i 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT 

FNBN-RESCON I LLC 

FNBN RESCON I LLC – Operating Agreement 

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TABLE OF CONTENTS 

Page 

ARTICLE I Certain Definitions...................................................................................................... 1 

1.1 Definitions........................................................................................................... 1 

ARTICLE II Organization of the Company ................................................................................... 2 

2.1	 Formation ........................................................................................................... 2 

2.2	 Name.................................................................................................................... 2 

2.3	 Organizational Contributions and Actions; Initial Transfer ........................ 2 

2.4	 Registered Office; Chief Executive Office. ...................................................... 2 

2.5	 Purpose; Duration.............................................................................................. 2 

2.6	 Single Purpose Limitations ............................................................................... 3 

2.7	 Limitations on the Company’s Activities......................................................... 3 

ARTICLE III Management and Operations of the Company......................................................... 5 

3.1 Management of the Company’s Affairs........................................................... 5 

3.2 Employees and Services..................................................................................... 6 

3.3 Related Party Agreements ................................................................................ 7 

3.4 Real Property ..................................................................................................... 7 

ARTICLE IV Rights and Duties of, and Restrictions on, Members .............................................. 7 

4.1 Filings; Duty of Members to Cooperate........................................................... 7 

4.2 Certain Restrictions and Requirements........................................................... 8 

ARTICLE V Borrowings; Contributions; Other Matters ............................................................... 8 

5.1 Capital Contributions........................................................................................ 8 

5.2	 No Reliance by Parties Extending Credit ........................................................ 8 

5.3	 No Liens .............................................................................................................. 8 

5.4	 Establishment and Permitted Uses of Collection Account............................. 8 

5.5	 Establishment and Permitted Uses of Liquidity Reserve and Litigation 

Reserve Accounts ............................................................................................... 9 

5.6	 Establishment and Permitted Uses of LIP Account........................................ 9 

ARTICLE VI Distributions and Allocations .................................................................................. 9 

6.1	 Distributions ....................................................................................................... 9 

6.2	 Allocations .......................................................................................................... 9 

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TABLE OF CONTENTS 

(continued) 

Page 

ARTICLE VII Accounting and Taxation ....................................................................................... 9 

7.1 Fiscal Year .......................................................................................................... 9 

7.2 Maintenance of Books and Records ................................................................. 9 

7.3 Annual Financial Statements.......................................................................... 10 

7.4 Taxation ............................................................................................................ 10 

7.5 Records Retention............................................................................................ 10 

ARTICLE VIII Restrictions on Disposition of Company Interests .............................................. 10 

8.1 Limitations on Disposition of Company Interests......................................... 10 

8.2 Change of Control............................................................................................ 10 

8.3 Additional Provisions Relating to Permitted Dispositions ........................... 10 

8.4 Effect of Permitted Dispositions ..................................................................... 11 

8.5 Effect of Prohibited Dispositions .................................................................... 12 

8.6 Distributions After Disposition ....................................................................... 12 

8.7 Resignation; Dissolution.................................................................................. 12 

ARTICLE IX Dissolution and Winding-Up of the Company ...................................................... 13 

9.1 Dissolution ........................................................................................................ 13 

9.2 Winding-Up Procedures.................................................................................. 13 

ARTICLE X Qualified Transferees.............................................................................................. 14
 

10.1 Qualified Transferees ...................................................................................... 14 

ARTICLE XI Manager Liability .................................................................................................. 17 

11.1 Liability of Manager ........................................................................................ 17 

ARTICLE XII Miscellaneous ....................................................................................................... 18 

12.1 Waiver of Rights of Partition and Dissolution .............................................. 18 

12.2 Entire Agreement............................................................................................. 18 

12.3 Governing Law; Jurisdiction.......................................................................... 18 

12.4 Third Party Beneficiaries................................................................................ 18 

12.5 Expenses............................................................................................................ 18 

12.6 Waivers and Amendments .............................................................................. 18 

12.7 Notices ............................................................................................................... 19 

12.8 Counterparts; Facsimile Signatures............................................................... 21 

12.9 Successors and Assigns.................................................................................... 21 

12.10 Construction ..................................................................................................... 21 

12.11 Compliance With Law; Severability .............................................................. 22 

12.12 Power of Attorney ............................................................................................ 23 

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TABLE OF CONTENTS 

(continued) 

Page 

12.13 Submission to Jurisdiction; Waivers.............................................................. 23 

Annex I – Certain Definitions 

Exhibits 

Exhibit A – Certificate of Formation 

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FNBN-RESCON I LLC 

LIMITED LIABILITY COMPANY AGREEMENT 

THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (as the same 

may be amended or modified from time to time in accordance with the terms hereof, this 

“Agreement”), is made and effective as of February 5, 2009, by and among the Federal Deposit 

Insurance Corporation as Receiver (“Receiver”) for First National Bank of Nevada (“Initial 

Member”) and FNBN-RESCON I LLC, a Delaware limited liability company (the 

“Company”). 

WHEREAS, Initial Member has formed the Company as a Delaware limited liability 

company for the purpose of carrying on the Business (as defined in Annex I hereto); and 

WHEREAS, the parties desire to set forth herein the terms and conditions of the 

foregoing; and 

WHEREAS, the Initial Member and the Company have executed and delivered to each 

other that certain Loan Contribution and Assignment Agreement dated of even date herewith (the 

“Loan Contribution and Assignment Agreement”); and 

WHEREAS, the Federal Deposit Insurance Corporation as Receiver for First National 

Bank of Nevada (“Participant”) and the Company have executed and delivered to each other 

that certain Participation and Servicing Agreement (the “Participation and Servicing 

Agreement”), pursuant to which, among other things, the Company has transferred and 

conveyed to the Initial Member, as Participant, the Participation Interest; and 

WHEREAS, following the contribution by Initial Member to the Company of the Loans 

as contemplated herein, Initial Member shall transfer to Stearns SPV I, LLC all of its interest in 

the Company, and Stearns SPV I, LLC shall agree to become a party to and bound by this 

Agreement as the sole “Member” (as defined in Annex I hereto) pursuant to a Limited Liability 

Company Interest Sale and Assignment Agreement (the “LLC Sale Agreement”) (the 

consummation of such transactions, the “Closing”). 

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, the parties hereto agree as follows: 

ARTICLE I 

Certain Definitions 

1.1 Definitions. Initially capitalized terms used and not defined herein shall have the 

meanings assigned to them in Annex I hereto, which is hereby incorporated into this Agreement 

as if set forth in full herein. 

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ARTICLE II 

Organization of the Company 

2.1 Formation. 

(a) Initial Member has caused the Certificate of Formation, in the form 

attached as Exhibit A hereto (the “Certificate”), to be filed in the office of the Secretary of State 

of the State of Delaware. The Certificate shall not be amended except to change the registered 

agent or office of the Company. 

(b) Initial Member hereby agrees to be, and is hereby admitted as, the sole 

Member of the Company until the Closing. The Company shall at all times have no more than 

one member. 

2.2 Name. 

(a) The name of the Company shall be “FNBN-RESCON I LLC”. 

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

such other name or names that comply with applicable law as Member may select from time to 

time. 

2.3 Organizational Contributions and Actions; Initial Transfer. 

(a) As soon as practicable after the execution hereof, Initial Member shall 

contribute to the Company the Loans in accordance with the provisions of the Loan Contribution 

and Assignment Agreement (such date, the “Contribution Date”). 

(b) Upon the consummation of the transaction contemplated in Section 2.3(a), 

the Initial Member shall own 100% of the limited liability company interests of the Company. 

