PARTICIPATION AND SERVICING AGREEMENT 

By and Between 

FNBN-CMLCON I LLC 

and 

FEDERAL DEPOSIT INSURANCE CORPORATION 

as RECEIVER for 

FIRST NATIONAL BANK OF NEVADA 

Dated as of February 20, 2009 

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TABLE OF CONTENTS 

Page 

ARTICLE I DEFINITIONS AND CONSTRUCTION ...............................................................1
 

Section 1.01 Definitions....................................................................................................1 

Section 1.02 Construction...............................................................................................13 

ARTICLE II PARTICIPATION INTERESTS..........................................................................14
 

Section 2.01 Acquisition and Sale ..................................................................................14 

Section 2.02 Participant’s Share .....................................................................................14 

Section 2.03 Participation Certificates............................................................................14 

Section 2.04 Nature of Participation...............................................................................15 

Section 2.05 Company as Lender of Record; Third Parties............................................15 

Section 2.06 Security Interest .........................................................................................15 

ARTICLE III DISBURSEMENTS; REIMBURSEMENTS .....................................................16
 

Section 3.01 Servicing Expenses ....................................................................................16 

Section 3.02 Working Capital.........................................................................................17 

Section 3.03 Use of Loan Proceeds ................................................................................17 

ARTICLE IV ALLOCATIONS; ACCOUNTS..........................................................................19
 

Section 4.01 Allocations and Distributions ....................................................................19 

Section 4.02 Collection Account ....................................................................................20 

Section 4.03 Liquidity and Litigation Reserves..............................................................20 

ARTICLE V SERVICING OBLIGATIONS OF THE COMPANY........................................23
 

Section 5.01 Appointment and Acceptance as Servicer .................................................23 

Section 5.02 Servicing Standard.....................................................................................23 

Section 5.03 Retention of Servicer .................................................................................24 

Section 5.04 Fidelity Bond; E&O Insurance ..................................................................27 

Section 5.05 Books and Records; Reports; Certifications; Audits .................................27 

Section 5.06 Recovery of Expenses; Interest; Working Capital Advances ....................29 

Section 5.07 Company’s Duty To Advise Participant; Delivery of Certain 

Notices .......................................................................................................29 

Section 5.08 Releases of Collateral ................................................................................29 

Section 5.09 Certain Servicing and Loan Administration Decisions .............................29 

Section 5.10 Management and Disposition of Collateral ...............................................31 

ARTICLE VI LOAN DEFAULTS; ACQUISITION OF COLLATERAL .............................33
 

Section 6.01 Discretion of the Company in Responding to Defaults of Borrower.........33 

Section 6.02 Acquisition of Collateral............................................................................33 

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ARTICLE VII PARTICIPANT CONSENT; LIMITS ON LIABILITY.................................34
 

Section 7.01 Actions Requiring Participant Consent......................................................34 

Section 7.02 Limitation of Liability................................................................................34 

ARTICLE VIII ADDITIONAL COMPANY COVENANTS; INDEMNIFICATION ..........35
 

Section 8.01 Covenants...................................................................................................35 

Section 8.02 Indemnification ..........................................................................................37 

ARTICLE IX CLEAN-UP CALL ...............................................................................................39
 

Section 9.01 Clean-Up Call Rights.................................................................................39 

Section 9.02 Exercise of Clean-Up Call Rights..............................................................39 

Section 9.03 Company To Proceed Expeditiously .........................................................39 

ARTICLE X EVENTS OF DEFAULT OF THE COMPANY .................................................40
 

Section 10.01 Events of Default .......................................................................................40 

Section 10.02 Remedies Upon Events of Defaults ...........................................................41 

ARTICLE XI RELATIONSHIP BETWEEN PARTICIPANT AND THE 

COMPANY..................................................................................................44
 

ARTICLE XII ASSIGNMENT....................................................................................................44
 

Section 12.01 No Assignment by Company.....................................................................44 

Section 12.02 Assignments by Participant........................................................................45 

ARTICLE XIII LENDERS’ TITLE INSURANCE; RIGHTS TO PAYMENTS...................46
 

Section 13.01 Title Policies ..............................................................................................46 

Section 13.02 Sharing of Payments ..................................................................................46 

ARTICLE XIV TERMINATION................................................................................................46
 

ARTICLE XV NOTICES.............................................................................................................46
 

ARTICLE XVI GOVERNING LAW; JURISDICTION ..........................................................48
 

Section 16.01 Governing Law ..........................................................................................48 

Section 16.03 Waiver of Jury Trial...................................................................................48 

ARTICLE XVII RIGHT TO SPECIFIC PERFORMANCE ...................................................49
 

ARTICLE XVIII WITHHOLDING ...........................................................................................49
 

ARTICLE XIX MISCELLANEOUS ..........................................................................................50
 

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Section 19.01 Entire Agreement .......................................................................................50 

Section 19.02 Counterparts; Facsimile Signatures ...........................................................50 

Section 19.03 Headings ....................................................................................................50 

Section 19.04 Compliance with Law ................................................................................50 

Section 19.05 Severability ................................................................................................50 

Section 19.06 No Third Party Beneficiaries .....................................................................51 

Section 19.07 Legal Fees ..................................................................................................51 

Section 19.08 Time of Essence .........................................................................................51 

Section 19.09 No Presumption .........................................................................................51 

Section 19.10 Amendments and Waivers .........................................................................51 

Exhibits 

Exhibit A: Loan Schedule 

Exhibit B-1: Form of Custodial Agreement 

Exhibit B-2: Form of Servicing Agreement 

Exhibit C: Form of Participation Certificate 

Exhibit D: Form of Monthly Report 

Exhibit E: Form of Transfer Supplement 

Exhibit F: Form of Account Control Agreement 

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PARTICIPATION AND SERVICING AGREEMENT 

THIS PARTICIPATION AND SERVICING AGREEMENT (as the same shall be 

amended or supplemented, this “Agreement”) is made and entered into as of the 20th day of 

February, 2009 (the “Effective Date”), by and between FNBN-CMLCON I LLC, a Delaware 

limited liability company (the “Company”), and the FEDERAL DEPOSIT INSURANCE 

CORPORATION (“FDIC”) AS RECEIVER FOR FIRST NATIONAL BANK OF NEVADA 

(including its successors and assigns, “Participant”). 

RECITALS 

WHEREAS, on July 25, 2008, the FDIC was appointed receiver (“Receiver”) for First 

National Bank of Nevada (“Failed Bank”); and 

WHEREAS, the Receiver owns a number of Loans (hereinafter defined) as described on 

the Loan Schedule attached hereto as Exhibit A (the “Loan Schedule”), which it desires to 

liquidate; and 

WHEREAS, the Receiver has formed the Company and holds the sole membership 

interest in the Company (the “LLC Interest”); and 

WHEREAS, the Receiver and the Company have entered into a Loan Contribution and 

Assignment Agreement dated of even date hereof (the “Contribution Agreement”), pursuant to 

which the Receiver has agreed to make a capital contribution of and transfer and convey all of 

the Receiver’s right, title and interest in and to the Loans to the Company, and the Company has 

agreed to transfer and convey to the Receiver a participation interest in the Loans (evidenced by 

a participation certificate), as more fully set forth herein; and 

WHEREAS, pursuant to the Limited Liability Company Interest Sale and Assignment 

Agreement dated of even date hereof (the “LLC Interest Sale Agreement”), the Receiver has 

agreed to sell and transfer the LLC Interest to SGH FNB Ventures, LLC (the completion of such 

sale, the “Closing”); and 

WHEREAS, Participant and the Company desire to memorialize their agreement relating 

to such participation interest and certain other matters as set forth in this Agreement; 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and 

agreements hereinafter contained, and for other good and valuable consideration the receipt and 

sufficiency of which are hereby acknowledged, Participant and the Company hereby agree as 

follows: 

ARTICLE I 

DEFINITIONS AND CONSTRUCTION 

Section 1.01 Definitions. For purposes of this Agreement, the following terms shall 

have the meanings and definitions hereinafter respectively set forth: 

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“Acceptable Rating” shall mean any of the top three rating categories that may be 

assigned to any security, obligation or entity by the Rating Agencies. 

“Acquired Collateral” shall mean Collateral to which title is acquired by or on behalf of 

the Company or any Ownership Entity by foreclosure, by deed in lieu of foreclosure, by power 

of sale or by sale pursuant to the Uniform Commercial Code, in any such case in accordance 

with the Loan Documents and in connection with performance by the Company of its obligations 

and duties under this Agreement. 

“Affiliate” shall mean, with respect to any specified Person, (i) any other Person directly 

or indirectly controlling or controlled by or under common control with such specified Person, 

(ii) any Person owning or controlling ten percent (10%) or more of the outstanding voting 

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

director, general partner, managing member, trustee, employee or promoter of the Person 

specified or any Immediate Family Member of such officer, director, partner, member, trustee, 

employee or promoter, (iv) any corporation, partnership, limited liability company or trust for 

which any Person referred to in clause (ii) or (iii) acts in that capacity, or (v) any Person who is 

an officer, director, general partner, managing member, trustee or holder of ten percent (10%) or 

more of outstanding voting securities, voting equity interests or beneficial interests of any Person 

described in clauses (i) through (iv); provided, however, that for purposes of this Agreement 

Participant shall not be deemed to be an Affiliate of either the Company or any Affiliate of the 

Company. For the purposes of this definition, the term “control” (including the phrases 

“controlled by” and “under common control with”) when used with respect to any specified 

Person means the possession, direct or indirect, of the power to direct or cause the direction of 

the management and policies of such Person, whether through the ownership of voting securities 

or interests, by contract or otherwise. 

“Agreement” shall have the meaning given in the preamble, and shall include all exhibits 

and schedules hereto. 

“Ancillary Documents” shall mean the Contribution Agreement, the LLC Interest Sale 

Agreement and the Guaranty required to be delivered thereby, the Company Operating 

Agreement, the Servicing Agreement and the Custodial Agreement, in each case once executed 

and delivered, and any and all other agreements and instruments executed and delivered 

contemporaneously in connection with the Closing. 

“Authorized Funding Draw” shall mean any principal advance with respect to a Loan 

listed, up to the maximum aggregate amount of principal advances set forth in the column of the 

Loan Schedule entitled “Maximum Authorized Funding Draw”, including any such advances 

made by Participant prior to the Servicing Transfer Date; provided, however, that (i) if required 

by applicable Law or if otherwise deemed necessary by the Company, an endorsement to the title 

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

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

which the applicable Authorized Funding Draw it covers is made, (b) increases the liability limit 

of the title policy by an amount equal to the principal amount of such Authorized Funding Draw, 

and (c) contains no new exceptions to title; (ii) notwithstanding anything to the contrary 

contained in this Agreement, the Company shall make or permit an Authorized Funding Draw if 

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then outstanding unpaid principal balance of the Loan exceeds the value of the Collateral only if 

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

able to repay the Loan or that the making of the Authorized Funding Draw is in the best interests 

(in terms of maximizing the value of the Loan) of the Company and the Participant; and (iii) 

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

provided, however, that if any term with respect to the Loan or the Loan Documents precludes 

such advance in the event of a Borrower default, such term may be waived if the Company 

determines, in its reasonable judgment, that such waiver is in the best interests of the Company 

and the Participant in terms of maximizing the value of the Loan. 

“Borrower” shall mean the borrower or other obligor with respect to a Loan. 

“Business Day” shall mean any day except a Saturday, Sunday or other day on which 

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

or authorized by Law to close. 

“Clean-Up Call” shall have the meaning given in Article IX. 

“Closing” shall have the meaning given in the fifth recital. 

“Collateral” shall mean any and all real or personal property, whether tangible or 

intangible, securing or pledged to secure a Loan, including any account, equipment, Guarantee or 

contract right, or other interest that is the subject of any Collateral Document and, as the context 

requires, includes Acquired Collateral. 

“Collateral Document” shall mean any pledge agreement, security agreement, personal 

or corporate guaranty, deed of trust, mortgage, contract for the sale of real property, assignment, 

collateral agreement or other agreement or document of any kind, whether an original or a copy, 

whether similar to or different from those enumerated, securing in any manner the performance 

or payment by any Borrower of its obligations or the obligations of any other Borrower under 

any of the Loans or Notes evidencing the Loans or evidencing any Acquired Collateral. 

“Collection Account” shall mean a segregated trust or custodial account established and 

maintained with an Eligible Institution for the sole purpose of holding and distributing Loan 

Proceeds. 

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

“Company Operating Agreement” shall mean the Limited Liability Company 

Operating Agreement of the Company in effect as of the Effective Date, as amended pursuant to 

the terms thereof. 

“Company’s Share” shall have the meaning given in Section 4.01(a). 

“Contribution Agreement” shall have the meaning given in the fourth recital. 

“Custodial Agreement” shall mean an agreement in the form of Exhibit B-1. 

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“Custodial Documents” shall have the meaning given in the Custodial Agreement. 

“Cut-Off Date” shall mean the close of business on December 31, 2008. 

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

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

(excluding trade payables arising in the ordinary course of business), (iii) all obligations of such 

Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all indebtedness 

created or arising under any conditional sale or other title retention agreement with respect to 

property acquired by such Person (even though the rights and remedies of the seller or lender 

under such agreement in the event of default are limited to repossession or sale of such property), 

(v) all obligations of such Person as lessee under leases that have been or should be, in 

accordance with GAAP, recorded as capital leases, or (vi) all indebtedness or obligations of 

others of the kinds referred to in clauses (i) through (v) above in respect of which such Person 

has entered into or issued any Guarantee. 

“Deemed Effective Date” shall have the meaning given in Section 12.02(b). 

“Default Rate” shall mean the default interest rate prescribed in a Note. 

“Document Custodian” shall have the meaning given in Section 8.01(c). 

“Effective Date” shall have the meaning given in the preamble. 

“Eligible Institution” shall mean a Person that is not an Affiliate of the Company and 

that is a federally insured depository institution that is well capitalized; provided that an Affiliate 

of the Company may be deemed to be an Eligible Institution if Participant provides a written 

consent (which may be withheld in Participant’s sole and absolute discretion), which consent 

may be withdrawn by Participant upon written notification to the Company, in which case such 

Affiliate of the Company shall no longer constitute an Eligible Institution as of the receipt of 

such notice and any accounts maintained pursuant to this Agreement at such institution shall be 

moved to an Eligible Institution within three (3) Business Days after the receipt of such notice. 

“Enforcement Action” shall mean the commencement of the exercise of any of the 

following remedies against any Borrower, any Guarantor or any other Person: (a) acceleration of 

the maturity of any liability or obligation of any Borrower or any Guarantor; (b) commencement 

of any litigation or proceeding, including the commencement of any foreclosure proceeding, the 

exercise of any power of sale, the sale by advertisement, obtaining of a receiver or taking of any 

other remedial action with respect to, or the enforcement of any remedy against, any Collateral 

or any of the property or assets of any Borrower or any Guarantor; (c) filing or joining in the 

filing of any petition against any Borrower or any Guarantor of any Insolvency Proceeding or 

any other commencement of an Insolvency Proceeding; (d) entering upon, taking possession of, 

exercising control over or taking title (legal or equitable) to any Collateral or taking of a deed or 

assignment in lieu of foreclosure; or (e) any legal action or proceeding pursuant to any 

intercreditor agreement. 

“Entitlement” shall mean any final zoning, platting, site plan or other applicable 

development approval or permit from any governmental agency or instrumentality having 

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jurisdiction relating to the development, construction, ownership or operation of any Collateral 

property, including a conditional use permit or a building permit. 

“Environmental Hazard” shall mean the presence at, in or under any real property 

constituting part of the Collateral (whether held in fee simple estate or subject to a ground lease, 

or otherwise, and including any improvements whether by buildings or facilities, and any 

personal property, fixtures, leases and other property or rights pertaining thereto) of any 

“hazardous substance,” as defined in Section 101(14) of the Comprehensive Environmental 

Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601(14), or any petroleum 

(including crude oil or any fraction thereof that is liquid at standard conditions of temperature 

and pressure), at a level or in an amount that requires remediation or abatement under applicable 

environmental Law. 

“Escrow Advance” shall mean any advance made to pay taxes or insurance premiums or 

any other cost or expense that, but for a shortfall in the Borrower’s escrow account, is payable 

using funds in the Borrower’s escrow account. 

“Event of Default” shall have the meaning given in Section 10.01. 

“Failed Bank” shall have the meaning given in the first recital. 

“Fannie Mae” shall mean the Federal National Mortgage Association of the United 

States, or any successor thereto. 

“Fannie Mae Guidelines” shall mean those guidelines governing reimbursement of costs 

and expenses by Fannie Mae with respect to loans owned or securitized by Fannie Mae, as in 

effect on the date on which an expense or cost is incurred. 

“FDIC” shall mean the Federal Deposit Insurance Corporation in any capacity. 

“Final Distribution” shall mean the distribution of all remaining Loan Proceeds in 

accordance with the terms of this Agreement after liquidation of all of the Loans and related 

Collateral. 

“Final LIP Distribution” shall have the meaning given in Section 4.03(c). 

“Final LIP Distribution Amount” shall mean the amount received by Participant as a 

result of the Final LIP Distribution. 

“GAAP” shall mean United States generally accepted accounting principles as in effect 

from time to time. 

“Governmental Authority” shall mean any United States or non-United States national, 

federal, state, local, municipal or provincial or international government or any political 

subdivision of any governmental, regulatory or administrative authority, agency or commission, 

or judicial or arbitral body. 

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“Guarantor” shall mean any guarantor of all or any portion of any Loan or all or any of 

any Borrower’s obligations set forth and described in the Loan Documents. 

“Guarantee” shall mean, with respect to any particular indebtedness or other obligation, 

(i) any direct or indirect guarantee thereof by a Person other than the obligor with respect to such 

indebtedness or other obligation or any transaction or arrangement intended to have the effect of 

directly or indirectly guaranteeing such indebtedness or other obligation, including without 

limitation any agreement by a Person other than the obligor with respect to such indebtedness or 

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

supply funds for the payment or purchase of such indebtedness or other obligation, (B) to 

purchase, sell or lease (as lessee or lessor) property of, to purchase or sell services from or to, to 

supply funds to or in any other manner invest in, the obligor with respect to such indebtedness or 

other obligation (including any agreement to pay for property or services of the obligor 

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

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

assure the holder or other obligee of such indebtedness or other obligation against loss, or 

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

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

other obligation to grant such obligee, under any circumstances) by a Person other than the 

obligor with respect to such indebtedness or other obligation of a security interest in, or other 

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

assumed or become liable for the payment of such indebtedness or other obligation. 

