

A-112 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
Excess Working Capital Advances 

Monthly Roll Forward [insert date] 

Balance, beginning of Due Period $ ­

Advanced by Manager to Collection Account for payments of Working Capital Expenses: 

(+) Servicing Expenses (and 

Interim Servicing Expenses) ­

(+) Pre-Approved Charges ­(+) Interim Servicing Fees ­(+) Required Funding Draws ­

Custodian and Paying 

(+) Agent fees ­

Verification Contractor 

(+) Amount ­

Advanced by Manager to Defeasance Account for payments: 

(+) As needed to cure a 

Purchase Money Notes Trigger Event Advanced by Manager to Distribution Account: 

(+) For repayments of Advance 

Loans (on the Advance Facility Maturity Date) Reimbursements from Cash (-) Flow ___________­Balance, end of Due Period $ ­

A-113 

AmTrust Bank CADC Loan and REO Structured Transaction 
Transferred LLC Interest Sale Agmt 
61049883 

Amount 

funded by

t Excess 

Working

Amount 

funded by

Capital 

Advances

Advance 

Loans

Discretionary Funding Advances Monthly Roll Forward  [insert date] 

Total - Detail Advances by Asset Number 

All Advances Asset A Asset B Asset C 

Balance, beginning of Due 
 Period $ - $ - $ - $ ­


(+)	 Permitted Vertical 

Development Funding Draws Advanced by Manager to Collection Account - - - ­Interest Due (LIBOR + 3.00%, (+)	 - - - ­ actual/360)
 


Reimbursements from Asset 
 (-)	 - - - ­ Proceeds (1) 

Balance, end of Due Period $ - $ - $ - $ ­Repayment only to the extent 
 of Asset Proceeds from the
 
Asset with respect to which
 


(1)	 the Advance was made. Required Funding Draws Monthly Report [insert date] 

Amount Amoun Amount of Current Unfunded Date of funded by funded by 

Loan Number / Purpose of Required Funding Draw Funding Draw UPB Commitment Draw Asset Proceeds WCR 

A-114 

AmTrust Bank CADC Loan and REO Structured Transaction 
Transferred LLC Interest Sale Agmt 
61049883 

$ ­

Total Funding Draws, month 
ended [insert date] $ ­


A-115 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
 PVC

es

Estimated 

Costs to

Complete

 - $ -

 - -

 - $ -

ing 

plete

Permitted Vertical Completion Expenses ("PVC 
Expenses") 
Vertical Development of Loans and Acquired REO Property Monthly Roll Forward
 [insert date] 


PVC Total 

Expenses Total Expended 

Beginning Paid (1) - Ending Budgeted through Remaining 

Asset Current Due Asset PVC Current Due Budgeted 

Asset Number/Name Balance Period Balance Expenses Period Expens 

$ $ $ 
 

- - - $ - $ - $
-
-


- - - - ­

Total - all Assets under 
 Vertical Development $ - $ - $ - $ - $ - $ 
 (1) Permitted Vertical Completion Expenses means (i) in connection with any Loan, Permitted Vertical Development Fund 
Draws, and/or (ii) in connection with any Acquired REO Property, the reasonable costs and expenses of Substantially Com 
Vertical Development of such REO Property. 


A-116 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
es 

[Note NG]

$ -

 - -

$ -

Purchase Money Notes and Defeasance Account Monthly Roll Forward
 [insert date]
 


Total - Purchase Money Not 

All Purchase Money Notes [Note A-1] [Note A-2] 

Purchase Money Notes Monthly Roll 

(+) Original Aggregate Principal Amount $ - $ - $ ­

(-) Payment from Defeasance Account - ­

Purchase Money Notes balance, end of Due 
Period $ - $ - $ ­


Defeasance Account Monthly Rollforward 
Balance after deposit for previous Due Period $ ­


(+) Additions from Cash Flow for this Due Period
 
 -


(+) Investment Income ­


(-) Release to pay Purchase Money Notes ­


Defeasance Account balance after activity for this Due Period $ ­

Note Guarantor Payments Balance after repayment for previous Due Period $ ­


(+) Payments by Guarantor, current month ­
(+) Interest Due, current month
 


(-) Repayments from Cash Flow for this Due
 


Period ­
Balance after activity for this Due Period $ ­

A-117 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
Purchase Money Note Trigger Event 