2.4 Registered Office; Chief Executive Office. The Company, at its own expense, 

shall maintain a registered office and registered agent in Delaware to the extent required by the 

Act, which office and agent shall be as determined by the Manager from time to time and which 

shall be set forth in the Certificate. Initially (and until otherwise determined by the Manager), 

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

registered agent in Delaware shall be, as specified in the Certificate as originally filed, which 

may be amended by the Manager from time to time as necessary to correctly reflect the name 

and address of the Company’s registered agent. The chief executive office of the Company shall 

be located at 4191 2nd Street South, St. Cloud, MN 56301, or such other place as shall be 

determined by the Manager from time to time. 

2.5 Purpose; Duration. 

(a) The purpose of the Company is to engage in and conduct the Business, 

directly or, to the extent specifically authorized in this Agreement, indirectly through other 

Persons. Without limiting the foregoing, the Company shall not form or have any Subsidiaries 

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unless authorized in or pursuant to this Agreement. The Company shall have all powers 

necessary, desirable or convenient, or which the Manager deems necessary, desirable or 

convenient, and may engage in any and all activities necessary, desirable or convenient, or which 

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

Company or consistent with the furtherance thereof. 

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

perpetually. 

2.6 Single Purpose Limitations. Notwithstanding any provision hereof or of any 

other document governing the formation, management or operation of the Company to the 

contrary, the following shall govern for so long as the Participation and Servicing Agreement 

remains in effect: Except to the extent permitted hereunder or under the Ancillary Documents, 

(i) the Company shall not incur or assume any Debt; (ii) the Company shall not consolidate or 

merge with or into any other Person, convert into any other type of Person or convey or transfer 

its properties and assets substantially as an entirety to any entity; and (iii) to the fullest extent 

permitted by law, the Company shall not be dissolved, liquidated or terminated in each case 

without the consent of Member and Participant. 

2.7 Limitations on the Company’s Activities. This Section 2.7 is being adopted in 

order to comply with certain provisions required in order to qualify the Company as a “special 

purpose” entity. 

(a) For so long as the Participation and Servicing Agreement is in effect, 

Member shall cause the Company to do or cause to be done all things necessary to preserve and 

keep in full force and effect its existence, rights (charter and statutory) and franchises, and 

Member also shall cause the Company to: 

(i) maintain financial statements separate from any Affiliate although 

it may be included in the consolidated financial statements of its parent or ultimate parent in 

accordance with GAAP; 

(ii) at all times hold itself out to the public as a legal entity separate 

from Member and any other Person; 

(iii) file its own tax returns, if any, as may be required under applicable 

law, to the extent (1) it is not part of a consolidated group filing a consolidated return or returns 

or (2) it is not treated as a division for tax purposes of another taxpayer, and pay any taxes so 

required to be paid under applicable law; 

(iv) except as contemplated hereby or by the Ancillary Documents, not 

commingle its assets with assets of any other Person; 

(v) conduct its business in its own name and strictly comply with all 

organizational formalities to maintain its separate existence; 

(vi) pay its own liabilities only out of its own funds; 

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(vii) maintain an arm’s length relationship with any Affiliate upon 

terms that are commercially reasonable and that are no less favorable to the Company than could 

be obtained in a comparable arm’s length transaction with an unrelated Person; 

(viii) pay the salaries of its own employees, if any and maintain, or cause 

to be maintained, a sufficient number of employees, if any, in light of its contemplated business 

operations; 

(ix) not hold out its credit or assets as being available to satisfy the 

obligations of others, or Guarantee or otherwise obligate itself with respect to the Debts of any 

other Person; 

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

overhead for shared office space; 

(xi) use separate stationery, invoices and checks; 

(xii) except as contemplated hereby or by the Ancillary Documents, not 

pledge its assets for the benefit of any other Person, or make any loans or advances to any other 

Person; provided that it may invest its funds in interest bearing accounts held by any bank that is 

not its Affiliate and make advances in accordance with the Participation and Servicing 

Agreement; 

(xiii) correct any known misunderstanding regarding its separate 

identity; and 

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

purpose, transactions and liabilities, if any. 

(b) The failure of the Company, or Member on behalf of the Company, to 

comply with any of the foregoing covenants or any other covenants contained in this Agreement 

shall not affect the status of the Company as a separate legal entity or the limited liability of 

Member. 

(c) So long as the Participation and Servicing Agreement is in effect, Member 

shall not permit a Dissolution Event or an Insolvency Event to occur with respect to the 

Company to which the Participant has not provided its written consent, and Member also shall 

not cause or permit the Company to: 

(i) except as contemplated hereby or by the Ancillary Documents, 

Guarantee any obligation of any Person, including any Affiliate; 

(ii) engage in any business unrelated to the Business; 

(iii) have any assets other than those related to the Business; 

(iv) incur, create or assume any Debt other than as expressly permitted 

hereby or by the Ancillary Documents; 

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(v) make or permit to remain outstanding any loan or advance to, or 

own or acquire any stock or securities of, any Person, except that the Company may invest in 

those investments permitted under the Ancillary Documents and may make any advance required 

or expressly permitted to be made pursuant to any provisions of the Ancillary Documents and 

permit the same to remain outstanding in accordance with such provisions; 

(vi) to the fullest extent permitted by law, engage in any dissolution, 

liquidation, consolidation, merger, asset sale or transfer of ownership interests other than such 

activities as are expressly permitted pursuant to any provision of the Ancillary Documents and 

subject to obtaining any approvals required under this Agreement; or 

(vii) except as contemplated or permitted by the Participation and 

Servicing Agreement, form, acquire or hold any Subsidiary. 

ARTICLE III 

Management and Operations of the Company 

3.1 Management of the Company’s Affairs. 

(a) Prior to the Closing, the management of the Company is vested 

exclusively in Initial Member, which is hereby appointed to act as the Manager. From and after 

the Closing, the management of the Company shall be vested exclusively in Member, which is 

hereby appointed as the Manager effective as of the Closing (the “Manager”). Subject to the 

terms and conditions of this Agreement, the Manager shall have full and exclusive power and 

discretion to, and shall, manage the business and affairs of the Company in accordance with this 

Agreement. The Manager shall not resign, may not assign or delegate its responsibilities to any 

other Person, and shall serve as such until such time, if any, as (i) the Member’s Company 

Interest is Disposed of in accordance with the terms of this Agreement and the transferee is 

admitted as the new, sole Member, in which case the transferee Member shall, effective upon 

such Disposition, be appointed the Manager, or (ii) the Manager is otherwise removed and 

replaced or the Company is dissolved in accordance with the terms of this Agreement. The 

Manager shall devote such time to the affairs of the Company as is necessary to manage the 

Company as set forth in this Agreement. Member hereby expressly acknowledges that this 

Agreement constitutes a personal services contract between Member as Manager, on the one 

hand, and the Company, on the other hand. Nothing in this Section 3.1 eliminates, limits or 

otherwise modifies any of the express terms of this Agreement or any liability, obligation or 

covenant of any Person hereunder. 

(b) Except as otherwise specifically provided in this Agreement and without 

limitation of the powers expressly granted to the Manager under any other provision of this 

Agreement, the authority, duties (including fiduciary duties) and functions of the Manager shall 

be identical to the authority, duties (including fiduciary duties) and functions of the board of 

directors and the officers of a corporation organized under the Delaware General Corporation 

Law (and not electing to be governed by subchapter XIV thereof). The Manager shall have no 

authority to take or authorize the taking of any action in contravention of any express term of this 

Agreement. 

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(c) No Person dealing with the Company or the Manager shall be required to 

determine, and any such Person may conclusively assume and rely upon, the authority of the 

Manager to execute any instrument or make any undertaking on behalf of the Company. No 

Person dealing with the Company or the Manager shall be required to determine any facts or 

circumstances bearing upon the existence of such authority. Without limitation of the foregoing, 

any Person dealing with the Company or the Manager is entitled to rely upon a certificate signed 

by the Manager as to: 

(i) the identity of Member; 

(ii) the existence or non-existence of any fact or facts that constitute a 

condition precedent to acts by the Manager or are in any other manner germane to the affairs of 

the Company; 

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

any instrument or document of or on behalf of the Company; or 

(iv) any act or failure to act by the Company or any other matter 

whatsoever involving the Company or the Member. 