“Guidelines” shall mean (i) the Statement on Loss Mitigation Strategies for Servicers of 

Residential Mortgages (September 2007), issued by the federal financial institutions regulatory 

agencies and the Conference of State Bank Supervisors, (ii) the Statement on Working with 

Mortgage Borrowers (April 2007), issued by the federal financial institutions regulatory 

agencies, and (iii) any amendments, supplements or successors to either of the foregoing. 

“Immediate Family Member” shall mean, with respect to any individual, his or her 

spouse, parents, parents-in-law, grandparents, descendents, nephews, nieces, brothers, sisters, 

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

children, grandchildren and grandchildren-in-law. 

“Indemnified Parties” shall have the meaning given in Section 8.02(a). 

“Insolvency Event” shall mean, with respect to any specified Person, the occurrence of 

any of the following events: 

(1) the specified Person makes an assignment for the benefit of creditors; 

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

Proceeding; 

(3) the specified Person is adjudged bankrupt or insolvent or there is entered 

against the specified Person an order for relief in any Insolvency Proceeding; 

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(4) the specified Person files a petition or answer seeking for the specified 

Person any reorganization, arrangement, composition, readjustment, liquidation, 

dissolution, or similar relief under any Law; 

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

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

of the specified Person’s properties; 

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

to contest the material allegations of a petition filed against the specified Person in any 

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

(7) the specified Person becomes unable to pay its obligations as they become 

due, or the sum of such specified Person’s debts is greater than all of such Person's 

property, at a fair valuation; or 

(8) within 90 days of any proceeding against the specified Person seeking 

reorganization, arrangement, composition, readjustment, liquidation, dissolution or 

similar relief under any Law if the proceeding has not been dismissed, or within 90 days 

after the appointment of a trustee, receiver or liquidator for the specified Person or all or 

any substantial part of the specified Person’s properties without the specified Person’s 

agreement or acquiescence, which appointment is not vacated or stayed, or if the 

appointment is stayed, for 90 days after the expiration of the stay if the appointment is 

not vacated. 

“Insolvency Proceeding” shall mean any proceeding under Title 11 of the United States 

Code (11 U.S.C. §§101, et seq.) or any proceeding under the Law of any jurisdiction involving 

any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar 

relief. 

“Interest Rate” shall mean the rate at which the outstanding principal balance of a Loan 

bears interest, as more particularly set forth in a Note, including, without limitation, the Default 

Rate if applicable. 

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

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

Authority. 

“Lien” shall mean any pledge, security interest, charge, restriction on or condition to 

transfer, voting or exercise or enjoyment of any right or beneficial interest, option, right of first 

refusal and any other lien, claim or encumbrance of any kind or nature whatsoever. 

“LIP Account” shall mean a segregated trust or custodial account established and 

maintained with an Eligible Institution for the sole purpose of holding and distributing the LIP 

Funds. 

“LIP Funds” shall have the meaning given in Section 4.03(c). 

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“Liquidity Reserve Account” shall mean a segregated trust or custodial account 

established and maintained with an Eligible Institution for the sole purpose of holding and 

distributing the funds in the Liquidity Reserve. 

“Liquidity Reserve” shall have the meaning given in Section 4.03(a). 

“Litigation Reserve Account” shall mean a segregated trust or custodial account 

established and maintained with an Eligible Institution for the sole purpose of holding and 

distributing the funds in the Litigation Reserve. 

“Litigation Reserve” shall have the meaning given in Section 4.03(b). 

“LLC Interest” shall have the meaning given in the third recital. 

“LLC Interest Sale Agreement” shall have the meaning given in the fifth recital. 

“Loan” shall mean any loan or Loan Participation listed on the Loan Schedule and any 

loan into which any listed loan or Loan Participation is refinanced, and includes with respect to 

each such loan or Loan Participation: (i) any obligation evidenced by a Note; (ii) all rights, 

powers or Liens of the Receiver in or under the Collateral Documents; (iii) any contract for deed 

or installment land contract and the real property which is subject to any such contract for deed 

or installment land contract; and (iv) any lease and the related leased property. 

“Loan Documents” shall mean all documents, agreements, certificates, instruments and 

other writings (including all Collateral Documents) now or hereafter executed by or delivered or 

caused to be delivered by any Borrower, any Guarantor or any other obligor evidencing, 

creating, guaranteeing or securing, or otherwise executed or delivered in respect of, all or any 

part of a Loan or any Acquired Collateral or evidencing any transaction contemplated thereby, 

and all Modifications thereto. 

“Loan Participation” shall mean any loan subject to a shared credit, participation or 

similar inter-creditor agreement under which the Failed Bank or the Receiver was the lead or 

agent financial depository institution or otherwise managed or held the credit or sold 

participations, or under which the Failed Bank or the Receiver was a participating financial 

depository institution or purchased participations in a credit managed by another Person. 

“Loan Participation Agreement” shall mean an agreement under which the Failed Bank 

or the Receiver was the lead or agent financial depository institution or otherwise managed or 

held a shared credit or sold participations, or under which the Failed Bank or the Receiver was a 

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

another Person. 

“Loan Proceeds” shall mean (i) any and all proceeds (net of such proceeds as are 

payable to others under any Loan Participation Agreement) with respect to any or all of the 

Loans and any or all of the Collateral that is received at any time after the Cut-Off Date, 

including principal, interest, interest at the Default Rate, prepayment fees, premiums and 

charges, extension and exit fees, late fees, assumption fees, other fees and charges, insurance 

proceeds and condemnation payments (or any portion thereof) that are not used and disbursed to 

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repair, replace or restore the related Collateral in accordance with the terms of the Loan 

Documents; (ii) any and all proceeds from sales or other dispositions of any or all of the Loans or 

the Collateral; (iii) any proceeds from making a draw under any letter of credit or certificate of 

deposit held with respect to any Loan, provided that such draw is permitted by the terms of the 

Loan Documents; (iv) any recoveries of Pre-Cut-Off Date Advances or other recoveries from 

Borrowers or Guarantors of any kind or nature with respect to the Loans; and (v) any interest or 

other earnings accrued and paid on any of the items referred to in the foregoing clauses (i) 

through (iv) while held in the Collection Account or any other account. 

“Loan Schedule” shall have the meaning given in the second recital. 

“Losses” shall have the meaning given in Section 8.02(a). 

“Management Fee” shall mean a fee, payable monthly to the Company on the 15th day 

of each month through (and including) the month in which the Final Distribution occurs, equal to 

one-twelfth (1/12th) of 0.435 percent (0.435%) multiplied by the Unpaid Principal Balance 

calculated as of the last day of the immediately preceding month. 

“Modification” shall mean any extension, renewal, substitution, replacement, 

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

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

“Note” shall mean each note or promissory note, lost instrument affidavit, loan 

agreement, shared credit or Loan Participation Agreement, intercreditor agreement, 

reimbursement agreement, any other evidence of indebtedness of any kind, or any other 

agreement, document or instrument evidencing a Loan, and all Modifications to the foregoing. 

“Ownership Entity” shall have the meaning given in Section 6.02. 

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

“Participant’s Share” shall have the meaning given in Section 2.02. 

“Participation” or “Participation Interest” shall mean an undivided ownership interest 

and participation, effective as of the Cut-Off Date, in, to and under (i) the Loans, including all 

future advances (including Authorized Funding Draws) made with respect thereto, (ii) the Loan 

Documents, (iii) all amounts payable to the Company under the Loan Documents and all 

obligations owed to the Company in connection with the Loans and the Loan Documents, (iv) all 

Collateral (including Acquired Collateral) relating to the Loans, (v) all claims, suits, causes of 

action and any other right of the Company, whether known or unknown, against a Borrower, any 

Guarantor or other obligor or any of their respective Affiliates, agents, representatives, 

contractors, advisors or any other Person arising under or in connection with the Loans or the 

Loan Documents or that is in any way based on or related to any of the foregoing, including 

contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in 

equity arising under or in connection with the Loan Documents or the transactions related thereto 

or contemplated thereby, (vi) all cash, securities and other property received or applied by or for 

the account of the Company under the Loans, including all distributions received through 

redemption, consummation of a plan of reorganization, restructuring, liquidation or otherwise of 

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a Borrower, Guarantor or other obligor under or with respect to the Loans, and any securities, 

interest, dividends or other property that may be distributed or collected with respect to any of 

the foregoing, and (vii) all proceeds of the foregoing. 

“Participation Certificate” shall have the meaning given in Section 2.03(a). 

“Permitted Investments” shall mean any one or more of the following obligations or 

securities having at the time of purchase, or at such other time as may be specified, the required 

ratings, if any, provided for in this definition: 

(1) direct obligations of, or guaranteed as to timely payment of principal and 

interest by, the United States of America or any agency or instrumentality of the United 

States of America, the obligations of which are backed by the full faith and credit of the 

United States of America; 

(2) demand and time deposits in or certificates of deposit of, or bankers’ 

acceptances issued by, any bank or trust company, savings and loan association or 

savings bank, provided that, in the case of obligations that are not fully FDIC-insured 

deposits, the commercial paper and/or long-term unsecured debt obligations of such 

depository institution or trust company (or in the case of the principal depository 

institution in a holding company system, the commercial paper or long-term unsecured 

debt obligations of such holding company) have an Acceptable Rating; 

(3) general obligations of or obligations guaranteed by any state of the United 

States or the District of Columbia receiving ratings of not less than the highest rating of 

each Rating Agency rating such obligations; 

(4) mutual funds in which investments are limited to the obligations referred 

to in clauses (1), (2) or (3) of this definition; and 

(5) with the prior written consent of Participant, any other demand, money 

market or time deposit or other obligation, security or investment. 

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

liability company, limited liability partnership, firm, joint venture, association, joint-stock 

company, trust, estate, unincorporated organization, governmental or regulatory body or other 

entity. 

“Post-Cut-Off Date Advances” shall mean advances made by or on behalf of the 

Receiver after the Cut-Off Date to fund Servicing Expenses. 

“Pre-Approved Charges” shall have the meaning given in the Contribution Agreement. 

“Pre-Cut-Off Date Advances” shall mean advances made by or on behalf of the 

Receiver or the Failed Bank (or other assignor that conveyed the Loans to the Failed Bank or the 

Receiver) on or prior to the Cut-Off Date to fund Servicing Expenses. 

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“Qualified Custodian” shall mean any Person that (i) is a bank, trust company or title 

insurance company subject to supervision and examination by any federal or state regulatory 

authority, (ii) is experienced in providing services of the type required to be performed by the 

Document Custodian under the Custodial Agreement, (iii) is not prohibited from exercising 

custodial powers in any jurisdiction in which the Custodial Documents (as defined in the 

Custodial Agreement) are or will be held, and is qualified and licensed to do business in each 

such jurisdiction to the extent required unless and to the extent the failure to be so qualified or 

licensed will not have a material adverse effect on the Document Custodian or the ability of the 

Document Custodian to perform its obligations under the Custodial Agreement, (iv) has 

combined capital and surplus of at least $50,000,000 as reported in its most recent report of 

condition, (v) is not an Affiliate of the Company or the Servicer, (vi) is acceptable to and 

approved by Participant (such approval not to be unreasonably withheld, delayed or 

conditioned), and (vii) has the facilities to safeguard the Loan Documents as required by the 

Custodial Agreement. 

“Qualified Servicer” shall mean any Person that (i) is properly licensed and qualified to 

conduct business in each jurisdiction in which such licenses and qualifications to conduct 

business are necessary for the servicing of the Loans and management of the Collateral, (ii) has 

the management capacity and experience to service loans of the type held by the Company, 

especially performing and non-performing construction loans, including those secured by 

residential properties, including the number and types of loans serviced, and the ability to track, 

process and post payments, to monitor construction, to approve and disburse construction draws, 

and to furnish tax reports to borrowers, (iii) either (x) has an Acceptable Rating as a mortgage 

loan servicer or special servicer or (y) is an FDIC-insured depository institution or an Affiliate of 

an FDIC-insured depository institution, and (iv) in the case of any mortgage loan servicer or 

special servicer that does not have an Acceptable Rating, is acceptable to and approved by 

Participant (such approval not to be unreasonably withheld, delayed or conditioned). 

“Rating Agencies” shall mean each of Moody’s Investors Service, Inc., Standard & 

Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., Fitch IBCA, Inc. and 

such other rating agencies as are nationally recognized. 

“Receiver” shall have the meaning given in the first recital. 

“Recovery Threshold Amount” shall mean $235,000,000. 

“Regulation AB” shall mean the regulations at 17 C.F.R. §§229.1100, et seq., as the 

same may be amended from time to time. 

“Secured Assets” shall have the meaning given in Section 2.06. 

“Servicer” shall have the meaning given in Section 5.03. 

“Servicing Agreement” shall mean an agreement in the form of Exhibit B-2 with such 

supplements and amendments thereto as are permitted thereby. 

“Servicing Expenses” shall mean all customary and reasonable out-of-pocket fees, costs, 

expenses and indemnified amounts incurred in connection with servicing the Loans and the 

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Acquired Collateral, including (i) any and all out-of-pocket fees, costs, expenses and indemnified 

amounts which a Borrower is obligated to pay to any Person or to reimburse to the lender 

pursuant to the applicable Note or any other Loan Documents, including Escrow Advances, 

(ii) any and all reasonable out-of-pocket expenses necessary to protect or preserve the value of 

the Collateral or the priority of the Liens and security interests created by the Loan Documents 

relating thereto, including taxes, insurance premiums (including forced place insurance 

premiums), payment of ground rent, the costs of prevention of waste, repairs and maintenance, 

foreclosure expenses and legal fees and expenses relating to foreclosure or other litigation with 

respect to the Loans, (iii) any and all direct expenses related to the preservation, operation, 

demolition, management and sale of the Acquired Collateral (including real estate broker fees 

and expenses and amounts disbursed to complete partially completed projects), and (iv) to the 

extent not covered by any of clauses (i) through (iii), legal fees and expenses (including 

judgments, settlements and reasonable attorneys fees) incurred by the Company in its defense of 

claims asserted against it that related to one or more Loans, and (x) arise out of the acts or 

omissions of the Failed Bank or the Receiver in connection with the origination or servicing of 

such Loans prior to the Servicing Transfer Date, or (y) allege, as the basis for such claims, any 

act or omission of the Company (or its Servicer) and such claims are decided (and there are final 

non-appealable orders) in favor of the Company (or its Servicer); provided, however, that 

Servicing Expenses shall not include Authorized Funding Draws or any of the costs, expenses or 

other amounts listed in Section 3.03(b). 

“Servicing Obligations” shall have the meaning given in Section 5.02. 

“Servicing Standard” shall have the meaning given in Section 5.02. 

“Servicing Transfer Date” shall be on or before February 27, 2009, or such other date as 

is agreed to by the Company and Participant. 

“Single Purpose Entity” shall mean a corporation or limited liability company that (i) is 

organized under the laws of any state of the United States or the District of Columbia, (ii) has no 

material assets other than the Loans and any Acquired Collateral, its right, title and interest in, to 

and under this Agreement and the other instruments contemplated by this Agreement, (iii) is not 

engaged in any significant business operations except its ownership of the Loans and any 

Acquired Collateral and the conduct of its business pursuant to this Agreement, (iv) does or 

causes to be done all things necessary to preserve and keep in full force and effect its existence, 

rights (charter and statutory) and franchises, (v) at all times holds itself out to the public as a 

legal entity separate from any other Person (including any Affiliate), (vi) except as expressly 

contemplated hereby or by the Ancillary Documents, does not commingle its assets with assets 

of any other Person, (vii) conducts its business in its own name and strictly complies with all 

organizational formalities to maintain its separate existence, (viii) maintains an arm’s length 

relationship with any Affiliate upon terms that are commercially reasonable and on terms no less 

favorable to it than could be obtained in a comparable arm’s length transaction with an unrelated 

Person, and (ix) has no Debt. 

“Site Assessment” shall have the meaning given in Section 6.02. 

“Subservicer” shall have the meaning given in Section 5.03. 

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“Subservicing Agreement” shall have the meaning given in Section 5.03. 

“Third Party Claim” shall have the meaning given in Section 8.02(a). 

“Transfer Supplement” shall have the meaning given in Section 12.02(a). 

“Uniform Commercial Code” shall mean, with respect to each discrete element or 

category of the personal property Collateral, the Uniform Commercial Code in effect in the 

applicable jurisdiction, as the same may be amended from time to time. 

“Unpaid Principal Balance” shall mean, at any time, an amount equal to the aggregate 

then outstanding principal balance of the Loans and, for each Loan with respect to which some 

or all of the related Collateral has been converted to Acquired Collateral and, until such time as 

the Acquired Collateral (or any portion thereof) is liquidated, the unpaid principal balance of the 

related Loan (adjusted pro rata for partial collateral sales, debt forgiveness or retained 

indebtedness) at the time at which such Loan was converted to Acquired Collateral plus any 

outstanding balance remaining on such Loan which is evidenced by a modification agreement or 

a replacement or successor promissory note executed by the Borrower. 

“Working Capital Advance” shall mean amounts advanced by or on behalf of the 

Company to fund the Company’s operations and operating deficits. 

Section 1.02 Construction. This Agreement shall be construed and interpreted in 

accordance with the following: 

(a) References to “Affiliates” include, only other Persons which from time to 

time constitute “Affiliates” 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” of such 

specified Person, except to the extent that any such reference specifically provides otherwise. 

(b) The term “or” is not exclusive. 

(c) A reference to a law includes any amendment, modification or 

replacement to such law. 

(d) Accounting terms shall have the meanings assigned to them by GAAP 

applied on a consistent basis by the accounting entity to which they refer. 

(e) References to any document, instrument or agreement (a) 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 (b) shall mean such 

document, instrument or agreement, or replacement thereto, 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. 

(f) Unless otherwise specified, the words “hereof,” “herein” and “hereunder” 

and words of similar import shall refer to this Agreement as a whole and not to any particular 

provision of this Agreement. 

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(g) The words “include” and “including” and words of similar import 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. 

(h) The word “during” when used 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. 

(i) Unless the context otherwise requires, singular nouns and pronouns when 

used herein shall be deemed to include the plural and vice versa and impersonal pronouns shall be 

deemed to include the personal pronoun of the appropriate gender. 

ARTICLE II 

PARTICIPATION INTERESTS 

Section 2.01 Acquisition and Sale. The Company hereby irrevocably grants, conveys, 

transfers and assigns to Participant, and Participant hereby irrevocably acquires and takes from 

the Company, the Participation Interest. It is the intention of the parties hereto that the 

conveyance of the Participation Interest as contemplated by this Agreement shall constitute a 

conveyance, transfer and assignment of that Participation Interest, including a beneficial interest 

in the Loans and the Loan Proceeds and any Acquired Collateral as and to the extent provided 

under New York Law, from the Company to Participant and that such Participation Interest 

(including such beneficial interest in the Loans and the Loan Proceeds and any Acquired 

Collateral) shall not be part of the Company’s estate, as determined pursuant to 11 U.S.C. § 

541(d), as amended, in the event of the filing of a bankruptcy petition by or against the Company 

under any bankruptcy Law. 