A Purchase Money Note Trigger Event will be deemed to have occurred if, as of any of the dates defined below, (a) the total amount then on deposit in the Defeasance Account, plus the sum of the aggregate amount from the Defeasance Account previously paid by the Company to all Holders to repay any Purchase Money Note and the aggregate reimbursements to the Purchase Money Notes Guarantor, divided by (b) the original aggregate principal amount of the Purchase Money Notes as of the Closing Date, is less than: 

7/25/13 - 7/24/14 25% 7/25/14 - 7/24/15 50% 7/25/15 - 7/24/16 75% 7/25/16 - 7/25/17 100% 

A-118 

AmTrust Bank CADC Loan and REO Structured Transaction Transferred LLC Interest Sale Agmt 61049883 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive Threshold Tracking Report 

 [insert date] 

Aggregate Cash Distributions to Private Owner, as of preceding Distribution Date $ ­

(+) Current month distribution to Private Owner in respect of its LLC Interest ­ (1) 

Aggregate Cash Distributions to Private Owner, as of the current Distribution 


Date $ ­


Incentive Threshold Base Amount 


Transferred LLC Interest Sale Price $ ­

Private Owner WCR Account Deposit ­

$ ­

INCENTIVE THRESHOLD EVENT 

Occurs as of a Distribution Date if: 

(a) the aggregate distributions made to the Private Owner in respect of its LLC 


interest are equal to or greater the sum of (x) two (2.0) times the Transferred LLC 


Interest Sale Price, plus (y) the amount of the Private Owner WCR Account Deposit 


and (b) the Incentive Threshold (for Incentive Threshold Event) is equal to zero. 


Aggregate cash distributions to Private Owner $ ­

Transferred LLC Interest Sale Price * 2 ­

Private Owner WCR Account Deposit amount ­

Distributions Remaining to Incentive Threshold Event $ ­

Incentive Threshold (for Incentive Threshold Event), as of the preceding 

Distribution Date $ ­

(+) Threshold Increase Amount ([2.21045]% per month) ­

(-) Current month distribution to Private Owner in respect of its LLC Interest ­ (2) 

(+) Private Owner Development Contributions made during the preceding Due Period ­ (3) 

Incentive Threshold (for Incentive Threshold Event), as of the current 


Distribution Date $ ­


Incentive Threshold Event met? Y/N 

(1) Excludes Management Fees and repayments of Excess Working Capital Advances 


and Discretionary Funding Advances and any interest earned thereon, but including 


any distributions to the Private Owner from the Working Capital Reserve. 


(2) The Return Threshold can never be less than zero. 

A-119 


AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
(3) Notwithstanding that each Private Owner Development Contribution is actually made 

to the Company by the deposit of the applicable funds in the Company Development 

Account, for purposes of all calculations with respect to the occurrence or nonoccurrence of the Incentive Threshold, each such Private Owner Development 

Contribution shall be deemed made only as of the applicable date of the 

disbursement of such funds from the Company Development Account for Permitted 

Horiztonal Development Expenses (in a pro rata portion determined based on the 

allocation having been used for the making of such actual Private Owner 

Development Contribution and related Initial Member Development Contribution). 

A-120 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
 

Additional Security Report

 [insert date] 

Undrawn Amount under Qualifying Letters of Credit: $_________ 

[and/or] 

Balance in Private Owner Pledged Account: $_________ 

Additional Security amount equal to or in excess of $6,500,000? Y / N 

In the event of any Additional Security consisting of a Qualifying Letter of 

Credit, for each such Qualifying Letter of Credit: 