(d) It is understood and agreed that (i) nothing contained in this Agreement 

creates any duty on behalf of the Participant, (ii) Member and the Company hereby expressly 

waive any fiduciary duties that may otherwise be deemed to be owed by the Participant to 

Member or the Company, and (iii) the Participant shall be entitled to act and exercise any right of 

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

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

(e) Unless and to the extent reimbursement is due pursuant to a Related Party 

Agreement, the Company shall not be liable for, and the Manager shall not seek reimbursement 

from the Company or Member for, any expenses or costs incurred after the formation of the 

Company by the Manager and/or its Affiliates on behalf of or for the benefit of the Company 

(including any costs or expenses incurred as a result of the performance of its obligations under 

Section 3.2). 

(f) This Section 3.1 is subject to any express requirement of direct Participant 

consent set forth elsewhere in this Agreement, including to Sections 2.6, 2.7(c), 8.1, 8.2, 8.7(a) 

and 12.6. Any purported action by the Company requiring the consent of Participant under this 

Agreement shall be null and void ab initio unless and until Participant’s consent is obtained. 

3.2 Employees and Services. After the Closing, the Manager shall cause to be made 

available to the Company, from time to time, employees, facilities and support services in a 

manner and to an extent reasonably required for it to fulfill its duties and obligations as Manager 

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

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

into contractual arrangements to secure employees, facilities and support services from third 

parties (including its Affiliates), provided, however, that the Company shall at all times provide 

for the servicing of the Loans through a servicer under contract with the Company and the 

safekeeping of the notes and other Loan documents by a document custodian under contract with 

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the Company, in each case in accordance with the Participation and Servicing Agreement. 

Notwithstanding anything to the contrary contained in this Section 3.2, no employees of Member 

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

any contractual relationships entered into to provide employees, facilities or support services 

shall be relationships between the third parties (or Affiliates) and Member (and not the 

Company) and shall not relieve Member of its obligations or any liability hereunder, and no 

expenses incurred to secure or maintain employees, facilities or support services shall be an 

expense of the Company unless the same is expressly reimbursable by the Company pursuant to 

the terms of the Participation and Servicing Agreement or is otherwise expressly set forth in this 

Agreement to be an expense of the Company. 

3.3 Related Party Agreements. Neither the Company nor any of its Subsidiaries 

shall enter into any current or future contract, agreement, commitment or arrangement (including 

any agreement to sell Company Property, incur any Debt or Guarantee any obligations) with any 

Affiliate (a “Related Party Agreement”), except as may otherwise be expressly provided herein 

or in any Ancillary Document. 

3.4 Real Property. The Company shall not take title in its own name to any real 

property with respect to which there is an Environmental Hazard. 

ARTICLE IV 

Rights and Duties of, and Restrictions on, Members 

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

be executed, delivered, filed, recorded or published, as appropriate, and any former Member will, 

as requested by the Manager from time to time but at the sole expense of the Company, execute 

and deliver, (i) all certificates, documents and other instruments that the Manager deems 

necessary or appropriate to form, qualify or continue the existence or qualification of the 

Company as a limited liability company in the State of Delaware or as a foreign limited liability 

company in all other jurisdictions in which the Company may, or may desire to, conduct 

business or have Company Property, (ii) any amendment to the Certificate or any instrument 

described in clause (i) required because of, or in order to effectuate, an amendment to this 

Agreement, or any change in the membership of the Company, in accordance with the terms 

hereof, (iii) all certificates, documents and other instruments (including conveyances and a 

certificate of cancellation) that the Manager deems necessary or appropriate to reflect the 

dissolution and liquidation of the Company pursuant to the terms of this Agreement, and (iv) 

such other certificates, documents and other instruments as are required by law or by any 

Governmental Authority to be executed by them in connection with the Business as conducted or 

proposed to be conducted by the Company from time to time. In addition, as soon as reasonably 

practical after the date hereof, 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 the 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 under the Loans), or materially adversely affect 

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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. 

4.2 Certain Restrictions and Requirements. 

(a) Member may not use or possess Company Property other than for a 

Company purpose, except as provided under license or other contractual arrangements. Member 

shall not have any authority to bind, or otherwise to act on behalf of, the Company except 

pursuant to authority expressly granted herein or pursuant to authority granted by the Manager in 

accordance with the terms hereof. 

(b) The Company shall not purchase or redeem Member’s Company Interest, 

directly or indirectly. 

(c) No Person may or shall be admitted as a Member in the Company except 

pursuant to and in accordance with Article VIII hereof. 

(d) Member will at all times meet the qualifications of a Qualified Transferee. 

ARTICLE V 

Borrowings; Contributions; Other Matters 

5.1 Capital Contributions. Except as otherwise expressly provided in this 

Agreement or the Act, no Member (or former Member or Initial Member) shall be obligated to 

make any contribution of capital to the Company or have any liability for the debts and 

obligations of the Company. This Section 5.1 is in furtherance of, and not in limitation of, 

Section 18-303(a) of the Act. 

5.2 No Reliance by Parties Extending Credit. Without limitation of the generality 

of Section 12.4 hereof, the provisions of Section 2.3 are hereby expressly stated not to be for the 

benefit of any Person (including any Person now or hereafter extending credit to the Company), 

other than Member, Initial Member and the Company, and it is the intent of Member, Initial 

Member and the Company that reliance on the provisions of Section 2.3 by any such Person 

other than Member, Initial Member and the Company should be deemed unreasonable for 

purposes of Section 18-502(b) of the Act. 

5.3 No Liens. Notwithstanding anything to the contrary contained in this Agreement, 

except for the security interest granted to Participant pursuant to the Participation and Servicing 

Agreement, the Company shall not encumber or permit any Lien to be placed on the Loans or the 

proceeds therefrom. 

5.4 Establishment and Permitted Uses of Collection Account. The Company shall, 

and hereby is authorized to, establish and maintain or cause to be established and maintained the 

Collection Account in accordance with the Participation and Servicing Agreement, and the funds 

deposited therein shall be disbursed and used solely as provided therein. 

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5.5 Establishment and Permitted Uses of Liquidity Reserve and Litigation 

Reserve Accounts. The Company hereby is authorized to establish and maintain or cause to be 

established and maintained a Liquidity Reserve Account and a Litigation Reserve Account in 

accordance with the Participation and Servicing Agreement and, in the event the Company elects 

to establish such accounts, the funds deposited therein shall be disbursed and used solely as 

provided in the Participation and Servicing Agreement. 

5.6 Establishment and Permitted Uses of LIP Account. The Company shall, and 

hereby is authorized to, establish and maintain or cause to be established and maintained the LIP 

Account in accordance with the Participation and Servicing Agreement, and the funds deposited 

therein shall be disbursed and used solely as provided therein. 

ARTICLE VI 

Distributions and Allocations 

6.1 Distributions. Subject to applicable law and any limitations contained elsewhere 

in this Agreement, the Manager may elect from time to time to distribute Distributable Cash to 

the Member. 

6.2 Allocations. All income and loss of the Company shall be allocated to the 

Member. 

ARTICLE VII 

Accounting and Taxation 

7.1 Fiscal Year. The books and records of the Company shall be kept on an accrual 

basis and the fiscal year of the Company shall commence on January 1 and end on December 31. 