Section 2.02 Participant’s Share. The Participation Interest shall entitle Participant to 

receive 80% of all remaining Loan Proceeds after payment of the items set forth in Section 

3.03(a), until the later to occur of (i) the receipt by Participant of the Recovery Threshold 

Amount, after aggregating the proceeds received by Participant from the sale of the LLC Interest 

(before deducting any fees due to advisers or any amounts deposited by Participant into the LIP 

Account), and the proceeds received by Participant from Participant’s share of Loan Proceeds, 

and the proceeds received by Participant from the Final LIP Distribution Amount and, (ii) the 

date that is one (1) year after the Effective Date and, thereafter (automatically and without any 

action on the part of any Person), the Participation Interest shall entitle Participant to 60% of all 

remaining Loan Proceeds (such percentage share, the “Participant’s Share”). Upon the later to 

occur of (x) the receipt by Participant of the Recovery Threshold Amount and (y) the date that is 

one (1) year after the Effective Date, unless the Recovery Threshold Amount is achieved as a 

result of a single sale of the remaining Loans and Acquired Collateral following a Clean-Up Call, 

Participant shall submit its Participation Certificate to the Company for replacement and the 

Company shall issue a new Participation Certificate to Participant evidencing the change in 

Participant’s Share from 80% to 60%. 

Section 2.03 Participation Certificates. 

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(a) Issuance of Certificate. The Participation Interest shall be evidenced by a 

Participation Certificate executed and delivered to Participant by the Company in the form of 

Exhibit C attached hereto (as the same may be replaced from time to time, the “Participation 

Certificate”). 

(b) Register. The Company shall maintain a register in which ownership of 

the Participation (including all transfers of all or any part thereof) is recorded. The Company and 

any agent of the Company may treat as the owner of the Participation the Person in whose name 

the Participation is registered on the register on any applicable date for the purpose of receiving 

payments under such Participation and on any other date for all other purposes. 

(c) Missing, Damaged and Destroyed Certificates. Upon the surrender of any 

mutilated Participation Certificate to the Company, or upon the receipt by the Company of 

evidence satisfactory to it that a Participation Certificate has been destroyed, lost or stolen, the 

Company shall replace the damaged, lost, stolen or destroyed Participation Certificate. 

Section 2.04 Nature of Participation. Except as is expressly provided in this 

Agreement, the Participation Interest shall not impose any obligations or liabilities on Participant 

with respect to the Loans or any Acquired Collateral and Participant shall not be liable for or 

obligated to pay (and Participant’s Share shall not be reduced by) any funding obligations of the 

Company or any costs or expenses incurred in connection with the ownership, servicing, 

management or administration of the Loans or any Acquired Collateral. 

Section 2.05 Company as Lender of Record; Third Parties. Notwithstanding the 

Participation Interest in favor of Participant created by this Agreement, the Company shall be 

and remain the lender under the Loans, retaining the Loans and the Loan Documents in the 

Company’s own name. The Company shall be, and hereby is, authorized to deal with all Persons 

with respect to the Loans, including Borrowers, Guarantors, parties to intercreditor agreements, 

and parties to Loan Participation Agreements. Participant hereby authorizes any third party, 

without inquiry as to whether any action by the Company is authorized hereunder, to deal with 

the Company concerning the Loans in the same manner as if Participant’s Participation Interest 

therein were not outstanding. As between Participant and the Company, nothing in the foregoing 

shall modify any obligation of Participant to the Company or of the Company to Participant set 

forth in this Agreement or any Ancillary Document. Subject to the Receiver’s obligations to 

provide interim servicing with respect to the Loans under the Contribution Agreement, all 

communications with Borrowers shall be made by (or on behalf of) and through the Company, 

and Participant shall not communicate directly with any Borrower, Guarantor or any of their 

respective principals, any party to any Loan Participation Agreement, or any property manager 

or leasing agent or any broker for the Collateral or any part thereof, regarding this Agreement or 

Participant’s Participation Interest, or cause any Borrower to be involved in or affected by any 

dispute between Participant and the Company. 

Section 2.06 Security Interest. This Agreement shall constitute a security agreement 

under applicable Law and, in furtherance thereof the Company shall be deemed to have granted, 

and does hereby grant, to Participant a first priority security interest in the following for the 

benefit of Participant and its assignees as security for the Company’s obligations under this 

Agreement, including its obligation to pay Participant’s Share hereunder:(i) the Loans, including 

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all future advances (including Authorized Funding Draws) made with respect thereto; (ii) the 

Loan Documents; (iii) all amounts payable to the Company under the Loan Documents and all 

obligations owed to the Company in connection with the Loans and the Loan Documents; (iv) all 

Collateral (including Acquired Collateral, whether held by the Company directly or indirectly 

through an Ownership Entity) relating to the Loans; (v) all claims, suits, causes of action and any 

other right of the Company, whether known or unknown, against a Borrower, any Guarantor or 

other obligor or any of their respective Affiliates, agents, representatives, contractors, advisors or 

any other Person arising under or in connection with the Loans or the Loan Documents or that is 

in any way based on or related to any of the foregoing, including contract claims, tort claims, 

malpractice claims, statutory claims and all other claims at law or in equity arising under or in 

connection with the Loan Documents or the transactions related thereto or contemplated thereby; 

(vi) all cash, securities and other property received or applied by or for the account of the 

Company under the Loans, including all distributions received through redemption, 

consummation of a plan of reorganization, restructuring, liquidation or otherwise of a Borrower, 

Guarantor or other obligor under or with respect to the Loans, and any securities, interest, 

dividends or other property that may be distributed or collected with respect to any of the 

foregoing; (vii) the Collection Account, the LIP Account, the Liquidity Reserve Account and the 

Litigation Reserve Account, and all amounts on deposit therein; (viii) all Ownership Entities; and 

(ix) any and all distributions on, or proceeds or products of or with respect to, any of the 

foregoing, and the rights to receive such proceeds thereof (collectively, the “Secured Assets”). 

All of the Notes and other Custodial Documents shall be held by the Document Custodian as set 

forth in Section 8.01(c) (except and to the extent the same are permitted to be removed from the 

Document Custodian’s possession as provided in the Custodial Agreement). The Participant 

shall retain possession of the Notes and other Custodial Documents with respect to the Loans 

until such time as the Company retains the Document Custodian pursuant to the provisions of 

Section 8.01(c) and, at such time, the Company shall cause the Document Custodian to take 

possession of the Notes and other Custodial Documents with respect to the Loans on behalf of 

Participant. The Company hereby authorizes the filing by Participant of such financing 

statements in such jurisdictions as Participant deems appropriate (in its sole and absolute 

discretion) with respect to the Loans, the Loan Documents and the Loan Proceeds. The 

Company shall deliver to Participant, (i) for each Loan, an allonge, endorsed in blank, and 

executed by the Company, and (ii) for each Loan, an assignment, in blank, and executed by the 

Company. Such allonges and assignments shall be held by the Document Custodian with the 

Notes and other Custodial Documents. Participant shall not use the allonge to effect the 

endorsement of a Note or the assignment to effect the assignment of a mortgage to Participant 

unless Participant is entitled to exercise its rights as a secured party. 

ARTICLE III 

DISBURSEMENTS; REIMBURSEMENTS 

Section 3.01 Servicing Expenses. From and after the Servicing Transfer Date, the 

Company shall cause all Servicing Expenses to be funded and paid in accordance with the Loan 

Documents and the terms of this Agreement, to the extent not paid by the Borrower or any 

Guarantor. Notwithstanding anything to the contrary contained herein, in no event shall the 

Company be obligated to advance any amount to pay Servicing Expenses if the Company 

determines, in its discretion exercised in accordance with the Servicing Standard, that such 

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amount, when combined with all previous Servicing Expenses and Pre-Cut-Off Date Advances 

for such Loan, would not ultimately be recoverable from the Loan Proceeds from such Loan 

(including from the related Collateral). Subject to the obligations of the Receiver to provide 

interim servicing for the Loans under the Contribution Agreement, and subject to the provisions 

of Section 3.03, all Servicing Expenses shall be funded by (or through or on behalf of) the 

Company and not by Participant. 

Section 3.02 Working Capital. The Company shall be required to make Working 

Capital Advances if, at any time, the Loan Proceeds, including funds available in the Collection 

Account or in any Liquidity Reserve Account or Litigation Reserve Account, are insufficient to 

pay all costs and expenses incurred by the Company. Without limiting the foregoing, to the 

extent not paid or reimbursed by a Borrower or Guarantor or available from Loan Proceeds or, if 

unavailable from either source, from the Liquidity Reserve or Litigation Reserve (to the extent 

applicable), the Company shall make Working Capital Advances to pay Servicing Expenses, the 

costs and expenses payable to the Document Custodian pursuant to the Custodial Agreement and 

Pre-Approved Charges. Working Capital Advances shall be unsecured, and the failure of any 

amount thereof to be reimbursed shall not in any way increase the Company’s Share. Working 

Capital Advances shall be payable only out of the assets of the Company and only as and to the 

extent provided in Section 3.03(a), and Participant shall have no liability for, and no Person shall 

have any recourse against Participant for, any Working Capital Advance or the repayment 

thereof. Working Capital Advances shall not bear interest. 

Section 3.03 Use of Loan Proceeds. 

(a) Permitted Payments. Except as otherwise provided in Section 3.03(b), 

each month the Company shall utilize or distribute the Loan Proceeds in the following manner: 

(i) first, to reimburse the Company for any Post-Cut-Off Date 

Advances that have been reimbursed by the Company to the Receiver pursuant to Section 

2.2 of the Contribution Agreement, or, to the extent that the Company has not yet 

reimbursed the Receiver as required under the Contribution Agreement, to reimburse the 

Receiver for any then unreimbursed Post-Cut-Off-Date Advances; and 

(ii) then, to reimburse the Company for Working Capital Advances, 

but only to the extent that the same were used to pay or reimburse costs or expenses 

constituting Servicing Expenses, fees and expenses of the Document Custodian or PreApproved Charges; and 

(iii) then, to pay the Company the Management Fee, including any 

Management Fee (or portion thereof) due with respect to any prior month but unpaid 

(without duplication of any amounts paid pursuant to clause (ii) above); and 

(iv) then, to pay the fees and expenses of the Document Custodian in 

accordance with the terms of the Custodial Agreement (without duplication of any 

amounts paid pursuant to clause (ii) above); and 

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(v) then, to reimburse the Company for any then outstanding Servicing 

Expenses (without duplication of any amounts paid pursuant to clause (ii) above); and 

(vi) then, to reimburse the Company for Pre-Approved Charges 

(without duplication of any amounts paid pursuant to clause (ii) above); and 

(vii) then, to fund any Liquidity Reserve Account or any Litigation 

Reserve Account as and to the extent permitted by Section 4.03(a) and (b); and 

(viii) last, to make distributions, pursuant to Section 4.01 of Participant’s 

Share and the Company’s Share of the remaining Loan Proceeds. 

(b) Costs That Are Not Reimbursable. Notwithstanding anything else to the 

contrary contained herein or in any Ancillary Document, without the prior written consent of the 

Participant (which may be withheld in the Participant’s sole and absolute discretion), in no event 

may the Company deduct from the Loan Proceeds, or otherwise use Loan Proceeds to reimburse 

itself or pay for, any of the following: 

(i) any expenses or costs that are not incurred in accordance with the 

Servicing Standard or the Fannie Mae Guidelines; 

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

Company, or any Affiliate of the Servicer or any Subservicer, except as is otherwise 

expressly permitted pursuant to this Agreement; 

(iii) any expenses incurred by the Company to become a member of the 

Mortgage Electronic Registration Systems or to maintain the Company therein as a 

member in good standing; 

(iv) any fees or other compensation to or expenses of financial 

advisers, except to the extent the same are incurred as brokers’ fees or sales commissions 

incurred to market or sell the Loans or any Acquired Collateral in a bulk sale, the terms 

of which bulk sale (including the financial adviser’s or broker’s fees) are approved in 

advance by the Participant); 

(v) any fine, tax or other penalty, late fee, service charge, interest or 

similar charge, costs to release Liens or any other costs or expenses (including legal fees 

and expenses) incurred by or on behalf of the Company as a result of the Company’s or 

the Servicer’s or any Subservicer’s failure to service any Loan or Collateral properly in 

accordance with the applicable Loan Documents, this Agreement, the Servicing 

Agreement, any Subservicing Agreement or otherwise, or failure to make a payment in a 

timely manner, or failure otherwise to act in a timely manner; 

(vi) any interest on any Servicing Expenses or Working Capital 

Advances; 

(vii) any overhead or administrative costs incurred by the Company or 

any other Person (including any expenses incurred by the Company or any Servicer or 

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Subservicer to comply with Section 5.05, other than to the extent expressly provided to 

the contrary in Section 5.05(b)); or 

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

Subservicer or any other Person. 

(c) Authorized Funding Draws. As provided in Section 4.03(c), the Company 

shall cause Authorized Funding Draws to be disbursed from the LIP Account (i) as and when 

requested by or on behalf of the Borrower in accordance with the Loan Documents, and (ii) to 

reimburse the Receiver for Authorized Funding Draws made by the Receiver at any time after the 

Cut-Off Date and on or before the Servicing Transfer Date. 

Section 3.04 Delinquent Real Property Taxes. Participant shall be liable for and shall 

pay real property taxes with respect to the Collateral if and to the extent such taxes (i) are 

delinquent as of the Cut-Off Date and (ii) remain delinquent and are paid by the Company. The 

amounts due by the Participant pursuant to this Section may be deducted from Participant’s Share, 

but shall be accounted for and reported separately by the Company (in such form as Participant 

may reasonably request) in the monthly reports required pursuant to Section 5.05(c). All amounts 

paid by Participant pursuant to this Section (including any such amounts as are deducted from 

Participant’s Share, shall be treated as Pre-Cut-Off Advances. 

ARTICLE IV 

ALLOCATIONS; ACCOUNTS 

Section 4.01 Allocations and Distributions. 

(a) Allocations. After the use and distribution of the Loan Proceeds as and to 

the extent permitted by Section 3.03(a)(i) through (vii), or as required by Section 9.03, the 

remaining Loan Proceeds shall be allocated monthly as follows: Participant shall be allocated and 

entitled to receive the Participant’s Share of such remaining Loan Proceeds and, following the 

disbursement of the Participant’s Share (and not until Participant’s Share has been disbursed to 

Participant), the remaining Loan Proceeds shall be distributed to the Company (such proceeds, the 

“Company’s Share”). 

(b) Distributions. The Company shall cause to be forwarded to Participant on 

or prior to the fifteenth (15) day of each month (or if the fifteenth (15th) day is not a Business 

Day, the immediately following Business Day of the month), commencing on the fifteenth (15th) 

day of the first month following the Servicing Transfer Date, the Participant’s Share of the 

remaining Loan Proceeds received in the prior calendar month. All amounts due to Participant 

under this Agreement shall be remitted by wire transfer, in immediately available funds, to such 

account or accounts as Participant may, from time to time, direct. Upon the receipt by Participant 

of the Participant’s Share of the remaining Loan Proceeds, Participant shall be deemed to have 

released its security interest in the Company’s Share with respect to such Loan Proceeds and the 

Company’s Share may be disbursed to the Company. At such time as a Loan or the related 

Collateral is liquidated in its entirety (and the balance of the Loan reduced to zero, all related 

Collateral is sold or otherwise disposed of in accordance with this Agreement, a discounted 

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payoff is accepted as payment in full, or the Loan is otherwise satisfied or discharged or the 

remaining balance charged-off in accordance with this Agreement), and upon receipt by 

Participant of the Participant’s Share with respect thereto, Participant shall be deemed to have 

released its security interest in the Note related to such Loan and the Company’s Share with 

respect to the Loan Proceeds. At such time, the Company may (and is hereby authorized by 

Participant to) request the release of such Note from the Document Custodian. In the event an 

executed release of Participant’s security interest is required by applicable Law, the Company 

shall prepare and, upon presentation of the same to Participant, Participant shall promptly execute 

and return the same to the Company, provided that the form of such release is reasonably 

acceptable to Participant. 

Section 4.02 Collection Account. On or prior to the Closing, the Company shall 

establish or cause to be established the Collection Account to be held in trust for the benefit of 

Participant and the Company. After the Closing and prior to the Servicing Transfer Date, the 

Company shall permit the Receiver, as the interim servicer as described in Section 5.03 and 

under the Contribution Agreement, to use the same as provided in Section 3.3 of the 

Contribution Agreement) and, thereafter, the Company shall maintain or cause the Servicer to 

maintain the Collection Account. The Company shall cause all Loan Proceeds to be deposited 

into the Collection Account on a daily basis. No funds from any other source (other than interest 

or earnings on the Loan Proceeds) shall be commingled in the Collection Account. Amounts on 

deposit in (or that are required to have been deposited into) the Collection Account (including 

interest and earnings thereon) shall be allocated and may be withdrawn and disbursed only in 

accordance with the provisions of Section 3.03(a) and Section 4.01; provided, however, that if 

the Company, the Servicer or any Subservicer at any time erroneously deposits any amount into 

the Collection Account, it may withdraw such amount. Amounts on deposit in the Collection 

Account shall be invested in Permitted Investments but with a maturity that allows for their 

allocation and distribution on a monthly basis in accordance with Section 4.01. The Servicer 

shall be authorized and directed to withdraw funds from the Collection Account only to make 

disbursements in accordance with this Agreement and not for any other purpose. The Collection 

Account (and all funds therein) shall be subject to the security interest granted to Participant in 

Section 2.06 of this Agreement and, prior to or concurrently with the establishment of the 

Collection Account, and in any event prior to the making of any deposit therein, the Company, 

Participant and the Eligible Institution that will hold such Collection Account shall have 

executed and delivered an account control agreement in substantially the form attached hereto as 

Exhibit F. 

Section 4.03 Liquidity and Litigation Reserves. 