A. Capital category of Issuing Bank as of the end of the Due Period 

pursuant to the standards in 12 U.S.C. § 1831o (b)(1), or applicable 

replacement legislation: __________ 

B. Is such Issuing Bank a Qualified Issuer? Y / N 

A-121 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
 

Other Reports 

Withdrawals from Collection Account 

Manager hereby certifies that all withdrawals by the Manager from the Collection 

Account during the relevant Due Period were made in accordance with the terms of 

the LLC Operating Agreement and the Custodial Agreement: Y / N 

Withdrawals from Company Development Account 

Manager hereby certifies that all withdrawals by the Manager from the Company 

Development Account during the relevant Due Period were made in accordance with 

the terms of the LLC Operating Agreement and the Custodial Agreement: Y / N 

Delinquency Report 

# and $ by delinquency classification: Current, 30-59 days, 60-89 days, 90+ days, in 
 

foreclosure, in bankruptcy, REO
 


Breakout of > 60 day delinquencies by collateral type, # and $
 


Breakout of > 60 day delinquencies by state, # and $
 


REO Report 

Listing of REO properties held to include original loan number, date of ownership, 

description, collateral type, address, UPB (of the loan prior to foreclosure), Net Fair 

Value, listing date, estimated sale date, appraisal amount, original list price, current 

list price, cumulative Servicing Expenses allocable, broker name, and comments 

Modification Report 

Listing of loans modified, to include borrower name, loan balance and terms before 

modification, loan balance and terms after modification. Show amounts of principal 

forgiven, if any, and principal forbearance amounts, if any. 

Liquidation Report 

Listing of loans and REO properties liquidated, to include borrower name, UPB, net 

liquidation proceeds, cumulative Servicing Expenses, realized loss amount 

A-122 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
Short Sale Report 

Listing of loans for which short sales were accepted, to include borrower name, UPB, 

payoff accepted, realized loss amount 

Judgment Report 

Listing of Judgments obtained, to include borrower name, Judgment amount, current 


month and cumulative payments received, remaining balance 


Significant Litigation Report 

Provide a litigation summary report describing any claim or counterclaim (“claim”) 

filed against the Company and/or Servicer with respect to assets subject to this 

Agreement, the actions taken to defend such claim, and an estimate of the projected 

exposure for: a) any claim in which the Company or Servicer expects to incur more 

than $10,000 in Servicing Expenses to defend such claim, b) any claim in which 

multiple plaintiffs have joined in filing an action against the Company and/or Servicer 

or the same law firm has filed individual claims on behalf of more than one plaintiff, 

and c) any claim(s) regardless of the dollar amount naming: (i) the Failed Bank, or (ii) 

FDIC (in any capacity) as defendant(s). Activity should be updated quarterly. 

Environmental Exposure Report 

Provide a report identifying any assets in which the Site Assessment identified an 


Environmental Hazard together with information on the nature of the hazard, 


additional tests performed, and the cost of correcting the hazard identified in the Site 


Assessment. 


MONTHLY LOAN-LEVEL DETAIL REPORTS 

Monthly Loan Trial Balance and Activity Report 

PROVIDE A MONTHLY LOAN-LEVEL REPORT 


IN EXCEL WITH THE FOLLOWING FIELDS: 


Current Loan Number 


Prior Servicer Loan Number 


P&I Constant 


Note Rate 


Next Due or Paid-Thru Date 


Payoff Date (if applicable) 


Principal Balance, end of prior month 


Principal collections - other than sales 


A-123 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
 

Principal proceeds – loan sales, including short sales 

Principal Write-Off Amount 

Other Non-Cash Principal Adjustment 

Transfer to REO 

Principal Balance, end of current month 

Escrow balance 

Other Advances Balance 

Interest collections 

Non-Cash Interest Adjustment 

Late Charges 

Pre-Payment Penalty Paid 

Other Fee Income 

Servicing System Data Download – To Initial Member 

Provide a monthly loan-level data download in Excel format with every field 

populated in the Servicer’s loan servicing system. This requirement may be modified 

in the future by the Initial Member to include only certain specified fields. 

SEMIANNUAL REPORT – TO INITIAL MEMBER (in January and July of each 

year, commencing [insert date]) 

Business Plan 

Updated Consolidated Business Plan and individual Asset Level Business Plans for 15 

largest Assets as required pursuant to Section 7.7 of the LLC Operating Agreement. 

Projected Cash Flows 

Excel model of projected cash flows by month, as of June 30 and December 31 of 

each year, as required pursuant to Section 7.7(c) of the LLC Operating Agreement. 

AS AVAILABLE – TO INITIAL MEMBER 

Custodial Report or an updated Asset Schedule and Exception List (as defined in the 

Custodial Agreement) from the Custodian/Paying Agent, as provided to the Company. 