7.2 Maintenance of Books and Records. At all times during the continuance of the 

Company, the Manager shall keep or cause to be kept, at the chief executive office referred to in 

Section 2.4, full and complete books of account. The books of account shall be maintained in a 

manner that provides sufficient assurance that: 

(a) transactions of the Company are executed in accordance with the general 

or specific authorization of the Manager consistent with the provisions of this Agreement; and 

(b) transactions of the Company are recorded in such form and manner as will 

(i) permit preparation of federal, state and local income and franchise tax returns and information 

returns in accordance with this Agreement and as required by law, (ii) permit preparation of the 

Company’s financial statements in accordance with GAAP and as otherwise set forth herein and 

the provisions of the reports required to be provided hereunder, and (iii) maintain accountability 

for the Company’s assets. 

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7.3 Annual Financial Statements. As soon as practicable following but no later 

than 90 days after the end of each fiscal year of the Company, the Manager shall prepare and 

deliver to Member and Participant an audited balance sheet of the Company as at the end of such 

fiscal year, and audited statements of operations and cash flow of the Company for such fiscal 

year, each prepared in accordance with GAAP and accompanied by the Accountants’ report 

thereon, which shall be certified in the customary manner by the Accountants. 

7.4 Taxation. The Company shall be treated as an entity that is disregarded as an 

entity separate from its owner for federal income tax purposes pursuant to Treasury Regulations 

Section 301.7701-3. 

7.5 Records Retention. Until the date that is the later of ten (10) years from the date 

hereof or three (3) years after the date on which the final accounting is delivered to Member and 

Participant pursuant to Section 9.2, in addition to any requirements set forth in the Participation 

and Servicing Agreement, the Manager shall retain and, upon reasonable advance notice and 

during normal business hours, make available to Member and Participant (and any 

representatives or agents of the same, including any Governmental Authority) for review and 

copying all books and records of the Company. 

ARTICLE VIII 

Restrictions on Disposition of Company Interests 

8.1 Limitations on Disposition of Company Interests. Except as otherwise 

provided in this Article VIII or in connection with the Closing, Member shall not, directly or 

indirectly, Dispose of all or any part of its Company Interest or any of its rights or interests under 

this Agreement unless (i) the transferee is a Qualified Transferee and (ii) it first obtains the prior 

written consent of the Participant (which consent shall not be unreasonably withheld, delayed or 

conditioned). In addition, Member shall not Dispose of less than all of its Company Interest. 

8.2 Change of Control. Except as otherwise provided in this Article VIII, Member 

will not permit any Change of Control to occur unless (i) it first obtains the prior written consent 

of the Participant (which consent shall not be unreasonably withheld, delayed or conditioned), 

and (ii) following such Change of Control, Member would be a Qualified Transferee. 

8.3 Additional Provisions Relating to Permitted Dispositions. Except as otherwise 

expressly provided in this Section 8.3, the following provisions shall apply to each Permitted 

Disposition under this Article VIII: 

(a) Member shall not take, or to cause the Company to take, any action that 

involves any material risk (other than any risk attributable to the fact that such action might lead 

to consummation of the proposed Permitted Disposition) of resulting in a material adverse effect 

on the business, financial condition, properties or prospects of the Company. In the event 

Member proposes to make a Permitted Disposition, Member shall be required to pay any and all 

filing and recording fees, fees of counsel and accountants and other out-of-pocket costs and 

expenses reasonably incurred by the Participant and/or the Company in connection with such 

Permitted Disposition. 

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(b) The transferee in a Permitted Disposition shall deliver to the Company, 

with a copy to the Participant, an agreement, in form and substance reasonably satisfactory to the 

Participant, by which such transferee shall (i) agree to become a party to and be bound by this 

Agreement as the “Member,” agree to be appointed as the Manager, and without limitation of the 

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

(ii) assume and agree to perform when due all of the obligations of the transferor Member under 

this Agreement, (iii) represent and warrant that it complies with the requirements set forth in 

Article X, and (iv) state that it is a Special Purpose Entity. 

(c) In connection with each Permitted Disposition, the transferor Member and 

the transferee shall deliver to the Company and the Participant such other documents and 

instruments as the Participant reasonably may request and which are required to effect the 

Permitted Disposition and substitute the transferee as a Member. 

8.4 Effect of Permitted Dispositions. 

(a) Upon consummation of any Permitted Disposition: 

(i) the transferee shall be admitted as a Member in the Company and 

be deemed to be a party to this Agreement as the “Member” and shall be appointed as the 

Manager; 

(ii) the transferred Company Interest shall continue to be subject to all 

the provisions of this Agreement, including the remainder of this Article VIII, and the transferee 

Member shall have the same status as the transferor Member had at the time of consummation of 

such Permitted Disposition and, without limiting the generality of the foregoing, any outstanding 

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

Document) by any direct or indirect predecessor to the transferee as the Member, or by any 

Affiliate of any such predecessor Member, shall be deemed to constitute an outstanding breach, 

misrepresentation, violation or default as the case may be, by the transferee Member; 

(iii) subject to Section 8.4(b) and the last sentence of Section 12.9, the 

transferor Member shall cease to be the Member of the Company (and accordingly, except as 

expressly otherwise provided in Section 8.4(b) or the last sentence of Section 12.9, shall cease to 

be responsible for the payment or performance of any of the obligations or liabilities under this 

Agreement of the Member). 

(b) No Permitted Disposition (and no resulting withdrawal or resignation of 

the transferor Member from the Company) shall: 

(i) relieve the transferor Member of any of the obligations or 

liabilities of the transferor Member under this Agreement required to have been paid or 

performed prior to the consummation of such Permitted Disposition (or of any liability it may 

have arising out of any breach, misrepresentation, violation or default by the transferor Member 

prior to such consummation); 

(ii) result in the termination of, relieve the transferor Member (or any 

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

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Member or its Affiliates under, any Related Party Agreement (such Related Party Agreements to 

continue in effect in accordance with their respective terms), except to the extent expressly 

provided in such Related Party Agreement; or 

(iii) dissolve the Company. 

8.5 Effect of Prohibited Dispositions. No actual or purported Disposition of any 

Company Interest of Member (or any portion thereof), or of any other right or interest of 

Member under this Agreement, whether voluntary or involuntary, in violation of any provision 

of this Agreement shall be valid or effective. The transferor of any Company Interest (or portion 

thereof) Disposed of in violation of any provision of this Agreement, until such Disposition or 

purported Disposition shall be rescinded, shall not be entitled to, and hereby specifically waives, 

any right to receive Company distributions from and after the date of such Disposition or 

purported Disposition or failure to comply, as the case may be. Notwithstanding the foregoing, 

to the extent that Member would have been entitled to Company distributions but for the 

preceding provisions of this Section 8.5 (“Omitted Distributions”), if and when such 

Disposition or purported Disposition shall be rescinded, Member shall be entitled to receive all 

such Omitted Dispositions (but no interest shall be paid thereon with respect to the period 

between the date such Omitted Dispositions would have been made but for this Section 8.5 and 

the date they are actually made). 

8.6 Distributions After Disposition. Distributions with respect to a Company 

Interest made on or after the effective date of the Permitted Disposition of such Company 

Interest shall be made to the transferee Member with respect to such Company Interest, 

regardless of when such distributions accrued on the books of the Company. 

8.7 Resignation; Dissolution. 

(a) Member may not withdraw or resign from the Company, except (i) in 

connection with the Disposition by Initial Member of its entire Company Interest as 

contemplated in the recitals, (ii) in connection with a Permitted Disposition made in accordance 

with the applicable provisions of this Article VIII or (iii) with the prior written consent of the 

Participant. 

(b) Member covenants that it shall not allow a Dissolution Event to occur with 

respect to itself. 

(c) Section 18-304 of the Act shall not apply to the Company. Nothing in this 

Section 8.7(c) shall limit the terms of Section 9.1 hereof. 

(d) Except as is otherwise expressly provided in this Agreement, Member 

shall not be entitled to receive any payment pursuant to Section 18-604 of the Act. 