(a) Liquidity Reserve Account. The Company, in its discretion, may establish 

a liquidity reserve (the “Liquidity Reserve”) from which to fund Servicing Expenses other than 

litigation costs and expenses. If the Company elects to establish a Liquidity Reserve it shall 

establish a Liquidity Reserve Account. The Liquidity Reserve Account shall be held in trust for 

the benefit of Participant and the Company and shall be established and maintained for the sole 

purpose of holding and distributing the Liquidity Reserve funds. The Company may fund the 

Liquidity Reserve with such portion of the Loan Proceeds as it deems appropriate, in the exercise 

of its reasonable discretion. Such determination will be made at the beginning of each month and, 

if the Company determines to fund the Liquidity Reserve Account for that month, it will fund 

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such amount for such month in accordance with the provisions of Section 3.03(a). At any time 

after the Company funds the Liquidity Reserve Account, the Company may, in the exercise of its 

reasonable discretion, determine to release some or all of the funds from the Liquidity Reserve 

Account and move such funds from the Liquidity Reserve Account to the Litigation Reserve 

Account or allocate and distribute such released funds in accordance with Section 4.01. At the 

time of the Final Distribution, all remaining funds held in the Liquidity Reserve Account shall be 

allocated and distributed in accordance with Section 4.01. Amounts on deposit in the Liquidity 

Reserve Account shall be invested in Permitted Investments, shall not be used to pay costs or 

expenses other than Servicing Expenses (excluding litigation costs and expenses), and shall be 

used to pay Servicing Expenses (other than litigation costs and expenses) only in any month in 

which the Loan Proceeds received during that month do not provide sufficient cash to pay all 

Servicing Expenses due and payable (without prepayment) during that month. No funds from any 

other source (other than interest or earnings on the funds held in the Liquidity Reserve Account) 

shall be commingled in the Liquidity Reserve Account. Amounts on deposit in the Liquidity 

Reserve Account (including interest and earnings thereon) shall be used and may be withdrawn 

and disbursed only in accordance with the provisions of this Section. The Servicer shall be 

authorized and directed to withdraw funds from the Liquidity Reserve Account only to make 

disbursements in accordance with this Agreement and not for any other purpose. The Liquidity 

Reserve Account (and all funds therein) shall be subject to the security interest granted to 

Participant in Section 2.06 of this Agreement and, as such, prior to establishing the Liquidity 

Reserve Account or making any amounts deposits therein, the Company shall provide Participant 

with an account control agreement in substantially the form attached hereto as Exhibit F. 

(b) Litigation Reserve Account. The Company, in its discretion, may 

establish a litigation reserve (the “Litigation Reserve”) from which to fund litigation costs and 

expenses (including attorneys’ fees and fees of experts and other consultants retained in 

connection with litigation) that constitute Servicing Expenses. If the Company elects to establish 

a Litigation Reserve it shall establish a Litigation Reserve Account. The Litigation Reserve 

Account shall be held in trust for the benefit of Participant and the Company and shall be 

established and maintained for the sole purpose of holding and distributing the Litigation Reserve 

funds. The Company may fund the Litigation Reserve with such portion of the Loan Proceeds as 

it deems appropriate, in the exercise of its reasonable discretion. Such determination will be 

made at the beginning of each month and if the Company determines to fund the Litigation 

Reserve Account for that month, it will fund such amount for such month in accordance with the 

provisions of Section 3.03(a). At any time after the Company funds the Litigation Reserve 

Account, the Company may, in the exercise of its reasonable discretion, determine to release 

some or all of the funds from the Litigation Reserve Account and move such funds from the 

Litigation Reserve Account to the Liquidity Reserve Account or allocate and distribute such 

released funds in accordance with Section 4.01. At the time of the Final Distribution, all 

remaining funds held in the Litigation Reserve Account shall be allocated and distributed to 

Participant and to the Company in accordance with Section 4.01. Amounts on deposit in the 

Litigation Reserve Account shall be invested in Permitted Investments, shall not be used to pay 

costs or expenses other than litigation costs and expenses that constitute Servicing Expenses, and 

shall be used to pay such litigation costs and expenses only in any month in which the Loan 

Proceeds received during that month do not provide sufficient cash to pay all Servicing Expenses 

due and payable (without prepayment) during that month. No funds from any other source (other 

than interest or earnings on the funds in the Litigation Reserve Account) shall be commingled in 

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the Litigation Reserve Account. Amounts on deposit in the Litigation Reserve Account 

(including interest and earnings thereon) shall be used and may be withdrawn and disbursed only 

in accordance with the provisions of this Section. The Servicer shall be authorized and directed to 

withdraw funds from the Litigation Reserve Account only to make disbursements in accordance 

with this Agreement and not for any other purpose. The Litigation Reserve Account (and all 

funds therein) shall be subject to the security interest granted to Participant in Section 2.06 of this 

Agreement and, as such, prior to establishing the Litigation Reserve Account or withholding any 

funds for deposit therein, the Company shall provide Participant with an account control 

agreement in substantially the form attached hereto as Exhibit F. 

(c) LIP Account. The Company shall establish and, until such time as the 

Servicer is retained, maintain and, thereafter, cause the Servicer to maintain the LIP Account, 

held in trust for the benefit of Participant and the Company. 

(i) The LIP Account shall be funded at such time as the LLC Interest 

is sold (or such later time as is agreed to by Participant and the Company) with an initial 

principal amount of $37,571,664 (the “LIP Funds”), as follows: Participant shall deposit 

cash in the amount of $30,057,331.20 (an amount equal to 80% of the initial principal 

amount of the LIP Account) into the LIP Account, and the Company shall deposit cash in 

the amount of $7,514,332.80 (an amount equal to 20% of the initial principal amount of 

the LIP Account) into the LIP Account. No funds from any other source (other than 

interest or earnings on the LIP Funds) shall be commingled in the LIP Account. 

(ii) The Servicer shall be authorized, at the Company’s direction, to 

withdraw funds from the LIP Account only to make Authorized Funding Draws, and the 

LIP Account and the LIP Funds shall not otherwise be used for any purpose. The 

Company shall not permit withdrawals from the LIP Account for any other purpose. On 

the Servicing Transfer Date, the Receiver shall be reimbursed from the LIP Account an 

amount equal to the Authorized Funding Draws made by it at any time after the Cut-Off 

Date and on or before the Servicing Transfer Date. 

(iii) The LIP Funds shall be invested in Permitted Investments, but with 

a maturity that allows for (i) distribution of the LIP Funds as and when needed to make 

Authorized Funding Draws and (ii) liquidation of the LIP Account and distribution of the 

remaining LIP Funds as required by this Section. On the date that is one (1) year after 

the Effective Date, unless otherwise agreed by the parties, the LIP Account shall be 

liquidated (and no further Authorized Funding Draws may be made on or after such 

date), and all remaining LIP Funds then on deposit in the LIP Account, including all 

interest and earnings thereon, shall be distributed. Interest and earnings on the LIP Funds 

and the final distribution of cash remaining upon the liquidation of the LIP Account (the 

“Final LIP Distribution”) shall be distributed eighty percent (80%) to Participant and 

twenty percent (20%) to the Company along with Participant’s Share and the Company’s 

Share of Loan Proceeds (in accordance with Section 4.01) for the month in which the LIP 

Account is liquidated. The LIP Account (and all funds therein) shall be subject to the 

security interest granted to the Participant in Section 2.06 and, prior to or concurrently 

with the establishment of the LIP Account, and in any event prior to making any 

withdrawals therefrom, the Company, the Participant and the Eligible Institution that will 

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hold such LIP Account shall have executed and delivered an account control agreement 

in substantially the form attached hereto as Exhibit F. 

ARTICLE V 

SERVICING OBLIGATIONS OF THE COMPANY 

Section 5.01 Appointment and Acceptance as Servicer. Effective as of the Cut-Off 

Date, the Company is appointed (and accepts the appointment as) servicer for the Loans and any 

Collateral (sometimes referred to herein as the “servicer”). 

Section 5.02 Servicing Standard. The Company shall be responsible for servicing the 

Loans and the Collateral in accordance with this Section 5.02 (collectively, the “Servicing 

Standard”) and the other provisions of this Article V, including the provisions of Section 5.03 

(which require that servicing be performed through one or more Servicers). The Company shall 

cause the Loans and the Collateral to be serviced, administered, managed and disposed of 

(collectively, the “Servicing Obligations”) (i) in the best interests and for the benefit of 

Participant and the Company, (ii) in accordance with the terms of the Loans (and related Loan 

Documents), (iii) in accordance with the terms of this Agreement (including Article III and 

Article IV and this Article V), (iv) in accordance with all applicable Law, and (v) in compliance 

with the Guidelines, to the extent applicable, and, (vi) to the extent consistent with the foregoing 

terms, in the same manner in which a prudent servicer would service and administer similar 

loans and in which a prudent servicer would manage and administer similar properties for its 

own portfolio or for other Persons, whichever standard is higher, but using no less care and 

diligence than would be customarily employed by a prudent servicer following customary and 

usual standards of practice of prudent mortgage lenders, loan servicers and asset managers 

servicing, managing and administering similar loans and properties on an arms’ length basis, 

provided that in the absence of a customary and usual standard of practice, the Company shall 

comply with the Fannie Mae Guidelines applicable to similar loans and properties in similar 

situations. The Company shall cause its Servicing Obligations with respect to the Loans and the 

Collateral to be performed without regard to (w) any relationship that the Company, or any 

Servicer or Subservicer, or any of their respective Affiliates may have to any Borrower, 

Guarantor or other obligor, or any of their respective Affiliates, including any other banking or 

lending relationship, (x) the Company’s, or any Servicer’s or Subservicer’s, obligation to make 

disbursements and advances with respect to the Loans and Collateral, (y) any relationship that 

the Servicer or any Subservicer may have to each other or to the Company or any of its 

Affiliates, or any relationship that any of their respective Affiliates may have to the Company or 

any of its Affiliates (other than the contractual relationship evidenced by this Agreement or the 

Servicing Agreement or any Subservicing Agreement), and (z) the Company’s, or any Servicer’s 

or Subservicer’s, right to receive compensation (including the Management Fee or any portion of 

the Company’s Share) for its services under this Agreement, the Servicing Agreement or any 

Subservicing Agreement. Without limiting the generality of the foregoing, the Company’s 

Servicing Obligations hereunder shall include the following: 

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(a) discharging in a timely manner each and every obligation which the Loan 

Documents provide is to be performed by the lender thereunder, on its own behalf and on behalf 

of Participant; 

(b) incurring costs (including Servicing Expenses) in accordance with the 

provisions of the Loan Documents; 

(c) causing to be maintained for the Collateral (including any Acquired 

Collateral) with respect to each Loan with respect to which the Borrower has failed to maintain 

required insurance, fire, hurricane, flood and hazard 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 Company may, in the exercise of its reasonable discretion, determine are 

prudent; 

(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 Collateral as well as all other matters involved in the 

administration, preservation and ultimate disposition of the Collateral; 

(f) to the extent consistent with the foregoing, seeking to maximize the timely 

and complete recovery of principal and interest on the Loans and otherwise to maximize the value 

of the Loans and the Collateral; 

(g) except as otherwise set forth in this Agreement, making decisions under, 

and enforcing and performing in accordance with, the Loan Documents all loan administration, 

inspections, review of financial data and other matters involved in the servicing, administration 

and management of the Loans and the Collateral; 

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

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

(i) making all Authorized Funding Draws pursuant to the Loan Documents 

and this Agreement. 

Section 5.03 Retention of Servicer. On the date hereof, the Company shall enter into 

one or more Servicing Agreements to provide for the servicing and administration and 

management of the Loans and Collateral by one or more Qualified Servicers (each, a 

“Servicer”). Except for the period between the Cut-Off Date and the Servicing Transfer Date, 

during which time the Loans shall be serviced by the Receiver pursuant to its interim servicing 

obligations in the Contribution Agreement, the Loans shall at all times be serviced (and any 

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

the Servicer (“Subservicers”) as permitted hereunder) and the performance of all day-to-day 

Servicing Obligations of the Company shall be conducted by or through one or more Servicers 

(including any Subservicers permitted hereunder). Subject to the other terms and conditions of 

this Agreement, any Servicer may be an Affiliate of the Company. Each Servicer may engage or 

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retain one or more Subservicers, including Affiliates of the Company, to perform certain of its 

duties under the Servicing Agreement, as it may deem necessary and appropriate, by entering 

into a subservicing agreement with each such Subservicer (“Subservicing Agreement”), provided 

that any Subservicer meets the requirements set forth in clause (i) of the definition of Qualified 

Servicer and, to the extent applicable to the services to be performed by such Subservicer, clause 

(ii) of the definition of Qualified Servicer. The costs and fees of the Servicers (and any 

Subservicers) shall be borne exclusively by the Company (and not Participant), without 

reduction in Participant’s Share or the amounts due hereunder with respect thereto. Under no 

circumstances is the Company to transfer to any Servicer any ownership interest in the servicing 

to the Loans or any right to transfer or sell the servicing to the Loans (other than in connection 

with the sale of any Loan), and no Servicer shall assign, pledge or otherwise transfer or purport 

to assign, pledge or otherwise transfer any interest in the servicing to the Loans (other than in 

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

violation of this provision shall be void ab initio and of no effect. 

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

otherwise agreed in writing by Participant, each Servicing Agreement (and any Subservicing 

Agreement with any Subservicer) shall, among other things, (i) provide for the servicing of the 

Loans and management of the Collateral by the Servicer (or Subservicer) in accordance with the 

Servicing Standard and the other terms of this Agreement; (ii) be terminable upon no more than 

30 days prior notice in the Event of Default or any default under the Servicing Agreement (or 

Subservicing Agreement) has occurred; (iii) provide that Participant as well as the Company (and, 

in the case of any Subservicing Agreement, the Servicer) shall be entitled to exercise termination 

rights upon the occurrence of any Event of Default, as and to the extent provided in Section 

10.02(a); (iv) provide that the Servicer (or any Subservicer) and the Company acknowledge that 

the Servicing Agreement (or Subservicing Agreement) constitutes a personal services agreement 

between the Company and the Servicer (or between the Servicer and the Subservicer); (v) provide 

that Participant is a third party beneficiary thereunder and entitled to enforce the same upon the 

occurrence of any Event of Default; (vi) upon the occurrence of any Event of Default, provide 

that Participant may exercise all of the rights of the Company (or, in the case of a Subservicing 

Agreement, the Servicer) thereunder and cause the termination or assignment of the same to any 

other Person, without penalty or payment of any fee; (vii) provide that Participant (and its 

representatives’) shall 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 Participant’s (and its representatives’) questions or to discuss any matter relating to the 

Servicer’s or Subservicer’s affairs, finances and accounts, as they relate to the Loans, the 

Collateral, the Collection Account or any other accounts established or maintained pursuant to 

this Agreement or the Servicing Agreement or any Subservicing Agreement, or any matters 

relating to this Agreement or the rights or obligations hereunder (to the extent provided in Section 

5.05); (viii) provide that all Loan Proceeds are to be deposited into the Collection Account on a 

daily basis and that under no circumstances are funds, other than Loan Proceeds and interest and 

earnings thereon to be deposited into the Collection Account, and under no circumstances are any 

funds, other then LIP Funds and interest and earnings thereon, to be deposited into the LIP 

Account; (ix) provide that the Servicer consents to the immediate termination of the Servicer 

upon the occurrence of any Event of Default as described in Section 10.01(b); (x) provide that the 

Servicer shall not transfer or assign its rights under the Servicing Agreement, other than its rights 

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to delegate to Subservicers certain responsibilities thereunder as and to the extent permitted by 

this Agreement, and that any prohibited transfer shall be void ab initio; (xi) provide for such 

other matters as are necessary or appropriate to ensure that the Servicer is obligated to comply 

with the Servicing Obligations of the Company hereunder; (xii) provide a full release and 

discharge of Participant and any predecessor Servicer, and all of their respective officers, 

directors, employees, agents, attorneys, contractors and representatives, and all of their respective 

successors, assigns (other than the Company) and Affiliates, from any and all claims (including 

any counterclaim or defensive claim), demands, causes of action, judgments or legal proceedings 

and remedies of whatever kind or nature that the Servicer had, has or might have in the future, 

whether known or unknown, which are related in any manner whatsoever to the servicing of the 

Loans by the Participant or such other predecessor servicer prior to the Servicing Transfer Date 

(other than due to gross negligence or willful misconduct of Participant or other predecessor 

servicer); and (xiii) not conflict with the terms and provisions of this Agreement or the Ancillary 

Documents insofar as the terms and provisions apply to the Servicer or the Servicing Obligations. 

Nothing contained in any Servicing Agreement or any Subservicing Agreement shall alter any 

obligation of the Company under this Participation Agreement (without reference to the Servicing 

Agreement) and, in the event of any inconsistency between the Servicing Agreement (or any 

Subservicing Agreement) and the terms of this Agreement (without reference to the Servicing 

Agreement), the terms of this Agreement (without reference to the Servicing Agreement) shall 

control. 

(b) Company Liable for Servicer and Subservicers. Notwithstanding anything 

to the contrary contained herein, the use of any Servicer (or any Subservicer) shall not release the 

Company from any of its Servicing Obligations or other obligations under this Agreement, and 

the Company 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 

Company. 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 Company (or, 

in the case of Subservicers, the Servicer). 

(c) Participant Approval Required; Copies of Servicing and Subservicing 

Agreements. Each Servicer that does not have an Acceptable Rating, regardless of whether the 

Servicer is an Affiliate of the Company, shall be subject to the prior written approval of 

Participant (which approval shall not be unreasonably withheld, delayed or conditioned). Copies 

of all fully executed Servicing Agreements and Subservicing Agreements, including all 

supplements and amendments thereto, shall be provided to Participant. 

(d) Regulation AB Requirements. The Company shall ensure that each 

Servicer (and any Subservicer) (A) has in place policies and procedures to comply with the 

provisions of Section 1122(d)(1)(i) through (iv) of Regulation AB, and (B) complies with the 

provisions of Sections 1122(d)(2)(i) through (vii), 1122(d)(3)(i) through (iv), and 1122(d)(4)(i) 

through (xv) 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). 

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(e) Servicer Fees. No Servicer or Subservicer shall be paid any fees or 

indemnified out of any Loan Proceeds, other than any Loan Proceeds distributed to the Company 

as the Management Fee or distributed to the Company in accordance with Section 4.01. 

Section 5.04 Fidelity Bond; E&O Insurance. The Servicer and each Subservicer shall 

at all times maintain in effect a blanket fidelity bond and an errors and omissions insurance 

policy affording, in each case, coverage with respect to all officers, directors, employees and 

other Persons acting on behalf of the Servicer or the Subservicer, as applicable, and covering 

errors and omissions in the performance of the Servicer’s, or the Subservicer’s, as applicable, 

obligations under this Agreement, the Servicing Agreement and any Subservicing Agreement. 

The errors and omissions insurance policy and the fidelity bond shall be in such form and 

amount that would meet the requirements of Fannie Mae if Fannie Mae were the purchaser of the 

Loans. Copies of fidelity bonds and insurance policies required to be maintained pursuant to this 

Section shall be made available to Participant or its representatives upon request. 

Section 5.05 Books and Records; Reports; Certifications; Audits. 