A-124 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
 

 

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 PMO Loan Acquisition Venture, LLC, 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 AmTrust CADC 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 21, 2010, by and among the Federal Deposit 

Insurance Corporation, in its capacity as receiver for AmTrust Bank, (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 as more fully described in the LLC Operating Agreement; 

WHEREAS, an Event of Default (as defined in the LLC Operating Agreement) has 

occurred and is continuing, and the Initial Member has elected, pursuant to the LLC Operating 

Agreement, to foreclose on its security interest in the LLC Interest and effect the assignment 

contemplated hereby; 

NOW THEREFORE, in consideration 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 

A-125 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
______________________ 

or more counterparts have been signed by each of the parties and delivered (including by 

telecopy) to the other party. 

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: 

PMO LOAN ACQUISITION VENTURE, LLC 

By: PMO Investor, L.P., its Managing Member
 


By:
 


Name:



Title: Authorized Signatory
 


TRANSFE REE:
 


By: ______________________
 


Name: 
 

Title:
 


A-126 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
EXHIBIT D



FORM OF LETTER OF CREDIT
 


[Form of Letter of Credit is not applicable, as the Private Owner has chosen to provide 

Qualifying Cash Collateral as the form of Additional Security.] 

A-127 

AmTrust Bank CADC Loan and REO Structured Transaction 

Transferred LLC Interest Sale Agmt 

61049883 
Exh ibit B 

Form of Asset Value Schedule 

t\rnTrust Onnk CADC Loan nnu REO Struc tured TrJ nsacuon 

Transferred LLC Interest Sale Agrnt 

1>1049883_8 
Exhibit C 

!FORM OF TRANSFEREE AC KNOWLEDGMENT AND CERTIFICATIONJ 

TRANSFEREE ACKNOWLEDGMENT AND CERTIF ICATION 

Reference is made to the Limited Liability Company Interest Sale and Assignment Agreement 

dated Jul y 21. 20 I 0 (the ""Transferr ed LLC Interes t Sale Agreement") by and among PMO 

Loan Acquisition Venture. LLC, a Delaware limited liability company (the ··Private Owner..), 

the Federal Deposit Insurance Corporation. in its capacity as receiver for AmTrust Bank 

(includi ng its successors and assigns thereto, the " Initial Member"), and AmTrust CADC 

Venture. LLC (the ""Companv''). Capitalized terms used, and not otherwise detined, in this 

Transferee Acknowledgement and Cert ification have the meanings given in the Transferred LLC 

Interest Sale Agreement. 

The undersigned. the Private Owner, hereby acknowledges and certifies to the Initial 

Member that it has read and understands, and is prepared to cause the Company to comply with, 

the obligations imposed upon the Company under the Contribution Agreement (as defined in the 

Agreement of Com mon Definitions) and the Transaction Documents (as defined in the 

Agreement of Common Defi nitions). Without limiting the fo regoing, and subject ro the 

provisions ofthe Contribution Agreement and the T ransaction Docum ents, the Pri vate Owner is 

aware of and prepared to cause the Company to comply with the obligations as s pecified in the 

Contribution Agreement (i) to remove the Initial Member and the Failed Bank (as defined in the 

Agreement ofCommon Definitions) as a party to any litigation or actions with respect to the 

Assets (as defined in the Agreement ofCommon Definitions) (incl udi ng without limitation the 

actions on the List (as deti ned below)). and to substitute the Company as the real party-in-interest 

in any such litigation or actions and (ii) to take all actions necessary to tile (.x) proots of claims in 

pending bankruptcy cases involving any Assets tor whi ch the Initial Member or the Failed Bank 

has not already tiled a proofof claim. and (y) all documents required by Rule 300 I of the Federal 

Rules of Bankruptcy Procedure and to take a ll such simi lar actions as may be required in any 

relevant jurisdiction in any pending bankruptcy or insolvency case or proceeding in such 

jurisdiction involving any Assets in order to evidence and assert the Compan y's rights . 