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ARTICLE IX 

Dissolution and Winding-Up of the Company 

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

occur of the following: 

(i) the agreement by Member and Participant to dissolve the 

Company; 

(ii) the sale of all or substantially all of the Company Property (other 

than cash and cash equivalent instruments), including as an entirety or substantially as an 

entirety; or 

(iii) without limitation of clause (i) above, a Dissolution Event or an 

Insolvency Event occurs with respect to Member or a Person that Controls Member. 

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

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

to which it is a party, the other terms and conditions of this Agreement or the Ancillary 

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

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

As part of the winding up of the affairs of the Company, the following steps will be taken: 

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

all of the assets of the Company are retained by the Company for distribution to Member as 

hereinafter provided. 

(b) The Company shall comply with Section 18-804(b) of the Act. 

(c) Distributions of the assets of the Company after a dissolution of the 

Company shall be conducted as follows: 

(i) first, to creditors, including the Participant (which for all purposes 

in its capacity as Participant shall constitute a creditor) and Member or former Members who are 

creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Company 

(whether by payment or the making of reasonable provision for payment thereof) other than 

liabilities for which reasonable provision for payment has been made and liabilities for 

distributions to Member and former Members under Section 18-601 of the Act; 

(ii) next, to Member and former Members in satisfaction of liabilities 

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

(iii) next, to Member. 

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ARTICLE X 

Qualified Transferees 

10.1 Qualified Transferees. Each Member, other than the Initial Member, shall at all 

times be in compliance with the following (and any proposed transferee of any Company Interest 

in compliance with the following shall be deemed a “Qualified Transferee”): 

(a) Organization; Good Standing; Licenses. Member (i) is a Special Purpose 

Entity duly organized, validly existing and in good standing under the laws of the state of its 

organization, (ii) has qualified or will qualify to do business as a foreign corporation, partnership 

or other entity and will remain so qualified, and is and will remain in good standing, in each 

jurisdiction in which the character of its properties or the nature of its activities makes such 

qualification necessary and in which failure to so qualify would have a material adverse effect 

upon Member or its ability to perform its obligations hereunder, (iii) has full power to own its 

property, to carry on its business as presently conducted, and to enter into and perform its 

obligations under this Agreement, (iv) has all licenses or other governmental approvals necessary 

to perform its obligations hereunder; and (v) has a net worth calculated in accordance with 

GAAP of not less than $5,000,000. 

(b) Authorization; No Violation. The execution and delivery by Member of 

this Agreement and the consummation of the transactions contemplated hereby have been duly 

and validly authorized by all necessary action. Neither the execution and delivery of this 

Agreement, nor the consummation of the transactions herein contemplated, nor compliance with 

the provisions hereof, will conflict with or result in a breach of, or constitute a default under, (i) 

any of the provisions of any law, governmental rule, regulation, judgment, decree or order 

binding on Member or its properties, (ii) the constituent documents of Member, or (iii) any of the 

provisions of any indenture, mortgage, contract or other instrument to which Member is a party 

or by which it is bound or result in the creation or imposition of any Lien upon any of its 

property pursuant to the terms of any such indenture, mortgage, contract or other instrument. 

(c) Governmental Approvals. All actions, approvals, consents, waivers, 

exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to 

be taken, given or obtained, as the case may be, by or from any Governmental Authority or 

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

Agreement and the consummation of the transactions contemplated hereby and the performance 

of its obligations hereunder, have been duly taken, given or obtained, as the case may be, are in 

full force and effect, are not subject to any pending proceedings or appeals (administrative, 

judicial or otherwise) and either the time within which any appeal therefrom may be taken or 

review thereof may be obtained has expired or no review thereof may be obtained or appeal 

therefrom taken. 

(d) No Litigation. On the date Member becomes a party to this Agreement, 

there is no action, suit, proceeding or investigation pending or threatened against Member before 

any Governmental Authority. 

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(e) No Violation of Orders, Decrees, etc. Member is not in default with 

respect to any order or decree of any court or any order, rule, regulation or demand of any 

federal, state, municipal or governmental agency. 

(f) Third Party Consents. No consents, approvals, waivers or notifications of 

stockholders, creditors, lessors or other nongovernmental persons are required to be obtained by 

Member in connection with the execution and delivery of this Agreement and the consummation 

of all the transactions herein contemplated and the performance of its obligations hereunder. 

(g) Owners Accredited Investors. All of the equity owners of Member are 

“accredited investors,” as that term is defined in Rule 501 under the Securities Act of 1933, as 

amended (the “Securities Act”). 

(h) Knowledge and Experience. Member, either by itself or through its 

advisers and principals, has such knowledge and experience in the origination, servicing, sale 

and/or purchase of performing and non-performing or distressed construction loans, including 

loans secured by residential properties, as well as financial and business matters, as to enable 

Member to utilize the information made available to it with respect to the Company Interest and 

the Loans to evaluate the merits and risks of a purchase of the Company Interest and, indirectly, 

the Loans, and to make an informed decision with respect thereto. 

(i) Economic Risks. Member acknowledges, understands and represents that 

it is able to bear the economic risks associated with the acquisition and ownership of the 

Company Interest and, indirectly, the Loans, including the risk of a total loss of its investment in 

the Company and, indirectly, the Loans and/or the risk that it may be required to hold the 

Company Interest and, indirectly, the Loans for an indefinite period of time. 

(j) No Representations. Member hereby acknowledges that, except as is 

otherwise expressly provided in this Agreement or the Loan Contribution and Assignment 

Agreement, none of the Initial Member or the FDIC or any Affiliate of either, or any of their 

respective officers, directors, employees, agents or contractors makes or has made any 

representation or warranty regarding the Company Interest or the Loans or the value of any 

property securing the same. 

(k) Due Diligence. Member acknowledges and agrees that, whether or not 

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

chooses to review any information that is or was made available to it regarding the Company’s 

Interest or the Loans, Member, by itself or through its advisers or principals, has the ability and 

shall be responsible for making its own independent investigation and evaluation of the 

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

acquisition of the Company Interest and, indirectly, the Loans. Except as is otherwise expressly 

provided in this Agreement or the Loan Contribution and Assignment Agreement, none of the 

Initial Member or the FDIC or any Affiliate of either, or any of their respective officers, 

directors, employees, agents or contractors makes and representation or warranty as to the 

completeness or accuracy of any information provided. 

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

nor the sale of the Company Interest (and, indirectly, the Loans) is intended to constitute an offer 

or sale of a “security” within the meaning of the Securities Act or any applicable federal or state 

securities laws, (ii) no inference that any of the Company Interest or the Loans is a “security” 

under such federal or state securities laws shall be drawn from any of the certifications, 

representations or warranties made by any Person in this Agreement, (iii) it is not contemplated 

that any filing will be made with the Securities and Exchange Commission or pursuant to the 

“Blue Sky” or securities laws of any jurisdiction, and (iv) if any of the Company Interest or the 

Loans is a security, such may not be resold or otherwise transferred by Member except in 

accordance with any and all applicable securities and Blue Sky laws. 

(m) Resales. Member is acquiring the Company Interest (and, indirectly, the 

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

meaning of the Securities Act. 

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

or otherwise dispose of the Company Interest (or any interest therein) or any Loan (or any 

interest therein or evidence thereof) to, or (ii) solicit any offer to buy or accept a transfer, pledge 

or other disposition of the Company Interest (or any interest therein) or any Loan (or any interest 

therein or evidence thereof) from, or (iii) otherwise approach or negotiate with respect to the 

Company Interest (or any interest therein) or any Loan (or any interest therein or evidence 

thereof) with, any person or entity in any manner, or take any other action, that would render the 

transfer to Member of the Company Interest or any interest in any Loan a violation of any law, 

rule, regulation or requirement relating to the issuance, regulation, registration or disposition of 

securities, nor will it so act, nor will it authorize any person or entity to so act, in any manner 

with respect to the Company Interest (or any interest therein) or any Loan (or interest therein or 

evidence thereof). 