(a) Maintenance of Books and Records. The Company shall cause to be kept 

and maintained (including by the Servicer and any Ownership Entity and including records 

transferred by Participant to the Company in connection with its conveyance of the Loans to the 

Company under the Contribution Agreement), at all times, at the Company’s principal place of 

business, a complete and accurate set of files, books and records regarding the Loans and the 

Collateral, and the Company’s and Participant’s interests in the Loans and the Collateral, 

including records relating to the Collection Account, the LIP Account, any Liquidity Reserve 

Account, any Litigation Reserve Account and the disbursement of all Loan Proceeds. This 

obligation to maintain a complete and accurate set of records shall encompass all files in the 

Company’s custody, possession or control pertaining to the Loans and the Collateral, including all 

original and other documentation pertaining to the Loans and the Collateral, all documentation 

relating to items of income and expense pertaining to the Loans and the Collateral, and all of the 

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

and the Collateral. 

(b) Retention of Books and Records. The Company 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 Effective Date or 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 Participant or 

its representatives (including any Governmental Authority) and agents at the office of the 

Company described in Article XV hereof 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 Participant), in each instance upon two (2) Business Days’ prior notice 

to the Company. Upon request by Participant, the Company, at the sole cost and expense of 

Participant, shall promptly send copies (the number of copies of which shall be reasonable) of 

such books and records to Participant. The Company shall provide Participant with reasonable 

advance notice of the Company’s intention to destroy or dispose of any documents or files 

relating to the Loans and, upon the request of Participant, shall allow Participant, at its own 

expense, to recover the same from the Company. 

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(c) Monthly Reports. The Company shall cause to be furnished to Participant, 

on or prior to the fifteenth (15th) day of each month (or if the fifteenth (15th) day is not a Business 

Day, then the first Business Day thereafter), commencing on the fifteenth (15th) day of the first 

month following the Servicing Transfer Date, an electronic report on the Loans and Collateral 

(including the Collection Account, any Liquidity Reserve Account, any Litigation Reserve 

Account and the disbursement of all Loan Proceeds) containing the information and substantially 

in the form set forth on Exhibit D or as may otherwise be agreed by the parties. 

(d) Annual Compliance Certificates. The Company shall, and shall cause 

each Servicer and Subservicer to, deliver to Participant, on or before March 15 of each year, 

commencing in the year 2010, an officer’s certificate stating, as to the signer thereof, that (i) a 

review of such party’s activities during the preceding calendar year (or portion thereof) 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 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 portion thereof 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. In the event a Servicer or any Subservicer was terminated, resigned or 

otherwise performed in such capacity for only part of a year, such party shall provide an officer’s 

certificate pursuant to this Section with respect to such portion of the year. 

(e) Annual Compliance Report. On or before March 15 of each year, 

commencing in the year 2010, the Company shall cause each Servicer and Subservicer, each at its 

own expense or the expense of the Company, to provide a report prepared by a nationally 

recognized firm of independent certified public accountants to the effect that, with respect to the 

most recently ended fiscal year, such firm has examined certain records and documents relating to 

compliance with the servicing requirements in this Agreement and that, on the basis of such 

examination conducted substantially in compliance with the Uniform Single Attestation Program 

for Mortgage Bankers , such firm is of the opinion that the Company or its servicer’s activities 

have been conducted in compliance with this Agreement (including, to the extent applicable, 

Regulation AB), or that such examination has disclosed no material items of noncompliance 

except for (i) such exceptions as such firm believes to be immaterial, and (ii) such other 

exceptions as are set forth in the report. 

(f) Audits. Until the later of the date that is ten (10) years after the Effective 

Date and the date that is three (3) years after the Final Distribution, the Company shall, and shall 

cause each Servicer and Subservicer to, (i) provide any representative of Participant (including 

any government agency or instrumentality), during normal business hours and on reasonable 

notice, with access to all of the books of account, reports and records relating to the Loans or any 

Collateral, the Servicing Obligations, the Collection Account, the LIP Account, any Liquidity 

Reserve Account, any Litigation Reserve Account, or any other matters relating to this Agreement 

or the rights or obligations hereunder, (ii) permit such representatives to make copies of and 

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

selected by Participant, and (iv) allow Participant’s representatives to discuss the Company’s and 

any Servicer’s and any Subservicer’s affairs, finances and accounts, as they relate to the Loans, 

the Collateral, the Servicing Obligations, the Collection Account, the LIP Account, any Liquidity 

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Reserve Account, any Litigation Reserve Account, or any other matters relating to this Agreement 

or the rights or obligations hereunder, with its officers, directors, employees, accountants (and by 

this provision the Company hereby authorizes such accountants to discuss such affairs, finances 

and accounts with such representatives), Servicers and Subservicers, and attorneys. Any expense 

incurred by Participant and any reasonable out-of-pocket expense incurred by the Company in 

connection with the exercise by Participant of its rights in this Section shall be borne by 

Participant; provided, however, that any expense incident to the exercise by Participant of its 

rights pursuant to this Section as a result of or during the continuance of an Event of Default shall 

in all cases be borne by the Company. 

Section 5.06 Recovery of Expenses; Interest; Working Capital Advances. The 

Company shall cause commercially reasonable efforts to be used to recover from Borrowers and 

Guarantors those Servicing Expenses and Pre-Cut-Off Date Advances which such Borrowers or 

Guarantors are obligated to pay. No Servicing Expenses shall bear interest chargeable in any 

way to Participant. The Company shall make Working Capital Advances as required in Section 

3.02. 

Section 5.07 Company’s Duty To Advise Participant; Delivery of Certain Notices. In 

addition to such other reports and access to records and reports as are required to be provided to 

Participant hereunder, the Company shall cause to be delivered to Participant such information 

relating to the Loans, the Collateral, the Company, the Servicers and any Subservicers as 

Participant may reasonably request from time to time and, in any case, shall ensure that 

Participant is promptly advised, in writing, of any matter of which the Company, any Servicer or 

any Subservicer becomes aware relating to the Loans, the Collateral, the Collection Account, the 

LIP Account, any Liquidity Reserve Account, any Litigation Reserve Account, or any Borrower 

or Guarantor that materially and adversely affects the interests of Participant hereunder. Without 

limiting the generality of the foregoing, the Company shall cause to be delivered to Participant 

information indicating any possible Environmental Hazards with respect to any Collateral. To 

the extent Participant requests information which is dependent upon obtaining such information 

from a Borrower, Guarantor or other third party, the Company shall cause to be made 

commercially reasonable efforts to obtain such information but it shall not be a breach by the 

Company of this Agreement if the Company fails to cause such information to be provided to 

Participant because a Borrower, Guarantor or other Person has failed to provide such information 

after such efforts have been made. 

Section 5.08 Releases of Collateral. Subject to the provisions of Section 4.16(b) of the 

Contribution Agreement, the Company 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. 

Section 5.09 Certain Servicing and Loan Administration Decisions. Subject to the 

other terms and conditions of this Agreement (including the Servicing Standard), the Company 

shall have full power and authority, acting alone or through the Servicer and any Subservicers, to 

cause to be done any and all things in connection with the servicing and administration of the 

Loans that the Company may deem necessary or desirable, and cause to be made all servicing 

decisions in its reasonable discretion, including the following: 

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(a) (i) modify or amend in any material respect any of the Loan Documents, 

(ii) waive or forbear from exercising any of the lenders’ material rights thereunder, (iii) waive any 

material condition to any Borrower’s right to receive disbursements, insurance proceeds, 

condemnation awards or other sums pursuant to the Loan Documents or to the completion of the 

construction or any restoration following a casualty or condemnation, and (iv) grant any material 

approvals or determinations with respect to modifications of or reallocations within any sources 

and uses schedule related to any Note; 

(b) forgive or reduce, or forbear from collecting, the indebtedness of a 

Borrower under any of the Loan Documents (including interest at the Default Rate and late fees), 

increase the indebtedness evidenced by the Notes or any of the other Loan Documents, and permit 

the Loan Documents to secure any indebtedness other than the indebtedness secured by the 

Collateral on the Effective Date; 

(c) reduce the Interest Rate under, or modify the maturity date of, any Note; 

(d) release or approve a transfer or encumbrance of any of the Collateral or 

accept substitute collateral for the Loan; 

(e) release any party or parties now or hereafter liable for the payment of the 

Loan or the performance of any other obligation relating thereto, including in connection with any 

Guarantee or any environmental indemnity; 

(f) permit the Collateral, or any portion thereof or any interest therein, or the 

beneficial ownership of Borrower, or any portion thereof, to be conveyed or transferred to any 

other Person or Persons or permit the indebtedness, or any portion thereof, to be assumed by any 

other Person or Persons; 

(g) cancel or agree to the termination of any of the Loan Documents; 

(h) approve any change order, even if the same would materially alter the use, 

type or construction quality of the Collateral; 

(i) consent to any agreement in any Insolvency Proceeding relating to any 

Loan, any Borrower, any Guarantor, any other obligor with respect to a Loan, or any Collateral, 

including voting for a plan of reorganization, and take any and all actions reasonably necessary to 

obtain relief from any stay imposed as part of (or seek dismissal of) any Insolvency Proceeding 

relating to any Loan, any Borrower, any Guarantor, any other obligor with respect to a Loan or 

any Collateral; 

(j) consent to any direct or indirect transfers or pledges of the ownership 

interests in any Borrower, any change in management of any Borrower (or its permitted 

successors and assigns), or any material change in the organizational documents of any Borrower; 

(k) approve any material modification, extension or termination of any lease 

to the extent such material modification, extension or termination requires the Company’s consent 

pursuant to the terms of the Loan Documents; 

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(l) subordinate the Liens of the Collateral Document or any other Loan 

Document; 

(m) consent to any senior or subordinate financing affecting the Borrower or 

the Collateral, or any mezzanine financing affecting the Borrower or any direct or indirect 

member of the Borrower; 

(n) waive any material default under the Loan Documents; 

(o) consent to material physical alterations of the Collateral; 

(p) settle, or consent to the settlement of, (i) any insurance claim or (ii) any 

condemnation claim or (iii) any deficiency; 

(q) consent to the application of condemnation awards or insurance proceeds 

for any purpose for the restoration of any Collateral in accordance with the terms of the Loan 

Documents or application to the secured obligations; 

(r) amend, or waive any provision of, any intercreditor agreement, and make 

all decisions with respect to the Loans under any intercreditor agreement; 

(s) take any Enforcement Action; 

(t) sell any Loan or deficiency to a third party; 

(u) accept a deed in lieu or in aid of foreclosure; 

(v) approve a mezzanine loan on the terms set forth in the Note or other Loan 

Documents and enter into an intercreditor agreement in connection therewith; and 

(w) if the applicable Loan is subject to an intercreditor agreement or Loan 

Participation Agreement with any entity other than an Affiliate of the Company, exercise any 

buy-sell rights, redemption rights, or similar rights under such inter-creditor agreement or the 

Loan Participation Agreement. 

Section 5.10 Management and Disposition of Collateral. Subject to the other terms and 

conditions of this Agreement (including the Servicing Standard), the Company shall have full 

power and authority, acting alone or through any Servicer and any Subservicers, to cause to be 

done any and all things in connection with the Company’s management of any Collateral or 

Acquired Collateral, that the Company may deem necessary or desirable, and cause to be made 

all asset management decisions in its reasonable discretion, including the following: 

(a) The Company may cause the retention of property management and 

leasing firms and other agents and contractors. 

(b) If required because construction has not been completed, the Company 

may enter into contracts for the completion and maintenance of the construction project, including 

contracts with the general contractor, the architect and the major subcontractors. 

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(c) The Company shall have the sole right to cause to be hired and terminated 

any property managers, sales agents and, if the project is not then fully complete at the time in 

question, contractors, architects and other design and construction professionals and consultants. 

(d) The Company shall cause reasonable efforts to be used to sell any 

Acquired Collateral to unaffiliated third parties for cash, and shall be responsible for the 

documentation of such sales. 

(e) The Company shall cause legal counsel to be hired when necessary or 

desirable in connection with any Acquired Collateral. 

(f) The Company may hold Acquired Collateral in an Ownership Entity and 

may permit the sale, transfer or release of all or any portion of any Acquired Collateral. 

(g) The Company may permit capital improvements and physical or structural 

changes to be made to the Acquired Collateral to complete partially completed projects, and the 

costs of all such improvements shall be deemed to be Servicing Expenses. 

(h) The Company may permit the authorization of any easements or other 

changes to title. 

(i) The Company may permit the settlement of any insurance claim or 

condemnation awards. 

(j) The Company may release a Borrower, any Guarantor, or any other party 

now or hereafter liable for the payment of a Loan or the performance of any other obligation 

relating thereto, including in connection with any Guarantee, any environmental indemnity, or 

any intercreditor agreement or Loan Participation Agreement, or amend in any way any 

intercreditor agreement or Loan Participation Agreement. 

(k) The Company may permit any lease for the Acquired Collateral or any 

new property management agreement relating to the property, or approve any modification to a 

lease, property management agreement, exclusive sales agreement, architect’s agreement, 

construction agreement, or other material agreements relating to the property. 

(l) The Company may permit any change in the property that would result in 

the termination or unavailability of any material Entitlement, franchise, license or approval for the 

property as contemplated by the Loan Documents. 

(m) The Company may permit the institution of any new Enforcement Action 

against a Borrower, any Guarantor or any other Person. 

(n) To the extent not precluded by Section 2.6 of the Contribution Agreement, 

the Company shall seek to recover from any Person, such as title companies and other insurers, 

such amounts as the Company may be entitled to claim therefrom with respect to any Loan or 

Collateral. 

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ARTICLE VI 

LOAN DEFAULTS; ACQUISITION OF COLLATERAL 

Section 6.01 Discretion of the Company in Responding to Defaults of Borrower. Upon 

the occurrence of an event of default under any of the Loan Documents, but subject to the other 

terms and conditions of this Agreement (including the Servicing Obligations of the Company), 

the Company shall cause to be determined the response to such default and course of action with 

respect to such default, including (a) the selection of attorneys to be used in connection with any 

action, whether judicial or otherwise, to protect the respective interests of the Company and 

Participant in the Loan and the Collateral, (b) the declaration and recording of a notice of such 

default and the acceleration of the maturity of the Loan, (c) the institution of proceedings to 

foreclose the Loan Documents securing the Loan pursuant to the power of sale contained therein 

or through a judicial action, (d) the institution of proceedings against any Guarantor, (e) the 

acceptance of a deed in lieu of foreclosure, (f) 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 (g) the institution or continuation of proceedings to obtain a 

deficiency judgment against such Borrower or any Guarantor. 

Section 6.02 Acquisition of Collateral. Nothing in this Section 6.02 or anything else in 

this Agreement shall be deemed to affirmatively require the Company to cause to be acquired all 

or any portion of any Collateral with respect to which there exists any Environmental Hazard. 

Prior to acquisition of title to any Collateral (whether by foreclosure, deed in lieu of foreclosure, 

by power of sale or by sale pursuant to the Uniform Commercial Code, or otherwise), the 

Company shall cause to be commissioned with respect to such Collateral either (i) a Transaction 

Screen Process consistent with ASTM Standard E 1528-06, by an environmental professional or 

(ii) such other site inspections and assessments as would customarily be undertaken or obtained 

by a prudent lender in order to ascertain whether there are any actual or threatened 

Environmental Hazards (a “Site Assessment”), and the cost of such Site Assessment shall be 

reimbursable as if it were a Servicing Expense as long as the costs for such Site Assessment were 

not paid to any Affiliate of the Company, or any Affiliate of the Servicer or any Subservicer. If 

title to any Collateral with respect to which there exists any Environmental Hazard 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 Collateral shall be taken and held in 

the name of a limited liability company or such other entity that is a Single Purpose Entity as the 

Company may choose (the “Ownership Entity”), whether already in existence or formed by the 

Company for such purpose. The Company or its wholly-owned subsidiary or Affiliate shall be 

the sole managing member of any Ownership Entity and Participant shall have a participation 

interest in the Acquired Collateral held by the Ownership Entity that provides for it to receive its 

Participant’s Share in accordance with Section 4.01 as if the Acquired Collateral were held by 

the Company. The purposes of the Ownership Entity shall be to hold the Acquired Collateral 

pending sale, to complete construction of such Collateral and to operate the Collateral as 

efficiently as possible in order to minimize financial loss to the Company and Participant and to 

sell the Acquired Collateral as promptly as practicable in a way designed to minimize financial 

loss to the Company and Participant. Notwithstanding anything to the contrary contained herein, 

either the Ownership Entity shall be a pass-through entity with no entity-level income tax 

obligations, or Participant’s Share shall be allocated before accrual or payment of any income tax 

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due by such Ownership Entity, and the Company shall indemnify and hold harmless Participant 

from and against any liability for any income taxes due by the Ownership Entity. 

ARTICLE VII 

PARTICIPANT CONSENT; LIMITS ON LIABILITY 

Section 7.01 Actions Requiring Participant Consent. Notwithstanding anything to the 

contrary contained in this Agreement, the Company shall not permit to be taken any of the 

following actions without the prior written consent of Participant, which may be withheld or 

conditioned in Participant’s sole and absolute discretion: 

(a) the sale or other transfer of any Loan, Collateral or Acquired Collateral (or 

any portion thereof) to any Affiliate of the Company, any Servicer or any Subservicer, or any 

Affiliate of any Servicer or any Subservicer; 

(b) the financing of the sale or other transfer of any Loan, Collateral or 

Acquired Collateral (or any portion thereof), unless cash in an amount equal to Participant’s Share 

of the sale price, after deduction of the Servicing Expenses related to such Loan, Collateral or 

Acquired Collateral, is distributed to Participant; 

(c) the sale of any Loan, Collateral or Acquired Collateral (or any portion 

thereof) that provides for any recourse against Participant or Participant’s Share of the Loan 

Proceeds; 

(d) any disbursement of any funds in the Collection Account other than in 

accordance with the provisions of this Agreement; 

(e) any disbursement of any LIP Funds other than to fund an Authorized 

Funding Draw; 

(f) other than capitalizing accrued and unpaid interest, Servicing Expenses 

and Pre-Cut-Off Date Advances, and other than through the making of Authorized Funding 

Draws, advancing additional funds that would increase the Unpaid Principal Balance; or 

(g) reimbursement for any expense or cost incurred (or paid) to any Affiliate 

of the Company or any Affiliate of the Servicer or any Subservicer. 

Section 7.02 Limitation of Liability. 