Attached hereto as Schedul e I is a list of litigation made available with respect to the 

Assets (the --usf'). The undersigned acknowledges that the Initial Member makes no 

representation or warranty as to the completeness or accuracy of the List o r the information 

contained or reterred to therein and that (without limitation ofthe foregoing) there may be 

additio nal litigation or bankruptcy actions pending against the Pailed Bank or the Initial Member 

with respect to the Assets or with respect to other parties with respect to the Assets. 

PMO Loan Acquisition Venture, LLC, a Delaware 

limited liability company 

By: PMO Investor. L.P .. its Managing Member 

By: ___ _______ _ ___ _ 

Name: 

Title: Authorized Signatory 

By:_______________ 

Name: 


Title: Authorized Signatory 


Am frust Bank CADC Loan ond REO Structured Tr~nsacuon 

l"ransferrcd LLC lnt~ri!St Sale A gmt 

61049883_8 
SCHEDULE I TO TRANSFEREE ACKNOWLEDGEMENT AND 

CERTIFICATION 

LIST OF LITIGATION 

The Initial Member makes no representation or warranty as to the completeness or 

accuracy of the List or the information contained or referred to therein. Without 

limitation of the foregoing, there may be additional litigation or bankruptcy actions 

pending against the Failed Bank or the Initial Member with respect to the Assets or 

with respect to other parties with respect to the Assets. 

AmTrust Bank CALoan and REO Structured Transaction 

rransferred LLC Interest Sale Agmt 

6!049883_8 
Exhibit D 

[FORM OF JOINDER AND CONSENT AGREEMENT) 

JOINDER AND CONSENT AGREEMENT 

THIS JOINDER AND CONSENT AGREEMENT, dated as ofJuly 21,2010, is 

delivered pursuant to Section I (b) of the Limited Liability Company Interest Sale and 

Assignment Agreement, dated as of.July 21, 20 I 0. by and among PMO Loan Acquisition 

Venture, LLC, a limited liability company organized and existing under the laws of 

Delaware (the "Private Owner"), the Federal Deposit Insurance Corporation (in any 

capacity, the ·'FDIC"), in its capacity as receiver for AmTrust Bank (including its 

successors and assigns thereto, the ''Initial Member"), and AmTrust CADC Venture, 

LLC, a limited liability company organized and existing under the laws of Delaware (the 

·'Company") (the "Transferred LLC Interest Sale Agreement") . Capitalized terms 

used herein without definition are used as defined in the Transferred LLC Interest Sale 

Agreement. 

By executing and delivering this Joinder and Consent Agreement, the Private 

Owner hereby becomes a party to the Asset Contribution and Sale Agreement. dated as of 

the date of this .Joinder and Consent Agreement, by and between the Initial Member and 

the Company (the ·'Contribution Agreement") with the same force and effect as if 

originally named as a party to the Contribution Agreement and, without limiting the 

generality of the f()regoing, consents to and assumes all obligations and liabilities 

imposed upon the Private Owner pursuant to the Contribution Agreement. The Private 

Owner hereby agrees to be bound for all intents and purposes as a party to the 

Contribution Agreement. 

(remainder ofpage blank) 

AmTrust Bank CADC Loan and REO Structured Transaction 

rransferred LLC Interest Sale Agmt 

61049883_8 
- ------- --- -------

----------------

IN WITNESS WHEREOF, the Private Owner has caused this Joinder and 

Consent Agreement to be duly executed and delivered as ofthe date first above written. 

PMO LOAN ACQUISITION VENTURE, LLC, as Private Owner 

By: PMO Investor. L.P., its Managing Member 

By:-----------------­

Name: 


Title: Authorized Signatory 


By: 


Name: 


Title: Authorized Signatory 


ACKNOWLEDGED AND AGREED as of 


the date first above written: 


FEDERAL DEPOSIT INSURANCE 


CORPORATION, in its capacity as 


receiver tor AmTrust Bank, as the Initial 


Member 


By: ________________________________ 


Name: 


Title: Attorney-in-Fact 


AMTRUST CADC VENTURE, LLC, as the Company 

By: 	 Federal Deposit Insurance 

Corporation in its capacity as 

receiver for AmTrust Bank, as Sole 

Member and Manager 

By: 


Name: 


Title: Attorney-in-Fact 


AmTru st Bank CADC Loan and REO St ructured Transaction 

T ransfe rred LLC lnt re t Sale A gmt 

6 [ 049883 _8