(o) Acquisition in Compliance with Law. Member’s acquisition of the 

Company Interest and the resulting investment in the Loans will comply with all applicable laws, 

rules, regulations and requirements, including any and all laws and/or restrictions imposed on 

resale of the Company Interest and the Loans by federal and state securities or Blue Sky laws, 

rules, regulations or requirements. 

(p) Independent Evaluation. Member has made an independent evaluation of 

the Company and its assets (including the Loans and related Loan files and/or any electronic data 

made available to it pertaining to the Loans held by the Company). Member also has conducted 

such other investigations as it deems appropriate, including searches of Uniform Commercial 

Code, title, court, bankruptcy and other public records. Member agrees and represents that it is 

entering into this Agreement solely on the basis of its own investigations and its judgment as to 

the value of the Company Interest and the nature, validity, enforceability, collectibility and value 

of the Loans and all other facts material to their ownership, including to the legal matters and 

risks relating to the collection and enforcement, and the performance of any obligations under 

any of the Loans in any jurisdiction. Member further acknowledges that no employee or 

representative of Initial Member or any Affiliate thereof, or any of their respective officers, 

directors, employees, agents or contractors has been authorized to make any statements or 

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representations other than those specifically contained in this Agreement or the Loan 

Contribution and Assignment Agreement. 

ARTICLE XI 

Manager Liability 

11.1 Liability of Manager. 

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

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

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

(b) The Manager may rely, and shall be protected in acting or refraining from 

acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, 

consent, order, bond, debenture or other paper or document reasonably believed by it to be 

genuine and to have been signed or presented by the proper party or parties. 

(c) The Manager may consult with legal counsel, accountants, appraisers, 

management consultants, investment bankers and other consultants and advisers selected by it, 

and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to 

matters that the Manager reasonably believes to be within such Person’s professional or expert 

competence shall be conclusively presumed to have been done or omitted in good faith and in 

accordance with such opinion. 

(d) The Manager shall not be liable to the Company or Member for its good 

faith reliance on the provisions of this Agreement. 

(e) The limitations and exculpation afforded by each provision of this Section 

11.1 are cumulative and not exclusive. Nothing in this Section 11.1 is intended, or shall be 

deemed, to permit conduct that would otherwise constitute misappropriation of a trade secret of 

the Company under applicable law or conduct that, even disregarding the terms hereof otherwise 

would be actionable by the Company or Member. 

(f) The provisions of this Section 11.1 are for the benefit of the Manager. 

This Section 11.1 may be amended, modified or repealed in the manner set forth elsewhere in 

this Agreement, but any amendment, modification or repeal of this Section 11.1 or any provision 

hereof (including as a result of any amendment, modification or repeal of the Delaware General 

Corporation Law) shall (unless the Manager shall expressly have consented to such amendment, 

modification or repeal) be prospective only and shall (unless the Manager shall expressly have 

consented to such amendment, modification or repeal) not in any way affect the limitations on 

liability under this Section 11.1 as in effect immediately prior to such amendment, modification 

or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, 

prior to such amendment, modification or repeal, regardless of when such claims may be 

asserted. 

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ARTICLE XII 

Miscellaneous 

12.1 Waiver of Rights of Partition and Dissolution. Member hereby irrevocably 

waives all rights it may have at any time to maintain any action for division or sale of the 

Company Property as now or hereafter permitted under any applicable statutes or other laws. 

Member hereby waives and renounces its rights to seek a court decree of dissolution or to seek 

the appointment of a court receiver for the Company as now or hereafter permitted under any 

applicable statutes or other laws. 

12.2 Entire Agreement. This Agreement, together with the Exhibits hereto (and any 

other agreements expressly contemplated hereby or thereby), constitutes the entire agreement 

and understanding, and supersedes all other prior agreements and understandings, both written 

and oral, between Member or its Affiliates or any of them and the Company with respect to the 

subject matter hereof. The Member acknowledges that certain agreements or other instruments 

are being (or were) executed by the Company, the Member (or a former Member) and/or 

Affiliates of the Member (or a former Member) and Participant simultaneously or otherwise in 

connection with the execution of this Agreement and that notwithstanding anything to the 

contrary contained in the foregoing sentence of this Section 12.2, such agreements shall be 

effective and binding on the parties thereto in accordance with the terms thereof. 

12.3 Governing Law; Jurisdiction. THIS AGREEMENT IS GOVERNED BY AND 

SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF 

DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT 

MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT 

TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the 

provisions of this Agreement and any mandatory, non-waivable provision of the Act, such 

provision of the Act shall control to the extent necessary to eliminate such direct conflict. 

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

12.4 Third Party Beneficiaries. Participant is hereby constituted an express third 

party beneficiary of this Agreement. Subject to Section 11.1, (i) this Agreement is for the benefit 

solely of, and shall inure solely to the benefit of, Member, the Company and Participant and (ii) 

this Agreement is not enforceable by any Person (including any creditor of the Company or of 

Member) other than Member, the Company and Participant. 

12.5 Expenses. Except as may otherwise be expressly provided herein or in any 

Ancillary Document, Member shall pay its own expenses (including legal, accounting 

investment banker, broker or finders fees) incident to the negotiation and execution of this 

Agreement and the Ancillary Documents, the consummation of the transactions contemplated by 

Section 2.3 hereof and the performance of its obligations hereunder. 

12.6 Waivers and Amendments. This Agreement may be amended or modified, and 

the terms hereof may be waived, only by a written instrument signed by Member and Participant. 

Except where a specific period for action or inaction is provided herein, no failure on the part of 

Member or Participant to exercise, and no delay on the part of Member or Participant in 

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exercising, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall 

any waiver on the part of Member or Participant of any such right, power or privilege, or any 

single or partial exercise of any such right, power or privilege, preclude any other or further 

exercise thereof or the exercise of any other right, power or privilege. 

12.7 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: 

If to the Company before the Closing, to: 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami
 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, VA 22226 

Attention: David Gearin 

If to the Company after the Closing, to: 

FNBN-RESCON I LLC 

4191 2nd Street South 

St. Cloud, MN 56301 

Attention: Norman Skalicky 

with a copy to: 

Skalicky Law Offices 

57 West 58th Street 

#8C 

New York, NY 10019 

Attention: Kelly Skalicky
 

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If to Member before the Closing, to: 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, VA 22226 

Attention: David Gearin 

If to Member after the Closing, to: 

Stearns SPV I, LLC 

4191 2nd Street South 

St. Cloud, MN 56301 

Attention: Norman Skalicky 

with a copy to: 

Lindquist and Vennum 

4200 IDS Center 

80 South 8th Street 

Minneapolis, MN 55402 

Attention: Scott Coleman 

If to Participant, to: 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-002 

Attention: Ralph Malami 

with a copy to: 

Senior Counsel 

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FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, VA 22226 

Attention: Senior Counsel 

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 

address for purposes of notice hereunder by notice to such effect to the other Persons identified 

above. 

12.8 Counterparts; Facsimile Signatures. 

(a) This Agreement may be executed in any number of counterparts, each of 

which shall be an original and all of which shall together constitute one and the same instrument. 

It shall not be necessary for any counterpart to bear the signature of all parties hereto. 

(b) This Agreement and any amendments hereto, to the extent signed and 

delivered by facsimile or other electronic means, shall be treated in all manner and respects as an 

original agreement and shall be considered to have the same binding legal effect as if it were the 

original signed version thereof delivered in person. No signatory to this Agreement shall raise 

the use of a facsimile machine or other electronic means to deliver a signature or the fact that any 

signature or agreement was transmitted or communicated through the use of a facsimile machine 

or other electronic means as a defense to the formation or enforceability of a contract and each 

such Person forever waives any such defense. 