(a) Company Liability Generally. Neither the Company nor any of its 

Affiliates, nor any of their respective officers, directors, employees, partners, principals or agents, 

including the Servicer and any Subservicer, shall be liable for any action taken or omitted to be 

taken by them or any one of them under this Agreement or in connection with any Loan or 

Collateral or any portion thereof, except for any act or omission constituting (i) gross negligence, 

bad faith or willful misconduct (including any act or omission constituting theft, embezzlement, 

breach of trust or violation of any Law) or (ii) a material breach of this Agreement. The failure to 

obtain Participant consent as required by any provision of this Agreement and the failure to 

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comply with the obligations in Section 8.01 shall be considered a material breach of this 

Agreement and gross negligence on the part of the Company. Neither the Company nor any of its 

Affiliates, nor any of their respective officers, directors, employees, partners, principals or agents, 

including the Servicer and any Subservicer, shall be liable for any action taken or omitted to be 

taken by Participant. 

(b) Reliance on Notices, etc. Neither the Company nor Participant shall incur 

any liability to the other by acting in good faith upon any notice, consent, certificate or other 

instrument or writing (including telegram, cable, telex or telecopy) that is reasonably believed by 

the Company or Participant, as applicable, to be genuine and to have been signed or sent by the 

proper party and that on its face is properly executed. 

(c) Participant Liability Generally. In the event Participant exercises its rights 

pursuant to Article X, neither Participant nor any of its officers, directors, employees, attorneys or 

agents, including any Servicer and any Subservicer, shall be liable for any action taken or omitted 

to be taken by them or any one of them under this Agreement or in connection with any Loan or 

Collateral or any portion thereof, except for any act or omission constituting willful misconduct. 

(d) No Consequential Damages. Regardless of the legal theory upon which 

any claim by or against the Company or Participant is based, including any claim based on 

contract, tort, strict liability, or fraud, neither Participant nor the Company shall be liable for, or 

may recover from the other, any amounts other than actual losses, costs and expenses (including 

reasonable attorneys’ fees and litigation and similar costs to pursue such recovery) incurred by the 

party asserting the claim. Without limiting the foregoing, neither party shall be liable for, or 

entitled to recover from the other party, any consequential, special, indirect, punitive, treble, 

nominal or exemplary damages, business interruption costs or expenses, or damages for lost 

profits, operating losses or lost investment opportunity (regardless of whether any such damages 

are characterized as direct or indirect), each of which is and all of which are hereby excluded by 

agreement of Participant and the Company, regardless of whether the party against whom such 

damages may be claimed has been advised of the possibility of any such damages, unless (in each 

case) such losses are incurred by the party asserting the claim as a direct result of a claim asserted 

against such party by a third party. For purposes of this Section, the following claims shall not 

constitute claims asserted by a third party: (A) with respect to the Company, any claims asserted 

by (1) any Servicer or Subservicer, (2) any Affiliate of any of the Company or any Servicer or 

Subservicer, and (3) any officer, director, employee, partner, principal or agent of any of the 

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

Subservicer; and (B) with respect to Participant, any claims asserted by any Affiliate or officer, 

director, employee, partner, principal or agent of Participant or any Affiliate. 

ARTICLE VIII 

ADDITIONAL COMPANY COVENANTS; INDEMNIFICATION 

Section 8.01 Covenants. The Company hereby covenants with Participant as follows: 

(a) Company Status; Licensing. The Company shall, at all times, constitute a 

single member limited liability company organized under the laws of the State of Delaware and a 

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Single Purpose Entity. As soon as reasonably practical after the Effective Date the Company 

shall 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 its business, including qualifications to 

conduct business in jurisdictions other than Delaware and licenses to purchase, own or service the 

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

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

asserted against the Company (including counterclaims and defense asserted by Borrowers), or 

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

securing or otherwise realize the full value of any Loan or Acquired Collateral. 

(b) Company Obligations. The Company (i) shall at all times have in effect 

and be subject to the Company Operating Agreement, (ii) except as is otherwise expressly 

permitted therein, shall amend the Company Operating Agreement only with the prior written 

approval of Participant, and (iii) shall not enter into or allow itself to become subject to any other 

constituent documents inconsistent with any terms of the Company Operating Agreement. 

(c) Document Custodian. The Company shall retain and enter into and, at all 

times, be a party to a Custodial Agreement with a document custodian (the “Document 

Custodian”) who is a Qualified Custodian and such Document Custodian shall at all times have 

custody and possession of the Notes and other Custodial Documents. At no time shall the 

Company have more than one Document Custodian. The fees and expenses paid to the Document 

Custodian shall be no more than market rates and the Document Custodian shall be terminable by 

the Company and by Participant upon no more than thirty (30) days notice provided by either, 

without cause thereunder. In the event that the Company (or any Servicer) removes any Notes or 

other Custodial Documents from the possession of the Document Custodian (which shall be done 

only in accordance with the Custodial Agreement), (i) any loss or destruction of or damage to 

such Notes or Custodial Documents shall be the liability of the Company (who, along with the 

Servicer shall be responsible for safeguarding such Notes and Custodial Documents), and (ii) 

such Notes shall be returned to the Document Custodian within the time provided under the 

applicable Uniform Commercial Code to maintain Participant’s perfection thereof by possession. 

If any Notes or other Custodial Documents are removed in connection with the modification or 

restructuring of a Loan, the modified or restructured Notes and other Custodial Documents 

removed in connection therewith shall be returned to the Document Custodian as soon as possible 

following the completion of the restructuring or modification (and, in any event, in accordance 

with clause (ii) of the immediately preceding sentence). The Company shall ensure that 

Participant receives a copy of each demand, notice or other communication given under the 

Custodial Agreement at the time that such notice or other communication is given thereunder. 

(d) Relationships with Borrowers, etc. The Company shall not, at any time, 

(i) be an Affiliate of or a partner or joint venturer with any Borrower, (ii) be an agent of any 

Borrower, or allow any Borrower to be an agent of the Company, or (iii) except as is otherwise 

contemplated by its ownership of the Loans and its right to hold Acquired Collateral, have any 

interest whatsoever in any Borrower, Guarantor or other obligor with respect to any Loan or any 

of the Collateral. 

(e) No Conflicting Obligations. The Company shall not, at any time, enter 

into or become a party to any agreement that would conflict with the terms of this Agreement. 

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(f) Compliance with Law. The Company shall, at all times, comply with 

applicable Law in connection with the performance of its obligations under this Agreement. 

(g) No Company Debt. Without limiting its obligation to constitute a Single 

Purpose Entity, the Company shall not, at any time, incur any Debt. 

(h) No Dissolution or Liquidation. The Company shall not dissolve or 

liquidate at any time prior to such time as the Company makes the Final Distribution and this 

Agreement is terminated. 

(i) No Bankruptcy Filing. The Company shall not (i) file a voluntary petition 

for bankruptcy, (ii) file a petition or answer seeking any reorganization, arrangement, 

composition, readjustment, liquidation, dissolution or similar relief under any Law, (iii) make an 

assignment for the benefit of creditors, (iv) seek, consent or acquiesce in the appointment of a 

trustee, receiver or liquidator or of all or any substantial part of its properties, (v) file an answer or 

other pleading admitting or failing to contest the material allegations of (A) a petition filed against 

it in any proceeding described in clause (i) through (iv), or (B) any order adjudging it a bankrupt 

or insolvent or for relief against it in any bankruptcy or Insolvency Proceeding, or (vi) allow itself 

to become unable to pay its obligations as they become due or allow the sum of its debts to be 

greater than all of its property, at a fair valuation. 

(j) No Liens. The Company shall not place or permit (voluntarily or 

involuntarily) any Lien to be placed on any of the Secured Assets (other than the security interest 

granted to Participant hereunder), and shall not take any action to interfere with Participant’s 

rights as a secured party with respect to the Secured Assets. 

(k) Servicer. The Company shall at all times cause its Servicing Obligations 

under this Agreement to be performed by a Servicer that is a Qualified Servicer. 

Section 8.02 Indemnification. 

(a) The Company shall indemnify and hold harmless Participant and 

Participant’s Affiliates, and their respective officers, directors, employees, partners, principals, 

agents and contractors (the “Indemnified Parties”) from and against any losses, damages, 

liabilities, costs and expenses (including reasonable attorneys’ fees and litigation and similar 

costs, and other out-of-pocket expenses incurred in investigating, defending, asserting or 

preparing the defense or assertion of any of the foregoing), deficiencies, claims, interest, awards, 

judgments, penalties and fines (collectively, “Losses”) arising out of or resulting from (i) any 

breach by the Company or any of its Affiliates or any of their respective officers, directors, 

employees, partners, principals, agents or contractors (including any Servicer or any Subservicer) 

of any of the their respective obligations under or covenants or agreements contained in this 

Agreement, the Servicing Agreement or any Subservicing Agreement (including any claim 

asserted by Participant against the Company to enforce its rights pursuant to Section 10.02), or 

any third-party allegation or claim based upon facts alleged that, if true, would constitute such a 

breach, or (ii) any gross negligence, bad faith or willful misconduct (including any gross 

negligence, bad faith or willful misconduct of any Servicer or Subservicer and including any act 

or omission constituting theft, embezzlement, breach of trust or violation of any Law). Such 

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

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

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

“Third Party Claim”), such Indemnified Party shall deliver notice thereof to the Company 

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 Company may reasonably request. The failure or 

delay to provide such notice, however, shall not release the Company from any of its obligations 

under this Section 8.02 except to the extent that it is materially prejudiced by such failure or 

delay. 

(b) If for any reason the indemnification provided for herein is unavailable or 

insufficient to hold harmless the Indemnified Parties, the Company 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 Company (including any Servicer or Subservicer), on the other hand in connection 

with a breach of the Company’s obligations under this Agreement. 

(c) If the Company confirms in writing to the Indemnified Party within fifteen 

(15) days after receipt of a Third Party Claim the Company’s responsibility to indemnify and hold 

harmless the Indemnified Party therefor, the Company may elect to assume control over the 

compromise or defense of such Third Party Claim at the Company’s own expense and by the 

Company’s own counsel, which counsel must be reasonably satisfactory to the Indemnified Party, 

provided that (i) the Indemnified Party may, if such Indemnified Party so desires, employ counsel 

at such Indemnified Party’s own expense to assist in the handling (but not control the defense) of 

any Third Party Claim; (ii) the Company shall keep the Indemnified Party advised of all material 

events with respect to any Third Party Claim; (iii) the Company 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 any Indemnified Party or any of its or 

his Affiliates; and (iv) the Company will not, without the prior written consent of each 

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 Company to satisfy the full amount of the liability in connection 

with such Third Party Claim and includes an unconditional release of the Indemnified Party from 

all liability arising out of such Third Party Claim. 

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

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 Company 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 Company (or any Affiliate) and the Indemnified Party are named as parties and either the 

Company (or such Affiliate) or the Indemnified Party determines with advice of counsel that there 

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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 Company 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 Company 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 Company 

or the Indemnified Party), all of the parties hereto shall, and shall cause their respective Affiliates 

to, cooperate in the defense or prosecution thereof and to in good faith retain and furnish such 

records, information and testimony, and attend such conferences, discovery proceedings, 

hearings, trials and appeals, as may be reasonably requested by a party hereto in connection 

therewith. 

(e) Under no circumstances shall any liability of the Company under the 

provisions of this Section 8.02 constitute a Servicing Expense or otherwise be charged to 

Participant or deducted from the Participant’s Share. 

ARTICLE IX 

CLEAN-UP CALL 

Section 9.01 Clean-Up Call Rights. Participant shall have the right, exercisable in its 

sole and absolute discretion, to require the liquidation and sale, for cash consideration, of any 

remaining Loans and Acquired Collateral held by the Company or any Ownership Entity (the 

“Clean-Up Call”) at any time after the earlier to occur of (i) the date that is seven (7) years after 

the Effective Date and (ii) the date on which the then Unpaid Principal Balance is ten percent 

(10%) or less of the Unpaid Principal Balance as of the Cut-Off Date as set forth on the Loan 

Schedule. 

Section 9.02 Exercise of Clean-Up Call Rights. In order to exercise its rights under this 

Section, Participant shall give notice in writing to the Company, setting forth the date by which 

the remaining Loans and Acquired Collateral are to be liquidated by the Company, which date 

shall be no less than 150 calendar days after the date of such notice. 

Section 9.03 Company To Proceed Expeditiously. The Company shall proceed 

expeditiously to cause to be commenced the liquidation of the remaining Loans and Acquired 

Collateral by means of sealed bid sales to Persons other than Affiliates of the Company, the 

Servicer or any Subservicer, or Affiliates of the Servicer or any Subservicer. The selection of 

any financial adviser or other Person, broker or sales agent retained for the liquidation of the 

remaining Loans and Acquired Collateral pursuant to this Section shall be subject to the prior 

approval of Participant, such approval not to be unreasonably withheld, delayed or conditioned 

as long as the fees to be charged by such financial adviser or other Person, broker or sales agent 

are reasonable. In the event the remaining Loans and Acquired Collateral are not liquidated by 

the date specified in the notice provided by Participant pursuant to Section 9.02, Participant shall 

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be entitled to liquidate the remaining Loans and Acquired Collateral in its discretion and the 

Company shall cooperate and assist with such liquidation to the extent reasonably requested by 

Participant. In the event the Company or any Affiliate thereof desires to bid to acquire the 

remaining Loans and Acquired Collateral, then Participant shall be entitled to liquidate the 

remaining Loans and Acquired Collateral in its discretion. In the event Participant undertakes to 

liquidate the remaining Loans and Acquired Collateral pursuant to this Section, all costs and 

expenses incurred by it shall be deducted from the Loan Proceeds and, after reimbursing the 

Company for any amounts to which it is entitled pursuant to Section 3.03 of this Agreement, the 

remaining Loan Proceeds shall be allocated between and distributed to Participant and the 

Company in accordance with Section 4.01. 

ARTICLE X 

EVENTS OF DEFAULT OF THE COMPANY 

Section 10.01 Events of Default. An “Event of Default” means the occurrence of any of 

the following: 

(a) Any failure by the Company to cause to be allocated any amount required 

to be allocated to Participant under the terms of this Agreement or to cause to be remitted to 

Participant any payment required to be made to Participant under the terms of this Agreement, as 

set forth in the monthly cash flow and distribution report, in either case which continues 

unremedied until 12:00 p.m. New York time on the Business Day immediately following the date 

upon which written notice of such failure, requiring the same to be remedied, shall have been 

given to the Company; or 

(b) There occurs any Insolvency Event (without any cure period other than as 

may be provided for in the definition of Insolvency Event) with respect to the Company, any 

Affiliate of the Company, the Servicer or any Affiliate thereof, or any Subservicer or any Affiliate 

thereof, or the Guarantor under the Guaranty required to be delivered pursuant to the LLC Interest 

Sale Agreement (or any replacement thereof); or 

(c) Any failure of the Company to duly perform its obligations in Section 

5.05(d) or Section 5.05(e),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 to the Company; or 

(d) Any failure of the Company to cause to be made any Authorized Funding 

Draw pursuant to Section 4.03(c) or any failure to cause to be made any payment of any Servicing 

Expense or any Working Capital Advance pursuant to Article III, 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 to the Company; or 

(e) The failure (i) by the Company at any time to comply with its obligation to 

retain and maintain the retention of a Servicer that is a Qualified Servicer, including as a result of 

the failure of the Servicer to meet the criteria of a Qualified Servicer, or (ii) by the Company to 

comply with its obligation to retain and maintain the retention of a Document Custodian that is a 

Qualified Custodian, including as a result of the failure of the Document Custodian to meet the 

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criteria of a Qualified Custodian, which, in the case of either clause (i) or (ii), 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 to the Company; or 

(f) The failure of the Company or any member of the Company to comply 

with and enforce the provisions of the Company Operating 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 to the Company; or 

(g) The failure of the Company to cause the liquidation of the remaining 

Loans and Acquired Collateral in accordance with Section 9.03 within the time specified by 

Participant (without any cure period) upon the exercise by Participant of the Clean-Up Call; or 

(h) The occurrence of either (i) an event of default or material breach by the 

Servicer 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 Company to the Servicer or by Participant to the Company, or (ii) a failure 

by the Company to replace the Servicer upon the occurrence of either an Event of Default under 

this Agreement as a result of the Servicer’s acts or omissions or a material breach of or event of 

default under the Servicing Agreement by the Servicer, in either case which continues unremedied 

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

same to be remedied shall have been given to the Company; or 

(i) The occurrence of any event of default or material breach by the Company 

under the Servicing Agreement or the Custodial Agreement (including any failure to pay fees or 

expenses due thereunder by the Company) which, in either case, remains unremedied following 

the expiration of any cure period provided for therein (with no additional cure period hereunder); 

or 

(j) The failure, as a result of any act or omission of the Company or its 

Servicer, of the parties to complete the transfer of the servicing of the Loans to the Servicer on or 

prior to the Servicing Transfer Date; or 

(k) Any other failure (other than those specified in any of Sections 10.01(a) 

through (j)) on the part of the Company to duly observe or perform in any material respect any 

other covenants or agreements on the part of the Company contained in this Agreement (including 

any obligations imposed upon any Servicer or any Subservicer), 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 to the Company; provided, however, that in the case of 

a failure that cannot be cured within thirty (30) days, the cure period shall be extended for an 

additional thirty (30) days if the Company can demonstrate to the reasonable satisfaction of 

Participant that the Company is diligently pursuing remedial action. 

Section 10.02 Remedies Upon Events of Defaults. 

(a) General. Upon the occurrence of an Event of Default, in addition to any 

other rights it may have pursuant to this Agreement, any Ancillary Document or applicable Law 

(including the Uniform Commercial Code), whether at law or in equity and whether pursuant to 

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statute or regulation or otherwise, Participant shall have the right to take, at Participant’s option 

and the Company’s expense, one or more of the following actions: (i) upon notice in writing to 

the Company (effective at such time as is specified in such notice), to act on behalf of the 

Company to terminate the existing Servicer (and any Subservicers) and to cause the Company to 

enter into a new Servicing Agreement with a servicer (a “successor Servicer”) selected by 

Participant (in its sole and absolute discretion), and (ii) upon notice in writing to the Company 

(effective at such time as is specified in such notice), to terminate the Company’s rights as 

servicer (but not its rights to the Company’s Share) pursuant to this Agreement and, in such case, 

(A) to terminate the Servicer and select (in its sole and absolute discretion), and enter into a 

Servicing Agreement with, a successor Servicer, such Servicing Agreement to be between 

Participant and the successor Servicer chosen by Participant, or (B) to retain the existing Servicer 

and to enter into a new Servicing Agreement between Participant and the Servicer (or to effect an 

assignment of the existing Servicing Agreement from the Company to Participant). Participant 

shall have no obligation to assume any obligations or liabilities of the Company under or in 

connection with any Servicing Agreement. Notwithstanding the foregoing, Participant shall not 

exercise its right to terminate the Servicer in the absence of (1) an Event of Default as described 

in Section 10.01(a) or Section 10.01(d) if such Event of Default is due to the failure by the 

Servicer to perform any material obligation under the Servicing Agreement, (2) an Event of 

Default as described in Section 10.01(b) with respect to the Servicer or any Affiliate thereof or 

any Subservicer or any Affiliate thereof, or Section 10.01(c) or (d) with respect to the Servicer or 

any Subservicer, or if the Servicer is an Affiliate of the Company, with respect to the Company or 

any Affiliate of the Company, (3) an Event of Default as described in Section 10.01(e)(i) as a 

result of the failure of the Servicer at any time to meet the criteria of a Qualified Servicer, or 

Section 10.01(h)(i), or (4) any other Event of Default that consists of a breach of a servicing 

obligation under this Agreement. In addition, the Company hereby consents to the immediate 

termination of the Servicer upon the occurrence of any Event of Default described in Section 

10.01(b). 

(b) Appointment of Successor Servicer. If Participant exercises its right to act 

on behalf of the Company to appoint a successor Servicer, the costs and expenses associated with 

such successor Servicer (including any servicing fees) shall be borne by the Company (and not 

Participant), and no termination or other fee shall be due to the Company or the Servicer or any 

Subservicer in connection with or as a result of any such action. All authority and power of the 

Company to act with respect to the terminated Servicer shall pass to and be vested in Participant 

under this Section and, without limitation, Participant is hereby authorized and empowered, as 

attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the expense of the 

Company, any and all documents and other instruments and to do or take any and all acts 

necessary or appropriate to effect the termination of the Servicer and the replacement of the 

Servicer with a successor Servicer. 

(c) Termination of Company’s Rights as Servicer. If Participant exercises its 

right pursuant to this Section to terminate the Company’s rights as servicer under this Agreement, 

all authority and power of the Company to act as servicer under this Agreement shall pass to and 

be vested in Participant under this Section and, without limitation, Participant is hereby 

authorized and empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf of 

and at the expense of the Company, 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 the 

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Servicer and, in the event Participant decides to retain the Servicer, to enter into a new Servicing 

Agreement between Participant and the Servicer or to effect an assignment of the existing 

Servicing Agreement from the Company to Participant. Participant shall have and be entitled to 

exercise all rights of the Company as servicer under this Agreement and the costs and expenses 

associated with any such successor Servicer or the existing Servicer (including any servicing fees) 

shall be borne by the Company (and not Participant). 

(d) Cooperation To Facilitate Transfer. In any event, if a Servicer or 

Subservicer is terminated pursuant to the provisions of this Article X, the Company shall, and 

shall cause any Servicer (and any Subservicer) to, provide Participant and any successor Servicer 

in a timely manner with all documents, records and data (including electronic documents, records 

and data) requested by Participant or any successor Servicer to enable it and any successor 

Servicer to assume the responsibilities as servicer under this Agreement, and to cooperate with 

Participant in effecting the termination of any Servicer (or Subservicer) or the Company’s rights 

as servicer under this Agreement, including (x) the transfer within one (1) Business Day of all 

cash amounts which, at the time, shall be or should have been credited to the Collection Account 

or are thereafter received with respect to any Loans or Acquired Collateral, and (y) the transfer of 

all lockbox accounts with respect to which payments or other amounts with respect to the Loans 

are directed or the redirection of all such payments and other amounts to such account as 

Participant may specify, and (z) the assignment to Participant of the right to access all such 

lockbox accounts, the Collection Account, the LIP Account, any Liquidity Reserve Account, any 

Litigation Reserve Account and any other account into which Loan Proceeds or Borrower escrow 

payments are deposited or held. Following the taking of any action pursuant to this Article X, the 

Company shall continue to be entitled to be reimbursed for Servicing Expenses but only to the 

extent that it was entitled to reimbursement of Servicing Expenses prior to such action. The 

Company shall be liable for, and Participant shall be entitled to deduct from the Company’s 

Share, all costs and expenses incurred by Participant (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 

Participant and any successor Servicer (and Subservicers) to service the Loans and Acquired 

Collateral properly and effectively, and (z) to retain and maintain the services of a successor 

Servicer (and any Subservicers). Within a reasonable time after receipt of a written request of the 

Company for the same, Participant shall provide reasonable documentation evidencing such costs 

and expenses, but Participant’s right to deduct such costs and expenses from the Company’s 

Share shall not be subject to or contingent upon the provision of such documentation. 

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

appoints Participant 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 Participant 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 attorneyin-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, 

Participant shall be entitled under this Section 10.02(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 

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Loans; (ii) file any claims or take any action or proceeding in any court of law or equity that 

Participant may reasonably deem necessary or advisable for the collection of all or any part of the 

Loans, defend any suit, action or proceeding brought against the Company with respect to any 

Loan, and settle, compromise or adjust any such suit, action or proceeding; (iv) execute, in 

connection with any sale or disposition of the Loans, any endorsements, assignments, bills of sale 

or other instruments of conveyance or transfer with respect to all or any part of the Loans; (v) 

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; (vi) pay or discharge taxes and Liens 

levied or placed on the Loans; (vii) generally, sell, transfer, pledge and make any agreement with 

respect to or otherwise deal with any of the Loans as fully and completely as though Participant 

were the absolute owner thereof for all purposes; and (viii) do, at Participant’s option and the 

Company’s expense, at any time and from time to time, all acts and things that Participant 

reasonably deems necessary to protect, preserve, or realize upon the Loans and Participant’s 

security interests therein and to effect the intent of this Agreement, all as fully and effectively as 

the Company might do. Anything in this Section to the contrary notwithstanding, Participant 

agrees that it shall not exercise any right under the power of attorney provided for in this Section 

unless an Event of Default shall have occurred and be continuing. 

(f) Offsets. Without limiting any other rights of Participant hereunder, in the 

event Participant exercises any rights or remedies as a result of or in connection with the 

occurrence of an Event of Default, 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 Participant 

with respect thereto may be offset by Participant against the Company’s Share. 

ARTICLE XI 

RELATIONSHIP BETWEEN PARTICIPANT AND THE COMPANY 

It is expressly understood and agreed that, with respect to this Agreement and the 

transactions contemplated hereby, as between themselves, Participant and the Company each 

hereby acknowledge and agree that Participant is participating in the ownership of the Loans and 

the Acquired Collateral and Participant and the Company are not investing in a common 

enterprise or partnership with each other. Each of the Company and Participant acknowledges 

that it shall occupy the status of, act as and be considered independent contractors and neither 

shall in any event be considered an agent, creditor, partner or employee of the other, it being the 

intent of the parties that this Agreement shall not constitute nor be construed to create a 

partnership or joint venture of any kind between Participant and the Company. 

ARTICLE XII 

ASSIGNMENT 

Section 12.01 No Assignment by Company. The Company shall not sell participations 

in the Loans or any Acquired Collateral or assign or delegate this Agreement or, except as is 

required by Section 5.03, any rights or obligations hereunder to any other Person, without the 

prior written consent of Participant, which consent may be withheld or conditioned in 

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Participant’s sole and absolute discretion. Any purported sale, sub-participation or assignment or 

delegation in violation of the preceding sentence shall be void ab initio and of no force or effect 

whatsoever. Subject to the foregoing, this Agreement shall be binding on and shall inure to the 

benefit of the Company and its respective successors and permitted assigns. The Company 

hereby acknowledges and agrees that this Agreement constitutes a personal services agreement 

between the Company and Participant. 

Section 12.02 Assignments by Participant. Participant shall be entitled to sell and assign 

all (but not part) of its Participation Interest (and the entire Participation Interest will be sold and 

transferred as a single participation interest) and, in conjunction therewith, its rights and 

obligations under this Agreement subject to applicable Law and the provisions of this Article 

XII. Participant’s right to sell and transfer its Participation Interest (and assign its rights and 

obligations under this Agreement) to any other Person, shall be subject to the following 

provisions: 

(a) Transfer Supplement. Except as provided in Section 12.02(b), any such 

assignment shall be made pursuant to a Transfer Supplement in substantially the form attached 

hereto as Exhibit E, duly completed, with such immaterial changes thereto as Participant and the 

transferee shall agree upon (a “Transfer Supplement”). Upon the execution and delivery of a 

Transfer Supplement by Participant and transferee, the same shall be delivered to the Company 

and, upon receipt, the Company shall acknowledge the same and be deemed to have accepted 

such Transfer Supplement. From and after the close of business at the Company’s office at 4393 

Riverboat Road, Suite 450, Salt Lake City, Utah 84123, on the Transfer Effective Date specified 

in such Transfer Supplement, the transferee shall be a party hereto and, to the extent provided in 

such Transfer Supplement, shall have the rights and obligations of Participant hereunder. 

(b) Transfer to FDIC. The Receiver, as the initial Participant, shall be entitled 

to transfer the Participation Interest to the FDIC (in any capacity) at any time, without the 

execution and delivery of a Transfer Supplement. Upon written notice of any such transfer 

delivered to the Company, the Company shall be deemed to have acknowledged such transfer and 

shall reflect such transfer on its books and in the register in which ownership of the Participation 

is recorded. The transfer of the Participation Interest shall be deemed to be effective on the 

transfer date specified by the FDIC in its notice to the Company of such transfer unless such 

notice is not provided pursuant to the provisions of this Section within seven (7) Business Days 

after such date, in which case the transfer shall be deemed to be effective on the date on which 

such notice is received by the Company (the “Deemed Effective Date”). From and after the 

Transfer Effective Date specified in such Transfer Supplement or the Deemed Effective Date, as 

applicable, the transferring Participant shall be released from any obligations it may have under 

this Agreement and shall cease to be a party to this Agreement. 

(c) Exchange of Participation Certificate. Upon any such assignment, the 

Participation Certificate held by the transferor shall be exchanged and a new Participation 

Certificate, as necessary to evidence each transferee and its interest, evidencing such transfer shall 

be issued. 

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ARTICLE XIII 

LENDERS’ TITLE INSURANCE; RIGHTS TO PAYMENTS 

Section 13.01 Title Policies. The Company and Participant hereby acknowledge and 

agree that the title policies insuring the Lien of the Collateral Documents securing the Loans 

which are required by the Loan Documents were issued in favor of Participant as the only 

insured thereunder; and have been or will be endorsed to reflect the Company as the only 

insured, but that Participant shall share in the Company’s interest therein, including any recovery 

thereunder, in accordance with the terms of this Agreement. 

Section 13.02 Sharing of Payments. Except as otherwise expressly set forth herein, 

neither the Company nor Participant shall obtain any payment or payments (whether voluntary or 

involuntary, through the exercise of any right of set-off or otherwise) to be applied on account of 

its interest in the Loans unless such payment or payments shall be shared by Participant and the 

Company in accordance with the terms of this Agreement. If any such payment or payments are 

rescinded, set aside or otherwise recovered by or on behalf of the Person from whom the 

payment or payments are received, or by or for the creditors of such Person, then any such 

payment or payments made to the Company or Participant pursuant to the preceding sentence 

shall be returned by the Company or Participant against whom such recovery is made. 

ARTICLE XIV 

TERMINATION 

At such time as the Final Distribution has been made, and all amounts due to Participant 

under and in accordance with this Agreement have been received by Participant, this Agreement 

shall be terminated and Participant shall have no further rights or remedies under this Agreement 

or with respect to the Loans, provided, however, that the provisions of Section 5.05(b), Section 

5.05(f), Section 7.02, Section 8.02, Article X, Article XI, Article XIV, Article XV, Article XVI, 

Article XVII and Article XIX and Participant’s rights thereunder and remedies for a breach 

thereof, shall survive the termination of this Agreement until such time as the obligations under 

Section 5.05(b) and Section 5.05(f) expire by their terms. 

ARTICLE XV 

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, or, delivered by hand or by 

nationally recognized air courier service, directed to the address of such Person set forth below: 

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If to Participant: Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

with a copy to: Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, Virginia 22226 

Attention: David Gearin 

If to the Company 

before the Closing: Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

with a copy to: Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, Virginia 22226 

Attention: David Gearin 

If to the Company 

after the Closing: FNBN-CMLCON I LLC 

 c/o Sorenson Group Management, LLC 

4393 Riverboat Road, Suite 450 

Salt Lake City, UT 84123 

Attention: Donald E. Wallace 

with a copy to: B. Ray Zoll, P.C. 

8941 South 700 E. 

Suite 103 

Sandy, Utah 84070 

Attn: B. Ray Zoll 

Any such notice shall become effective when received (or receipt is refused) by the addressee, 

provided that any notice or communication that is received (or refused) other than during regular 

business hours of the recipient shall be deemed to have been given at the opening of business on 

the next Business Day of the recipient. From time to time, any Person may designate a new 

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address for purposes of notice hereunder by notice to such effect to the other Persons identified 

above. 

ARTICLE XVI 

GOVERNING LAW; JURISDICTION 

Section 16.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY 

AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, 

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. Nothing in this Agreement shall require any unlawful action 

or inaction by any party hereto. 

Section 16.02 Jurisdiction; Venue and Service. The Company, for itself and its 

Affiliates, hereby irrevocably and unconditionally: 

(a) (i) agrees that any suit, action or proceeding instituted against it by any 

other party with respect to this Agreement may be instituted, and that any suit, action or 

proceeding by it against any other party with respect to this Agreement shall be instituted, only in 

the Supreme Court of the State of New York, County of New York, or the U.S. District Court for 

the Southern District of New York or the United States District Court for the District of Columbia 

(and appellate courts from any of the foregoing), (ii) consents and submits, for itself and its 

property, to the jurisdiction of such courts for the purpose of any such suit, action or proceeding 

instituted against it by any other party and (iii) agrees that a final judgment in any such suit, 

action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the 

judgment or in any other manner provided by Law; 

(b) agrees that service of all writs, process and summonses in any suit, action 

or proceeding pursuant to Section 16.02(a) may be effected by the mailing of copies thereof by 

registered or certified mail, postage prepaid, to the Company at its address for notices pursuant to 

Article XV (with copies to such other Persons as specified therein); provided, however, that 

nothing contained in this Section 16.02 shall affect the ability of the Company to be served 

process in any other manner permitted by Law; 

(c) (i) waives any objection that it may now or hereafter have to the laying of 

venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any 

court specified in Section 16.02(a), (ii) waives any claim that any such suit, action or proceeding 

brought in any such court has been brought in an inconvenient forum and (iii) agrees not to plead 

or claim either of the foregoing. 

(d) agrees that nothing contained in this Section 16.02 shall be construed as a 

consent to jurisdiction by the Failed Bank or the FDIC or a limitation on any removal rights the 

FDIC may have. 

Section 16.03 Waiver of Jury Trial. EACH OF THE COMPANY, FOR ITSELF AND 

ITS AFFILIATES, AND THE PARTICIPANT HEREBY IRREVOCABLY AND 

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UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF 

ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES 

THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT 

A JURY. 

ARTICLE XVII 

RIGHT TO SPECIFIC PERFORMANCE 

THE COMPANY HEREBY ACKNOWLEDGES AND AGREES THAT THE 

DAMAGES TO BE INCURRED BY PARTICIPANT AS A RESULT OF THE COMPANY’S 

BREACH OF THIS AGREEMENT WILL BE DIFFICULT, IF NOT IMPOSSIBLE, TO 

ASCERTAIN, THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY AND THAT 

ANY BREACH OR THREATENED BREACH OF ANY OF THE PROVISIONS OF THIS 

AGREEMENT BY THE COMPANY MAY CAUSE IMMEDIATE IRREPARABLE HARM 

FOR WHICH THERE MAY BE NO ADEQUATE REMEDY AT LAW. ACCORDINGLY, 

THE PARTIES AGREE THAT, IN THE EVENT OF ANY SUCH BREACH OR 

THREATENED BREACH, PARTICIPANT SHALL BE ENTITLED TO IMMEDIATE AND 

PERMANENT EQUITABLE RELIEF (INCLUDING INJUNCTIVE RELIEF AND SPECIFIC 

PERFORMANCE OF THE PROVISIONS OF THIS AGREEMENT) FROM A COURT OF 

COMPETENT JURISDICTION (IN ADDITION TO ANY OTHER REMEDY TO WHICH IT 

MAY BE ENTITLED AT LAW OR IN EQUITY). THE PARTIES AGREE AND STIPULATE 

THAT PARTICIPANT SHALL BE ENTITLED TO SUCH EQUITABLE (INCLUDING 

INJUNCTIVE) RELIEF WITHOUT POSTING A BOND OR OTHER SECURITY AND THE 

COMPANY FURTHER WAIVES ANY DEFENSE IN ANY SUCH ACTION FOR SPECIFIC 

PERFORMANCE OR INJUNCTIVE RELIEF THAT A REMEDY AT LAW WOULD BE 

ADEQUATE AND ANY REQUIREMENT UNDER LAW TO POST SECURITY AS A 

PREREQUISITE TO OBTAINING EQUITABLE RELIEF. NOTHING CONTAINED IN 

THIS SECTION SHALL LIMIT THE PARTIES’ RIGHT TO ANY REMEDIES AT LAW, 

INCLUDING THE RECOVERY OF DAMAGES FOR BREACH OF THIS AGREEMENT. 

ARTICLE XVIII 

WITHHOLDING 

The Company shall be entitled to deduct and withhold such amounts required to be 

deducted and withheld under any applicable provision of federal, state or local tax Law from any 

distribution otherwise payable to Participant hereunder. To the extent that amounts are so 

deducted and withheld and paid over to the appropriate taxing authority, such deducted and 

withheld amounts shall be treated for all purposes of this Agreement as having been paid to 

Participant. Notwithstanding the foregoing, no amounts shall be deducted or withheld from any 

distribution to Participant hereunder provided that Participant delivers to the Company a properly 

completed Internal Revenue Service Form W-9, W-8ECI or W-8BEN (or an applicable 

successor form) that exempts such distributions from such deductions and withholding. 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

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49
 
ARTICLE XIX 

MISCELLANEOUS 

Section 19.01 Entire Agreement. This Agreement and the Ancillary Documents contain 

the entire agreement between Participant and the Company with respect to the subject matter 

hereof and supersedes any and all other prior agreements, whether oral or written. 

Section 19.02 Counterparts; Facsimile Signatures. This Agreement may be executed in 

two (2) or more counterparts, each of which shall be deemed an original but all of which together 

shall constitute but one and the same agreement. 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. 

Section 19.03 Headings. 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 Sections and paragraphs in this Agreement 

unless otherwise specified. 

Section 19.04 Compliance with Law. Except as otherwise specifically provided herein, 

each party to this Agreement shall, at its own cost and expense, obey and comply with all 

applicable laws, as they may pertain to such party’s performance of its obligations hereunder 

Section 19.05 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 scope of such provision and/or the Persons 

against whom, and/or the circumstances under which, such provision shall be effective in such 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 

50
 
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 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 16.01. 