12.9 Successors and Assigns. Except as otherwise specifically provided in this 

Agreement (including in Article VIII), this Agreement shall be binding upon and inure to the 

benefit of Member, the Company and Participant and their respective Successors and assigns. 

Without limitation of Section 8.4, this Agreement, as in effect on the date that any particular 

Person shall cease to be Member, shall continue to bind such Person in relation to the period 

during which it was Member. 

12.10 Construction. 

(a) Captions. Paragraph titles or captions contained in this Agreement are 

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

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

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

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

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

time constitute “Affiliates” or “Subsidiaries,” as the case may be, of such specified Person, and 

do not include, at any particular time, other Persons that may have been, but at such time have 

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ceased to be, “Affiliates,” or “Subsidiaries,” as the case may be, of such specified Person, except 

to the extent that any such reference specifically provides otherwise. A reference to Member or 

other Person, in and of itself, does not, and shall not be deemed to, refer to or include any other 

Person having an interest in Member or other Person (such as, without limitation, any 

stockholder or member of or partner in Member, or other Person). 

(c) Use of “Or.” The term “or” is not exclusive. 

(d) References to Laws. A reference in this Agreement to a law includes any 

amendment, modification or replacement to such law. 

(e) Use of Accounting Terms. Accounting terms used herein shall have the 

meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to 

which they refer. 

(f) References to Documents. References to any document, instrument or 

agreement (i) shall be deemed to include all appendices, exhibits, schedules and other 

attachments thereto and all documents, instruments or agreements issued or executed in 

replacement thereof, and (ii) shall mean such document, instrument or agreement, or replacement 

thereof, as amended, modified and supplemented from time to time in accordance with its terms 

and as the same is in effect at any given time. 

(g) Use of “Herein.” Unless otherwise specified, the words “hereof,” “herein” 

and “hereunder” and words of similar import when used in this Agreement shall refer to this 

Agreement as a whole and not to any particular provision of this Agreement. 

(h) Use of “Including.” The words “include” and “including” and words of 

similar import when used in this Agreement are not limiting and shall be construed to be 

followed by the words “without limitation,” whether or not they are in fact followed by such 

words. 

(i) Use of “During.” The word “during” when used in this Agreement with 

respect to a period of time shall be construed to mean commencing at the beginning of such 

period and continuing until the end of such period. 

12.11 Compliance With Law; Severability. 

(a) 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. 

(b) Severability. Any provision of this Agreement which is prohibited or 

unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as 

follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a 

particular Person or Persons and/or under any particular circumstance or circumstances, such 

provision shall be ineffective, but only in such jurisdiction and only with respect to such 

particular Person or Persons and/or under such particular circumstance or circumstances, as the 

case may be; (ii) without limitation of clause (i), such provision shall in any event be ineffective 

only as to such jurisdiction and only to the extent of such prohibition or unenforceability, and 

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such prohibition or unenforceability in such jurisdiction shall not invalidate or render 

unenforceable such provision in any other jurisdiction; and (iii) without limitation of clauses (i) 

or (ii), such ineffectiveness shall not invalidate any of the remaining provisions of this 

Agreement. Without limitation of the preceding sentence, it is the intent of the parties to this 

Agreement that in the event that in any court proceeding, such court determines that any 

provision of this Agreement is prohibited or unenforceable in any jurisdiction (because of the 

duration or scope (geographic or otherwise) of such provision, or for any other reason) such 

court shall have the power to, and shall, (x) modify such provision (including without limitation, 

to the extent applicable, by limiting the duration or scope of such provision and/or the Persons 

against whom, and/or the circumstances under which, such provision shall be effective in such 

jurisdiction) for purposes of such proceeding to the minimum extent necessary so that such 

provision, as so modified, may then be enforced in such proceeding and (y) enforce such 

provision, as so modified pursuant to clause (x), in such proceeding. Nothing in this 

Section 12.11(b) is intended to, or shall, limit (1) the ability of any party to this Agreement to 

appeal any court ruling or the effect of any favorable ruling on appeal or (2) the intended effect 

of Section 12.3. 

12.12 Power of Attorney. Member does hereby constitute and appoint the Manager as 

its true and lawful representative and attorney-in-fact, in its name, place and stead to make, 

execute, sign, acknowledge, deliver or file any certificate, document or other instrument that 

Member is required to execute and deliver pursuant to clause (i), (ii) or (iii) of Section 4.1 

hereof. The foregoing notwithstanding, the Manager shall not have any right, power or authority 

to amend or modify this Agreement. The power of attorney granted hereby is coupled with an 

interest and shall (i) survive and not be affected by the subsequent death, incapacity, disability, 

dissolution, termination or bankruptcy of Member granting the same or the transfer of all or any 

portion of Member’s Company Interest and (ii) extend to Member’s Successors, assigns and 

legal representatives. 

12.13 Submission to Jurisdiction; Waivers. Each of the Company and Member 

(other than the Initial Member) hereby irrevocably and unconditionally: 

(a) (i) agrees that any suit, action or proceeding against it or any of its 

Affiliates by the Participant (or its direct or indirect predecessors, as such) arising out of or 

relating to or in connection with this Agreement or any Ancillary Document may be instituted, 

and that any suit, action or proceeding by the Company or Member or any of their respective 

Affiliates against the Participant (or its direct or indirect predecessors, as such) arising out of or 

relating to or in connection with this Agreement or any Ancillary Document shall be instituted 

only, in the Supreme Court of the State of New York, County of New York, or the United States 

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, 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 12.13(a) may be effected by the mailing of copies thereof by 

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registered or certified mail, postage prepaid, to it at its address for notices pursuant to Section 

12.7 (with copies to such other Persons as specified therein), such service to become effective 30 

days after such mailing, provided that nothing contained in this Section 12.13(b) shall affect the 

right of any party to serve process in any other manner permitted by law; 

(c) (i) waives any objection which 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 or any 

Ancillary Document brought in any court specified in Section 12.13(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 Agreement shall be construed to 

constitute a consent to jurisdiction by the FDIC in any capacity or a limitation on any removal 

rights the FDIC, in any capacity, may have; and 

(e) WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF 

ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY 

ANCILLARY DOCUMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE 

TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by 

their respective officers or agents thereunto duly authorized on the date first above written. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION as RECEIVER for FIRST 

NATIONAL BANK OF NEVADA 

By:___________________________ 

Name: Ralph Malami 

Title: Attorney-in-Fact 

FNBN-RESCON I LLC, a Delaware limited 

liability company 

By: Federal Deposit Insurance Corporation as 

Receiver for First National Bank of Nevada, 

Sole Member and Manager 

By:___________________________ 

Name: Ralph Malami 

Title: Attorney-in-Fact 

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12372935.2 
Annex I 

Certain Definitions 

As used in the Agreement, the following terms have the following meanings 

(terms defined in the singular to include the plural and vice versa and references in this Annex I 

to sections constitute references to sections of the Agreement unless otherwise expressly 

indicated): 

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

Company. 

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

101 et seq. 

“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, general partner, managing 

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

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

any Person who is an officer, director, general partner, managing member, trustee or holder of 

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

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

for purposes of this Agreement neither Participant nor the Initial Member shall be deemed to be 

an Affiliate of 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 set forth in the preamble. 

“Ancillary Documents” means the LLC Sale Agreement and the Guaranty 

required to be delivered thereby, the Loan Contribution and Assignment Agreement, the 

Participation and Servicing Agreement, including the Servicing Agreement and the Custodial 

Agreement which are exhibits thereto, in each case once executed and delivered, and any and all 

other agreements and instruments executed and delivered contemporaneously in connection with 

the Closing. 

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

Contribution and Assignment Agreement and the ownership, servicing, administration, 

management and liquidation of the Loans. 

“Certificate” shall have the meaning set forth in Section 2.1(a). 

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“Change of Control” with respect to Member shall mean (i) the Disposition of 

any equity or other interest in Member that would result in Member failing to be a MajorityOwned Subsidiary of Stearns Bank, N.A.; (ii) the Person who currently Controls Member 

ceasing to Control Member; or (iii) the merger of Member or any Person who Controls Member 

into another Person. 

“Closing” shall have the definition set forth in the recitals. 

“Collection Account” shall have the meaning assigned thereto in the 

Participation and Servicing Agreement. 

“Company” shall have the meaning set forth in the preamble. 

“Company Interest” shall mean, with respect to any particular Member, the 

entire limited liability company interest (as such term is defined in the Act) of such Member, 

including (i) such Member’s rights to share in the income, gain, loss, deductions and credits of, 

and the right to receive distributions from, the Company, (ii) all other rights, benefits and 

privileges enjoyed by such Member (under the Act, this Agreement or otherwise) in its capacity 

as a Member, including rights to vote, consent and approve, and (iii) all obligations, duties and 

liabilities imposed on such Member (under the Act, this Agreement or otherwise) in its capacity 

as a Member. 

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

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

pursuant to the Loan Contribution and Assignment Agreement. 

“Contribution Date” shall have the meaning set forth in Section 2.3(a). 

“Control” (including the phrases “Controlled by” and “under common Control 

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

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

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

“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. 

“Disposition” shall mean any sale, assignment, alienation, gift, exchange, 

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

attempted disposition whatsoever, whether voluntary or involuntary. For the avoidance of doubt, 

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it is understood and agreed that a statutory conversion of a Person into another form of Person 

does not constitute a Disposition. The term “Dispose” shall mean to make or consummate a 

“Disposition.” 

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

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

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

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

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

revocation of its charter and the expiration of 90 days after the date of notice to the corporation 

of revocation without a reinstatement of its charter. For the avoidance of doubt, it is understood 

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

a “Dissolution Event.” 

“Distributable Cash” shall mean the amount of cash which the Manager deems 

available for distribution to the Member, taking into account all debts, liabilities and obligations 

of the Company then due and amounts which the Manager deems necessary to place into 

reserves for customary, usual and reasonably foreseeable claims with respect to the Business. 

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

property (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. 

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

“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. 

“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 

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

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

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

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

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

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

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

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

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

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

obligation. 

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

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

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

stepchildren, grandchildren and grandchildren-in-law. 

“Initial Member” shall have the meaning set forth in the preamble. 

“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; 

(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 

statute, law, or regulation; 

(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); 

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(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 statute, law or 

regulation 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 statues, laws or regulations 

of any jurisdiction involving any reorganization, arrangement, composition, readjustment, 

liquidation, dissolution, or similar relief. 

“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 nature whatsoever. 

“LIP Account” shall have the meaning assigned thereto in the Participation and 

Servicing Agreement. 

“Liquidity Reserve Account” shall have the meaning assigned thereto in the 

Participation and Servicing Agreement. 

“Litigation Reserve Account” shall have the meaning assigned thereto in the 

Participation and Servicing Agreement. 

“LLC Sale Agreement” shall have the meaning set forth in the recitals. 

“Loan” shall have the meaning assigned thereto in the Loan Contribution and 

Assignment Agreement. 

“Loan Contribution and Assignment Agreement” shall have the meaning set 

forth in the third Recital. 

“Majority-Owned Subsidiary” shall mean, with respect to any specified Person, 

any other Person (i) as to which such specified Person owns, directly or indirectly, of record and 

beneficially, (x) not less than a majority of the voting power and (y) (A) if such other Person is a 

corporation, not less than fifty-one percent (51%) of the outstanding capital stock, and (B) if 

such other Person is not a corporation, not less than fifty-one percent (51%) of the equity and 

profits interests at the time any determination thereof is being made, in the case of both subclauses (x) and (y) other than director’s qualifying (or other similar) shares (it being understood 

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that a pledge for collateral security purposes of an equity interest in a Person shall not be deemed 

to affect the ownership of such equity interest by the pledgor, or the Control of such Person, so 

long as such pledgor continues to be entitled, in all material respects, to not less than a majority 

of the voting power and not less than fifty-one percent (51%) the income with respect to such 

equity interest), and (ii) which such specified Person in any event Controls. 

“Manager” shall mean, at all times, the sole Member within which the 

management of the Company is exclusively vested and which shall be appointed manager at such 

time as such Member executes this Agreement. 

“Member” shall mean (i) prior to the Closing, Initial Member, and (ii) following 

the Closing, Stearns SPV I, LLC or any Successor thereto. 

“Omitted Distributions” shall have the meaning set forth in Section 8.5. 

“Participant” shall have the meaning assigned thereto in the Participation and 

Servicing Agreement. 

“Participation and Servicing Agreement” shall have the meaning set forth in 

the fourth Recital. 

“Participation Interest” shall have the meaning assigned thereto in the 

Participation and Servicing Agreement. 

“Permitted Disposition” shall mean (i) the transfer of the entire Company 

Interest of the Initial Member to Stearns SPV I, LLC contemplated by the recitals to this 

Agreement and (ii) a direct transfer of a Company Interest permitted pursuant to Section 8.1 

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

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

other entity. 

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

“Receiver” shall have the meaning set forth in the Preamble. 

“Related Party Agreement” shall have the meaning set forth in Section 3.3. 

“Securities Act” shall have the meaning set forth in Section 10.1(g). 

“Special 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 its Company Interest, its right, title and interest in, to and 

under this Agreement and the other instruments contemplated by this Agreement or other assets 

directly related to the Company, (iii) is not engaged in any significant business operations except 

by virtue of or as a result of, or otherwise directly in connection with, its ownership of its 

Company Interest, its status as Member, the exercise of any of its rights or powers under this 

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Agreement or the other instruments contemplated by this Agreement or the actions of the 

Company; (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 its parent, the Company and 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. 

“Subsidiary” shall mean, with respect to any specified Person, each of (i) any 

other Person not less than a majority of the overall economic equity in which is owned, directly 

or indirectly through one of more intermediaries, by such specified Person, and (ii) without 

limitation of clause (i), any other Person who or which, directly or indirectly through one or 

more intermediaries, is Controlled by such specified Person (it being understood with respect to 

each of clauses (i) and (ii) that a pledge for collateral security purposes of an equity interest in a 

Person shall not be deemed to affect the ownership of such equity interest by the pledgor or the 

Control of such Person so long as such pledgor continues to be entitled, in all material respects, 

to all the voting power and all the income with respect to such equity interest). 

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

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

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

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

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

with respect to Participant, any Person that is a direct or indirect transferee (whether by 

Disposition, merger, consolidation or otherwise) of any of Participant’s rights or interests under 

this Agreement or any other Ancillary Document. 

“Treasury Regulations” shall mean the regulations promulgated by the United 

States Department of the Treasury pursuant to and in respect of provisions of the Internal 

revenue Code of 1986, as amended, and all references to sections of the Treasury Regulations 

shall include any corresponding provision or provisions of succeeding, substitute, proposed or 

final Treasury Regulations. 

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

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EXHIBIT A 

FORM OF CERTIFICATE OF FORMATION 

OF 

FNBN-RESCON I LLC 

Pursuant to and in accordance with the provisions of Section 18-201 of the 

Delaware Limited Liability Company Act, the undersigned hereby certifies that: 

FIRST, the name of the limited liability company is FNBN-RESCON I LLC (the 

“Company”). 

SECOND, the address of the registered office of the Company in the State of 

Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of 

New Castle. The name of the registered agent at such address is The Corporation Trust 

Company. 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of 

Formation of the Company on this day of January, 2009. 

By:_________________________________ 

Name: Ralph Malami 

Title: Authorized Person 

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