Section 19.06 No Third Party Beneficiaries. This Agreement is made for the sole benefit 

of Participant and the Company and their respective successors and permitted assigns, and no 

other Person or Persons (including Borrowers or any co-lender or other Person with any interest 

in or liability under any of the Loans) shall have any rights or remedies under or by reason of this 

Agreement. 

Section 19.07 Legal Fees. No party to this Agreement shall be responsible for the 

payment of the legal fees or expenses incurred by the other party hereto in connection with the 

negotiation and execution of this Agreement or any subsequent modifications or supplements 

hereto. 

Section 19.08 Time of Essence. Time is hereby declared to be of the essence of this 

Agreement and of every part hereof. 

Section 19.09 No Presumption. This Agreement shall be construed fairly as to each 

party hereto and if at any time any such term or condition is desired or required to be interpreted 

or construed, no consideration shall be given to the issue of who actually prepared, drafted or 

requested any term or condition of this Agreement or any agreement or instrument subject 

hereto. 

Section 19.10 Amendments and Waivers. No provision of this Agreement may be 

amended or waived except in writing executed by all of the parties to this Agreement. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

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51
 
IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to 

be executed as of 
 the day and year first above written. 

PARTICIPANT: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION AS RECEIVER FOR FIRST 

NATIONAL BANK OF NEVADA 

BY:t1~ 

Name: Ralph Malami 

Title: Attorney-in-Fact
 

THE COMPANY: 

FNBN-CMLCON I LLC 

By: Federal Deposit Insurance Corporation as 

Receiver for First National Bank of 
 Nevada, as Sole 

Member and Manager

Name: Ralph Malami 

Byfldø~

Title: Attorney-in-Fact
 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

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52
 
EXHIBIT A
 

LOAN SCHEDULE
 

[Attached] 

A-1 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

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EXHIBIT B-1
 

FORM OF CUSTODIAL AGREEMENT
 

[Attached] 

B-1 

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EXHIBIT B-2
 

FORM OF SERVICING AGREEMENT
 

[Attached] 

B-2 

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12349276.4 
EXHIBIT C 

FORM OF PARTICIPATION CERTIFICATE 

This Participation Certificate evidences an undivided ownership interest, as hereinafter 

specified, in the Loans and the Loan Documents relating thereto pursuant to the terms of that 

certain Participation and Servicing Agreement (the “Agreement”) dated as of February 20, 2009, 

by and between the Federal Deposit Insurance Corporation as Receiver for First National Bank 

of Nevada (“Participant”) and FNBN-CMLCON I LLC (the “Company”). 

The Participant’s Share evidenced by this Participation Certificate is eighty percent 

(80%). 

Initially capitalized terms used and not otherwise defined in this Participation Certificate 

shall have the meanings given such terms in the Agreement. 

FNBN-CMLCON I LLC 

By: Federal Deposit Insurance Corporation as 

Receiver for First National Bank of Nevada, as 

Sole Member and Manager 

By: 

Name: 

Title: 

Effective Date of this Certificate: February 20, 2009 

C-1 

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EXHIBIT D 

FORM OF MONTHLY REPORT 

MONTHLY REPORTS 

Data File 

Requested Information in attached list 

Cashflow and Distribution Report 

Principal collections 

+ Interest collections 

+ Real Estate Owned (“REO”) properties liquidation proceeds 

+Recoveries of Servicing Expenses (including Post-Cut-Off Advances and Pre-Cut-Off 

Advances) 

+ Other Collections (including late fees and penalties) 

Release from Liquidity Reserve 

+Release from Litigation Reserve 

 GROSS FUNDS AVAILABLE 

- Payments on Loan Participations 

 NET FUNDS AVAILABLE 

- Prior month cumulative Working Capital Advances 

- Management Fees 

- Custodial Fee 

- Servicing Expenses 

- Holdback for Liquidity Reserve Account 

- Holdback for Litigation Reserve Account 

 TOTAL AUTHORIZED DISBURSEMENTS 

NET DISTRIBUTABLE CASH 

+ Working Capital Advance (amount equal to total in row above, if negative) 

ADJUSTED NET DISTRIBUTABLE CASH 

DISTRIBUTION TO PARTICIPANT (%) 

DISTRIBUTION TO COMPANY (%) 

 TOTAL DISTRIBUTIONS (Equal to Adjusted Net Distributable Cash) 

Threshold Tracking Report 

Threshold Level 

Cumulative distributions toward Recovery Threshold, beginning of month 

+ Current month distribution 

= Cumulative distributions toward Recovery Threshold, end of month 

Remaining distributions to Recovery Threshold, end of month 

D-1 

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Monthly Loan and REO Rollforward Report:– by # and $ 

Loans 

By #: 

Beginning number of loans 

- Pay-offs 

- REO transfers 

= Ending number of loans 

D-2 

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By $: 

Beginning pool balance (UPB) 

+ Commitments funded 

- Payments received, 

- UPB transfers to REO 

- Write down of principal (Other) 

= Ending pool balance (UPB) 

REO 

By #: 

Beginning number of REO properties 

+ Transfers in 

- Sales 

= Ending number 

By $: 

Beginning UPB of REO properties 

+ Capitalized Post-Acquisition Costs 

+ UPB on REO transfers in 

- Net liquidation proceeds 

- Reimbursement of Post Acquisition Expenses 

+/- Realized Gain (Losses) 

= Ending UPB 

Working Capital Advances Report 

WORKING CAPITAL ADVANCES - MONTHLY 

ROLLFORWARD 

Cumulative balance, prior month-end 

Net advances (recoveries), current month 

Cumulative balance, current month-end 

Commitments/LIP Report 

LIP to disburse, beginning of month 

Reduction for draws 

Reductions for loan payoffs 

Reductions for REO transfers 

Other reductions, if any 

LIP to disburse, end of month 

Months remaining to final commitment expiration 

LIP Bank Account, Monthly Rollforward 

Balance, beginning of month 

Draws for month 

Interest credited 

D-3 

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Balance, end of month 

Liquidity Reserve Report 

LIQUIDITY RESERVE - MONTHLY ROLLFORWARD 

Balance, beginning of month 

Current month addition 

Current month disbursements 

Balance, end of month 

Litigation Reserve Report 

LITIGATION RESERVE - MONTHLY ROLLFORWARD 

Balance, beginning of month 

Current month addition 

Current month disbursements 

Balance, end of month 

Delinquency Report 

# and $ by delinquency classification: Current, < 30, 30-60 days, 61-90 days, > 90 days, in 

foreclosure, in bankruptcy, REO 

Breakout of > 60 day delinquencies by collateral type, # and $ 

Breakout of > 60 day delinquencies by state, # and $ 

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) First National Bank 

of Nevada 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. 

REO Report 

D-4 

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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 book value, listing date, 

estimated sale date, appraisal amount, original list price, current list price, cumulative Servicing 

Expenses allocable, broker name, and comments 

Modification Report 

Listing of loans modified, to include borrower name, loan balance and terms before 

modification, loan balance and terms after modification 

Liquidation Report 

Listing of loans and REO properties liquidated, to include borrower name, UPB, net liquidation 

proceeds, cumulative Servicing Expenses, realized loss amount 

Short Sale Report 

Listing 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 

D-5 

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SEMIANNUAL REPORT 

Projected Cash Flows 

Excel model of projected cash flows to Participant by month, as of June 30 and December 31 

each year. The model should present projected monthly cash inflows on the Loans and REO, 

projected outflows of Servicing Expenses, net monthly cash available for allocation, and the 

amount of allocation to Participation Certificate. 

The projection should run through the final projected distribution on the Participation Certificate. 

AS AVAILABLE 

Loan Schedule 

Loan Schedule from the Document Custodian, as provided to the Company. 

D-6 

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Reporting Requirements 

Data File from servicing system to be provided in Excel 

(or such other data fields that Participant may request related to Company assets 

utilizing systems maintained by Servicer or any Subservicer) 

Data Fields Required by property 

Loan Number 

2nd Loan Number 

Combined Loan Amount 

1st Loan Amt 

2nd Loan Amt 

Combined UPB or Disb Amt 

1st Loan UPB or Disb 

2nd Ln UPB or Disb Amt 

Original Rate 

Current Rate 

Term 

Note 

CP Mod 

1st Due 

Next Due 

Maturity 

Margin 

Index 

Street 

City 

ST 

ZIP 

Original Appraisal 

Lien 

Credit Score 

CoBwr Score 

Units 

Prop Class 

Purp Type 

Occ 

Documentation 

Int Only 

Int Only End 

PMI Cert 

Basis 

PI Pymt 

TI Pymt 

2nd T&I Bal 

TI Balance 

D-7 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

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Last CP Insp 

CP % Comp 

COO 

BPO Date 

BPO Value As Is 

BPO Value Repair or Complete 

BPO Prop Condition 

Last Dlq Insp 

Inspection Type 

Insp Order 

Inspection Comments 

Updated Score 

Type 

Prod 

Product Description 

1st Mtg Loan 

Builder 

Sq Ft 

Int Type 

Inv 

Grp 

FC 

Consumer Indicator 

Bankruptcy Date 

D-8 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 
EXHIBIT E 

FORM OF TRANSFER SUPPLEMENT 

THIS TRANSFER SUPPLEMENT, dated as of the date specified in Item I of Schedule I 

hereto, among the Transferring Participant specified in Item 2 of Schedule I hereto (the 

“Transferring Participant”), the Purchasing Participant specified in Item 3 of Schedule I hereto 

(the “Purchasing Participant”), and the Company is made and entered into with reference to 

the following: 

Recitals: 

A. This Transfer Supplement is being executed and delivered in accordance with 

Section 12.02 of that certain Participation and Servicing Agreement, dated as of February 20, 

2009, between the Federal Deposit Insurance Corporation as Receiver for First National Bank of 

Nevada as Participant and FNBN-CMLCON I LLC, as the Company (collectively, the 

“Parties”) (as the same may be amended, modified or supplemented from time to time, 

collectively the “Participation Agreement”). Initially capitalized terms used and not otherwise 

defined herein shall have the meanings given such terms in the Participation Agreement. 

B. The Purchasing Participant wishes to become Participant under the Participation 

Agreement and have assigned to it all of the Transferring Participant’s rights and obligations 

under the Participation Agreement and, to the extent applicable, the Ancillary Documents (as 

defined in the Participation Agreement). 

C. The Transferring Participant is selling and assigning to the Purchasing Participant, 

and the Purchasing Participant is purchasing and assuming, all of the Transferring Participant’s 

rights and obligations under the Participation Agreement and, to the extent applicable, the 

Ancillary Documents (the “Transferring Participant’s Interests”). 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as 

follows: 

1. Transfer Effective Notice. Upon receipt by the Company of four (4) counterparts 

of this Transfer Supplement (to each of which is attached a fully completed Schedule I and 

Schedule II, and each of which has been executed by the Transferring Participant and by the 

Purchasing Participant), the Company will transmit to the Transferring Participant and the 

Purchasing Participant a transfer effective notice substantially in the form of Schedule III to this 

Transfer Supplement (a “Transfer Effective Notice”). The date on which the transfer effected 

by this Transfer Supplement shall become effective (the “Transfer Effective Date”), shall be the 

date on which the Purchasing Participant becomes the owner of record of the Transferring 

Participant’s Participation on the register maintained by the Company. From and after the close 

of business at Company’s office on the Transfer Effective Date, the Purchasing Participant shall 

be Participant under the Participation Agreement for all purposes thereof having the interest in 

the Transferring Participant’s Interests reflected in this Transfer Supplement. 

E-1 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 
2. Purchase Price; Sale. At or before 12:00 o’clock noon, local time at the 

Transferring Participant’s office specified in Schedule III, on the Transfer Effective Date, the 

Purchasing Participant shall pay to the Transferring Participant, in immediately available funds, 

an amount equal to the purchase price, as agreed upon between the Transferring Participant and 

the Purchasing Participant (the “Purchase Price”), for the Transferring Participant’s Interests. 

Effective upon receipt by the Transferring Participant of the Purchase Price from the Purchasing 

Participant, the Transferring Participant hereby irrevocably sells, assigns and transfers to the 

Purchasing Participant, without recourse, representation or warranty (express or implied) except 

as set forth in Section 5 hereof, and the Purchasing Participant hereby irrevocably purchases, 

takes and assumes from the Transferring Participant, the Transferring Participant’s Interests. 

3. Principal, Interest and Fees. All principal under the Participation Agreement that 

would otherwise be payable from and after the Transfer Effective Date to or for the account of 

the Transferring Participant in respect of the Transferring Participant’s Interests shall, instead, be 

payable to or for the account of the Purchasing Participant. 

4. Further Assurances. At any time and from time to time upon the written request 

of any party to this Transfer Supplement, each other party hereto will execute and deliver such 

further documents and do such further acts and things as such requesting party may reasonably 

request in order to effect the purposes of this Transfer Supplement. 

5. Certain Representations and Agreements. By executing and delivering this 

Transfer Supplement, the Transferring Participant and the Purchasing Participant represent, 

warrant and confirm to and agree with each other and the Company as follows: 

5.1 Each of the Transferring Participant and the Purchasing Participant has all 

requisite corporate or company authority to execute and deliver this Transfer Supplement and 

perform its obligations hereunder. 

5.2 The Purchasing Participant confirms that it has made such review, analysis and 

decision to acquire the Transferring Participant’s Interest independently and without reliance 

upon the Company or the Transferring Participant. 

5.3 The Purchasing Participant confirms that it has such knowledge and experience in 

the origination, sale and/or purchase of performing and non-performing or distressed loans, 

including, without limitation, construction loans secured by residential properties, as well as 

financial and business matters as to enable the undersigned to utilize the information made 

available to it with respect to the Transferring Participant’s Interests to evaluate the merits and 

risks of a purchase of the Transferring Participant’s Interests, and to make an informed decision 

with respect thereto. 

5.4 The Purchasing Participant acknowledges, understands and represents that it is 

able to bear the economic risks associated with the acquisition and ownership of the Transferring 

Participant’s Interests, including, without limitation, the risk of a total loss of its investment 

therein and the risk that it may be required to hold the Transferring Participant’s Interests for an 

indefinite period of time. 

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FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 
5.5 The Purchasing Participant acknowledges that, unless otherwise provided in this 

Transfer Supplement, the Transferring Participant is not and will not make any representation or 

warranty with respect to the Transferring Participant’s Interests. 

5.6 The Purchasing Participant acknowledges and agrees that (i) the proposed sale of 

the Transferring Participant’s Interests is not intended to constitute the sale of a “security” within 

the meaning of the Securities Act of 1933, as amended, or any applicable federal or state 

securities laws, (ii) no inference that any of the Transferring Participant’s Interests is a “security” 

under such federal or state securities laws shall be drawn from any of the representations or 

warranties made by the Purchasing Participant, (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 Transferring Participant’s Interests is a security, 

such may not be resold or otherwise transferred by the undersigned except in accordance with 

any and all applicable federal securities laws and Blue Sky laws. 

5.7 The Purchasing Participant shall perform in accordance with its terms all of the 

obligations which by the terms of the Participation Agreement are required to be performed by it 

as Participant. 

[Other representations to be agreed to by Purchasing Participant and Transferring 

Participant.] 

6. Schedule II. Schedule II hereto sets forth administrative information with respect 

to the Purchasing Participant. 

7. Governing Law. This Transfer Supplement shall be governed by, construed and 

enforced in accordance with the laws of the State of New York, without regard to principles of 

choice of law that might refer the governance, construction or enforcement of this Transfer 

Supplement to the laws of any other jurisdiction. 

8. Counterparts. This Transfer Supplement may be executed in any number of 

counterparts and by the different parties hereto on separate counterparts each of which, when so 

executed, shall be deemed an original, but all such counterparts shall constitute but one and the 

same instrument. 

IN WITNESS WHEREOF, the parties hereto have caused this Transfer Supplement to be 

executed by their respective duly authorized officers on Schedule I hereto as of the date set forth 

in Item I of Schedule I hereto. 

[Remainder of Page Intentionally Left Blank] 

E-3 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 
 

 

SCHEDULE I TO TRANSFER SUPPLEMENT 

COMPLETION OF INFORMATION AND 

SIGNATURES FOR TRANSFER SUPPLEMENT 

Re: Participation and Servicing Agreement, dated February 20, 2009 between the 

Federal Deposit Insurance Corporation as Receiver for First National Bank of 

Nevada and _____________, a __________________ (as the same may be 

amended, modified or supplemented from time to time, the “Participation 

Agreement”). 

Item I (Date of Assignment Supplement): [Insert date of Assignment Supplement] 

Item 2 (Transferring Participant): [Insert name of Transferring Participant] 

Item 3 (Purchasing Participant): [Insert name of Purchasing Participant] 

Item 5 (Signatures of Parties to Transfer Supplement): 

[Name of Transferring Participant], as Transferring 

Participant 

By: 

Title: 

[Name of Purchasing Participant], as Purchasing 

Participant 

By: 

Title: 

FNBN-CMLCON I LLC 

By: 

Sole Member and Manager 

By: 

Title: 

E-I-1 

FDIC FNBN Commercial Construction Participation and Servicing Agm EXECUTION VERSION 

12349276.4 
 

 

 

 

 

SCHEDULE II TO TRANSFER SUPPLEMENT 

LIST OF OFFICES, ADDRESSES 

FOR NOTICES 

[Name of Purchasing Participant] 

Notice Information for Purchasing Participant: 

Address for Notices: 

Attention: 

Telephone: 

Facsimile: 

E-II-1 

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12349276.4 
SCHEDULE III TO TRANSFER SUPPLEMENT 

TRANSFER EFFECTIVE NOTICE 

To: [Insert Names of Transferring 

Participant and Purchasing Participant] 

The undersigned, as the Company under the Participation and Servicing Agreement dated 

as of February __, 2009, by and between [__________________] and FNBN-CMLCON I LLC 

(collectively, the “Parties”) (as the same may be amended, modified or supplemented from time 

to time, the “Participation Agreement”), acknowledges receipt of four (4) executed 

counterparts of a completed Transfer Supplement, dated ___________, 20__, from [name of 

Transferring Participant] to [name of Purchasing Participant] (the “Transfer Supplement”). 

Initially capitalized terms used and not otherwise defined in this Transfer Effective Notice have 

the meanings given in the Transfer Supplement. 

Pursuant to the Transfer Supplement, you are advised that the Transfer Effective Date 

will be _________________, 20___. [Insert fifth Business Day following date of Transfer 

Effective Notice or other date agreed to among the Transferring Participant, the Purchasing 

Participant, and the Company.] 

Very truly yours, 

FNBN-CMLCON I LLC 

By: 

Sole Member and Manager 

By: 

Name: 

Title: 

E-III-1 

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12349276.4 
EXHIBIT F 

FORM OF ACCOUNT CONTROL AGREEMENT 

E-III-1 

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